Next Generation Telco’s are already on the move. They have realized that they need to change from mere connectivity providers to become enablers of unconventional and disruptive business models to make a move in the saturating and competitive markets. Many operators have already initiated their attempts to switch from ‘dumb’ to ‘smart’ pipe providers.
We are already seeing initiatives in Telco world like Telefonica partnering with Nielsen for market research, Flytxt in Bangladesh launching an ad market place in partnership with Robi and joint venture between T-mobile, Verizon and ATNT IRIS for mobile wallet initiatives. As you can see the transformation is not just limited to developed markets, operators in emerging markets too are now facing the pressure of stagnating revenues, margin pressure and customer retention, which would push them to go in pursuit of ‘smart pipe strategy’.
‘Smart pipe’ enables new business models
First question is what do operators possess beyond spectrum and communication channel. Operators own multiple touch points and all the transaction records of consumption of the most ubiquitous/personal device in consumer’s life. The next big question is how operators can turn to unconventional business models? How they can become partners to market research companies? How they can supply intelligence for enabling third party services? How can they facilitate social communities and collaboration? How do they compete with other digital advertising and publishing companies? The answer lies within them; it is the ‘Big Data’ available with them. The success lies in how they will get smarter in utilizing their unique assets – subscriber insights and touch points to make timely business decisions and build these new business models.
Need for CXO’s to make ‘smart decisions’
CXO’s of Telco’s will have a more challenging environment for decision making. In addition to the usual challenges of demanding consumers, cut throat competition, regulatory pressure etc there are many more dimensions evolving in terms of three pillars of any Telco business – customers, products and capacity/bandwidth.
Increased adoption of smart devices: There is an increase in the adoption of smart devices like smartphones, tablets, etc. People are likely to prefer accessing services on the move, which gives opportunities and challenges for Telco’s. Ericsson predicts over 50 billion smart connected devices by 2020 which will increase the A2A interactions exponentially.
Explosion in customer touch points: Users have multiple devices and multiple connections to switch between. Customers are communicating and transacting through multiple channels like voice, SMS, Apps, OBD, WAP Push, so on.
Dynamic customer profiles: Customers were used to be identified by their static profiles of mainly demographics data. Next came the inclusion of their usage behaviour. Now lot more dimensions are being added to that like their social interactions, location data, online spending patterns, etc. Operators know a lot more about their customers now, but how to make use of that to create value for them without violating any privacy norms is the challenge for operators going forward.
Broader product portfolio with shorter lifecycles: With the onset of App stores and entry of OTT, Telco’s have products more from partners than their own. They have to identify right products to create that compelling service portfolio for revenue optimization and customer value creation. Most of the products especially in the VAS spectrum are having short life cycle hence recommending and encouraging their contextual usage is critical. It is expected that there would be millions of products on display in a Telco’s menu in the next five years and it becomes a challenge for them to promote these products and increase their uptake.
Scarce and expensive capacity: The advancement of 3G/LTE/Wifi technologies would make the capacity more expensive. With the multi fold increase in connected devices and customer base, the capacity will be a scarce resource for operators given the expected ten-fold increase in mobile traffic over the next decade.
Trust based relationship: Relationship between operator and subscriber is also evolving from pure supplier of goods to custodian of identity, Money and interest. Operators are no more a communication service provider. They are evolving into multi-vertical service provider or at least enabler.
‘Smart’ decisions bank on ‘Big Data Analytics’
It is proven beyond any doubt that for right decision making, Telco’s need Smart analytics which in turn need managing 4V’s of Big Data available with the operators – the volume, velocity, variety and veracity. The souce of information for CXO’s would be mostly the data stream including billions of customer profile updates and daily transactions happening through the millions of touchpoints.
A technology which could enable operators derive insights, recommendations and actions coming out those big volumes of data is going to be an inevitable component in the business architeture for Telco’s in the coming decade. Our next blog article will take a deep dive into Big Data Analytics dimension in Telco’s and the desired analytics architecture for leveraging it.