Communications service providers (CSPs) are continuing to introduce and deliver a host of B2B services to offset declines in their legacy businesses and move beyond a reliance on basic connectivity as their main source of revenue. A recent report from TM Forum, the global industry association for telecommunications providers and suppliers, captures the extent to which CSPs are pivoting to B2B services and the results experienced thus far. The report, sponsored by Aria, assesses the behaviors and activities of 33 operators which, between them, are responsible for generating more than 70 percent of telecoms revenues worldwide. Here are our key takeaways:
B2B revenue growth on the upswing following difficult Covid years
Overall, telecom revenue generated by new B2B services grew globally by 3.1 percent in 2021, an impressive rebound following a year of Covid-depressed results. Younger telecom enterprises, unshackled by the need to protect legacy revenues and less burdened by the presence of immovable and inflexible back-office technology systems, performed even better, with many seeing double-digit year-on-year growth. This upward trajectory suggests that telcos are moving in the right direction in their efforts to compensate for declines in voice, MPLS, and other traditional sources of revenue.
Initial sources of B2B revenue growth
Thus far, IoT, cloud, and security services have emerged as the primary drivers of B2B growth. IT and professional services are becoming important areas of focus as well, as CSPs believe these offerings have the potential to become more profitable than their traditional managed networks businesses. While television was initially the focus of many operators, telcos in North America and parts of Western Europe are scaling back due to the exorbitant costs of content development, the need to direct investment dollars toward developing higher-speed broadband connectivity offerings, and increased competition and disruption from a litany of connected TV and over-the-top streaming providers.
Marketplaces and platforms likely to drive future growth
CSPs have come to realize that merely exposing and charging for APIs is not enough to generate interest from developers. In response, they are turning their attention towards developing their own platform business models and are looking to launch IoT, healthcare, and consumer electronics marketplaces. Success in developing these marketplace endeavors will be dependent on the CSPs’ ability to engage a wide range of partners and to invoice for services resold.
In characterizing the state of B2B in telecoms today, TM Forum says there are “encouraging signs of growth, but hardly a bonanza.” To accelerate and sustain B2B revenue growth, CSPs will need to acquire the complex account management and adaptable billing capabilities that can support the introduction of new lines of business, an expanding ecosystem of non-traditional partners, and deliver to customers a deeper level of service personalization.
Read the full TM Forum Report here