How Can Telcos Create Value for End-Users ?

I have written in the past about my fundamental dislike of Uber. In a nutshell, I don’t think Uber is particularly innovative, and I don’t think it would work if the industry they are attacking hadn’t been so behind the times in the first place.

Yesterday, I stumbled upon an article on Fred Bazin‘s Wechat Moments that reinforced my fundamental distaste but more important focuses on value creation for end users. The article is entitled Why A New Generation Of On-Demand Businesses Rejected The Uber Model. It’s not a take down of the Uber model per se, but it shows how other startups are addressing the same pain point that Uber like startups are addressing, but differently.

The key is around value creation for the end-user. When you’re building a intermediation technology layer and trying to distance yourself as much as you can from the actual service being delivered (a taxi service in the case of Uber) you’re very limited in what value you can create for the end-user.

This tied into another trail of thought that has been with me for a while, on how customer intimacy could be (read probably is) the way for telcos to create value for end users. Let me expand on that.

For years now, most telcos I know have had at their core a strategy of reducing customer intimacy. Intimacy, in the form of customer interaction is seen as a cost in a Telco organisation. A few are bucking the trend (which is what makes this Ting advert so funny) but for the most part, Telcos do not want to talk to their customers, and if they have to, then the shorter the better. Just the opposite of the Zappos philosophy.

Unfortunately, when it comes to services beyond the pipe itself, intimacy is about the only thing that distinguishes the telcos from the  online service providers. And the latter have scale and agility that the telcos can only dream about. So ditching intimacy, seems like a pretty stupid move to me. It’s the avenue for value creation. In a sense, a telco is first and for most a service underlayer in the same way that Uber is a service overlayer. Neither are the service at its core.

If the telcos want to remain in the thin service layer that they have managed to secure historically (in communications and content delivery, but it’s shrinking fast) then they need to change their corporate alignment and understand that cutting costs in customer intimacy is the exact opposite to what they should be doing.

At BBWF in November I saw a fantastic video on Smart Home during one of the sessions (it’s not online unfortunately, so I can’t share it). Smart Home is seen as one of the golden goose eggs for telcos. In this video you saw kids come back from home and badge into their homes, while the network texted the parents that the kids were home. One part of me says “wow!”, the other part says “creepy!” Are you going to trust a telco to run that kind of service that is at the heart of your family, loved ones, property, etc. ?

I know I wouldn’t, and that’s not just because my telco is currently China Telecom. A telco would have to demonstrate a lot more in terms of competence, reactiveness and care to me before I’d trust them with something like that. And just like the Uber model makes it hard to create value by keeping the actual service at arm’s length, the telcos are going to have a hard time building that trust by keeping the customer at arm’s length.