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What Privacy Means for Mobile Operators

Nachiket Deshpande

Privacy is as hot a topic as ever. While consumers are sharing more and more data via social networks, and the Internet of Things begins to permeate their every day lives, there's an undercurrent of concern.

Studies have shown that consumers are more receptive to companies using their data in return for some type of tangible benefit to them, as long as they have trust in how that data is being utilized. Fortunately, as customers are more open with their data, most mobile operators are making sincere efforts to comply with privacy laws, and protect the privacy of their subscribers, even as they use it to create new revenue.

For example, some operators offer additional "perks" to subscribers that allow the use of their data as an incentive. In all of these cases, operators are choosing to be upfront and open about their intentions to use their customers' data, allowing them to choose whether or not they want it to be used. For operators, this is where monetization gets easier. Operators such as Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T), Telenor Group (Nasdaq: TELN) and PT Indosat Tbk are each starting to implement a business model that relies on the monetization of data.

In the case of Verizon, though the company was clearly profitable, it wanted to add other avenues that would make it possible to expand its presence and generate more revenue. Part of that strategy drove the decision to acquire AOL and Millennial Media as a way to provide a premium experience for customers across all devices. The deal also ultimately gives Verizon access to the advertising capabilities of the AOL and Millennial Media platforms, which it plans to use as a way to tap into addition revenue streams from digital content and advertising. AOL has also started to promote its mobile push with announcements related to data-driven ad services that offer more customized and targeted ad offerings.

Similarly, AT&T has moved into big data in a big way. In 2013, the company annouced it would offer subscribers in Austin, Texas, a discounted price for high-speed Internet -- by all accounts a tangible benefit. The only thing subscribers needed to do was agree to allow AT&T access to their Internet usage data across the web so that the mobile operator could serve them targeted ads. As this offer continues to develop and expand to new areas, it will be interesting to see how many subscribers take AT&T up on this proposition.

Another recent example is Telenor's acquisition of Tapad. The lesson learned here is that mobile operators are recognizing that data is quickly becoming a currency in today's digital world and many are starting to take the steps needed to become successful in today's "always on" economy. Mobile operators have a massive asset: real-life, high-quality data. This valuable data provides a way for them to keep up and profit, as many operators continue to face pressure to grow in areas beyond their core business services. Delivering unique intelligence -- including device location and user behavior -- subscriber data enables mobile operators to goes beyond the capabilities that have been available up until now.

As further evidence, Indosat, a member of Ooredoo , is also looking beyond its core communications services for additional revenue opportunities. The company recently partnered with Smaato Inc. , a major global mobile Real-Time Bidding (RTB) Advertising Exchange, to launch an Indonesia Mobile Exchange (IMX). They too wanted to build products and services in new areas, leveraging its network of more than 55 million customers. And by partnering with Smaato, they are able to create an exchange that allows local and global advertisers to provide targeted and personalized mobile advertising to Indonesian consumers, while also allowing both Indosat and Smaato to tap into a new revenue source, as Indonesia is expected to see extreme growth in digital advertising in the coming year.

But as US and international mobile operators start to implement new business models that rely heavily on subscriber data, understanding privacy laws is critical. The solutions they look into should be designed with privacy at the forefront, using de-identification, anonymization or others methods that make it possible for them to protect subscribers' personal information. Also, as mentioned above, providing opt-in/opt-out options -- whether just to inform or offer incentives -- will likely be better received, as they let customers decide whether or not they want to participate in sharing their own data.

Mobile operators have realized that the rich data they have on hand is very valuable. In fact, many already know that it is the key for them to unlock new revenue sources. As operators start to take more steps to implement new business models that utilize subscriber data, they need to strike the right balance between protecting privacy interests and creating value ad services for their subscribers.

— Nachiket Deshpande, Vice President at Cinarra Systems

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User Rank: Light Sabre
3/16/2016 | 1:42:06 PM
Discounts for data
We all knew this would eventually come to pass. How will mobile operators offer privacy and security while profiting from subscriber data? What happens after the first major mobile customer data breach?
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