This article focuses on regional carriers – and how they can compete in today’s competitive market.
If you’re a regional independent telco, what is your current strategy? How do you compete against over-the-top nationwide competitors? What would make a customer excited about buying service from you?
As I mentioned in part one of this series, I believe most regional carriers have an access-based strategic position – your core strategy is the access you have to your customers as a result of your geography and local infrastructure.
If this is true, I’ve been asking myself what it means for the strategy of a small independent telco – what should these IOCs focus on, and what should they avoid?
If your company’s competitive strategy is based around your local geography, and you’re seeking to enhance that strategic position – to make yourself more unique – then it makes sense to focus your efforts on activities that relate to your location in the local community.
A service provider can enhance its uniqueness by focusing on face-to-face customer service, by sending people out to local businesses to help set up new phone systems, by getting involved in the local community, by investing in IP connectivity to local homes and businesses – all those activities that you can perform uniquely well as a local company, and through which you can enhance your uniqueness compared to over-the-top, out-of-market competitors.
- It’s unlikely that you’re going to be able to offer a better set of features than a large competitor that can buy the latest products or develop special features in-house (as part of their own efforts to be unique).
- Large competitors will have big advantages with regards to economies of scale – they can buy expensive equipment safe in the knowledge that they’ll use all the available capacity, whereas small carriers pay a much heftier price-per-seat for new products / switches / equipment because they’re only using the equipment for a small number of subscribers.
- It’s unlikely that a regional carrier is going to be able to compete for the best talent nationwide – unless a highly skilled person happens to live in the local community – whereas a bigger competitor can offer the kind of compensation package needed to attract and relocate the best engineers, the best developers, the best sales people and so on.
It would be easy to feel depressed at this point (take a moment if you need to), but I don’t think that should be our response. Instead I think this analysis gives us an opportunity to develop a powerful strategic position that acknowledges both the strengths and the weaknesses of an access-based position.
- Invest heavily in face-to-face customer support, in boots-on-the-ground to help business customers with new Hosted PBX / regular PBX installations, in transport/connectivity, in local community marketing and engagement.
- Recognize those areas where either economies of scale or lack of internal expertise will hinder you from competing – and instead look for opportunities to share the cost of expensive equipment or projects with other local carriers, look for services that you should be outsourcing to a third party (e.g. billing), take advantage of the move away from specialized hardware to reduce your CapEx and pay for products at the scale you’ll actually use them, make use of vendor support (and external expert consultants!) to provide in-depth technical expertise that you don’t need on-staff.
- Think deeply about new products you want to sell, or new places you want to sell them – and ask whether these new activities will enhance your distinctive local strategic position or dilute it. I’m especially keen to get feedback from companies that have a CLEC division – what unique strategic position does that CLEC have in offering services outside your local area compared to any other CLEC or the incumbent provider?
I’m optimistic about the future of regional carriers. While the advent of cloud services has introduced new competitors, it also makes it easier for IOCs to use shared equipment, shared services and shared expertise over the internet. The costs of these services can be scaled to your size (which wasn’t so true with a major hardware purchase) so a local service provider can access a strong backbone of services affordably and then create a unique identity through their engagement in the local community, investments in connectivity, and customer service.
In the next part of this series, I’ll be applying the same principles to service providers focusing on hosted PBX services for businesses.
If you don’t care about that, you can skip ahead to the conclusion – where I try to figure out whether I have a strategy in my own business.