Gartner’s 2019 CIO Agenda: CSP Industry Insights lists three technologies that will have game-changing impact to telcos: artificial intelligence, analytics and cloud solutions. The analyst predicts that increases in IT investments in 2019 will focus on these as core-enablers for digital business initiatives.
Data, data everywhere- not a drop of insight! I am paraphrasing, of course, lines from “The Rime of the Ancient Mariner” by Samuel Taylor Coleridge but I hope you can understand the point I am conveying here.
Telecom Asia December 2018
Like other consumer-facing businesses, telcos are not short of data. The issue is, like banks, they have traditionally focus attention on transactional data - how much Mr. Consumer is spending with his telco.
The digital economy is changing much of this. Relentless pressures from regulators around data privacy, from consumers around user experience, and from competition with declining ARPUs, telcos are starting to ask the right question - how do I innovate my operation so I am able to grow my business profitably?
The data that telcos are looking at today is a cacophony of information provided by their customers consciously and otherwise. The latter comprise activities that the customer undertakes, directly or indirectly, while using the telco’s services.
As an analytics leader at a major telecommunications equipment provider explained it, “There’s a lot of data. There’s always been a lot of data. The fact that it’s coming at us so fast and in such a variety of forms puts a really big burden on us. We are trying to figure out what’s the problem we’re trying to solve with data, and how we can use it to make a good business decisions.” The Analytics Advantage, Deloitte.
Amrish Kacker, partner for consulting at Analysys Mason says the telecom industry is at an inflection point - from the revenue side.
“In the last 2 to 3 years, across Southeast Asia, telcos have been struggling to grow revenues at the service level. Rising smartphone penetration has also resulted in declines in SMS (messaging) and voice revenue. Data is not growing fast enough to offset the decline. We have now reached an inflection in the market where the declines in SMS and voice revenue cannot significantly go further down,” says Kacker.
He believes that this recognition that revenue from SMS and voice cannot go any further down may allow operators to focus on that part of the business that has opportunity to grow - data. “Up until now the top line is shrinking and therefore the strategies have been either not to lose market share and/or cut cost. Now that there is real growth in data, you will see a lot more innovation from service providers,” he opines.
He sees subscriptions that offer “unlimited data as standard” as a megatrend that will come as a result of this change in mindset. “Content on mobile” will become a significant player. “Expect a lot more innovation on the marketing of data-centric services, as well as on content-on-mobile will contribute to more revenue growth for operators,” says Kacker.
Mordor Intelligence defines telecom analytics as business intelligence specifically applied and packaged to satisfy the complex needs of telecommunication organizations. Telecom analytics is aimed at decreasing operational costs and maximizing profits by increasing sales, reducing fraud and improving risk management.
For Kacker, the more significant use of analytics will be around internal decision-making. He cites one use case: capex optimization. Today the way capex is planned is something like: congested sites are identified and plans set in motion to add extra capacity in those sites. It is primarily a network decision. But most research today tells us that what is more important [for operators] is customer experience.
“There is increasing debate on where to spend the money [around customer experience] to get the most bang for the money,” he quips.
Marketing and networking are now coming together to ask the question of where to invest capital going forward. Kacker says this is where big data comes in.
“Drawing upon big data, operators are able to see the traffic flowing through its networks on a cell-by-cell or tower-by-tower basis. Big data and analytics is able to help you answer the question of how much revenue you are generating from the high-value customers attached to that tower or cell site. This helps an operator make informed decision - not based on traffic but based on revenue,” says Kacker.
This information will allow the operator to more efficiently allocate capital to where customers are spending most of their money. At the same time, an operator is able to provide their customers with better experience. To Kacker this approach represents a big change [in mindset] for operators.
While the network [infrastructure] will remain important in this new paradigm of customer-centricity, he believes that operators will need to make a cultural shift - decide to make decisions based on revenue and not from traffic.
“An operator needs to say I want to use analytics as a way to run my business; I want to use much more existing data and I want it presented to me in a timely manner, in a way that makes it meaningful and I want to use this same logic to drive capex optimization,” he says.
Operators want to better understand their yield per customer, are driven to get better revenue per megabyte, and desire to be able to price their products based on actual usage.
Kacker stresses that analytics is not new to the telecoms industry. Operators have used analytics to make quantitative decision albeit days or weeks after the fact. Today’s advanced analytical tools allow for near real-time analysis.
“Because it is available to the operator any time, they have the option to make constant revisions thereby giving them the opportunity to review decisions on the basis of the data at hand. This is the cultural shift that is most exciting because it offers the industry the opportunity to become more efficient and be innovative,” concludes Kacker.