Telecoms firms need to move fast to reinvent themselves

The world’s major telecoms operators are seeing their business squeezed by new firms, many of which offer services that make use the operators’ networks, but bring little or no benefit to the operators themselves. In areas where networks once made most of their money, margins continue to shrink. In the face of this competition, telecoms firms need to move fast to reinvent themselves and grow their profits.

While the future may seem bleak, the established telecoms operators have two trump cards up their sleeves: saleable Big Data and customer trust. If they play them in the right way, they’ll help transform the companies back into the industry’s innovators.

Falling Behind

Once upon a time, the world’s telecoms operators were nimble start-ups, able to move fast to take advantage of changes in the market. But as time has gone on and they’ve amassed large and disparate systems to handle all their data, their agility has been hampered. The systems on which they built their initial success are now holding them back, and a new generation of firms, unencumbered by such a legacy, has come along. These new organisations have stolen away and developed what was previously core business: the likes of voice calls, which now look almost archaic compared the flexibility of Skype and FaceTime, and text messages, which are losing ground to faster (and cheaper) internet-based instant messaging.

The world’s telecoms operators need to do something to keep pace with the new competitors that are threatening to overtake them. And while this may seem like a tall order, the telecoms firms have two unique strengths that they can use to transform themselves back into the innovators of the industry. The two key things are their access to saleable, proprietary data and the deep trust of their customers.

Saleable Data

Telecoms firms have vast amounts of data available to them, much of which is unique to telecoms and not available elsewhere: handset locations and call detail records (CDRs) are good examples. But such information is currently only used to support business-as-usual functions within the telecoms firms – location updates are primarily used to support mobility, while CDRs are used for billing. However, the same data has potential value to other organisations, which makes it a saleable asset. While there are significant technology issues to be considered when it comes to selling this data on a large scale, telecoms firms are already familiar with storing, searching, aggregating and disclosing key network information to law-enforcement bodies, for example. Packaging it for commercial exploitation is merely an extension of this.

The problem is that much of this data is considered personal, and making use of it is guaranteed to engender feverish caution within the telecoms firm, and to raise concerns among customers over privacy invasion. But the telecoms firms need not be scared of exploiting this data for legitimate purposes, and they’re in an incredibly strong position when it comes to persuading consumers to allow them to use and sell this data.

Deep Consumer Trust

Stories of people getting their credit card details stolen in online scams are ten-a-penny. Conversely, try to remember the last time you heard someone complain that a call was fraudulently charged to their mobile account. In all likelihood, you’ll never have heard such a story, because tight regulation around telecoms operators means that their security when it comes to authentication, authorisation and accounting (AAA) is superb. People trust their telecoms provider with a lot of personal information, where many are inherently suspicious of Facebook, Google and others when it comes to what they do with personal data. The sort of customer trust that the telecoms operators enjoy takes years – decades, even – to build up. The new companies that are threatening them simply can’t compete in this area, even the ones that have become household names. They’ve not been around as long and can’t point to the same strict legislation or regulation with which they have to comply.

In making their case for selling people’s data, telecoms firms need to portray themselves as the established, trusted and secure entities that they are: a ‘We won’t let you down’ message. This on its own may not be enough to persuade sceptics, but it should form the backbone of a convincing argument to win over the customer.

Persuading the Sceptics

There are two further strands to an argument that’ll persuade customers to allow personal information to be used or sold. First, that when a lot of personal data is aggregated and anonymised, it isn’t an invasion of any one individual’s privacy. And second, that if customers allow at least some of their data to be sold or used by the telecoms companies, they and their partner organisations can offer them more personalised services from which they as a customer will benefit. While many in the industry remain cautious about the potential political damage of privacy infringements, there is a growing body of analysts forecasting the end of objections to using private information as individuals become steadily more accustomed to the beneficial uses to which it can be put.

Much of the value that telecoms firms can derive from customer data relies on that data being aggregated and anonymised. For example, your handset location indicating you’re on your way to the airport is of little consequence or value to the airport authorities from an operational point of view. However, knowing about a movement of large numbers of people towards the airport is of great value to them, because they would know to open additional security lanes, or the overflow car park. Similarly, the Highways Agency or trunk road operators would have an interest in this data showing sudden mass movements: it could be combined with their own traffic flow information to help ensure the smooth flow of traffic by adjusting variable speed limits or switching on motorway slip road traffic lights.

The key thing operators need to impress upon customers, therefore, is that the use of private data, when combined with hundreds or thousands of other people’s private data and anonymised, doesn’t infringe on their privacy. It’s much the same as someone answering questions from pollsters on the streets: they’re sharing personal information (their opinion), but it’s done anonymously with no way of linking information back to the individual.

Effective anonymisation would require a common set of standards for telecoms operators to adhere to, most probably enforced by government. This is something also recommended by delegates at the ICT Knowledge Transfer Network’s 2011 A Fine Balance: Location and cyber privacy in the digital age, where over 80 per cent felt government intervention was required.

While there’s much value to be gained from anonymised, aggregated data, there’s also a growing expectation of more personalised information and services, particularly among the so-called Facebook generation, who have grown up sharing large amounts of their lives on social networks. Many people expect information to come to them, rather than having to look for it. To help companies provide this kind of service, telecoms operators could sell data: real-time handset location is one example. The partner companies could use this to send location-specific offers and information. While the prospect of having their location sold for marketing purposes may alarm some , many would love to get a message when they arrive in a new city telling them about a place they can get a good meal that doesn’t cost the Earth.

The key thing is to ensure that customer trust is not damaged, and this means putting them in control. But asking every single subscriber for permission every time the telecom’s operator wants to use or sell their personal data is impractical, because the users would simply be bombarded with requests. Instead, what the operators should do is offer services that will be of interest to subscribers, to which they can choose to sign up in return for their data being used. The sign-up process should offer two options: an ‘I agree to this particular service and use of my data’ or a perpetual ‘I agree to use this and all future services you offer, and for you and your partners to use my data as required to provide them’. This puts the customer in control: those who are happy to share pretty much anything in return for operator services can sign up once and forget about it, where more cautious users can be more selective with what they allow their data to be used for.

Further Examples of how Telecoms Data can be Monetised

As well as the examples we’ve looked at above, there are other potential buyers queuing up to get their hands on telecoms operators’ data. As well as the Highways Agency, other transport operators such as Transport for London (TfL) would have an interest in knowing about crowds of people around the various networks it runs. Do a growing number of stationary people near the gate-line at one station indicate a fault with the ticket barriers? Or when there’s disruption, such as a broken down train, knowing where the crowds are building up as a result can be an enormous help in planning how to mitigate the problem. While handset locations won’t be the only data the TfL operators have at their disposal, it’s a useful additional source, and does not require major infrastructure outlay on the part of the telecoms operator. For the transport companies, more data can lead to faster and better decision-making, and, by extension, better service delivery.

Shopping centres would also have a keen interest in monitoring handset movements through the complex. Again, one individual’s route is of little interest, but the aggregated patterns of movement between shops and different areas of the centre are of great value to those who operate it, as well as those designing new centres. Knowing how people move around the complex will enable planners to improve the design to optimise the shopping experience and maximise people’s spend. Only the telecoms operators are able to provide this level of insight without significant infrastructure spend, as many of them are already scattering small cells with localised coverage around shopping centres. As well as the initial purpose of improving coverage, it enables them to pinpoint handset location more accurately.

Conclusion

Telecoms firms are facing a strong challenge to what have traditionally been their core areas of business. To fight off this threat, they need to take advantage of two things they have that none of the new competitors can offer: saleable proprietary data and deep consumer trust.
While there are technology issues to overcome to do so, there are numerous examples of how telecoms operators’ proprietary data could be used or sold to other firms. But using or selling customers’ private information is likely to raise concerns. To allay these, the telecoms operators need to make a big deal about how strongly regulated and secure they are – something that many of the newer competing firms can’t boast. Telecoms operators also need to engage with customers to highlight the benefits they can enjoy if they allow their data to be used or sold, while at the same time offering them the option to protect elements they wish to keep private.

By giving out a ‘Trust us, we haven’t let you down before, and we won’t do so now’ message, the telecoms companies can portray themselves as the guardians of customer data, acting with their customers’ best interests in mind. If they can make this argument convincingly, and then highlight the benefits that customers stand to enjoy as a result of their data being used or sold, the telecoms operators should be able to convince even their most privacy-conscious customers to allow them to sell or use their data.

If they tread carefully, playing their two trump cards will enable the world’s telecoms operators to reinvent themselves as the industry’s innovators, opening up lucrative new revenue streams.

John Boniface is a Telecoms Consultant at IPL


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