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The Changing Consumer Landscape- Telco Strategies for Success

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THE CHANGING CONSUMER LANDSCAPE: TELCO STRATEGIES FOR SUCCESS | MAY 2020 © STL Partners EXECUTIVE BRIEFING 2 Executive summary The consumer landscape is changing and operators need a strategy to stay relevant There is a new opportunity for operators to better address the consumer market and win "in the home". Owing to behavioural changes, driven in part by COVID-19, and the increasing digital maturity of consumers in general, demand for reliable connectivity as well as additional value-add services is growing in the market. Consumers are expecting more from their broadband provider and this presents telcos with an opportunity to become more relevant in the home. This report looks at the different strategies telcos can pursue to win "in the home" and address the changing demands of consumers. It draws on an interview programme with eight operators, as well as a survey of more than 1100+ consumers globally 1 . As well as canvassing consumers' high-level views of telcos and their services, the survey explores consumer willingness to buy cybersecurity services from telcos in some depth. Consumers are increasing in digital maturity and operators can capitalise on this by creating peace of mind The programme found that people of all ages (including non-digital natives) are becoming more technically aware. This means they may be willing to purchase more services beyond core connectivity from their broadband provider. At the same time, their expectations on performance are rising. Consumers have a better understanding of the products on offer and, for example, expect Wi- Fi to deliver quoted broadband speeds throughout the house and not just in proximity to the router. In this report, we conclude that operators looking to capitalise on this should therefore: Explore new "in home" products beyond connectivity We set-out, in detail, two potential propositions which we believe offer telcos a strong opportunity: 1. Smart home: A handful of the telcos we spoke to for the interview programme are now exploring services and solutions within the smart home market. Furthermore, telcos such as Deutsche Telekom (Magenta SmartHome), Orange, and AT&T (Digital Life) have already made forays into the space. We believe the telco has a clear right to play in the smart home space for two reasons: 1.1. The smart home market is complex and the telco can help drive simplicity, by coordinating and integrating solutions from multiple third parties 1 See Appendix 1: Consumer segments used in the survey for definitions of consumer segments

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