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Could Data Be the New 'Currency'?

Ray Le Maistre

The debate about the impact of "big data" on our personal and working lives has been raging for a few years -- now Telefónica wants to take that debate in a new direction with a discussion about whether the data that is being collected, stored and analyzed could act as a new form of currency.

The idea was posited Wednesday in Brussels at a summit on the topic, when the Spanish telco unveiled the results of a survey of more than 6,700 "Millennials" (people aged between 18 and 30), which found that the vast majority of that demographic saying that they're aware of the data being collected about them and that they feel in control of their personal online data. (See Millennials Get Big Data: Survey.)

At the same time, of course, they're also concerned about privacy and security, with more than 90% of those surveyed "taking active steps to protect themselves online."

Given those levels of awareness, and the growing volumes of data being created each year, Telefónica SA (NYSE: TEF) is (rightly) curious about the role of data in the future, leading it to sponsor a report on the topic, Data: the new currency?

The report raises a question of whether "data can be the basis of a new transactional relationship between people and companies in which both sides benefit from new products and services and increased economic growth."

That's a question that should be of interest to all communications service providers (CSPs), given that they have access to vast volumes of data about their customers and networks and are desperate to find new roles to play in a digital society (roles that will generate new revenues, naturally).

Need to know more about big data analytics and its impact on communications service providers? Then check out the agenda for Telecom Analytics World 2014, November 11, at the Westin Peachtree Plaza, Atlanta

And it's interesting that in a time when the word "open" is being used so often as we examine the future network architectures being considered by CSPs, that the report also notes:

    In order to take full advantage of the potential of big data, it is essential that the vast amounts of data generated by organisations is made available in a usable form as open or 'liquid' data. Open or 'liquid' data needs to be machine readable, accessible to a broad audience at little or no cost and capable of being shared and distributed. According to a report produced by McKinsey in 2013, improving use of open data in seven sectors -- education, transport, consumer products, electricity, oil and gas, healthcare and consumer finance -- would produce $3 trillion (€2.2 trillion) in economic value.

It could be argued that data is already a loose currency, but one without a set exchange rate: Information is constantly shared by individuals, corporations and governments in return for some that has a perceived value. And who hasn't received a "reward" for sharing information in the form of a survey response of one sort or another?

What's being suggested here appears to be something different, though, something with structure. As CSPs consider their big data analytics strategies, and figure out a way to "monetize" the end results, maybe they need to think about non-traditional ways of gaining value from their data, especially if the resulting new methods chime with the "millennials."

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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Mitch Wagner
Mitch Wagner
10/20/2014 | 6:57:47 PM
Already partway there
As indicated in the article, we're already using data as currency -- or barter goods. We trade our data to Google for access to its sophisticated search and email engine, to Facebook for publishing, and so on. 

There have been plans in the past for allowing users to trade data for a price, but those platforms fizzled. Why buy a cow when milk is free?
10/20/2014 | 2:30:01 PM
Re: Not Data, Capacity
OK -- Not at all relevant to the point I was making, but fine.
10/20/2014 | 1:43:07 PM
Re: Not Data, Capacity
"Great point, Attochron. The established law of diminishing returns would hold that there's an inverse relationship between data volume and value, as in, as more data is generated, the value of each data point diminishes. But if your business is focused on moving those data points around, that particular law doesn't hold (although there are other diminishing returns in play)."

Not if your company owns that part of the utility of the big data set and then your company will be more focused in mining data and optimizing it irrespective of data points because then you will be considering entire stacks of data and not a single point.
10/20/2014 | 1:40:17 PM
Re: Data Monetization
Data mining companies are springing up pretty quick and they need data scavenged from big data sets after the parent company has finished using them. The onbly thing is that data does not lose its resale value if it is sold in the right terms and in the right markets.
10/19/2014 | 2:08:22 AM
Data Monetization
I know the "Data is the New Currency" is a catchy title, but my belief is that simply the ability to monetize data is what is important.  There is a need for security, proxies, and preference control to allow a better relationship between companies and private citizens.

Our recently developed report Data as a Service (DaaS) Market and Forecasts 2014 - 2019 covered the need for "data mediation" including AAA, security/privacy controls, and more.

There is too much to discuss in a blog posting.  I am open to anyone that wishes to take this further offline.
10/16/2014 | 4:04:46 PM
Re: Not Data, Capacity
Great point, Attochron. The established law of diminishing returns would hold that there's an inverse relationship between data volume and value, as in, as more data is generated, the value of each data point diminishes. But if your business is focused on moving those data points around, that particular law doesn't hold (although there are other diminishing returns in play).
10/16/2014 | 4:02:39 PM
Re: interesting if it gets formalized in any way
jabailo, interesting thought and great direction on formula!

Maybe we create "micro" marketing - value tied to the individual applied to the potential market and of value to sellers in that market?
10/16/2014 | 3:21:37 PM
Not Data, Capacity
I agree that the data is worth something but it has a shelf life and it gets a new value every time it's retransmitted which is arbitrary in the sense that the new customer will value it differently based on their purposes.  What doesn't change so quickly is the value of the *capacity* used to transmit the data. Capacity is the new currency. The problem is that unlike the Fed new capacity can't be 'printed' as cheaply relative to the value (i.e. so many pennies it costs to print a new $100 bill). So as long as networks are capacity-constrained the less incentive there will be to make capacity the currency. But someone will figure out a new paradigm and when they do the carriers will turn into (or be bought by) banks. Cheers! 
10/16/2014 | 10:31:57 AM
Re: Interesting if it gets formalized in any way
If you can prove that by knowing factor X about an individual, and you can provide an association with the sale of some class of product, then data about X has some % of the value of product P depending on how strong that association is.

10/16/2014 | 6:46:30 AM
Re: Interesting if it gets formalized in any way
Great write-up of what sounds like a very interesting report.

In that trade-off between leveraging data analytics on the one hand and privacy on the other, it's key to remember that data collected with the user's willing participation and engagement has much higher value than higher level meta-data. Knowing that 1,000 people have looked up "Ebola" has nothing like the same value as understanding why they looked it up. 

As Telefonica and other telcos look at the the loyalty that consumers show to the likes of Facebook, Google et al despite misgivings about the way they use their data, attaching a value to that data and sharing some of that value with consumers is an obvious way to think about differentiating.
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