The following is a guest post by Tsahi Levent-Levi.
In the fast-paced world of telecommunications, we can almost see the network effect in action right in front of our eyes. The network effect posits that the more users you have for a product or service, the more useful or valuable that product or service will be.
When it comes to our ubiquitous cellular network, GSM, this has not been any different. Largely, we have a single worldwide network, connecting almost all the mobile carriers in the world known as the GSM. Whenever you dial a number to someone, that signal can pass between carriers connecting the call for you.
GSM rode the wave of the network effect for a while. Its ambitious goals are even inherent in its very name: Global System for Mobile communication. But a quick reading of user trends demonstrates that a globally available, single phone system is no longer as valuable as it used to be.
GSM of course isn’t the first example of how the mighty have fallen. Fax machines are still around, but their value is diminishing year by year. Consumer SMS is on a continuous downward spiral thanks to consumer messaging services such as WhatsApp. And some believe we have already passed the peak in telephony use. People are simply talking less and less on their mobile devices.
Traditional telecom services such as SMS and GSM voice calling are being edged out by the fast and furious network effect of ubiquitous internet and data services. These services are rapidly diminishing GSM operators’ access to the user base they need.
The internet created the lowest common denominator – letting users send messages and conduct voice and video calls without network operators’ voice or SMS services. It started when Skype entered our lives over a decade ago, followed by the introduction of mobile apps for iPhone and Android devices, such as Viber, WhatsApp and literally thousands more.
There is more going on here though than traditional price wars. We aren’t using these apps every day/all day just because they are cheaper (or free). We are using them because we now have access to high-quality services for one and all. Ubiquitous Internet and data services not only leveled the playing field, it recreated it. And in the process, knocked the high-cost operator services right out of the ball park.
What these services have in common is the benefit of a “double” network effect. They leverage the network effect of the ubiquitous internet and affordable smartphones, while building momentum with a network effect all their own. Some of these services have reached hundreds of millions of active users, who if you asked them, could not live without them!
The final nail in the GSM coffin is the growing trend of adding in-app messaging and real-time communications to services. App developers are no longer willing to let their users loose so fast. They prefer to control more of the user interaction. Why?
- Better visibility of their customer’s journey: If all interactions take place within their app or on their site, developers can collect data and analyze it using a single mechanism rather than relying on multiple integrations across mediums, services and 3rd parties.
- To better customize the interaction to their specific use case: whether to store interactions, anonymize users communicating or more.
- Richer context for better engagement: If users have already logged on to a site or are using an app, why should developers need to ask them to identify themselves in order to speak to a rep or sales agent? They should already know who they are and with the right information, be able to deduce why the call is being made based on the interaction with the product or service over the last few minutes.
There are lots of examples of products and services that are reaping the benefits of disengaging from the communications from the GSM mindset. Here are just a few:
- Meetup: A company catering to local groups across the globe has added messaging to its own service to enable participants in a group and people reaching out to group organizers to communicate without leaving the Meetup environment.
- Quora: A popular Q&A site has added its own built-in messaging service.
- Pinterest: A visual discovery service added group messaging to its feature set in 2014.
- Upwork: A service based on the merger of Odesk and Elance for freelancers has its own messaging service and an integration enabling voice and video sessions between employers and freelancers.
Today providing a service, especially for aggregators, means providing communication capabilities. And more often than not, this is being done completely external to the GSM calling model.
No doubt we are in a state of transition that may take some time. During this transition GSM calling models will continue to diminish in value, while internet-based communications will become more and more popular and continue to gain users. Through this transition, enterprises and operators will need to decide which communication channels they wish to invest in – the old GSM model, the new IP-based, service centric communication model or a hybrid of both.
Rethinking the ‘Global’ in GSM originally published by Gigaom, © copyright 2015.
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