In a piece yesterday, I wrote that Nigerian telcos should build contract- subscription-based billing system to overcome the challenges of WhatsApp and other OTT solutions. Simply, if the user had paid a fee, under a monthly plan, the telco would become ambivalent to whatever the user is doing with his or her phone. That way, the telco would preserve its ARPU (average revenue per user). This is the idea as noted, and I do think entrepreneurs can make it happen, not the telcos themselves.
Telcos should invest in business model research and find ways to move from PAYG to subscription-based billing. That way, they would care less on what people do with their phones on their networks as the subscription must have covered those expenses. Regulating technology would be extremely dangerous. If we allow Telcos to succeed, the newspapers can ask for the same consideration since Facebook and Google are decimating their business models also. When you are dealing with aggregators, you rarely win because aggregators operate with near-zero marginal cost. Yes, their products are extremely valuable to the users even when they pay absolutely nothing [sure, I get it – privacy of data]. If you hit them hard, you would lose the soul of your business.
… You need contract subscription billing so that you become ambivalent to whatever the customer is using. That way, you preserve ARPU. Yet, an entrepreneur can help build the subscription ecosystem for the telcos. That would be a huge business in the land.
Interestingly, that is a very big business opportunity and the grandfather of any deal any entrepreneur could strike with the telcos. You can build that system, and get telcos to use them in their pricing and business modeling. Building it would require integrating the customer biometric data from telcos, NIMC (National Identity Management Commission) database and possibly BVN (Bank Verification Number). The telcos will pay fees to use your system as they develop their products to serve customers under subscription billing. These products will be monthly plans differentiated by data usage carefully tied to monthly fees.
I do not expect the telcos to do this, as if they do it, it would be a disparate world of silos [exactly what we have for the biometrics capture with the SIM registration]. If an entrepreneur does it, great things would happen as adoption would skyrocket and the challenges of WhatsApp would be managed.
Yet, this would be a tough challenge. First, you would need the telcos in order to help them, and getting them to work together may be extremely challenging [MTN may not see any value helping 9Mobile by coming together]. Second, the government data has not evolved and no one knows for certain when that will be ready. Third, BVN is largely a private data for NIBSS which makes it nearly impossible for anyone to have access to the comprehensive database. Of course, the toughest things are usually the best opportunities. If you make them happen, glory awaits. So, if you can, go for it.---
Click to join Tekedia Capital and build Next Africa with min of $10,000 co-investment in startups.