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Telcos 'Asleep at the Wheel' on Big Data

Ray Le Maistre
11/3/2014
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Communications service providers are "asleep at the wheel" when it comes to analyzing and monetizing the data they have at their fingertips, according to an industry expert who has worked at the cutting edge of telecom analytics developments.

Mike Sherman, the former head of L!ving Analytics, Group Digital Life, at Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY), told conference delegates at the recent Broadband World Forum in Amsterdam that telcos are "sitting on a goldmine," but that many have yet to figure out how best to capitalize on their information assets.

Telcos could make real gains in generating revenues from the information they hold by developing partnerships with "transaction specialists" such as credit card companies and banks, in order to source and make use of transaction data, instead of just relying on the demographics information that is their default approach, says Sherman.

Most of the data that telcos are trying to monetize is "demographics, and that is limited in its use," Sherman noted. "If I was looking for third-party data, I would be wanting to talk to transaction companies, because they are the ones who know what people buy, not just where they shop."


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.


Sherman added that telcos need to think about their customers and their approach to using data in a different way: "We need to get away from using data behind people's backs," he noted. "If you offer people the opportunity to have a better experience and receive the information they want," then they'll opt in to receive the information and services that drive revenues, such as ads.

Telcos are desperate to identify and develop new sources of revenues, so getting to grips with big data analytics and figuring out business strategies using new tools and systems is high on the agenda of many service providers, which have been delving into the world of data warehousing and analytics for several years already and finding ways (mostly) to cut costs. (See Telcos Warm to Big Data and Big Data Saves T-Mobile Big Bucks.)

All this month, Light Reading will be taking a close look at analytics developments as they relate to communications service providers, as our very own Sarah Reedy explains in this video blog: Defining Big Data & Telco Analytics.

For more insights into the world of big data and telecom analytics, see:

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

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MikeP688
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MikeP688,
User Rank: Light Sabre
11/6/2014 | 1:34:57 PM
Re: Opportunity
I hope for the sake of us all that your contention will be borne out by the actions at hand.   I will retain my scepticism in the meantime as we assess the evolution that is before us which we deliberate consistently here.  
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
11/5/2014 | 3:38:58 PM
Re: Opportunity
Telcos have a history of ignoring these types of opportunities. Consider the rise of social networks such as Facebook. Telcos could have owned that space. They already know the people who are your friends and family -- they are the people you call and text.
DHagar
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DHagar,
User Rank: Light Sabre
11/4/2014 | 9:05:04 PM
Re: Opportunity
MordyK, I am happy to hear that!  I am glad to be wrong in this instance, because I have always believed it is in the context of how it is presented and used.  That is great news and I change my vote to your column on that basis!
MordyK
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MordyK,
User Rank: Light Sabre
11/4/2014 | 8:52:47 PM
Re: Opportunity
@DHagar I wrote up a business model that disagrees with your notion. While I agree that the current data is limited, if designed into a platform with additional data it can act as the ultimate context platform.
MordyK
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MordyK,
User Rank: Light Sabre
11/4/2014 | 8:50:44 PM
Re: Opportunity
Yodlee is a perfect example about the user's right to share their own bank data, and the same applies to telco's. While your comments are valid for opt-out, IMHO they are irelevant to an opt-in data platform.
MordyK
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MordyK,
User Rank: Light Sabre
11/4/2014 | 8:47:25 PM
Re: Opportunity
@mikep68 I have been arguing for a long time that privacy is actually improved with a carrier model, as current apps need to listen in to the user's location the entire time, whereas the carrier can limit sharing the data to when its actually needed. Smart and intelligent sharing!
MordyK
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MordyK,
User Rank: Light Sabre
11/4/2014 | 8:44:47 PM
Re: Opportunity
IMO there are a few obstacles to leveraging and monetizing this data:

A: the data is siloed in difficult to use data structures, so the need to migrate the data to a more flexible architecture is a prerequisite.

B: Carrier's need to stop thinking like telco's and put a priority on data gathering. This includes getting the RAN side of the equation to take in the requirements of the data side.

C: Remove the caution of privacy and embrace the age of apps and data, all while actually arguing that its improving privacy. This means that the legal culture needs to change from the flat "no" to a more flexible "this is how it can be done" approach.

To date carriers have simply paid lip service to data by recycling existing internal API's and exposing them to 3rd parties. but I believe that what's truly required is to embrace data as a business stream and independent unit, in the spirit of Mr. Sherman's comments.
DHagar
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DHagar,
User Rank: Light Sabre
11/4/2014 | 8:13:46 PM
Re: Opportunity
James_B_Crawshaw, you present an excellent perspective on the telcos' value versus other data sources.  Very true, they do have their space, but it is limited.  They would do well to effectively utilize the data they have and continue to find the best value proposition.
James_B_Crawshaw
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James_B_Crawshaw,
User Rank: Blogger
11/4/2014 | 6:39:14 PM
Re: Opportunity
It is the banks and credit card companies that are sitting on the goldmine of consumer data, not the telcos. Fortunately, privacy laws in most countries prevent the payments processors from selling your personal data. So they only sell the data to marketers on an aggregated and anonimized basis eg "Top Tier Auto Spenders" have reduced their spending on hummus by 50% this month in Baltimore.

Though they don't disclose how much money they make from selling this data, "Consulting and Research fees" is the main contributor to Mastercard's "Other revenues" (alongside fraud services and other stuff) which comprise 12% of group revenue. For Visa, "Other" is just 5% of group revenue (they don't mention what Other is comprised of). 

The data that telcos have is not quite as interesting as card purchase history but it has some value. The monthly spend is a useful indicator of wealth. Location history is potentially useful. But as they are bound by the same privacy laws the data needs to be anonimised and aggregated. So it can yield useful information about phones being stuck in traffic jams (eg for TomTom's LiveTraffic). And potentially operators might be able to sell an anonimised generic web targetting filter such as high ARPU and low ARPU customers. But I doubt it will generate as great a proportion of revenue for telcos as it does for credit card companies and even then we are talking single digit percentage terms. Browser cookie data is still far more valuable. 
DHagar
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DHagar,
User Rank: Light Sabre
11/4/2014 | 1:29:55 PM
Re: Opportunity
MikeP688, you make valid points.  You are absolutely correct about the potential for intrusion of private data, which needs to be protected.  My thoughts in what type of data was more along the lines of consumer/market trends for consumer segmentation.  This would be aggregate consumer preferences/buying trends integrated with demographics data.  The possible benefit of this to consumers would be more targeted goods and services that meet our interests.

Certainly, more intrusion or increased personal data exposure would not be a plus.
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