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The 4 New Rules Telecom Needs to Play By Did you know that today's voice communications travel along the same public switched network used in the days of switchboard operators?

By Scott Lahman Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.


The telecom industry is in need of a serious shake-up. While other industries -- television, music, publishing, retail -- have evolved to keep up in the digital age, telecommunications behemoths have dug their heels in and left the industry largely unchanged, maintaining the same framework used in the days of Alexander Graham Bell.

Related: Apple Says It Has No Plans to Sell Mobile Services Directly to Consumers

Sure, it may seem like the telephone industry has undergone a transformation, thanks to the cutting-edge design of smartphones, but in actuality, voice communication technology has remained stagnant. In fact, the major portion of all voice communication is still carried along the public switched telephone network (PSTN), which in turn consists of telephone lines, cellular networks, communications satellites, etc.

To put this in perspective, the PSTN is the same system used in the early days of the telephone, when switchboard operators directly linked two phones together through a connective line.

All of that is to say that the telecom industry is long overdue for its answer to the information age: specifically, its very own version of Netflix, iTunes, Kindle or Amazon.

Here, then, are four new rules to bring the telecom industry into the digital age:

1. Embrace the power of WiFi.

In the time before widespread WiFi access, phone carriers had us, hook, line and sinker. After all, they were the only ones who could package and sell on-the-go access to information and technology, so there wasn't much of a choice.

Now, with WiFi coverage growing, data shows that Americans are covered 80 percent of the time. With that figure inching toward complete coverage, through city-owned WiFi networks, the need to pay for cellular coverage is diminishing faster than pumpkin pie on Thanksgiving Day.

As you can imagine, the telecom industry is not a fan of expanding WiFi coverage -- with the exception of T-Mobile, hats off to them. The reason is that expanded WiFi could render Telecom's pricey networks obsolete. As it stands, large telecom providers are regularly lobbying against municipal and community broadband projects.

Phone companies are committing highway robbery by charging customers astronomical prices for cell tower service, even though other networks, like WiFi, are readily available for free, or for much less.

2. Just say no to contracts.

I've got to hand it to the traditional U.S. carriers: They're master bundlers. As revenue has fallen in voice and messaging, the carriers have increasingly bundled these services into their core data offerings. Unfortunately for them, that hasn't worked in the digital age.

Today's consumer expects choice in bundling -- or unbundling -- for his/her own services. The unbundling of songs, shows, channels and communication is really at the heart of the digital age. This revolution is certainly driven by software and technology advancements, but it's also driven by economics, meaning consumers only want to pay for what they use and value; everything else is just waste. And in case you haven't noticed, Gen Y and Gen Z are very anti-waste.

That's why "pay for what you use" is the mantra of the new telecom industry. While I commend the efforts of the pre-pay carriers in this regard, and the leadership of T-Mobile in offering rollover data, more should be done.

Related: Why a Phone Call Is Better Than an Email (Usually)

And for consumers who think an unbundled future is a distant reality, keep in mind that there are already a number of solutions for voice- and text-over-IP that utilize Internet protocol as a connective link between devices. With these services, customers can ditch the ball-and-chain and be free from "the trap." Currently, only about 1 percent of contract customers switch from top wireless carriers. This needs to increase if we're going to see innovation in the space.

Of course, the mobile carriers don't have to wait for Armageddon to change their offerings and take leadership positions in offering their service on an unbundled and á la carte basis. In the absence of bundles and contracts, they just might rediscover a concept that has been missing for a long time -- loyalty.

3. Kill the retail storefront.

Blockbuster, Borders and Circuit City all succumbed to their fate, in part because they never harnessed the power of the Internet. Why shouldn't telecom follow suit? Consumers after all are accustomed to making purchases entirely online, avoiding the hassle of heading into a physical store. But traditional telecom companies have yet to make this jump, instead requiring lengthy store visits and long-winded phone conversations to get set up with service.

If telecom companies don't recognize the need for a simple, convenient "one-stop shop" available online, it's likely they'll share a fate similar to that of the aforementioned companies. RIP.

4. It's time to untether.

Phone numbers make up the largest and greatest social network of all. A phone number is more than just a random set of numbers used to call someone; there's a specific, personal identity associated with each individual phone number.

In a nutshell, phone numbers are the identities you carry with you. As such, users should have the flexibility to use those identities at the drop of a hat.

The idea of tethering a phone number to one device is archaic, and won't fly in today's digital age. People are expected to switch from work mode to personal mode at the push of a button; and in order to keep up with and serve customers, the telecommunications industry needs to provide them the option to access different numbers and associated identities at any given time, on any device.

Software telecom, or "cloudphone," as we call it at textPlus, transforms every aspect of the industry. It changes the way telecom is discovered (see "Kill the storefront," above). It changes the way telecom is consumed (e.g., embedding calls in Google search results). And it changes the way telecom is paid for (ad-supported telecom, anyone?).

Most importantly, it introduces new features and flavors to a service that has only offered "vanilla" up to this point. Social features -- check. Fun features -- check. Gamification -- double check. Fun is not a characteristic normally associated with telecom, but it needs to be. Gen Z's members, in particular, demand that their software be simple, unobtrusive, playful, social and consistent across every device and touchpoint they own.

In the end, industries grow and thrive -- or decline and collapse -- based on their ability to evolve with the times. The fact of the matter is that the telecom industry is still relying on a system drawn up more than 100 years ago. To say it's behind schedule is putting it kindly.

It's time to expel our outdated structure in favor of a modern model providing users with the flexibility to communicate how they want, when they want and where they want.

Related: After Snapping Up Sprint, SoftBank Sets Sights on T-Mobile

Scott Lahman

Founder and CEO, textPlus

Scott Lahman is founder and CEO of textPlus. Before founding textPlus, he founded JAMDAT Mobile in March 2000 with Austin Murray and Zachary Norman. JAMDAT Mobile had a successful IPO in 2004 and was eventually sold to Electronic Arts for $680 million, in 2006. Prior to founding JAMDAT, Scott was an officer and executive at Activision from 1994 to 2000. Lahman began his career in the film and television industry, most notably as a development executive for Robert De Niro's Tribeca Productions from 1990 to 1994. He holds a B.A. from Columbia University

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