Telcos around the world face a common challenge: margin erosion and revenue shrinkage in their core businesses. They also confront a new breed of competitors resulting from convergence, where lines blur and companies diversify outside of their original markets.
Intense competition and commoditization of communications services are driving increased network traffic and usage, but not a corresponding rise in operators' revenues. In fact, studies show that operators' revenues are gradually decoupled from network traffic - where bandwidth requirements are far exceeding revenue growth. This puts tremendous pressure on operators to cut costs (see chart 1).
It's no wonder that telecom operators must rethink their business models in search of new sources of revenue growth. In light of this, the question is: "Is big data monetization the crown jewel for telecom operators?"
Big data is simply defined as generation of unprecedented amounts of both structured and unstructured data at a speed that is beyond the ability of a typical database to process. Convergence is contributing to the data glut, driven by the rise in mobility, and cloud, and digital and social networks, all of which require broadband networks to manage the data volumes. With explosive growth in data volumes, the decreasing cost of data storage, and more companies recognizing the value of data, big data analytics and monetization is a top-of- mind issue for those in the C-suites.
In fact, the rise of big data presents a unique opportunity for telecom operators seeking alternative sources of revenue. Here is why: telecom operators hold a treasure trove of big data. Anything that passes through an operator's network - from voice calls to data usage to apps download - leaves behind a digital footprint that could be analyzed and converted into valuable insights. Telcos have a unique opportunity to generate new revenue streams by amassing this huge amount of structured and unstructured data into information-based offerings, which leads to big data monetization.
Gartner predicts that the financial demands of storing and managing big data will lead 30% of businesses to directly or indirectly monetize their information assets by trading, bartering or outright selling them by 2016. In the US overall demand for information services is expected to exceed $600 billion by 2015, according to research by Accenture. This represents a sizeable and attractive market, and big data monetization may be a tipping point for those that seek to break away from traditional business models.