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How VAS Supports Digital Transformation In the Telecom Industry

Progressive Telecom companies offer VAS (Value Added Services) over and above their core products and services. These services are just that – value add.

In this article, we’ll discuss VAS and how it supports digital transformation, but first, let’s provide some context:

Telecoms under pressure

With fierce competition, the rise of over-the-top communication apps such as SMS, VoIP, and WhatsApp, as well as connected TV and mobile apps, Telcos can no longer differentiate themselves based solely on infrastructure and operations. 

This is because when the focus is only on infrastructure and operations, there is little else to separate them from competitors or give them a competitive advantage. Of course, social media apps, and in particular Google and Facebook, dominate the communications market. As a result, people no longer rely on Telcos as much as they used to for interactions. 

Then there’s rapidly increasing bandwidth requirements for the advent of Internet of Things, 5G and other technologies which translates into the need for Telcos to ensure near-continual upgrading of their infrastructures just to keep up, all the while that infrastructure becomes less and less critical to growth and profitability. Even so, Telcos are not likely to survive for very much longer if they do not make solid steps for 5G network implementation in the very near future. 

Digitalisation across industries depends on telecoms

Digitalisation across industries are dependent on the Telecom industry providing critical infrastructure, applications and productivity improvements. In fact, over $10 trillion of value stemming from digitalisation in five important industries depends on the Telecom industry over the next decade:

the future of digital transformation

Traditional Telecom revenues are under pressure, and it’s becoming more and more important for operators to roll out new digitised business models to ensure that they share in the value of global transformation. So, although the Telecommunication industry plays an essential part in driving digitalisation in other industries, it must unlock significant value through its own digital transformation.

This is probably the reason telecoms has been slow to take up arms: digital transformation is hard, especially when companies are already under pressure from innovation and new technologies.

Telecom companies must unlock value through their own transformation first

It is critical for telecoms to undergo an internal digital transformation if they are to survive the fourth industrial revolution. Part of that process is to implement VAS for increased profit from new revenue streams and to remodel the customer experience.

World Economic Forum’s research hit on four broad digital themes which they believe will have the greatest impact on telecom companies:

  • Future networks – Virtualisation minus the physical hardware layer will change the foundation of differentiating factors.
  • Beyond the network – As consumers face an increase of digital transformation in their lives and work, there will rise opportunities for telecoms to move beyond the network and connectivity, to embrace IoT solutions, human interfaces and VR.
  • Remodelling customer engagement – To set themselves apart amidst fierce competition, infrastructure-only will not do much more, and telecoms will therefore need something more sustainable; they need to not just provide their customers with what they need, but deliver digital experiences that delight. This is especially important at this time as consumers have realigned their expectations based on other high-quality digital experiences from other industries which now need to be matched by companies in other sectors.
  • Digital workforce for innovation – So far, the majority of telecommunication companies have been slow to embrace change, but with the advent of new technologies and innovation, it is critical for operators to fill capability gaps with new innovation models and updated talent strategies to create a digital workforce to not only match consumer demand but anticipate it and act accordingly.

Examining the four digital themes that telecoms companies should address for their own digital transformation so that they can meet the evolving demands of their customers, we will demonstrate how Value Added Services (VAS) offers solutions beyond the network and remodelling customer engagement. In the next section, we’ll show you how.

VAS thrusts Telcos beyond the network

Value Added Services (VAS) describes add-on products and services to the basic core functions a telecommunications company provides, such as phone or other carrier services.

VAS benefits both telecoms and customers. Telecoms are able to offer additional services over and above their core functions, and VAS provides convenience to customers, saving them both time and effort.  

VAS can be further described as possessing the following qualities:

  • Not part of the core services of an operator, but rather, adds value to both user and carrier. 
  • Some VAS can be offered on their own, or as a way to stimulate incremental demand for core services.
  • Some VAS are able to operationally stand on their own.
  • Won’t cannibalise basic service until proven favourable.
  • Often sold at a premium price.
  • May offer synergy between other services.

Value-added services on offer today will become a basic service when they no longer provide differentiation in the market because they’ve become so commonplace. Some examples of VAS services for telecoms include bulk SMS to broadcast hundreds or thousands of SMSs, USSD to provide self-help services to customers, like data top-ups and GPS navigation technology to find services or stores closest to users.

In order to maintain or increase profit, as well as to create a differentiating factor, telecoms can no longer remain in a network and infrastructure-only frame of mind. VAS thrusts telecommunications out of average and into extraordinary.

VAS is also used by progressive Telcos to increase user time spent on mobile devices, upsell additional services to users of core products or services, create synergy flow in the telco’s range of services and create a differentiating factor to attract more customers in a very congested, competitive industry.

VAS is not only beneficial for the business, but also for customers who benefit from improved pricing and convenience. 

vas - new revenue streams

VAS assists Telcos to create new revenue streams

In order for telecommunication companies to survive in the current onslaught of newness, many of them have started embracing other and sometimes unconventional revenue streams to stay profitable. For example, Verizon has increased its reach through media, giving the Group multiple additional revenue streams over and beyond the usual telecommunications offerings. 

Another example is Orange S.A. who offers many additional services (like finance and mobile banking) together with its core network services and infrastructure. To survive in the near future, telcos need to understand how to leverage their data assets, privacy and security, cloud and AI technologies, strategic partnerships and value added services to create new revenue streams.

Additional VAS benefits for telecommunication companies

We’ve already demonstrated that VAS provides telcos with the opportunity to move beyond the network for additional revenue streams, remodels customer engagement as it replaces the old delivery models with a standardised, holistic approach that is targeted at end-to-end service management, enabling best industry practices, the inclusion of specific service levels and standardised processes to result in an optimal service experience for customers.

What else can Telcos expect from implementing VAS?

  • Operators who offer more value than their competitors see a decrease in churn rate and increased loyalty.
  • Most Value Added Services result in users spending more time on their devices, which translates into an increased need for data and therefore higher profits.
  • VAS intensifies the whole customer experience by improving quality, touch points, and offerings.
  • Because it provides increased revenue streams, it leads to increased ARPU and higher profitability.
  • Reduction in capital expenditure (CAPEX) and operational expenditure (OPEX); this is because VAS allows telecoms to streamline the supply chain and reduce suppliers and steps in the process.
  • More and more customers are demanding personalisation. VAS assists in enabling telecommunications companies to provide a personalised experience.
  • Less revenue leakage.

It’s important to understand that each value added solution comes with its additional benefits. For example, In-App Ads allow telecoms to monetise their apps, or offer app monetisation functionality to clients. In-App Ads allows the customer to display current promotions, new solutions or customised solutions. It includes the client’s branding, offers multi-language support and display content can be fully controlled.

VAS by Adapt IT Telecoms

What Value Added Services does Adapt IT Telecoms offer, and what are their benefits to telecoms?

  • USSD Gateway – this allows for real-time interaction and communication with your customers and effectively target the right customers across segments and maximise marketing efforts.
  • SMSC Gateway – this forms part of the operating centre for the processing and regulation of SMS communication. This solution provides the ideal channel for you to connect, engage and market products to your customers directly.
  • NextGen v.Services Framework – this is a unique, open standard platform enabling simple, fast, affordable integrations between applications and networks, all via a single, common framework. This allows you to build innovative solutions that connect users to the right information, applications, and services, at precisely the right time.
  • Location based service –  this taps into geo-data to track a subscriber’s location to deliver relevant information to them in real-time. This can provide users with valuable information, offer entertainment, enable security features, or offer value-added services.

Conclusion

Telecom executives are facing ferocious pressure from competition, innovation and new technology. There is a huge demand for digitisation across all industries, but fulfilment depends on telecoms who have been slow to take up the challenge, even though it is essential they undergo their own internal digital transformation first.

With this in mind, Telecoms should focus on the areas that will have the most impact, VAS assists in transforming business beyond infrastructure as well as remodelling the customer experience to create new revenue streams

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