August is normally a deadly quiet month. Almost to the extent that it would be very easy to say I might as well take the whole month off. This year seems to be different. We are rushed off our feet. It’s all good stuff. I’m not complaining. Just saying that we are very busy.
August is also normally a very quiet news month. The media resorts to headlines such as “Boy’s ice cream melts before he could finish it” and other riveting slow news day reports. The one bit of news that you could set your watch by every year in August is the Ofcom Communications Market Report. This year it came out when I was on holiday in North Wales and observing radio silence so I’ve only just noticed it. On that basis whatever I might say on the subject has possibly already been said.
Notwithstanding that the Ofcom CMR usually has some nuggets worth looking at. The first that stands out is the headline saying:
“Total UK revenues from telecoms, TV, radio, and post fell for the fourth successive year in 2012. These services generated £59.5bn in revenues during the year, a £0.1bn (0.2%) fall compared to 2011 as a £0.7bn fall in telecoms revenues was offset by increasing TV, radio and post revenues.”
This is interesting because our use of the internet is growing massively. This might lead you to naturally conclude that the revenues for businesses operating in that market are growing. Certainly this is true for Timico.
It is clear though that for the industry as a whole the model is changing. Old fashioned lines of business are changing. ISDN is being replaced by SIP trunks – telephony by VoIP. The cost of minutes has plummeted largely to a fixed monthly fee per subscriber. Broadband prices are also at rock bottom, particularly for consumers. The government is right when it says we have one of the most competitive markets in the world.
This is also true for mobile and whilst people might whinge about mobile prices the mobile operators are struggling with their gross margins. These large telcos are still seen as fat organisations paying fat salaries and there is probably some way to go on the cost cutting side before mobile markets reach the bottom.
Everyone in the game is trying to modernise their business model. The money must still be there. It is just going elsewhere. One clue is in the growth in TV, radio and post revenues. People must be using their internet connection to spend money. In our house we probably watch more TV over the internet that on the actual TV itself. Including the advertising. We also buy a lot more stuff over the internet than we used to, hence the rise in postal revenues. It’s mostly not downloaded. It comes in a van.
As the world moves more “onto the internet” the one thing that is becoming more and more important is the integrity and the quality of the internet connection. This is particularly true for businesses who are increasingly growing to depend on revenues that rely in one way or another on connectivity to make them happen. For example if you own an ecommerce site then every minute of downtime means lost revenues. Similarly in the physical retail world, most payments are processed using broadband connections. Lose the connection and lose the lolly.
However people might be spending their cash this represents a huge opportunity for the telco that can respond to change. They just have to look up and look forward and not dwell on what was.
One final note. Ofcom bless em do have a way of stating the bleedin obvious. They tell us that nearly all (98%) tablet owners say they use their tablets to connect to the internet. One wonders what the other 2% use their tablets for?!
Gotta go. Busy busy busy.