Why Drone Deliveries Are Important To Telcos

The idea in a nutshell :

  • Google are now offering commercial drone product deliveries.
  • Telcos are under pressure to cut costs and have recently been rewarded for doing so.
  • Drones offer short term benefits to tier 1 telcos, starting at the network equipment level.
  • Drone deliveries can also raise sales and reduce costs in online channels.
  • Offering a stepping stone and the chance to cut the really expensive stuff that will have to go in the end anyway — retail stores.

A Google drone delivering a package.

Google drones get the go ahead in Australia. Source.

Drone deliveries have started in Canberra.

Google’s announcement that they now have CASA’s (Civil Aviation Safety  Authority) endorsement to trial commercially available drone deliveries in Canberra is significant news. Google beat Amazon to launch the capability although the latter won’t be far behind.

When big companies like Amazon and Google do things like this, it’s sometimes worth thinking about their motives. For example, Google is building self driving cars — why? In my view, it’s probably an attempt, at least in part, to keep people online for a couple more hours each day.

Likewise, it seems reasonably clear that they’re investing in drones because they believe people will buy more things online when delivery is faster and cheaper.

How could drones help phone companies?

First, drones can help with some of the less glamorous aspects of the telco business. Reducing number of climbs required, insurance costs, and the time taken to perform inspections. The HBR suggest 30% of climbs could be eliminated altogether by drones.  They can also provide improved coverage at high population events like sporting meets.

Some telco sales are generated online and some are retail. I sincerely doubt that Optus, Telstra or Vodafone currently sell more than 25% of everything in their online stores. Most telcos I’ve worked  with want to raise the proportion of sales that take place online. Faster deliveries could well improve online sales for telcos as much as they would for Amazon, and drones are capable of providing just that. One analyst house claims that drone deliveries may result in $6.3 billion of digital revenue.

Drone delivery vs traditional delivery.

Amazon drone deliveries beat all other delivery options in both cost and time. Source.

For example, 70% of Australia now buys SIM Only plans. SIMs cost a couple of bucks each and are easily canceled if they fall into the wrong hands. They’re also extremely light. Considering these facts, SIMs seem like the ideal product to deliver by drone.

Drones can quickly reach more remote areas of Australia too, helping telcos reach more customers at lower prices. Add that to the idea that drone deliveries will reduce courier delivery fees by up to 90%, as believed by one Russian telco.

With some improvements, drones can help telcos provide a fully digital experience

Telcos are going to have to invest more in the online avenue anyway. Moving to all online orders is something the phone companies are going to have to face sometime soon. The eSIM will replace any need for shopping mall outlets. What drones offer telcos is a way to reduce costs and anticipate the totally digital experience they’ll have. The best estimate of the rollout of eSIMS is that it follows the same sort of adoption curve that the nano sim does.

Digital capabilities would have to be updated, too. Retail stores provide a human front to telcos. They answer questions real people who don’t care about what phones or plans have. Providing a digital way to do the same thing is a challenge they’re going to have to face.

My own point of view, having gone into retail stores regularly and asked questions the answers to which I knew as an industry insider, is that people will be better served by audible digital interactions customers can keep a record of.

Final words Telcos do not seem at all interested in drone deliveries

All of this said, there are what I’d describe as ‘low levels’ of interest so far, from the telcos I’ve spoken to. (Total disinterest) I discussed the idea of drone deliveries with a number of telcos, most of which expressed a sincere lack of interest in any form. But then again, this is the most common response to any new idea in the telco business.

We can’t expect telcos to drop everything and turn to drones on the announcement of a fledgling capability in the ACT – which is what CASA have signed off. Drones do seem like an important part of the inevitable progression towards online sales for telcos. They also seem like a useful way to cut a lot of costs and delay out of processes involving physical SIMs while they’re still around.

I wonder if a market leader like Amaysim, who already have 3-hour SIM delivery in metro areas, might be the sort of company to implement drone deliveries in Australia.