I was thinking this morning about what were the key things I’d look for in a Service Provider that would indicate future success. In other words if I were to put up my own money to invest in this space where would I put it.
I narrowed my thinking down to these four main points.
A service provider should…
1. Focused on the customer experience
The provider strategies must be centered around providing a unique experience to subscribers. This could range from friendly and helpful install techs and CSRs, to clean and elegant easy to use self-service portals and mobile apps. Think about the desired experience you want a subscriber to go through and make it seem less and enjoyable. Providers need to understand what makes the varying subscriber demographics tick – what will they value.
2. Focused on innovation
The days of a provider offering just voice, video, and data are over. Most providers are now offering a quad bundle which includes a mobile phone plan as the fourth offering. The problem is that services overtime begin to generate less profit as it becomes more of a commodity and competition increases. It’s absolutely important that providers innovate in developing additional value-add services that both help retain subscribers but also generate higher margin on each revenue dollar.
3. Own and operate a mobile network
There are a few different ways to deliver a providers services to its subscribers. Today it mostly occurs over hybrid fiber coax (HFC) networks, fiber to the home (FTTH) networks, and 4G LTE networks. In the past providers would only have a single type of delivery mechanism. Telcos used copper DSL, cable companies used HFC, and mobile providers used their licensed spectrum.
Today, providers must adopt an access strategy that sustains them into the future and fits how subscribers will access their service. A FTTH network for anything new combines with HFC/DOCSIS in areas where there is already cable is the ideal for fixed broadband. However, 5G technology and small cell solutions are going to change the game and disrupt fixed broadband and drive connectivity for IoT and smart city applications. Providers should at this point either have their own spectrum and mobile network or become affiliated with a larger mobile provider or they will be limited in their competitiveness.
4. Balance healthy financials and profits with innovation
Obviously I’d still be interested in providers having healthy balance sheets and cash flow. I’ve seen providers with 70+% gross margin on voice and data services but declining margin on video services with an all in EBITDA margin percent at 30+%. All provider vary here and the trend that is important are the balance of these metrics with investment levels in area of innovation and acquisition. Also having a proven track record of bringing innovation to market helps.
In conclusion a provider that immerses itself in its customers and their experience and truly understands the services they value will be able to prosper where others cannot. Part of that understanding is how these subscribers will connect to your services and the large shift to mobile-only connectivity like WiFi, LTE, and 5G.