Telcos need a holistic approach to data analytics

Mark Newman/Ovum

OvumTelecom operators have been hyping big data for at least five years, but it’s taking them a long time to realize the benefits of data analytics.

There are, essentially, three things that an operator can do with information gleaned from customer usage trends. The first is feeding information about which services customers are using and when, and any network problems they are having, into the network planning process.

The second is using customers’ data as part of a customer experience management (CEM) program. And the third is monetizing the data by either selling it to third parties or including it in existing propositions – think Internet of Things.

Each of these usage cases is compelling. Network capex is mobile operators’ biggest single item of expenditure. Customer experience has emerged as, arguably, the biggest strategic priority for the operator community. And building new revenue streams is core to the strategy of any digital operator.

One leading vendor told Ovum that the problem for telecom operators is that analytics touches many different parts of their business and there is no central function that brings these discrete divisions and business needs together to create an overarching business case and rationale.

This particular vendor has a legacy in the telecom infrastructure business and, as such, was finding it easiest to generate interest in its solutions from the networks division. The same will likely be true of analytics vendors with existing relationships selling products that sit within the customer experience or enterprise services divisions.

While operators are already using analytics – to a greater or lesser degree – in network planning and management and CEM functions, the repackaging of customer and network analytics into products that can be sold into different vertical sectors remains an underexploited opportunity.

Many operators have launched products (Telefonica – Smart Steps, Sprint – Pinsight Media+, Vodafone – mAnalytics, etc.), but there is little evidence that these services are generating meaningful revenues. Knowing how to position and price services can be difficult for an operator because in many cases there is no existing service that sets a price benchmark.

One operator that has developed a successful line of business in data analytics is Megafon in Russia. It generated 3 billion roubles ($47 million) in revenues – approximately 1% of total revenues – from data analytics products in 2014. The biggest single segment for Megafon was transportation, specifically the railways.

Ovum sees potential for data analytics across a number of verticals. Within transportation, operators such as Vodafone have had some success partnering with satellite navigation service providers such as TomTom. Media is also a key vertical – a number of operators are looking to package their data to sell to the advertising industry.

A big technology challenge for operators is the fact that their data sits in different silos. Extracting, amalgamating, and interpreting this data is a huge task. Nevertheless, it is one that a number of others face and should not be used as an excuse for hesitation.

Speaking at Mobile World Congress in Barcelona in 2014, IBM CEO Ginni Rometty said that three out of four of the company’s clients either had a big data strategy or are piloting one. The challenge for service providers in becoming leading adopters of big data solutions is taking a holistic approach, joining up the dots in different parts of their business and adopting a single strategy and business plan.


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