XConnect - Telco Disruption in 2021: Innovation, Optimisation and Differentiation with Data

At the close of 2019, telecoms operators around the globe set their strategies and laid out their plans for 2020, only to see them change almost overnight. As the industry looks at 2021, I think there’s a cautious optimism. We’ve seen what unexpected events can do to the global economy and how quickly the telecoms industry can adapt.

While 2020 has been an ongoing period of adaptation and adjustment, 2021 is going to be about optimising operations and finding ways to create new levels of resilience. At the same time, telecoms operators have seen that there are new opportunities to experiment and that more of the same no longer matches customer expectations. Digital transformation has accelerated, and in the voice and messaging market, challenges have been amplified.

Continued price erosion in the voice market, combined with fraud and Origin Based Rating (OBR) eating into margins, is a challenge for operators. In the A2P messaging space, growing competition means there’s a drive for differentiation. This means that across voice and messaging, operators need to look at any opportunity to increase performance, reduce losses and increase efficiency. 

In 2021, operators have to look at how they can maximise the value of every minute and message on their network and protect their margins. There are six trends that I see shaping the market in 2021 that operators should be following so that they can go from surviving in 2020 to thriving in 2021:

1- RCS is Becoming a Reality

After years of discussions across the industry about Rich Communications Services (RCS), it will finally gain traction in 2021. Leading brands will deploy RCS at scale to engage with customers with an optimised customer experience.

GSMA reports that the number of monthly users of RCS Business Messaging has surpassed $215 million and this is expected to double. By 2021, it estimates that RCS messaging services will reach a market value of $74 billion. RCS will allow companies to improve their service offering with the use of new features, while driving costs down through the automation of customer interactions. The challenge will be to guarantee performance and ensure users receive an optimised experience.

2- Growing M&A in A2P and Voice

The A2P messaging market continues to drive growth for messaging aggregators serving brands and platforms. In 2021, there will be increasing M&A activity around A2P messaging. More and more Mobile Network Operators (MNOs) are developing A2P business divisions to diversify and refresh their offering in a competitive market while A2P messaging aggregators are looking at adjacent services that they can quickly incorporate into their offerings. 

Aggregators will buy into the voice market to offer a comprehensive service and voice players will acquire A2P messaging aggregators to quickly enter the business messaging market. It doesn’t make sense for these two services to stay siloed as we see the emergence of Communications Platform as a Service (CPaaS). According to Zion Market Research, the global A2P messaging market is projected to gain proceeds worth nearly $83.3 billion by 2026. 

3- OBR Headaches will Grow  

OBR is currently deployed in more than 10 EU countries as well as a growing number of destinations across the Middle East and North Africa (MENA). A growing number of networks across different countries are now adding OBR, averaging around one every month or higher. This penalty surcharge can be around €0.35, which means a 3,500% increase over the standard termination rate.  

OBR has the potential to impact any operator that terminates international voice traffic. With OBR gradually being introduced across continents, it’s important that operators understand the risks and take the necessary steps to reduce the impact on their businesses. Operators that take action now to stop future losses from OBR benefit from predictable margins and gain an advantage over competitors. 

4- Two-Factor Authentication is Driving Business Messaging

According to Market Research Future, the market for global Two-Factor Authentication (2FA) is expected to reach $8.98 billion by 2024. 2FA for web platforms and services is anticipated to propel the growth of the global A2P SMS market. In addition, one-time passwords (OTPs) are growing in popularity due to increasing cybersecurity threats and regulatory requirements.

Despite the growth of 2FA and OTPs in recent years, the number of successful account takeover attacks has also increased. 2FA needs to become more agile and sophisticated in order to deal with advancing security threats. The challenge in meeting the requirements for 2FA lies in being able to improve user security without inconveniencing those same users.

5- Identity and Validation

Mobile phone numbers will grow in importance for identifying and validating transactions. In 2020, we saw eCommerce and all kinds of online transactions show explosive growth due to lockdowns and quarantines. Mobile phone numbers remain one of the fastest and most efficient ways to confirm an identity and authenticate a transaction. 

Using phone numbers as a source of identification allows businesses to check validity and service capabilities of telephone numbers prior to scheduling call agents, as well as number types that could indicate suspicious activity. 2021 will present a big opportunity for phone numbers to be used to identify people and approve transactions. As a result, telephone number data quality will become critical.

6- Data Will Be More Important than Ever

The quality of data used by operators will be more important than ever for capturing new opportunities and optimising their operations. Whether it is in direct routing A2P messages or reducing voice fraud, enhancing global number intelligence means increased precision, performance and trust. Adding new data sets to operations and enhancing the data quality can be a way to gain a competitive edge and increase profitability. 

In 2021, the operators and A2P messaging aggregators that enhance their data with global number intelligence will be able to differentiate their offerings and increase customer and user satisfaction. Across other industries, businesses are using data to refine their approach and telecoms should not be any different.   

7- Looking to the Future

Overall, 2021 will be about readjusting and rethinking how operators approach the challenges in their business and how they pursue new opportunities. They have to be smarter and use new tools and data to achieve their goals. Otherwise, they’ll be trying to grow in a rapidly changing market with a legacy approach. There is a huge opportunity in experimentation and pushing innovation in 2021.

The operators that get it right will be ready to not just succeed over the next 12 months but grow and adapt when new unexpected events occur. 2021 will be a year of rapid development in our industry because operators have no choice. They have to adapt and learn from 2020 to create the businesses of the future.