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Telcordia: Telecom Needs More Marketing Savvy

ORLANDO, Fla. -- International CTIA WIRELESS 2011 -- Policy management technology is giving telecom service providers the tools needed to develop more customized and dynamic services, but using those tools well will require operators to think more like car companies, airlines and other consumer marketing organizations, says Grant Lenahan, VP of strategy for Telcordia Technologies Inc.

Speaking at Light Reading's Policy Management in the 4G Era conference held here this week, Lenahan cited several ways wireless carriers can create services for which consumers will pay extra, but he admitted in an interview afterward that service providers are often reluctant to go down the path of developing a range of differentiated services.

"What we are finding is an element of pushback," Lenahan said. "This is a new area for most telecom operators; they are not used to thinking about market segments."

But just as car companies sell many different models and airlines price the same seats differently depending on when they are purchased, telecom operators need to develop service packages tied to consumer demand and behavior that generate revenue beyond basic service plans or even tiered pricing. By targeting plans and add-ons to particular market segments, bundling apps or downloads with bandwidth, offering promotions or discounts to stimulate off-peak usage and creating impulse buys, wireless service providers can become more savvy marketing engines.

"We have customers doing this today, developing new services in less than day, so we know you can do this stuff," Lenahan said.

Too hard?
Operators who are resisting cite two issues: First, having many different service plans is technically difficult, and second, they are convinced consumers like things simple and won't accept a large menu of options.

"We can show them how to do this technically," Lenahan said. "It worries me more that operators think a limited choice of plans is what consumers want."

That kind of thinking stems from a limited view of how services are priced and sold. Too often, service providers think in terms of capacity-based plans when they could be more creative in their packaging.

For example, Telcordia has an Indian customer who is selling access to specific sites, such as Twitter Inc. and Facebook , because its consumers don't want to buy Internet access but instead want access to specific sites, Lenahan said.

Service providers can also sell specific content, such as movie downloads, for a fixed and relatively low price, if it comes with targeted advertising. The service provider then zero-rates the movie download for the consumer, but earns its revenue from the movie company through a split of ad dollars that are higher than normal because the ad is reaching a specific target market.

There is a way to convince consumers to allow their personal information to be used, anonymously, to deliver targeted information, if service providers build in protection for that information and to then offer subsidized content at lower cost.

"This can be a win-win for operators and consumers," Lenahan said. "If consumers know you are never going to release their specific data to anyone, and they are going to get discounts on what they want, they will be more inclined to give you their information. The carrier has then forced its way into the middle of the ad revenue stream by virtue of owning that information."

More push-back
Again, however, Telcordia is meeting service provider resistance on this business model.

"They think it's too hard," Lenahan says. "But it's a beautiful opportunity to take the moral high ground and still turn a profit."

The complex part of all this is figuring out how to factor in the things that influence what consumers are willing to pay for -- things like convenience, packaging and timing. That's where Telcordia hopes to sell its expertise.

Service providers in developing companies are adopting these kinds of pricing models more quickly, Lenahan said. He cited Telemar Norte Leste S.A. (Oi) in Brazil, which has developed a micro-segmentation model that is generating the highest EBITDA margins in that country with continuously evolving services.

That kind of dynamic service strategy also requires a more dynamic policy management infrastructure and Lenahan laid out a couple of challenges on that front. They include moving from static to dynamic policies for Policy Control Enforcement Functions, with filters that the service provider creates and can change, and building those policies more around user profiles that evolve based on user interaction.

Without new, more flexible and user-oriented approaches to mobile services, the wireless industry is essentially creating a wireless "dumb pipe" over which other more savvy marketers will deliver services and make profits, Lenahan said.

— Carol Wilson, Chief Editor, Events, Light Reading

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