Telecom

Incremental Change in Innovative Category

Telecoms expand mission

Telecoms outgrew their name.

Voice communication—the very activity that defined telecoms—grew more slowly than other types of data transmitted on telephones and other mobile devices that people used to organize their lives.

This change followed development of communications ecosystems that integrate the creation of digital content, its distribution over networks, and delivery on mobile and stationary devices.

For telecoms, the ecosystems present an opportunity to expand their narrow distribution utility. Telecoms sought partnerships and acquisitions to brand content or devices and engage more closely with the end consumer. Some telecoms companies attempted to form their own branded ecosystems.

The existing ecosystems were organized around the largest consumer technology brands— Apple, Google, Amazon, Microsoft and Facebook—because they offered the full menu of content, distribution, and devices.

In the context of this transformation, brand value of the telecom providers overall rose only 1 percent last year, but the increase followed a 7 percent decline. These other trends also characterized the category:

Monetizing data

Telecoms attempted to monetize the information they have about the preferences of their customers, as regulations allowed.

Mobile payment

In emerging markets, telecoms often leapfrogged banks to become the proprietors of mobile payment solutions.

Consolidation

Mergers and acquisitions continued to rationalize the category in mature markets.

Global scale

Indicative of the scale of the telecom category, the first four brands in the BrandZ™ telecom ranking—AT&T, China Mobile, Verizon and Vodafone— also are among the Top 20 most valuable global brands across all categories.

With the purchase of Cable & Wireless, Vodafone positioned itself for convergence. It gained greater capacity for serving business clients and a fiber-optic network in the UK that strengthened its position against BT. BT entered the ranks of the BrandZ Top 100 Most Valuable Global Brands this year, although it fell just short of the Top 10 telecom category ranking.

As the provider of communications services for the 2012 London Summer Olympics and Paralympic Games, BT increased its profile worldwide. The brand invested in developing fiber-optic broadband infrastructure in fast growing markets to offer customers globally managed IT networked services. BT generates an increasing percent of its revenues from outside of the UK.

The need to compete effectively also produced these other corporate hookups: the purchase of 70 percent of Sprint by the Japanese telecom SoftBank and T-Mobile's acquisition of MetroPCS.

Regional variations

Brand value changes varied by geographic region. MTN, a South African multinational brand, rose 23 percent in brand value, the greatest appreciation in the BrandZ telecom category.

The brand, which operates throughout Africa and in parts of the Middle East, enjoyed strong revenue and earnings growth following a 15 percent increase in subscribers and a 58.5 percent hike in revenue derived from data.

China Mobile, China's most valuable brand, across all categories, increased 18 percent in value. As the expansion of telecommunication networks continued to accelerate in China, China Mobile won more 3G subscribers than its rivals with its aggressive marketing strategy. Responding to a dramatic increase in mobile data transmission, the brand launched its Wireless City Wi-Fi data plan in more than 300 cities last year. It is also expanding its 4G network.

Russia's largest telecom, MTS focused on operational improvements that helped drive a profit increase. In a strategic initiative to leverage its retail presence of 4,200 locations and extend financial services to Russia's large population of unbanked consumers, the brand has recently increased its interest in MTS Bank, the majority of which is still owned by their common parent Sistema.

Europe's economy depressed results for Deutsche Telekom, Orange, and Spain's Movistar, while Japan's NTT DOCOMO felt the effects of slow growth in Japan.

Differentiation and trust

Telecoms implemented strategies to differentiate and compete effectively against each other and over-the-top challengers. These operators, such as Skype, Google, and increasingly appbased brands like Viber and WhatsApp, enable consumers to make free calls over telecom networks.

Some of the telecom providers—Verizon and BT are good examples—attempted to transform from being conduits of data into diversified technology businesses, providing software solutions, data integration and consulting services. These kinds of offerings potentially embed telecoms more deeply into the lives of customers.

The rise of telematics is an important related opportunity for telecoms. Telematics is about the Internet of things, the automatic gathering, storing and transmitting of data between smart machines. Telecoms benefit from this development because they are the conduits of the data, but they also face a larger opportunity.

Telematics is a growing factor in healthcare, automotive, insurance, education and other businesses. Insurers, for example, use telematics to record individual driving habits and set customized rates based on the data. Telecoms potentially can play a role in the entire process, including the data gathering, transmission and data analysis stages of telematics.

Consumer focus

In addition to the business-to-business telematics opportunities, telecoms also sought new revenue-generating businesses on the consumer side, in the growth of the smart home concept, for example.

Using mobile phones, consumers can regulate the heating and cooling of their homes or adjust the settings of appliances. Each interaction draws down data and drives revenue for a telecom.

Second screen, or simultaneous viewing, was one of the biggest trends driving consumer use of data. The term describes the growing habit of watching TV on a large screen while interacting about the broadcast on a small-screen device, perhaps messaging within a social network.

Recognizing this trend, AT&T introduced a program it calls Mobile Share, in which customers pay for talk and text on a phone but can share any data on all their mobile devices for no extra charge. Verizon led with an offering it calls the Share Everything plan. Verizon also advanced its 4G LTE network.

Insights BrandZ BigData™

Leaders strengthen their brand equity

The essential and pervasive nature of communications in our lives has shown up in the BrandZ™ research in the dramatic increase in brand equity strength among the top telecom brands. Eight years ago, the top brands were less characterful, desirable and distinct one from another.

Today, the Top 10 most valuable telecoms are much more "meaningful," (appealing and meeting needs), "different" (unique in a good way and trend setting) and "salient" (famous, stands out) than other brands in the category. In these key aspects of brand equity that drive sales, the Top 10 telecoms also outperform the Top 100 Most Valuable Global Brands overall.

Action Points

1. Tell a story

Storytelling is important for all brands, but particularly those in a category for a long time defined by a short story about pipes delivering voice and data. Tell a more up-to-date story. The story needs to be clear so people understand it, compelling so people want to act and credible, meaning that it sounds right coming from the brand.

2. Be different

In a commoditized business, tangible delivery of brand experience is requisite. It’s like an airline. Consumers expect the plane to fly and get them there on time. There are tangible, rational deliverables that are required. Then there’s service around how the customer gets connected, the in-store experience. Then there’s account management and any loyalty incentives. Differentiate your service to drive brand value.

3. Stress service

People's lives are busy enough. They want an experience, a promise that they'll get everything—cable, phone and Internet. When the experience meets their expectations they won't think of the provider as a utility. They'll connect with the brand.

Telecom Up 1%


Definition
The telecom provider category includes brands that primarily develop, maintain and market hardwire or wireless infrastructure networks for voice and data transmission.


BrandZ Top 100 2013

BrandZ Global 2013 Report Top 100 Report

Top 100 Chart


2013 BrandZ Top 100 Infographic

BrandZ 2013 Infographic


Methodology and valuation by Kantar Millward Brown


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