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October 18, 2010

What Service Providers Can Learn from Newspapers, Part 1

By Jon Arnold, Principal, J Arnold & Associates


Earlier this month, I wrote on my Analyst 2.0 blog about the redesign of the Globe and Mail, Canada’s leading national daily. While this is a good stand-alone story about how newspapers are coping in the Internet age, I think there are several relevant takeaways here for service providers. Being an analyst – and not rooted solely in the world of telecom – I can’t help but see the parallels and opportunities these changes present for carriers.


We all know how the Internet is killing newspapers, and perhaps more importantly, how it changes our behaviors and expectations around news, and our relationship with information. I’ve had long-standing issues about how the Internet legitimizes content, and gives credibility to opinion without any regard for the editorial process or professional standards around objectivity that accredited journalists abide by. I’ll set that aside for now, and just focus on some of the more interesting things the Globe is doing that I think can translate well for telcos.

First, think about what these businesses have in common. Telcos and newspapers both build their businesses around having large subscriber bases, although the latter depends more heavily on advertising for sustainability. Until recently, both have also been single mode: telcos with voice and newspapers with print. The Internet has changed that, and now both are very much multi-modal providers, increasingly focused on Web-based content.

Stepping back, both are also facing challenges with their legacy networks. We all know about how good the PSTN is for telephony, but how limited it is for data. The same is true for newspapers, which rely on a “network “ of home delivery and newsstand sales for distribution. In essence, this is their transport network for getting the product to market, and having had multiple paper routes as a kid (I may be dating myself here); I can say it’s a pretty efficient model. Very few of us are awake before the morning paper arrives, and before the Web, this truly was the way most people got their news. It may not have been real time the way telephony is, but for its purpose, it was real time enough.

At the heart of things, the core business of telcos and newspapers has become commoditized by the Internet, and they must adapt or die. Voice still has value, and news still has value – but both are simply done differently today. In my view, news and VoIP are synonymous now. Both can be had from a multitude of providers, at little or no cost, and in a manner that suits the needs/whims of the end user – rather than being controlled by the provider. Based on these narrow definitions, it’s becoming pretty much impossible for incumbents/legacy providers/publishers to maintain the status quo. Once the underlying offering has become a commodity all that matters is timely delivery at the lowest cost possible.

Telcos have been on this road for a while now, but still have a long way to go to re-invent the voice business. The impact of the Internet on newspapers is more recent, but things happen faster now, and the Globe is a great example of a publisher that has taken a big picture view of how they need to adapt. It’s not enough to get the news out faster or drop the price to grow subscribers. As their Editor-in-Chief, John Stackhouse explained, the objective is to redefine the relationship with readers and learn how to stay relevant amidst the sea of news/information/entertainment everyone in the media business is swimming in. This, of course, is a two-sided dilemma. Not only must all the media providers compete with each other to provide the right mix of content, but we as consumers have to make choices about where to focus our attention, when to take it all in, how much multitasking to do, which media modes to use, which sources can be trusted, etc. Nobody has figured this out yet, but market efficiencies will determine the winners in due time.

Before that happens, though, the Globe has made some big bets now on what they believe newspaper 2.0 has to look like. Content is still the main story, but there’s so much more to consider beyond “the news”. Telecom is no different. The business is still built around voice, but POTS is a dead end. As we all know, the Internet has greatly expanded what’s possible with voice, and newspapers are in the same boat. However, their boat is taking on water more quickly, and the Globe is just one of many publishers trying to build a better boat. This is a logical break point for my thinking, and in my next column, I’ll examine some specific examples of how the Globe is doing just that.


Jon Arnold, Principal at J Arnold & Associates, writes the Service Provider Views column for TMCnet. To read more of Jon’s articles, please visit his columnist page.

Edited by Jaclyn Allard


 
 
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