As operators grapple with rebranding themselves as "digital businesses" in a bid to succeed in what they are told is now a "digital ecosystem", the products they offer become increasingly important.

Developing new products is not what operators have excelled at in recent times, but as the telecoms industry becomes ever more dependent on the internet and the digital companies that rule it, they are being forced to ape their new competitors.

A major part of this re-education is confronting the fact that power no longer lies in sending information – the traditional telco approach - but with the customers who receive it.

As Ericsson's Jean Philippe Poirault, Head of IT Solutions & Services, tells European Communications: "Operators are going through a fundamental transformation to becoming customer focused businesses. The more customer centric they become, the more product is important."

Poirault was speaking at the TM Forum's annual showcase – itself rebranded as TM Forum Live! – the theme of which was "transforming to a successful digital business".

"[Operators] have a lot of work to do to transform...It takes too long to get products to market," says Poirault. "Traditionally it has taken them 18 months, but the good news is that now it can be down to a matter of weeks or months."

UK-based Virgin Media has a history of being innovative when it comes to products, having launched the world's first MVNO in the 1990s. Now, as part of US cableco Liberty Global, it has launched the UK's first quad-play offering. Its Big Kahuna bundle, for example, offers superfast broadband, a TiVO set top box, a multiscreen TV anywhere service, a landline and a mobile SIM with 250MB of data.

[Read more: Virgin Media to offer Big Kahuna quad-play bundles in the UK]

In a presentation at TM Forum Live!, Virgin Media's Head of Product and Proposition Delivery Tony Fear outlined why it had decided to "shift the focus" to products.

"If the customer is king then product is queen," he said. 

However, Fear said the company had a "ballooning" product catalogue as it tried to keep up with what customers wanted and what other parts of Virgin Media thought they should offer.

To make it fit for purpose, Virgin signed up Huawei to help transform its product lifecycle management processes. It introduced a five-step system: innovate, develop, release, evaluate and retire the product if it's not working well. The overriding goal was to make it more agile and cost efficient by simplifying and centralising product categories, according to Fear. As a result of the work with Huawei, Virgin reduced its product catalogue by 74 percent.

Sometimes a more radical approach is required. Michael Matthews is a former Chief Strategy Officer at NSN, now Nokia Networks. In a keynote address at TM Forum Live!, Matthews said the vendor had a "cultural problem" that meant the bang for its multi-million R&D buck was not as pronounced it should be.

His solution? "We 'kidnapped' a team of smart people from across the organisation and put them on a plane to Silicon Valley. Fuelled by pizza, the team was divided into six groups and given a set time period to come up with new products. Four were selected and all were sold to customers within three months."

But what makes a great product? According to Eric Troup, CTO of Comms and Media Industries at Microsoft, everyone is wrestling with that question. "Fundamentally, it's something that creates demand for [an operator's] core proposition – connectivity. But the internet, multiple distribution channels and ubiquitous connectivity make it more difficult to do something different."

With power shifting to consumers, Tecnotree CCO Ilkka Aura believes a great product needs to address the element of empowering the customer. He cites shared data plans and partnering with OTT providers such as Spotify as good examples, but adds the obvious caveat that there has to be a "monetisation plan" in place.

"Value creation comes from analysing customer preferences and offering services accordingly. But many operators view customers in fixed siloes such as mobile, wireline, broadband, etc...they need a master customer database above all of these siloes that enables mass customisation," Aura explains. The next step is following the Amazon model of recommendation and contextual marketing, he adds.

JP Rangaswarmi, Chief Scientist at Salesforce.com, believes there is a gap in the market for providing filters to the vast amounts of information that customers receive. Operators could have something to offer here. He is equally optimistic that operators shouldn't feel they have already lost the product battle to Facebook, Google et al. "The distance between companies and customers has reduced but it is till up for grabs," he says.

If operators can find a way to provide products that their customers want then a role beyond the provision of connectivity could be theirs. History is not on their side.

 

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