Leaders expand scale
and emotional appeal
Prepare for opportunities in home automation
Acquisition and consolidation
accelerated in mature markets
as telecom providers attempted
to build scale, add content and
strengthen the emotional appeal of
brands built around functionality.
Faster 4G LTE connections continued to
proliferate, even in developing markets like
China and India, where the availability of low-priced
devices expanded smartphone use
and increased data transmission.
The major telecom providers also advanced
their fiber-optic programs to gain competitive
advantage in speed and quality, and to create
infrastructure to benefit from the next major
opportunities: home automation and the
Internet of Things.
Meanwhile, the telecom brands faced
challenges from a broad set of competitors,
including cable companies, local niche
telecoms, Google and over-the-top Internet
providers that enabled customers to obtain
voice for free.
Based on strong financial results in its home
market and in Asia, the Australian telecom
provider Telstra appeared for the first time in
the BrandZ™ Telecom Provider Top 10.
China Mobile remained the world's largest
Internet provider with over 800 million
subscribers, and for the first time, more
Chinese people used mobile devices rather
than PCs to access the Internet.
Verizon completed its purchase of the
45 percent of Verizon Wireless owned by
UK-based Vodafone. The transaction lifted
Verizon's share price and lowered Vodafone's
market value, although it also left Vodafone
well-funded for expansion or acquisition.
The consolidation trend was most evident
in the UK, as BT agreed to acquire EE, the
nation's largest mobile operator, itself the
product of a prior joint venture of T-Mobile,
owned by Deutsche Telekom, and Orange.
The transaction establishes BT among UK
telecom providers offering a quad play
bundle of landline, mobile, Internet and
TV. Investors rewarded the move with a
rise in share price. Sky, the UK-based TV
channel, announced plans to create a quad
play offering through an agreement with
O2, which is owned by Spain's Telefónica.
Meanwhile, Hutchinson Whampoa, owner of
Three Mobile network in the UK, agreed to
terms with Telefónica to purchase O2.
Quad plays are a strategic effort to create a
more emotional customer connection to the
brand, differentiate with exclusive content
and raise revenue from higher data use. Quad
plays also enable premium-priced products,
especially important as voice becomes
commoditized by free over-the-top options
like Skype, Viber or WhatsApp.
TalkTalk Group and Virgin Media already offer
quad plays in the UK, and European telecom
providers offer quad plays throughout
the continent. Whether customers prefer
bundled services, and if bundling will lower
customer churn, remain open questions.
Fighting for share
In the US, AT&T and Verizon continued to
battle for share, trying to maximize income
from existing customers and minimize
churn after challengers Sprint and T-Mobile
disrupted the market by offering contract-free
AT&T and Verizon responded with more
transparent plans, including options without
long-term contracts and unbundling that
separated the cost of the device from the
cost of service. AT&T acquired the Cricket
brand to serve price-sensitive customers with
no-contract, pre-paid rates.
The pricing changes were part of the larger
effort to build brands around service rather
than devices. At a time when retailers
closed or downsized their physical locations
and strengthened their online presence,
telecom providers added stores as a way
to differentiate with brand experience and
deepen customer relationships by simplifying
a complicated transaction. The launch of
iPhone 6 late in 2014 drove traffic.
In an effort to diversify beyond its traditional
business, AT&T partnered with Uber,
preinstalling the car-sharing service's app
on all AT&T android phones, and providing
a wireless service to many Uber drivers.
The brand also planned to link its home
automation service, "Digital Life" and its
connected car service, "Drive". AT&T added
800,000 connected cars in the fourth
quarter of 2014.
Facing the future
Along with their wireless services, both AT&T
and Verizon offered high-speed the fiber-optic
wiring that provides landline, Internet
and TV. Along with offering similar benefits
to the quad play, fiber-optic wire enables
telecoms to offer the speed and resolution
clarity required to compete more effectively
with cable companies for content delivery.
Fiber-optic wiring in millions of homes
positions telecom providers for the
connected home phenomenon, which
foresees a time when mobile devices
become the command units controlling
household energy use, appliances and cars.
Japan's NTT DoCoMo introduced fiber-optic
service and bundled discounts. Google
announced plans to expand its Google Fiber
service beyond its original rollout in Kansas
City, Provo, Utah and Austin, Texas to more
mid-sized US cities.
And in a move that could eventually disrupt
the telecom providers category, Google
launched a Google-branded wireless service,
buying network capacity from Sprint and
T-Mobile. The service, which will work
only on Google's Nexus phone, is initially
a learning experience for Google and a
laboratory for innovation.
Meanwhile, the US Federal Communication
Commission ruled on the contentious issue
of net neutrality. The commission decided to
regulate the Internet like a utility and prevent
the telecoms from adjusting customer
pricing according to bandwidth consumed.
By early 2015, 4G LTE networks were
available in 124 countries, according to the
Global Mobile Suppliers Association.
While there was no single global telecom
provider, some brands created regional
networks. Mexico's América Móvil and KPN
of the Netherlands increased cooperation
following a failed attempt to hook up several
Drawn by the growth of Mexico's middle
class and the possibility of building one
network to serve North America, AT&T
purchased Lusacell, a wireless brand owned
by Mexico's Grupo Salinas. AT&T also
planned to buy the Nextel brand in Mexico
and combine it with Lusacell.
Orange and Vodafone were among the
international telecom brands competing in
Africa with local brands such as MTN, as the
increased availability of affordable devices
expanded the market.
With a smartphone penetration rate of over
70 percent, Korea remained one of the
most advanced telecom markets, where
functional benefits are played down and
telecoms are seen as lifestyle brands.