Customer migrations are becoming a fact of life in the communications industry. Rapidly evolving technology and standards, the refarming of spectrum, and competitive and regulatory changes virtually guarantee that service providers will need to migrate customers to new platforms every few years.
For service providers that means risk, because customers use such transitions as opportunities to evaluate personal or business needs, entertain alternative providers or at least improve commercial terms. For customers, what’s of most concern is the disruption the change causes and how they experience a transition overall, particularly when a new technology is involved.
At best, customers won’t notice any transitions a service provider does well, and neither will other companies or the industry. At worst, these transitions can trigger legal action from customers, become a public relations nightmare, erode the business value of a transaction significantly, or cause a mass exodus of customers from a service provider.
In PwC’s experience, service providers can execute transitions well – by having deep insight about their customers’ needs, planning cross-functionally and avoiding reacting, leading decisively and focusing their process. And a well-executed transition can enhance a service provider’s brand or reputation - and even catalyse a new phase of growth.
The most widespread shift that affects consumers is the rapid pace of generational change in technology. In wireless, for example, there has been a shift of ‘Gs’ every decade with this being the decade for 4G to be adopted widely. In the wireline/cable industry, there’s a very real desire to transition from copper-based networks to fibre networks and from TDM to IP-based platforms. These technology transitions are investment intensive and typically occur over an extended period. And each generational change creates the need to migrate subscribers from one network to the other.
Beyond the innovations in products and services that cause migrations, there is the current pace of mergers and divestitures, of disruptions to business models, and of regulation that also cause a constant flow of change for service providers (see Figure 1). In the US, for example, only four large wireless operators remain, down from eight large operators only a year ago. In much of the world, the stream of consolidation in the wireless industry flows steadily, often with no more than three or four dominant service providers in any market.
As consolidation affects infrastructure vendors, investment decisions may bring end-of-life dates for certain platforms. Service providers then have the unenviable task of migrating customers from one platform to another. As an example, by 2015, the average TDM switch will be 30 years old.
Lastly, regulatory changes can be a major trigger for migrations. Since the first conversion in The Netherlands in 2006, governments around the globe have been mandating the move from broadcasting in analogue television to digital television. One of the best examples of a large-scale migration that a regulatory change caused is the conversion to digital TV in the US in 2009. Another regulatory-initiated move that likely will have a wide-ranging impact on the industry is the conversion from TDM to IP. In the US, the Federal Communications Commission (FCC) has set up the Technology Transitions Policy Task Force to evaluate and encourage the migration from TDM to IP.
Early adopters and fast followers will migrate voluntarily with little incentive and often at their own cost. With each departing subscriber, the economics of the legacy platform become less attractive. So at a certain point, service providers must force an involuntary migration.
 Cable News Network, http://www.cnn.com/2014/01/22/tech/mobile/south-korea-5g/.
 International Telecommunication Union, http://www.ctu.int/download/PHai_migration_status.pdf.
 Federal Communications Commission, http://www.fcc.gov/document/technology-transitions-policy-task-force-seeks-comment-trials.