Nobody doubts that network operators are looking for new revenue sources. Even the operators themselves doubt that there’s much consensus on what sources might be credible. An idea that’s floated around both operators and OTTs is what a recent Light Reading article refers to as a “super app”. Patterned after the WeChat app in China, a super app would presumably be a kind of universal portal, a one-stop shop for a lot of activities. Since portals are a strategy operators have favored for other reasons, might this be an example of a new opportunity?
Operator portals emerged, at least into my personal visibility, over a decade ago, as operators looked for a way of reducing the need for customers to interact with operator representatives for things like routine service changes and (increasingly) customer support. In terms of service changes, portals have been generally successful, but both operators and customers have been less excited by the customer support dimension. Few operators have really even looked at extending their portal into super-app territory.
What’s the difference? Portals are designed to support user interaction with a company’s own services/products. What’s behind the super-app concept is the theory that by expanding the portal to supply access to other services and sites, the portal becomes more valuable and the customer is encouraged to use it, thus increasing engagement with the portal provider.
The first and most obvious question about the viability of the super-app opportunity for network operators is whether “increasing engagement” is useful. If you’re a Google or a Meta or a Microsoft, it’s easy to see how being a window into your customer’s world would give you a competitive advantage. Knowing what a user is doing online is inherently valuable, after all, providing that you can leverage that knowledge, which all OTTs are surely able to do. But what about operators?
There is considerable regulatory and consumer concern about having an ISP “see” traffic. Many worry to the extent that they’ll use a different DNS service just so that the operator can’t see their requests for website IP address access. People use VPNs to hide their traffic. Given that, would they accept an operator’s portal? How long do you think it would take for someone to publish a story about the risk to privacy?
This doesn’t mean that a super-app strategy would be bad, though, just that it might be harder for a network operator to make it good. If OTTs have it easier, that would mean that competing with them to create a super-app would be an uphill fight, unless there was something an operator could leverage. Is there? To answer that, look at the cable players like Comcast.
Comcast has a sort-of-super-app already. It has an ecosystem of services built around the video Xfinity property. It adds security and other optional features too. Clearly an ISP can be a super-app player, but most operators don’t have a strong video story to build on/around. In the US, AT&T tried and ended up spinning out its content stuff. Verizon never really tried, though it did resell streaming video. There may be a signal here; cable companies (because they were originally built on video and evolved to broadband) have an easier super-app play than telcos, because they really started with broadband. The implication is that if you aren’t a content player out of the box, you have little chance of buying or building yourself into the space.
Could security be a play? Certainly in the business space, but operator attempts to sell consumer security services have met with only limited success. There are some indications that today’s ransomware world could introduce an opportunity, but how would the operator really play in ransomware detection? That would almost surely mean getting into the secure email business, which is another space that’s seen only limited successes.
Home monitoring was another initiative that some operators tried, but here again the service has had only limited traction. The problem with monitoring is that there’s installation involved, and most operators have a higher unit cost of outside support labor than competing security companies. Could operators send the consumer something for self-install? Again, there are already players who do that, including both Amazon and Google.
As interesting as I think super-app revenue might be, and as interested as operators might be in securing some, I think the simple truth is that it’s too late. Operators were at one time touching their customers in a real sense. You had installers, outside plant people. To manage the decline in revenue per bit, operators initiated operations cost management practices, many of which focused on getting rid of those field people. It might have been smarter to have figured out what else could be done with them, but they’re gone now and it’s too late.
Is there no hope? The only thing I can think of at this point is to build on the support-portal concept. A network connection is a user’s window on the world, but also the world’s window into the user’s facility. A lot of diagnostic work could be done by an operator, on the network connection the operator provides (which is a big part of their current portal thinking), on the local network, and even on network devices. However, this sort of thing has minimal chance of generating significant consumer revenue, and consumers are the source of bucks that operators need to tap.
Which likely means that operators have waited too long to make a go of the super-app concept. That’s the downside of their reluctance to move beyond connectivity services, even in the face of what should have been a stark reality back in the ‘90s. When a “service” like Internet access emerges, it creates what’s in effect a more generalized dialtone. Other services can then ride on it, and that shifts the provider of the access service to one of providing an underlying and largely invisible pipe. People pay for services they recognize.
This is why I think AT&T is smart in thinking about what sort of facilitating features they could add. If you don’t want to climb the value stack all the way to the retail summit, then you need to at least get yourself to base camp.