The global tsunami of youthful preoccupation with Twitter, Google, Instagram and Facebook or as a young Singaporean characterized it ‘TGIF’ has rollicked telecommunication operators across Europe, Africa and Asia who are watching their slow-cooked banquet eaten by uninvited guests.
The year 2013 marked the first time that global spend on traditional operator messaging services, including SMS and MMS regressed. Correspondingly, the ascendanceof OTT messaging services, such as WhatsApp and WeChat, will cause a 20% decline in global operator messaging revenue by 2017, say pundits.
Telcos are bearing up under the cruel irony of their network becoming commoditized, and all the while, over-the-top (OTT) players ride on the telecommunications backbone, raising billions in revenues in an exponentially shorter time frame. Telcos also pay a heavy cost for being‘regulated’by national administrations. In contrast, the new ‘social’ kids on the block gambol the cyberspace unfettered, barring the occasional nod to subscriber privacy.
While the US government gleefully rings in taxes from the new media players, elsewhere, policy-makers and regulators are recognizing their predicament, as the traditional revenue sharing model of telephone and data traffic generated within national boundaries begins crumbling and the new currency for Facebook advertisements, Viber stickers and such like are realized offshore. “OTT success and innovation means that revenues are going overseas”, says Siddhu Singh, chief corporate and operations officer of Celcom Malaysia. Indeed, access to premium content has replaced pricing as the primary regulatory objective, a panel discussion discovered at ITU World Telecom 2013found. “Something will need to be done soon”, worries an East African regulator. “Are we regulators here to protectthe investment of providers who are too big to fail?” demanded another African regulator of the speakers.
While policy-makers ponder the model for making OTTs pay their way, there is growing evidence that big data is coming to the rescue of the network operators, in more strategic ways than stemming churn.
Rob van den Dam, global telecommunications industry leader of IBM’s Institute for Business Value in Amsterdam, points out that telcos, or more fashionably now, Communication Service Providers (CSPs), are at the heart of their customers’ digital universe. “They are sitting on a gold mine of digital data that enables them to understand their customers at an unparalleled level,” he says.“It is a key corporate asset, much needed in the current competitive landscape. Big data provides the opportunity for CSPs to become more competitive and reverse recent declines in revenue and profit levels”.
Big data is triggered each time a customer makes a call, generates a text or browses the web. The telco is in the privileged position of knowing who called whom, which websites were visited, which apps were downloaded and most crucially, where the customer was when the phone was used as well as his or her current location. The telco is also privy to information like did the call went through, was it dropped or interrupted, how fast did the song or app download and what was the response latency during the game that was played?
The bulk of telcos are still pre-occupied with data pipes, and have treated the metadata of voice, text and messaging as no more than TCP-IP traffic. However, there are a few who are recognizing their unique position to exploit and offer it to other companies, be that in retail or sports.
Examples already emerging outside the US include Everything Everywhere in the UK, which combines web logs and mobile geo-location during football matches to give an accurate picture to sponsors of what fans are doing and looking at.Telefonica’sSmart Stepsin Spain, meanwhile, is tailored to the retail, property, leisure and media sectors and can, for instance, help a retailer analyse footfalls in any specified location and observe the catchment of any specified area. The data used is anonymised and aggregated to extrapolate insights enriched with market data from GfK, a market research partner.
Stateside, Verizon’s Precision Market Insights promotes unprecendented360 degree views and behavioral insights of target audiences. In a nod to privacy concerns, it qualifies its enthusiasm with the proviso that customer information is provided solely on an aggregated basis as a means to enhance the overall media experience and dialogue between growing businesses and consumers.
After sitting on the goldmine of data, the US’s most trusted communications provider is also setting the pace for usingmetadata to determine where they put their towers, change their frequencies with a view to provide the best network. In the words of a Verizon executive, “We eat our own dog food”.