Looking back 15 years, boy did we have it all, we thought we were unbeatable.

We had we had all the users, 100% penetration in the developed world.

End billing relationship with the customer.

Ubiquitous ‘out of the box’ connectivity to anyone in the world.

Roaming agreements that gave the ability to use the service anywhere in the world.

More and more use cases, more and more utility for anyone using the service with the use of notifications

Sure price was dropping but volume increases far outweighed any drops, revenue was growing nicely

We were having a good scrap with the competition, with Rod with $10 txt on one side and me with text2000 on the other. With each jab we threw, 10,000’s of customers would switch sides. Then along came a third entrant to the market, it added to the competition and fun. It was a great battle nothing could stop us.

We were winning in mobile but did we really understand the mobile internet and what was lurking just around the corner and the [awesome] beast we were about to unleash?

Then the silent killer arrived and we welcomed them with open arms.

At first, it was a toy, a niche, BB messenger, fun but not mass market.

Then others started, joined the fight.  We weren’t worried,  there was so much friction for the customer to use the service.  How could it replace our amazing SMS ubiquitous offering?

Think about it looking at the customer friction points?

  • Download an app
  • Create a profile
  • Convince friends to do the same
  • Separate inbox’s
  • Multiple friends means multiple service providers, WhatsApp, Facebook Massager, Imessage, Hangouts
  • Friction friction friction
  • And some of them don’t even seem to have a commercial model. What were they thinking? Irrational madness surely.

RCS= Rich Communication Service

The thing was, we had it all. They had massive barriers to entry and massive friction ….. but they also had massive ambition and were operating to a business model about creating and owning a new global market, not making near-term returns. They were playing a much bigger and longer game and using our investment in networks, device subsidies and customers to do it. Genius, them that is.

At the same time, we had collectively just spent millions on investing a data network and our customers weren’t using it fast enough. So we started giving away data. I started it with a short-lived $6 data bundle that gave 100mb of data and free Facebook and Twitter. Spark still have a variant of this with their Spark Socialiser pack.

While we were doing that we kept fighting the same battle, unlimited text bundles. Now don’t get me wrong we were smart with pricing we bundled, we upsized, we popcorn priced.

But here is the rub, we were fighting the wrong fight, and the story is really a global one.  While the incumbents fought over old products new players rode on top of their networks (OTT player) for free and built a whole new system.  While we were fighting against ourselves with last century’s weapons we were helping the real competition get strong. We weren’t innovating.  We wouldn’t want to develop a multi-platform, rich media solution that customers could use for free on our expensive data networks as that would canabalise our revenues – would we?

And we were right – look at, a 32% drop in SMS revenue between, 2015 and 2017 (it would look much worse if you went back further). At the same time, RCS was growing.

So what are the lessons?:

  • Make sure you know who your enemy really is. They are everywhere.
  • Don’t assume your business model is defensible. Very few are.
  • Innovate Innovate Innovate. Everyone else is.
  • When you decide that you can’t canabalise yourself, use the chart above.  Someone is already working out how to canabalise you.
  • Look to other commercial models.  FB, WhatsApp et al don’t have direct billing relationships with their customers. Understand the difference between subscription funded models vs advertising funded vs eCommerce funded versus a model where the monetisation strategy isn’t clear because they are simply building a community.
  • Game play where your frenemies are heading – what’s the end game
  • Think global, while local incumbent telcos were duking it out, the digital players were thinking and acting globally





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