Telecommunications companies in revenue fight with ‘upstart’ platforms

Traditional telecommunications companies are being “stripped” of core revenue-generating services by emerging technologies and will have to think outside the box to remain competitive in the coming years, according to one of the country’s foremost industry experts.

Joe Cunningham, text messaging pioneer in the nineties and chairman of IT professional services firm Ammeon, said traditional industry powerhouses are coming under increasing pressure from born-on-the-internet companies which will force them to adapt over the next few years.

Carriers will have to use their unique resources more effectively and come up with innovative cloud-based services as free messaging platforms such as Whatsapp eat further into their revenues as a result of the proliferation of mobile technology.

“That [mobile] innovation has been tremendous in terms of what it’s done to a whole set of industries,” Mr Cunningham said.

“The revolution that we see happening next is that telco carriers themselves are really being stripped of services by a new set of upstarts.

“If you look at messaging, five or six years ago one of the main carriers in the UK was doing maybe £2bn a year in revenue from messaging at a really high margin.

"Offerings like Whatsapp and Line and Facebook Messenger have hugely carved into that, and that business has now gone down to hundreds of millions of pounds.

“So something that was a core tenet of these carrier businesses which was their messaging services is just getting pulled away from them and what we’re seeing in the broader IT environment is a migration to the cloud.”

Speaking ahead of the inaugural Telecommunications Graduate Initiative in Dublin next month, the former Aldiscon founder and Logica chief technology officer said mobile carriers have to make better use of their brand recognition, connectivity, existing messaging services, customer billing relationships and authentication services to shape their future.

Carriers also have the benefit of being able to bring new services to market much quicker than has been previously possible with the advent of new technology.

“With innovations like looking at agile processes, looking at DevOps where you really combine developing new products with the actual operating and deployment of those products, we’re talking about getting delivery times down to weeks and days as opposed to months and years and that’s where we think telcos can start really becoming competitive against… new competitors like Google and Amazon and Apple and the services that these guys are producing that are competing with those core traditional telco services,” said Mr Cunningham.