Who Are the Key Telco Competitors?
Industry competitors normally pay money to track their market share versus their "real" competitors. The problem is that, in rapidly-changing and porous new markets, the legacy competitors--even when they are the most benchmarked firms--are not the strategic competitors.
These days, many service providers would say that "Google" or other app providers are their key competitors, even as they continue to benchmark against others in their "narrow" markets (mobile market share, or fixed network video or internet access).
The biggest single change in the internet value chain between 2005 and 2010, for example, was the shift of revenue from telcos to Apple, Microsoft and Google. Telecom providers lost 12 percent of profit, while Apple, Microsoft and Google gained 11 percent.
Nevertheless, the strategic issue is diminishing relevance. The "access to the internet" and associated service provider functions simply represent less value in the internet ecosystem, compared to apps, devices and platforms.
But sometimes, the traditional "narrow market definition" competitors really contribute to value loss.
In any ecosystem, one segment’s revenue is another segment’s cost. So when Reliance Jio says it saved consumers $10 billion in a single year, that also means the mobile and telecom industry lost $10 billion in annual revenue.
You would be hard pressed to name any single other competitor that has had that immediate impact and value destruction, in a single year.
You might say that is an example of Reliance Jio literally destroying the older telecom model and recreating it with new leadership and price points.
Tactically, Reliance Jio (a traditional competitor in the mobile or telecom market) has had the greatest impact. Strategically, app, device or platform providers will erode the most value, longer term.
That impact on the Indian telecom market illustrates a key trend of competition and markets in the internet age: disruptors can emerge as leaders in older markets by literally destroying the existing markets. If you look at the impact of voice over internet protocols and over-the-top messaging, that impact is clear.
The legacy markets are shrinking, in terms of revenue, as usage skyrockets, with new leaders displace former providers. In many cases, the new leaders have business models other than service revenue, so use of the apps is provided for free.
Reliance Jio’s disruptive attack has destroyed $10 billion worth of annual service provider revenue, with consumers being the beneficiaries. That is a now-familiar pattern in the internet era. Consumers benefit, but most suppliers do not, as profit gets ripped out of most value chains and rearranged.
The range of threats are both tactical (narrowly-defined competition from other service providers) and strategic (shift of value and revenue from access to apps, devices, platforms).