Social Media in the UK Telecommunications Industry

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Investigation of the Adoption of Social Media in the UK Telecommunications Industry

Executive Summary

This report attempts to evaluate how the advent of Web 2.0 and consequent social media technologies have changed the way telecommunications companies interact with their stakeholders in the UK. The findings of the report show how social media technologies such as instant messaging, wikis, and social media platforms have drastically changed telecoms’ internal and external business operations, and highlights the importance of online communities and how they can influence general opinion. Further analysis presents the rapid diffusion of innovation among new social media technologies, such as increasing mobile and messaging platforms, and the impact that they have had on telecoms companies. Using the primary findings of this study, a strategy for telecoms companies is suggested through which they can take advantage of the increasing use of mobile technologies, and foster online communities to create marketing campaigns that take advantage of brand user generated content to attract customers.

Introduction

Web 2.0 radically transformed how Internet users interact with one another and with the brands they support, due to being able to communicate using digital platforms. The development of these technologies has led to a wealth of social networking platforms such as Facebook and YouTube, where users can share and create content about anything. Moreover, the use of these platforms has also changed the way businesses interact with stakeholders. Organisations can now exchange information in a rapid manner from all over the world. In the same way, consumers now have more direct relationships with their favourite brands and others with the same interests, establishing online communities that can influence general opinions about brands, thereby changing traditional consumer buying behaviour (Ebersbach et al., 2008).


Figure 1: Number of social network users worldwide (Statista, 2017)

This report attempts to evaluate the impact that social media technologies have had on how telecommunications companies in the UK interact with their stakeholders. To answer the question, the report will firstly provide a background of the telecommunications industry; this will be followed by an introduction to the most widely used social media tools within the industry. Secondly, through an analysis of business drivers, the report will carry out an evaluation of social media adoption. Thirdly, the report will analyse the rapid innovation diffusion of social media and future trends in a bid to analyse the impact they have had on the telecommunications industry over the past number of years. Finally, the report will draw on the findings to suggest a strategy for improving communications plans with stakeholders by taking advantage of new technologies. Finally, the report will conclude by examining the implications of the use of social media in the telecommunications industry, and presents observations regarding possible future implications.

1. Telecommunications Industry

Ofcom (2017), the UK’s communications regulator, defines the telecommunications industry as a combination of telecoms, television, radio, and mail correspondence. In an attempt to obtain an in-depth analysis, this report will focus only on how social media have influenced the telecommunications sector in the UK. Telecoms companies offer a wide range of services. However, their core business is providing network services communications, both fixed and wireless. Moreover, the UK Parliament (2017, p.2) considers the telecoms industry to have significant, importance as they ‘underpin much of the economic and social activity in the UK’. In fact, all UK companies rely in some way on the connectivity provided by telecoms companies. Even citizens acknowledge the importance of telecoms services, as broadband is currently viewed as one of top five modern-day essentials (Which?, 2016).

The leading companies in the UK in fixed broadband services are BT, Sky, Virgin Media, and Talk Talk. BT’s market share increased after its acquisition of EE in 2016 (Ofcom, 2017).


Figure 2:  UK telecoms’ fixed broadband market share (Ofcom, 2017).

In mobile services, the leading companies are EE, O2, Vodafone, and Three (BT Group, 2016).


Figure 3: UK market share mobile revenues (BT Group, 2016).

Over a five-year comparison, revenues of the UK telecoms combined decreased by -2.2%; however, in 2016 they increased by 0.4% (Ofcom, 2017).


Figure 4:  UK telecoms revenues (Ofcom, 2017).

In consideration of the extensive use of technologies within telecoms companies, the industry can be characterised according to technological readiness and integration (Low et al., 2011). Moreover, due to the high competitive pressure within the industry, particularly in the UK, these companies have increasingly made use of new technologies, making them excellent examples in the adoption of Web 2.0 and social media technologies.

2. Social Media Tools

The advent of online platforms has changed how companies interact with their customers. These changes are mostly driven by how online communities can influence potential customer opinions. Online platforms are characterised primarily by user-generated content, fostering the creation of communities online made up of customers who interact with each other, and share information and personal views on specific brands (Cova and Pace, 2006). Business Week (2004), for example, devoted its ranking of the world’s 100 most valuable brands to the rise of what it labelled ‘brand communities’, and the impact they have on their chosen brand. With the increasing importance of brand communities on social networks, telecommunications companies have begun adopting these platforms with the intention to control, or have an impact on the messages and information shared online.

The development of e-business capabilities is crucial, as it is not only rapidly changing the way that companies buy, sell, and deal with customers, but also becoming a more central part of internal business operations (Zhu, 2004). Instant messaging applications such as Slack (Slack, 2018) can connect business teams with tools and services for better integrating their work, and for remaining up-to-date with new tasks. Organisations that use these tools obtain substantial returns through efficiency improvements. Faster response times, better integration between business units, and accessibility to information are only some examples of how instant messaging platforms, alongside the use of APIs, can improve business performance.

With the advent of the Internet, the research of new products has become simpler. Studies note that the rise of information-sharing mechanisms, such as blogs and social media, is shifting the online market from a small number of products with high demand to a large number of products with relatively small demands, nurturing the formation of the “long-tail” (Anderson, 2006, p.10-15). Hence, the rise of social network platforms opens up new opportunities for analysing several aspects and patterns of communication, through the collection of data (Baars and Kemper, 2008). For example, it is possible to understand what people think about the performance of a telecommunication service, and react accordingly. Therefore, the correct use of data is essential when analysing customer needs and future trends.

The increasing use of data collection for reasons other than new business opportunities has also given rise to ethical concerns, in particular among governments and regulators. The newly developed General Data Protection Regulation (GDPR) aims to give control back to citizens of their data. For example, customers now have the right to ask businesses to view or delete data collected about them (). This regulation will have several consequences. Companies will be required to adopt comprehensive changes in order to implement a new comparable level of privacy. As such, businesses will need to make investments in both technical and ethical contexts in order to adjust to this new law.

3. Social Media Adoption

Through the TOE framework (Tornatsky and Fleischer, 1990), composed of structural, environmental and technological factors, and with the use of real case scenarios, this report will evaluate social media adoption in the telecoms industry, and the impact that these technologies have had on how said organisations interact with their stakeholders. The TOE framework is characterised by:

  1. Organisation, which describes the internal operations of firms.
  2. External task environment, which refers to the external context of the firms
  3. Technology, which analysis the current and future trends of social network technologies.

Figure 5: TOE framework representation (Tornatsky and Fleischer, 1990).

In the analysis of social media adoption, along with the TOE framework, this report will employ the business drivers of telecom companies. In their paper, Oliveira and Martins (2010) identify three business drivers for telecoms companies in the adoption of digital technologies: perceived benefits, obstacles, and technological readiness. Therefore, with the use of a model, in this case a combination of the TOE framework and the identified business drivers, the following section will analyse social media adoption in the telecoms industry, and how these technologies can support their business operations.


Figure 6: Business drivers within the TOE framework.

3.1 Benefits

The advent of Web 2.0 has delivered benefits to the internal and external interaction between businesses and their customers and suppliers. As explained earlies, social media platforms have fostered the creation of online communities who interact based on their favourite brands, and has a positive effect on brand trust, and therefore, on brand loyalty (Laroche, Habibi and Richard, 2013). Moreover, these technologies have also created a collaborative environment known as ‘Enterprise 2.0’, where employees collaborate with one another through private online platforms that nurture knowledge-sharing (Efimova and Grudin, 2007). Similarly, communication between businesses have also changed. For example, integration of the supply chain through e-procurement indicates as a result increased performance among organisations (Hsin Chang, Tsai and Hsu, 2013).

3.1.1 Internal

Mark Morell (2010) explains how British Telecommunications’ organisational culture, where their employees should support one another by continually sharing new knowledge, and remain in contact with each other, has helped the company to successfully create and implement an internal blog available to more than 14 000 employees and third parties. With the use of a blogging platform in the form of an intranet system, British Telecommunication is capable of assessing employees’ needs in terms of sharing new knowledge, creating an integrated technology platform, and remaining up-to-date with new implementations.

3.1.2 External

In 2013, O2 created a campaign with the attempts to engage with online communities, while at the same time delivering a positive message that would be associated with their brand (Shortyawards, 2013). The campaign involved social media accounts on Twitter, thus user-generated content, exhorting social media accounts to encourage other users to eliminate the use of harsh comments over social media platforms. The campaign used the hashtag #bemoreodog to collect conversations, thereby allowing O2 to respond where appropriate, and allowing consumers to learn more about the campaign. As a result, commissioned Nielsen research found that users associated with the message on Twitter were more likely to report that they would choose O2 next time they switched mobile phone networks, compared to those that had not been exposed to the campaign.

3.2 Obstacles

In the evaluation of the adoption of social media technologies, obstacles are as significant as perceived benefits, as they may offer indicators about cultural behaviour within the industry. To better understand these behaviours, the analysis should be divided between internal and external barriers. For example, whereas employees’ motivations are the primary factors in the internal adoption of new technologies (Vuori and Okkonen, 2012), in the external environment, the main barriers are related to cost and technical operations (Pan and Jang, 2008). By understanding these behaviours, it will be possible to address new opportunities in the adoption of social media technologies.

3.2.1 Internal

The main obstacle in the adoption of new technologies within organisations is the slow adoption of new platforms by employees. According to Vuori and Okkonen (2012), two main factors that characterise this slow adoption. Firstly, the time and effort required to learn how to use these new platforms, and accordingly, an increased workload. Secondly, the similarities between one platform and another, and as a result, low perceived added value and a lack of effort in learning how to switch to the new information system. To create motivation for platform switching, the use of rewards or promotions can help to address these barriers.

3.2.2 External

Environmental factors define the main external obstacles to social media adoption. In the telecoms industry, however, there are lower barriers (Zhu et al., 2003). For instance, larger organisations with large financial resources, such as telecoms companies, are more likely to adopt new technologies. Moreover, industries with a high level of consumer readiness and competitive pressure generally follow environmental trends in the adoption of new technologies. However, in developed countries, one of the main barriers to the adoption of new technologies is the regulatory environment. The analysis of external obstacles indicates how, other than financial resources, the adoption of new technologies is mainly driven by factors external to organisations.

3.3 Opportunities

3.3.1 Internal

The analysis of the obstacles to social media adoption discovered that in the internal environment, social media barriers are related to a lack of motivation among employees. In particular, by constantly introducing new platforms, employees may come to view learning how to use these platforms as a waste of time. Through the combination of social media and e-learning (Cidral et al., 2018), it is possible to create rewards for employees who help others, while at the same time fostering the use of new platforms, thanks to increased shared knowledge. Thus, offering rewards to employees may be serve as a possible solution for removing some barriers to the internal adoption of social media technologies, and as a means for addressing new opportunities to foster knowledge within the organisation.

3.3.2 External

By considering the primary obstacles in the internal analysis, the main reason for why employees do not adopt new social platforms can be identified as a lack of motivation. A possible solution to this scenario is to offer rewards to employees who make use of new platforms, as they will offer value to the business in terms of supporting their operations. In recent years, telecoms companies such as Vodafone and EE have created internal social media platforms to motivate their employees to share new knowledge, with significant results (O’Reilly, 2018; Vodafone, 2016). However, by focusing only on Intranet, companies are missing out on the opportunity to leverage their employees, and on taking advantage of their knowledge of the company to create marketing campaigns using Q&A social media platforms such as Quora and Reddit, which can serve as tools for connecting brands with potential customers, thus creating rewards for both employees and the company. Therefore, when seeking out new opportunities, companies must also analyse their internal environment, through which it is possible to discover existing resources that can be used to take advantage of the possibilities that social media platforms offer.

4. Innovation Issues

4.1 Innovation Diffusion

Innovation adoption, in a social system, can be promoted as having a domino effect. Tornatsky and Fleischer (1990) define ‘technology innovation’ as a set of events and behaviours on the part of individuals or social units. The diffusion of innovation (Rogers, 2003) is generally linked to a small number of early adopters; over time, the new service or product will gain momentum and spread through a specific social system. Hence, the diffusion of new technologies depends on the initial adoption behaviours of a few people, who will then help spread it throughout their social networks to people who may initially have barriers against its approval. In the case of social media technologies, the diffusion of innovation occurs more rapidly than previous technological changes, as Web 2.0 renders connections among individuals quicker.

4.2 Innovation and the Telecommunications Industry

In recent years, entrepreneurs have increasingly taken advantage of social media platforms to foster the continued creation of new platforms, made easier by the low cost involved in their development, and the rapid diffusion of innovation. Consequently, nowadays, Internet users find themselves with many options related to their experience and social media intentions. However, the high threat of substitution and the low cost of change have given rise to what is known as the ‘cyber migration’ (Zengyan et al., 2009; Cheung et al., 2011), where costumers regularly switch between these services. These rapid changes between platforms have made it more difficult to retain customers.

In recent years, even telecoms companies have suffered the cyber migration effect. The status of smartphones as the most widely-owned internet-enabled device, and the introduction of the mobile application, WhatsApp, have radically transformed how people share information with each other. As reported by The Economist (2015), in 2015, WhatsApp already counted more daily messages than all other standard texts combined. Therefore, the increased use of WhatsApp resulted in a reduction of revenues generated from SMS services for telecom companies (Ofcom, 2017); in an attempt to retain costumers, these companies now offer this as a free service.


Figure 7: WhatsApp messages surpassing the number of traditional messages combined (The Economist, 2015).

5. Impact Analysis

As reported in section 4.2, social media platforms have created a radical shift in the telecommunications industry. For example, the amount of mobile data used to access for the Internet per month over the past few years has drastically increased (Ofcom, 2018).

Figure 8: Average fixed broadband revenue per connection and data use per month (Ofcom, 2017).

In the same way, mobile users are now progressively making use of data using their smartphones (Ofcom, 2017)


Figure 9: Average monthly mobile data per connection (Ofcom, 2017).

The increase in use of mobile data is driven both by an increased use of social media platforms and by an increase in the use of smartphones (Statista, 2017).


Figure 10: Percentage of internet connections in the UK by device (Statista, 2017).

The increased use of data and social media platforms has changed the business strategies of telecommunications companies. From having previously offered direct messaging and video calls, today, these services are shifting towards the use of mobile and desktop applications via internet broadband. For example, SMS revenues and usage in the telecoms industry are falling, as people have moved away from traditional messages to social media platforms such as WeChat and WhatsApp. In the UK, 69% of people use internet applications rather than SMS.

In the same way, Internet phone calls are slowly taking the place of traditional phone calls, as the number of individuals who are making voice and video calls using the Internet continues to increase (Statista, 2017).


Figure 11: Share of individuals making voice calls over the internet in the UK (Statista, 2017).

Furthermore, the increased use of smartphones and data have opened up new possibilities for how telecoms companies interact with their customers. In fact, through the use of big data databases and social media analytics, telecoms can now reach a wider audience, and can do so with a better understanding of the opinions customers have of their brand (Statista, 2017).


Figure 12: Areas of increased impact of digital technologies usage in organizations in the UK (Statista, 2017).

As shown in the image above, with the introduction of social media, marketing campaigns are now focusing more on individuals and communities, as they are the ones structuring and shaping social media platforms (Berthon et al., 2012).

5.1 Implications

To summarise, the impact analysis demonstrated two significant changes in the impact of social media platforms within the telecoms industry. Firstly, the ease of use of platforms such as WhatsApp and WeChat has transformed the services that telecoms companies offer to their customers, with a switch to focusing on delivering more data and free mobile data for the use of mobile applications. Secondly, marketing campaigns are now more focused on social media platforms, as individuals can influence people within their networks, and the collection of online data can help telecoms companies create a micro-targeting campaign, or predict future consumer behaviour. As such, the increasing use of data and the fostering of online communities via social media has changed interactions between telecoms companies and their customers.

6. Recommendations

This report discussed how social media have changed how telecoms companies interact with their customers, and how there are now more exposure opportunities available to the former. For example, when a brand engages with its fans through social media, it can benefit from a secondary effect and gain more exposure among the friends of the targeted audience (Lipsman et al., 2012). It was also discussed how user-generated content, which structures the content of social media platforms, have the potential to shape consumer brand perceptions (Smith, Fischer and Yongjian, 2012). In this way, social media have given costumers the power to influence opinions on how people may perceive brands.

6.1 Recommended Strategy

The recommended strategy will make use of the AIDA model. The model describes the four cognitive phases experienced by an individual when changing their behaviour towards a product or service (Doyle, 2011). The steps involved are attention, interest, desire, and action. Through these steps, the model creates a purchasing funnel that supports buyers, from gaining an awareness of the product to its eventual purchase. Moreover, if considered in the context of social media, the AIDA model will not only focus on consumers and the company, but will also involve the social networks and communities connected with the target audience.


Figure 13: The four stages of  the AIDA model.

The strategy comprises two steps and aims to influence non-costumers through existing customers within the same social network. The first step is to make use of the AIDA model to attract existing customers, and to have them create new content on their social media platforms that includes the specific brand. Secondly, using the data collected by social network platforms, it will be possible to evaluate the impact of the strategy on existing customers, extract the structure of social networks, and target new potential customers. As such, the strategy takes advantage of the trend indicating that online consumers trust their friends on social media more than the advertisements displayed by business organisations (Katona, Zubcsek and Sarvary, 2011).

6.1.1 AIDA Model

Attention

The objective of this step is to create awareness of advertising aimed at the target audience. With the use of GPS technology, telecoms companies can track the location of their customers. Thus, when they are near a digital screen, for example, at London bus stops, a targeted advertisement can be displayed.


Figure 14: Example of digital display at London bus station.

Interest

The next step is aimed at stimulating interest in the advertisement. The use of GPS for displaying the advertisement will ensure that existing customers are targeted. Thus, by displaying the logo of a brand, such publicity will likely attract the interest customers.

Desire

Obtaining the desire of the customer is likely the most challenging aspect. To do this, the advertisement might offer motivation related to personal identity, by setting up a campaign that enables consumers to adapt their personal preferences. Research indicates one of the reasons for people engaging in brand-related content as being self-expression (Muntinga, Moorman and Smit, 2011).

Action

The final stage of the AIDA model consists of persuading customers regarding the ‘call to action’. The idea is to offer a simple way for customers to freely express their personal brand through the campaign, thereby persuading them into the creation of user-generated content (Burmann, 2010). For example, the use of a set of pre-generated artistic images that represent a range of personalities, and in which customers can see their specific personality being reflected.

6.1.2 Metrics and Implementations

The final part of the strategy comprises the collection of data. The data will be used to take advantage of social media measurements, to evaluate the effectiveness of the strategy, and to extract online communities involved with the brand. In this way, it is possible to firstly gain an understanding of the efficacy of the marketing strategy on existing customers, using ratios such as the activation of the advertisement and the creation of new content. Secondly, the process will provide an understanding of the existing customer communities. Through the use of visual graphics software such as GEPHI (Gephi, n.d.), and the model created by Girvan and Newman (2002), it is possible to understand the structure of these communities. Moreover, the evaluation of social media metrics such as network structure and social roles (Peters et al., 2013), will help the identification of potential customers to target who are strictly related to the existing users.

7. Conclusions

Social media technologies have drastically changed the interactions of telecommunications companies in the UK with their stakeholders. This report carried out an extensive literature review on the background of the telecommunications industry in the UK, followed by a discussion of the emergence of social media tools such as wikis, instant messaging, social media platforms, and the use of big data, alongside its ethic concerns. Using the TOE framework and business drivers, the report then analysed the adoption of these technologies. Moreover, innovation issues pertaining to social media technologies, as well as future trends, were also presented. From the innovation analysis and recent changes in the telecommunications industry, the impact that these technologies have had on the industry was analysed. Finally, according to the findings of the impact of these technologies and the trends analysed in the research, the report suggested a strategy for improving external business performance, and for improving the communication between telecoms companies and their customers and other stakeholders.

As explained in this report, smartphones are currently the first device used for connecting to the internet. Moreover, mobile phones make it easy to access applications, which are easy to use and offer a wide range of services. WhatsApp, for example, makes it easy to share information through instant messaging. Furthermore, as mobile data speed becomes faster, voice applications will likely become more popular and replace traditional phone calls. With the development of this environment, it is possible then to make two considerations. Firstly, the reduction of use of traditional messages and phone calls does not pose a threat to telecoms companies, as can be replaced by the introduction of new technologies and the consequent increase of prices in plans. Secondly, the replacement of traditional messages and phone calls through social media applications, could replace the need of a phone number, hence the use of a physical sim. Therefore, it is possible to consider that the increase use of social media platforms and application, can pose, to telecoms companies, a threat of identity. For example, telecoms companies could shift to data-only plans and the establish the use of virtual sim, as seen with iPads (Apple, n.d.). Subsequently, customers will be able to switch between different plan week by week according to the cheaper offer. Thus, this situation will probably create a new ‘cyber migration’ effect in the telecom industry.

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