The race telcos can win: Growth beyond connectivity

In a previous article – Part 1 of this two-parter – we outlined six pain points stressing today’s telco: price erosion, legacy costs, commoditization and a culture forced into margin defense. We also cover the deeper issue, feeling stuck in the value chain, unable to grow beyond connectivity. Margin defense, moves to cutting costs rather than building revenues. 

All sound negative – and negativity’s not something we’re big on at Bango. But to find solutions, it’s necessary to define problems first. The good news: these problems don’t have a plurality of solutions – just a very powerful singular one. 

That solution is more than the plain numbers of audience size and conversion rate. It’s about seeing the market itself differently: what consumers really value, and what your role is in delivering it. And doing it without massive capex demands or multi-year transformation programs.

So after Part 1’s painful realities, let’s look at the upside for telecoms players … in Part 2. 

Summarizing the squeeze for today’s telco

If you had to describe the situation for most telcos, it’d be “Keep calm and carry on.” Shareholders demand more profit … so people, services, and investment get cut. Customers churn the first chance they get … so plans are offered with business-killing intro discounts. New technology is entering the market … but the gear in-situ hasn’t amortized its costs yet. 

It’s the oldest trap in the book “we lost money on each customer, but made it up on volume”.

It’s rational short-term management, but it isn’t growth. Of course, telcos aren’t the only large organizations faced with these problems. But unlike many companies elsewhere, telecoms providers have a huge opportunity to think about their business in a truly new way. 

Yes, there’s a telco-shaped gap in the market just waiting for you to fill it. Here are the four changes in mindset you need to get started. 

Traditional thinking puts telcos upstream in the value chain, the raw material of connectivity. In today’s market, that framing is precisely what keeps you trapped in commoditization.

Raw materials, compete on price, are interchangeable, and sold by the ton. However vital, they’re low value inputs. And in a market with many players and plenty of capacity, scope for raising prices is minimal; customer loyalty, zero. 

It’s strange things became this way – you’re in a cutting-edge sector with some of the priciest infrastructure on the planet doing the most high-tech of jobs – but that’s where we are. 

Now let’s flip the lens. Imagine a world where you’re not simply the upstream enabler, faraway and unseen; you are the vital last point of connection to the consumer. You’re there, in every home, at every desk, weaving them into the swathe of software and services that define their lives. That’s not an upstream positioning; it’s as far downstream as it gets. 

And that’s where you belong – in front of the consumer, up close and personal. Where services are consumed, where value is created, where the relationship is strongest. This view is where change begins – and where you start claiming a rightful share of the digital value chain your technology already powers.

Even when the market grows, telco revenue often feels like a fixed pie — fought over by discounts and churn offers… Every $1 uplift in ARPU is hard-won; every free trial risk churn at expiry; every discount you offer they just want more. Because savvy consumers know all your hot buttons. 

That “thinking of leaving?” option on your voicemail tree? They’re not thinking of leaving; they want that $50-off deal you give new customers. And likely as not you’ll give it to them.

Here’s the second part of our turnaround philosophy: what if instead of extracting more value from customers, you could focus on creating more value for customers? The key is making the monthly subscription you charge the gateway to their digital lifestyle. The killer app here: as a telco, you can probably make that life easier and cheaper.

Their favorite streaming channels, the music they listen to over dinner, the games they play online, even the apps and services they consume every day – all are subscription content over your pipes. Right now, it’s an agreement between the content provider and your consumer. But what if there was a way to bring those separate subscriptions together, included in your monthly fee … saving them the hassle of managing a dozen individual accounts? 

Subscription management is how telcos leverage their existing customer relationships into longer-term, higher-value revenues, making the telecoms provider the natural choice whenever a consumer wants to use a new service. You may think that’s a big operational challenge – and you’d be right. Fortunately, Bango has solved it for you. But first, our next two mindset fixes.

For most Telcos, customer operations sit firmly on the cost side of your P&L. Database updates, credit checks, marketing and communications workflows, customer service and the details of metering and billing: plenty of red ink there. In fact, it’s among the stuff that faces slash-and-burn in the next budget season.

But that same infrastructure can become your profit engine.

Put yourself in a content provider’s shoes. They’ve got services but not scale. Every consumer is another mouth to feed: a new account, a new monthly debit, a new stress on Customer Service. And there’s an upper limit to the number of subs a consumer wants to handle; on average consumers in the US have 5.4 subscriptions, most people look to cancel one sub for each new one they take up. It feels as much a zero-sum game as, well, the telecoms sector.

Your new mindset: they’ve got thousands of subscribers – but you’ve got millions. What if your service could include their service, offered to your market at scale? As part of a multi-subscription bundle that opens them up to a many more consumers, a more diverse audience, even an international market they want to move into?

That’s how you leverage your infrastructural investment the same way you leverage your subscription model: going from a “dumb pipe” connectivity provider to a partner for content providers. Owning the consumer relationship while adding value – a win for both sides.

With this mindset, you stop being a broadband provider and start becoming a digital services destination, with revenues busting $60-80 as a value-added service instead of $20-40 for a commodity. 

The obvious question is: what happens when everyone else does bundling too? 

It’s not a liability – it’s a strength. Because unlike plain-vanilla broadband, the content you can offer from your partners is not a commodity. It’s stuff they look forward to, post about, feel a stake in. It’s their favorite new sources, sports shows, actors, genres, stories. And – increasingly – it’s the tools they use to negotiate modern life AI productivity, Music or Streaming content… 

When you offer a bundle of content, you get to choose the bundle. And with hundreds of providers out there, and more becoming available each day, the bundles you offer can be very tailored. 

Perhaps your audience is full of sports fans, or sci-fi buffs, or nature enthusiasts. By adding that value to your connectivity subscription, you can appeal to as broad or narrow a segment as you want. And given scale economies it’s likely you can offer it at lower cost than they’re paying now for separate subs.  

Bundling content with connectivity is how you build real consumer connection, since they see you as a gateway to their favorite stuff. Leading to higher ARPU, lower churn, and longer CLV.

The key: the Digital Vending Machine® from Bango

Of course, bundling multiple subscription partners isn’t easy – that’s the point– so we’ve done it for you, with the special needs of telco operators in mind. It’s called the DVM™ which has an ecosystem of more than 160 content providers, – a cloud platform with over 200 content providers that lets you build, launch, and manage bundles across the full customer lifecycle — without rebuilding your core systems.

• Service provisioning and entitlement management
• Upgrades, downgrades, pauses, resumes, and cancellations 
• Trial offers, time-bound promotions, and membership eligibility
• Multiple partners with overlapping lifecycles in one bundle
• Billing, settlement, reconciliation, and termination fees

Best of all, it does so without friction. If a subscription offer takes off, you can roll it out to in other bundles without issues; old offers can be retired and new ones created without rebuilding infrastructure; terms for each provider are managed behind the scenes and consumers can self-serve in many scenarios. It’s fast to launch, simple to scale, logical to optimize, and easy to iterate for ever-greater success. 

Price, Positioning, Promotion, Profit: The DVM gives you it all

When we built the DVM, we took a clear-eyed view of market players’ strengths and weaknesses, from the innovative content of providers to the installed base of major telcos. And built the management layer that could connect the two – in a way that worked for all parties. 

In the USA, 8 of the top 10 telcos already use it; across the world, the figure is over 50. And we’d like you to be one of them.