Will Telefonica be “SMART”?
Thursday, 11 February, 2010SMART stands for Services, Management, Applications, Relationships and Technology. It opposes to LEAN, which stands for Low-cost Enablers of Agnostic Networks.
In the recent years Telefonica has been following a slightly erratic behaviour regarding content throughout its different business units. Currently they have emoción and Imagenio, first one the mobile content portal and the second one the IPTV service. Imagenio is key to the triple-play offering in Spain.
Some years ago they entered in the content development business through Endemol, however they backed off that investment some years later. They got in the web portal world through Terra and Lycos, trip that wasn’t too successful. They got in the Satellite TV business in Spain thorugh Via Digital, which they later merged with Canal+. In a strange but highly profitable movement they sold their position in Sogecable (which aggregated Via Digital and Canal+ under the Digital+ brand) to Grupo Prisa and some time later re-bought it at a lower price, re-taking a position in the spanish satellite TV market. As I said, slightly erratic, profitable at times, unprofitable some others.
However, what will the future bring us? Telefonica HAS to be SMART. Just like Real Madrid is expected to win each and every single game they play or Ferrari every F1 race they participate in. They can’t reduce themselves to providing access. Voice is a commodity, Mobile Voice is almost a commodity too, we already have flat fees for data transmission through 3G… where will future revenues come from when all current services will fall under a common flat fee?
Cesar Alierta wasn’t too happy some days ago about the money Google makes “using” his network and paying nothing for it (http://www.youtube.com/watch?v=wUcyNs8Eays). Well, that’s the tough part of being a carrier! Telefonica needs to reinvent itself. Telefonica needs to start understanding his customers better and not only his… he needs to understand the trend-makers better (and these aren’t his current customers, trend makers are in USA, UK, Sweden, Germany… not in the core countries Telefonica has presence in).
Telefonica needs to start to lead innovation, being proactive and not reactive as it is now. You can’t expect to succeed with something like keteke fighting against facebook, myspace, twitter, tuenti… when you arrive much much later to the market. In cases like that you have three options. First one is to forget about it, you won’t get money from there as you are late. Second is to buy one of the main players but with a VC vision of the investment, not a carrier vision as otherwise it will die in time (see Terra, Lycos, etc…). Third one is to develop something new completely different and innovative. In my opinion Telefonica made a mistake with keteke as they followed the third path but with something that was a copy of the current players. That only succeeds and works out if you are Apple and the UI you provide to do the same as the rest is “apple-cool”
Viewing trends of TV audiences are changing very fast. Tivo, Hulu, Youtube… are making that change happen. Telefonica has to be SMART and analyse, study and determine where we are going and take a first step into the future, providing not only the network access, but the new services that people demand to watch TV in a more convenient way. Buying content providers to offer streaming content thorugh internet? Maybe. Buying Broadcasters and allowing their customers to watch linear TV as On Demand, adapting TV content to the user’s time schedule and not the other way round? Maybe. Becoming a big advertising media buyer just as Google and take advantage of all its different channels? Maybe. Changes like these will probably kill Imagenio and their current IPTV service, but that is the toll they will have to pay, they will need to reinvent Imagenio and harness the power that broadband access and Internet provides in order to develop the personal TV services that in the next 5-10 years we will all demand.
