The rapid growth of the Internet has shaped the dynamics of Internet needs, and this consequently affects the development of ISP challenges. When the World Wide Web and the Internet were born in 1991, it was considered a “young” revolution. It only took a couple of decades for the 4.7 billion people of the world population to be dependent on the internet, allowing other revolutions such as cloud, 5G, and IR 4.0 to occur. And the gatekeeper of our interconnectedness is none other than ISPs, which had to face financial and traffic challenges.
With such a massive amount of internet needs, ISPs have to seek or find opportunities to remain sustainable, and, if possible, maximize their income. But to understand what these opportunities are and how ISPs can add their revenues, ISPs must first analyze the current landscape and challenges in the game. To address this issue, Telkom DWS in the seminar “ISP's Next Big Thing: Appeal to Your Customers and Monetize Digital Market Opportunities” by sharing insights on current ISP challenges and possible solutions that can be implemented.
Here are several key challenges that ISPs have to face in a digital age where a global pandemic is ongoing:
• Suppressing Operating Cost
When the digital age increases our dependency on the internet, the pandemic elevates it even more. NTT, an internet provider in Japan, reports 30-40% increase of internet traffic during the pandemic. Similar growth (40%) was found in Spain and other countries. These spiking needs take a toll on internet infrastructure maintenance and operating cost. ISPs then need to find ways to make cost-effective business plans and decisions to make their businesses sustainable and keep their quality service at an all-time high.
• Non-existent Growth of Purchasing Power
While the need for the internet keeps on increasing, the pandemic significantly impacts the economy, resulting in the growth inhibition of purchasing power. In the US, major ISPs such as AT&T, Comcast, and T-Mobile signed a pledge to keep low-welfare American households connected to the internet. In Indonesia, the government has also provided internet quota for students. While these acts are charitable, it’s also a sign of how customers in a pandemic simply do not have the power to purchase more. ISPs cannot simply raise their fees to increase their revenue.
• Market Reduction and Price War
With greater demands, comes greater competition. And although it’s counterintuitive with the classic supply-demand theory, it’s not rare to see that price war occurs when demands are high, considering that customers have more options now. Together with the needs to suppress operational cost, the impact of price war among ISPs can be disastrous. To add the challenge, ISPs with the B2B model might face further difficulties as several business clients might cease their operation or lower their expenditure in times of crisis.
With these challenges, ISPs must find other ways to increase their revenues and make their business sustainable. There needs to be an extension of services that can cater different business needs other than mere Internet access. In the webinar, two innovative solutions such as SMS masking and IoT solutions can be the key to increasing ISP revenue. Development in these areas can appeal to wider targets, helping ISPs remain sustainable. We’ll take a look at more details on how these innovations can support ISP business in another post. You can also visit Telkom DWS’ Youtube on https://www.youtube.com/watch?v=_DI3Khrg4eU&t=7632s to watch the complete webinar.
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