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Why is telecoms such a mess?

August 17, 2015

This weekend I spent more than 7 hours battling with my telecommunications providers. Neither provided resolution, but you reach the point where even reaching the right person feels like a massive victory. I am not going to name the two providers involved – one in the US, the other in Europe – because it isn’t about pillorying them. It seems to me an industry wide problem: they are quite simply incompetent and unable to manage their business.

I don’t plan to regale the details of my specific issues, but more to use them to illustrate what goes wrong and why I think that may be happening. It is an object lesson to every business struggling to maintain or build profitability – and perhaps to those who regulate them.

The telecoms industry appears unable to extract itself from rigid rules and procedures – all of which create bureaucracy and many of which quite clearly operate to the firm’s disadvantage. In part, this can be blamed on a regulatory environment where, in the name of consumer interest, government authorities endlessly interfere and create levels of complexity that make the consumer a victim. One guiding force is supposed to be the maintenance of competition, but this doesn’t seem very successful. Providers seem very similar – including in the dreadful quality of their customer service and the mindlessness of their rules. Just two quick examples: one of my calls was to terminate a service. It took me eight attempts to find someone who even recognized my account. This individual could see that I own the account and that I pay the monthly bills – but could not talk to me because someone has changed the address and created a PIN on the account. He could not explain how it was possible for this to happen, nor could he tell me what address was showing because it is ‘confidential information’.

In the other example, a friend wanted to move her children off the family account that had been created years ago. The ‘children’ are now in their mid-20s. However, the only way they can be moved is if they terminate service and take a new contract – and if they do this, they also lose their current phone number. However, if they move to a different provider, they can take their number with them.

Regulation is certainly part of the issue here, but I believe that the operators have created much of the complexity themselves. In their efforts to segment markets and maximize revenues, they have created an impossible array of charging structures and then erected a protective maze around them. Their organizations are split into so many parts, none of which seem able to communicate. Their systems also rarely speak to each other and of course, no one has been given any authority to make judgments.

Is the incredible cost of these operations really worthwhile? I recall working with a software company that had similar pricing complexity. Over 65% of their invoices went out wrong. Customers refused to pay. The software company’s reaction was to threaten the customers. It went out of business. The story seems very similar to that of the telecoms industry. Surely someone will one day decide to fix the problems; I hear that several are seeking to outsource operations so that they can focus on ‘building the brand’. I’m not sure that is a viable commercial solution; maybe the best start point would be to drive simplification and focus on the customer experience.

One Comment
  1. Great observations. My clients complain about telecom complexity all the time.

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