No match found
The lifestyle changes resulting from the Covid-19 pandemic, and the advent of 5G technology, have raised hopes that the global telecom industry could break out of its seemingly inexorable drift towards commoditization, in which all players gravitate towards equal market shares and provide indistinguishable and interchangeable products and services at identical prices.
While the surge in demand for virtual services and the transformative use cases with regard to 5G could have been opportunities for first movers to distinguish themselves from their competition, our analysis shows that the general trend observed over more than a decade remains unaltered: telecommunication providers still deliver an increasingly similar performance in an ever more competitive marketplace. Overall commoditization levels in both global mobile and fixed telecoms have increased during the years 2019 to 2021 respectively, indicating that operators have by and large still not managed to move towards becoming providers of differentiated, value-added services.
The goal of this study is assessing whether certain players in the telecom market have managed to create and sustain value and distance themselves from the crowd. To determine the level of commoditization within telecom markets throughout 58 countries across all meaningfully populated continents we used two key factors – the average revenue per user spread and the market share spread – and arrived at a Commoditization Index (CI) score for each country.
Are market shares converging due to price competition, not differentiation? Are ARPA spreads contracting due to lack of real differentiation? We studied 50+ markets and are inclined to answer: Yes to both. But take a look at the data yourself.
Are market shares converging due to price competition, not differentiation? Are ARPU spreads contracting due to lack of real differentiation? We studied 50+ markets and are inclined to answer: Yes to both. But take a look at the data yourself.
The study shows that commoditization levels in both global mobile and fixed telecoms have increased. However, we found there is the potential for differentiation. Those operators who are able to break out of the ‘vanilla broadband’ category altogether and shift part of their value creation to enabling different need states of digital life more broadly across work, home, play, education, mobility and beyond, will be able to create new bundles and greater customer stickiness, and hence reverse the commoditization trend. There is much to play for in the upcoming years for fix and mobile telecoms to stay future-driven and distinguish their products and services in a highly commoditized and competitive market.