Five Steps Telecommunications Service Providers Can Take To Tackle Tough Economic Times

Zawya
June 03, 2009

It is no secret that businesses are feeling the pain of the economic downturn and the telecom industry is no exception.

But this downturn may be a blessing in disguise to some service providers an opportunity to rethink their operations environment and make critical changes that will ultimately transform them into leaner, more agile market players.

Service providers that take a more strategic approach to reducing operations costs and maximizing ROI will realize gains in the long run even after the economy has improved and customers are spending freely once again.

New competitors and continued pressure on ARPU, combined with the current challenging economic conditions, are now forcing carriers to heed the best practices of customer-facing industries like retail, as well as the efficiencies espoused by the IT world.

Here are five steps that telcos can take to help navigate turbulent times.

• Find Revenue Leaks. Ensuring that you collect the revenue you are owed seems like a straightforward and basic concept, but revenue leakage can represent as much as 7% of a service provider's revenues. Errors in rating, mediation, and billing systems are the most common causes of revenue loss but, once identified, can often be fixed to provide an immediate positive impact on revenue. The challenge lies in discovering the sources of revenue leaks. Two sources include handoff and synchronization errors between back-office systems which leads to Step 2.
• Automate. Lack of automation often results in re-works and errors. Any re-work costs time and money, and slows the time to generating revenue. Revenue leakage is another outcome of a lack of automation, and is frequently caused by the manual handoff of information between systems, or incorrect system synchronization. Manual processes create errors, and each error costs money. Completely hands-free provisioning may still be a pipe dream for most carriers, but any degree of automation will reduce errors and save money.
• Maximize Your Assets. The right discovery and reconciliation capability along with an accurate inventory management system can ensure that customer and service configuration information is accurate and updated across different elements in the network, thereby driving up the rate of asset utilization. By obtaining an accurate picture of the network, you can avoid buying unnecessary equipment and better utilize existing network infrastructure.
• Cap Churn Rate. While reasons for customer churn can vary by provider and market segment, and can range from price to service quality to services offered, it is critical for operators to understand the top reasons why their customers are churning and to identify how they can stem that loss in the short term. Given that the cost of acquiring a customer is anywhere from three to five times as much as the cost of retaining a customer, implementing measures to retain even 10% of would-be churners can have a significant impact on revenue and profitability -- and give the operator some breathing room to implement a more comprehensive churn management strategy over the long term.
• Look to the Future. Truth is, the communications industry has been less impacted by this economy than other sectors, with major operators reporting healthy growth in their wireless and broadband divisions. This relatively strong position in a difficult economy provides operators with the opportunity to position themselves for growth when the market begins to improve. Operators that have been able to maintain a relatively strong position over the last several months should use this time to consider new opportunities, including partnerships, the acquisition of distressed assets, and internal restructuring. When the economic climate improves, the strongest and most successful operators will be those who have spent the downturn not just reacting to the current situation, but proactively making changes in anticipation of future growth.

The bottom line is that service providers need to take a more holistic approach to issues such as revenue assurance, customer management, and systems and process automation or risk facing an endless cycle of patching up problems as they occur. They need to think positive, plan for the future -- and at the same time streamline their operations, improve efficiencies, and plan the next round of innovative service offerings.

By Sanjay Mewada, VP of Strategy from NetCracker.