Tu Me doesn’t have to just To Go
Aug 8th, 2013 by Aswath
It has been reported that Telefonica will shut down Tu Me and redirect its resources in shoring up another service, To Go. People have theorized that compared to competing services from OTTs, To Me has anemic traction with uncertain revenue potential. On the other hand, the reasoning continues, To Go has solid revenue opportunities, since it accrues billable minutes/SMS from existing customer base. Two years back, I gave a talk at Telecom 2018 Workshop, in which I argued that telcos will have difficult time directly competing with OTTs and suggested an alternate approach. In this post, I revisit those points in the context of Telefonica’s decision.
We have to recognize that Telcos and OTTs are fundamentally different. OTTs are funded by risk loving VCs. They are designed to take big risks with a quick entry and just as quick an exit. They go for world domination and design their services for viral adoption.
Telcos are a study in contrast. They are established enterprises beholden to shareholders who value steady return and adverse to big risks. Furthermore, they need to be worried about cross elasticity of new services with old ones. They also have strong presence in geographically restricted areas; usually federate with other telcos in out-of-regions. But such federation is not easy to come by since potential partners may have different priorities in introducing new and speculative services. So on Day 1, a new service will have low Network effect.
It is clear that To Me experience exactly these issues and predictably they had low traction. Though I do not have verified data, it is a safe bet that they were more successful in their local regions more so than out-of-regions. Since they are marketing To Go to their existing customers, they will have better luck with that service. It allows their subscribers to access the services using multiple means of access. This way, they have become an “OTT” for their subscribers. But it is only half the solution.
If we take the perspective of friends of Telefonica’s subscribers, we will notice the missing piece. They also use multiple technologies to access the network, but in the current scheme, it all have to come via PSTN with attendant restrictive set of features due to federation agreements with their carriers. This need not be the case anymore. Supposing Telefonica allows non-subscribers to reach its network using WebRTC technology, then its customers can use new services and features with no loss of Network effect.
This is the fundamental benefit of WebRTC from the perspective of the carriers: it frees them to introduce new services and features to their subscribers without loss of network effect and without relying on federating and coordinating with other carriers.
“Supposing Telefonica allows non-subscribers to reach its network using WebRTC technology, then its customers can use new services and features with no loss of Network effect.”
– So you mean that, to make is easy for its own customers friends to reach them Telefonica should introduce WebRTC clients? But for the rest of the world (being a pure OTT) they are not interested (apparently that’s y they killed TuMe)?
Yes, that is what I am saying predicated on a couple of things:
1. Developing a simple session oriented WebRTC “client” is not expensive from time and cost point of view.
2. There is no need to market out-of-region. It is done by your subscribers.
The trouble with Tu Me was Telefonica has to incur customer acquisition cost, that too in out-of regions. It was an expensive pursuit with a potential revenue generating opportunity (that proved elusive). What I am proposing is a customer retentive feature with very little cost.