We are already seeing initiatives in Telco world like Telefonica partnering with Nielsen for market research, Flytxt in Bangladesh launching an ad market place in partnership with Robi and joint venture between T-mobile, Verizon and ATNT IRIS for mobile wallet initiatives. As you can see the transformation is not just limited to developed markets, operators in emerging markets too are now facing the pressure of stagnating revenues, margin pressure and customer retention, which would push them to go in pursuit of ’smart pipe strategy’.

‘Smart pipe’ enables new business models

First question is what do operators possess beyond spectrum and communication channel. Operators own multiple touch points and all the transaction records of consumption of the most ubiquitous/personal device in consumer’s life. The next big question is how operators can turn to unconventional business models? How they can become partners to market research companies? How they can supply intelligence for enabling third party services? How can they facilitate social communities and collaboration? How do they compete with other digital advertising and publishing companies? The answer lies within them; it is the ‘Big Data’ available with them. The success lies in how they will get smarter in utilizing their unique assets – subscriber insights and touch points to make timely business decisions and build these new business models.

Need for CXO’s to make ’smart decisions’

CXO’s of Telco’s will have a more challenging environment for decision making. In addition to the usual challenges of demanding consumers, cut throat competition, regulatory pressure etc there are many more dimensions evolving in terms of three pillars of any Telco business – customers, products and capacity/bandwidth.

Increased adoption of smart devices: There is an increase in the adoption of smart devices like smartphones, tablets, etc. People are likely to prefer accessing services on the move, which gives opportunities and challenges for Telco’s. Ericsson predicts over 50 billion smart connected devices by 2020 which will increase the A2A interactions exponentially.

Explosion in customer touch points: Users have multiple devices and multiple connections to switch between. Customers are communicating and transacting through multiple channels like voice, SMS, Apps, OBD, WAP Push, so on.

Dynamic customer profiles: Customers were used to be identified by their static profiles of mainly demographics data. Next came the inclusion of their usage behaviour. Now lot more dimensions are being added to that like their social interactions, location data, online spending patterns, etc. Operators know a lot more about their customers now, but how to make use of that to create value for them without violating any privacy norms is the challenge for operators going forward.

Broader product portfolio with shorter lifecycles: With the onset of App stores and entry of OTT, Telco’s have products more from partners than their own. They have to identify right products to create that compelling service portfolio for revenue optimization and customer value creation. Most of the products especially in the VAS spectrum are having short life cycle hence recommending and encouraging their contextual usage is critical. It is expected that there would be millions of products on display in a Telco’s menu in the next five years and it becomes a challenge for them to promote these products and increase their uptake.

Scarce and expensive capacity: The advancement of 3G/LTE/Wifi technologies would make the capacity more expensive. With the multi fold increase in connected devices and customer base, the capacity will be a scarce resource for operators given the expected ten-fold increase in mobile traffic over the next decade.

Trust based relationship: Relationship between operator and subscriber is also evolving from pure supplier of goods to custodian of identity, Money and interest. Operators are no more a communication service provider. They are evolving into multi-vertical service provider or at least enabler.

‘Smart’ decisions bank on ‘Big Data Analytics’

It is proven beyond any doubt that for right decision making, Telco’s need Smart analytics which in turn need managing 4V’s of Big Data available with the operators – the volume, velocity, variety and veracity. The souce of information for CXO’s would be mostly the data stream including billions of customer profile updates and daily transactions happening through the millions of touchpoints.

A technology which could enable operators derive insights, recommendations and actions coming out those big volumes of data is going to be an inevitable component in the business architeture for Telco’s in the coming decade. Our next blog article will take a deep dive into Big Data Analytics dimension in Telco’s and the desired analytics architecture for leveraging it.

Finally Consolidation is here

Telecom business in India is dependent on volumes, rather than margins. The prediction of 2010 around consolidation of operator market into 4 or 5 national operators is now likely to become a reality. Due to repeated regulator interventions on voice tariffs, the voice ARPU in Indian market is one of the lowest in the world. This helps a lot in improving penetration in the market, particularly in rural areas. However, it raises serious challenges to operator’s profitability.

New Revenue Stream through Next Gen Services

However, in a highly price sensitive market, there has been significant uptake of Value Added Services, particularly that of entertainment and social networking applications. The Indian market is very price sensitive and characterised by high volumes and low margins. Since the launch of 3G, the Government of India has focused on increasing broadband connectivity throughout India to provide e-learning, tele-medicine and government services. Operators are also exploring new business model like mobile money, M2M, surveillance, cloud Storage, OTT messaging, authentication services and mobile advertising. While voice revenues stagnate, video, data and other new business models will keep on balancing the revenue streams for operators.

Rural is going to be the focus

The rural tele-density in India is about 38% as on January 2013 according to TRAI. Industry observers have predicted that the next wave of growth will come from rural areas and it looks most likely to happen going by the current trends. Hence, mobile operators are expected to focus more on programs targeted at improving penetration in rural markets. We may see resurgence of Rural focussed campaigns and first time internet users on mobile may surprise the industry with data and VAS consumption. Operators will adopt innovative strategies to reach out to rural population through public/private, profit/non-profit and organized/unorganised organization networks.

Need for regulatory support

Regulation will have to do a lot of support to re-invoke the vigour of Indian telecom sector. A policy to ensure that National Development goals are met through dynamic market play and advancing technology is the need of the hour. Transparent policy on license and spectrum, and support for opening of new business models and segments will be of importance to this. A government staged/supported FDI in telecom will revive the sectors uncertain outlook.

Technology will hold the key

The market is likely to move towards adoption of LTE and 4G over the coming year. Enhanced bandwidth, flexibility, and agility provided by technology adoption will enable an advanced telecom ecosystem.

Operators will need to do a lot of technology revamp across infrastructure, and deploy specialized applications like analytics in order to win the new age market. Applications that support new business models like mobile money and mobile advertising, as well as provide actionable insights into areas like customer experience will enable success in leveraging the market conditions. Transactions in e-commerce space are likely to reach the peak of hype cycle and online security becomes a real threat. Significant upgrade of technical capabilities will be required to enable integration of subscriber database with Aadhaar numbers.

Telecom and mobile communications are enabling other industry sectors such as banking, energy, education, health etc. Telecom will thus become a pivotal industry in enabling industry convergence.

Customer Experience is the new Differentiator

As the number of connected devices and transactions multiple, the market will move to the big data era, where high volume transaction processing, warehousing and analytical capabilities will matter. Big data analytics will provide immense opportunities to enhance customer experience, and thus to differentiate in a highly competitive market. Operators focusing on customer experience through campaigns around better network, speed and innovative products and services will generate substantial incremental revenue, which will lead to long term sustainability.

As the market matures and competition intensifies, operators will have to differentiate their services with respect to customer focus, personalization and delivering tailored offers. Capabilities that are built over big data analytics and campaign management will be increasingly important for Indian telecom operators to ride through this wave in 2013.

Operators look to unearth the hidden usage behaviour patterns: Analytics can bring in amazing information and knowhow for operators on preferences and behaviour of their consumers. However, Operators need improved analytics for drilling down the data and to derive insights, that will help in micro-segmentation, precision targeting and best offer selection. Going forward the capability of operators in unearthing the usage behaviour patterns would become a key differentiator for them in offering right value proposition for their consumers.

Emergence of Decisioning Oriented Analytics (DOA) based systems: There is data and there are insights. However, if the insights are not accurate and powerful enough to draw timely and contextually relevant recommendations and actions, operators will find it difficult to justify their investment in Big Data and Analytics systems. The demand for stronger Decisioning Oriented Analytics applications would surge ahead as against traditional offline analytics engines and those systems that provide only insights. Real-time Decisioning and contextual Recommendations would be essential attributes of these Decisioning Oriented Analytics applications.

Operators will invest in generating incremental revenues: Despite the growth in data and VAS consumption, revenues of operators are still at stake. ARPU growth is essential in today’s volatile markets. Incremental revenues generated through capturing consumer needs and delivering precise targeted campaigns will assume more significance over the coming years. Operators would focus on marketing programs encouraging higher usage and subscriptions thus increasing ARPU.

VAS opportunity will continue: As per the latest report from Informa, Mobile VAS revenue will grow from $200 Billion in 2009 to $340 Billion in 2014 with emerging markets accounting 36% of this forecasted revenue. This offers a great opportunity to cross-sell for operators especially in South Asian and African countries. Consumer intelligence and insights could help operators to recommend right offers to make use of this up-selling opportunity.

Managing churn and actualizing customer retention will be on priority: It is a known fact that retaining existing customers is far more profitable than acquiring new ones. However, there are challenges in retaining customers, especially the highly profitable customers that fall into the 20% bracket and rake in 80% of the profits. Operators have to bring in effective measures to predict and mitigate churn in order to tackle this. Rewarding the relationship value, providing value based offers and trip-wire based win-back packages would be decisive in reducing churn and enhancing customer retention.

New channel proliferation and multichannel integration on the rise: Operators are successfully integrating multiple channels for service provisioning, end-to-end service delivery, customer communication and sales operations. This creates multitude number of consumer touch points. More the number of consumer interactions, more the opportunity to understand them better thus making up-selling and cross-selling easier. These calls for a platform that can manage this seamless integration of communication through multiple channels and consolidate consumer data across these touch points to derive timely insights.

Low CAPEX models are scaling up: Operators are looking for risk free technology implementations inviting low CAPEX, without compromising on scalability. Revenue sharing models like managed Services and technology delivered through cloud and SaaS, will reduce infrastructure costs significantly, and 2013 will witness scalable and large scale implementations of these models.

Next few years will witness collaborative innovation in the area of Mobile, "Big Data", Customer Experience and Cloud.

2. Strong analytics always translate to best campaign results: There is little disagreement on the fact that strong subscriber analytics are the key to campaign success, however analytics powered campaigns do not always produce best campaign results. There are two key reasons why this is happening. First, marketers suffer from analysis paralysis and do not give proper attention to timing of the campaign. When lifecycle of the product is too short or when subscriber preferences are dynamically changing, it would not be totally inaccurate to call marketers ‘shortsighted’ to be spending too much time on analytics than on addressing the opportunity at hand. Second, marketers tend to be not so particular about the other aspects of campaign management such as offer design, messaging, measurement, channel preferences etc. While there is nothing wrong in using analytics per se, marketers often tend to ignore other equally important aspects in a campaign design therefore, strong analytics do not always translate to best results.

3. Having DND is enough to ensure subscriber privacy: Some mobile operators tend to use ad-hoc technologies that do not have capabilities to help them keep track of how much they communicate with every subscriber every day. There are cases where some subscribers receive double digit communications every day as there is neither a way to keep track of them, nor a way to control the number of messages a subscriber is communicated per day. In some cases, subscribers are communicated messages at odd times such as middle of the night as there is no means to enforce blackout periods. Therefore, it is necessary to view subscriber privacy not just from DND angle but frequency caps and blackout periods as well that ensure customer experience of marketing communication is top notch. The technology and processes should adequately address these requirements, only then subscriber relationship is nurtured and campaign management is fruitful.

4. Real-time is necessary only for offer communication: The products and services of a mobile operator have an extremely short lifecycle. Therefore, the product has to be marketed to the right subscriber at the right time when the context is still relevant. “Real-time” is a characteristic that is not just limited to offer communication, but campaign management as a whole. Telecom campaign management usually would have a “Call to action” and a “reward/incentive”. Therefore, real-time should apply to offer communication, subscriber response tracking, and also for crediting the reward/incentive before it turns into customer dissatisfaction. Therefore, ‘real-time’ is a characteristic that is applicable to all steps of campaign management and should not be limited to offer communication alone. Having a right perspective about real-time capability is important to understand the impact it can have on customer experience and marketing visibility.

5. Reward management is an offline activity: Many marketers tend to see reward management as an offline activity. If a subscriber is communicated of a campaign with a reward promised, subscriber expects the reward to be credited soon after the call to action is performed, especially if it is a transactional activity. Therefore, if the reward is not credited within a short span of subscriber’s activity, the value of the reward diminishes and it may lead to substantial subscriber dissatisfaction. Managing rewards offline as a file based process may also lead to many errors and revenue leakage. Therefore, reward management should be an integrated campaign management activity, not an offline activity.

6. Conversion is a good enough measure of campaign impact on subscriber behavior: Campaign conversion is seen by majority marketers as a good enough measure of success/impact of the campaign. But how would the marketer ever know if the subscriber has purchased because of the campaign effectiveness or out of regular habit? To identify this, marketer has to employ control groups to see the incremental impact. Good campaign management tools provide integrated control group functionality to measure campaigns. In addition, there will be other means to measure campaign such as pre & post campaign analysis that will add to the accuracy measurement in addition to control group based impact measurement.

7. A technology designed for e-mail can be extended to mobile media: Today we see a deluge of campaign management technology providers who unsuccessfully extend their limited capability of campaign management to cross channel and destroy the value of mobile campaign management. A technology designed for slow architecture such as e-mail cannot be used for mobile as mobile is a real-time channel and therefore, using e-mail campaign technology for mobile is like using cold pill for fever. Slow architecture technologies often tend to involve manual work which leads to revenue leakage because of the inability to contain the campaign benefits to intended subscribers. An extension of such a technology will lead to lot of manual work, increased costs and reduced impact, therefore mobile campaign needs a specialist who is focused on mobile technology alone.

There is a need for marketers to understand the right approach to campaign management and clear these misconceptions to effectively use it as a tool to enhance revenue and manage subscriber challenge today’s competitive telecom markets.

For majority of African consumers, life revolves around a mobile device. Innovative services are built around mobile phone across Africa for information dissemination, local yellow page services, mobile banking & payment services, media & entertainment services, social networking services, healthcare services, tourism related services etc. The ways in which mobile is transforming everyday lives of Africans is astounding and is well on its way to have its own impact in alleviating poverty and improving the quality of life. For example, operators such as NetOne in Zimbabwe are distributing pension funds on mobile phone for customers thereby cutting down their travel expenses, Duetsche Welle – A German news Distribution Company is disseminating news via SMS for subscribers who do not have access to a radio or a news paper. Innovative m-payment services by operators are bringing accessibility of mobile banking services to a large section of Africans who do not have access to basic banking service. Mobile users not having data enabled handsets are accessing social network services such as Google Chat via SMS, Twitter via SMS etc. are becoming increasingly popular. The affordability of a mobile phone for an average African consumer is changing their lives more ways than one can imagine.

Mobile Operator’s Role

Mobile operator plays a key role in not just building innovative services around mobile phones, but also in understanding subscriber diversity and catering to their specific needs. Operator needs to quickly build capability to understand subscriber needs and preferences and market relevant services to them in an efficient and timely manner. For marketing services such as music services, social networking via SMS, news content via SMS, data packages for data enabled handsets, m-payment services etc., and advertising 3rd party services such as directory services with click to call or financial services advertising etc., mobile operator needs to understand subscriber’s dynamically changing preferences. Operator also needs to create an efficient marketing and advertising ecosystem to enable reaching right subscriber at right time with right content.

According to Google, about 5.2 billion Ad impressions were served to African consumers in 2010. These impressions were from the internet Ad networks who could reach the data enabled handset users which is very small share of the mobile population of 649 million. Only entity which could reach all of them is the mobile operator and all that is needed is to create a successful mobile advertising ecosystem supported and enabled by operator. Below are the key steps operator needs to do to enable mobile advertising ecosystem with unmatched reach

Step1:

Create a centralized data repository of all the customer interaction on their network. make data available to be able to create insights

Step 2:

Have the right set of tools and technology to derive actionable insights required by the marketers, without compromising on subscriber privacy

Step3:

Create a self service Ad campaign management ecosystem where any advertisers can come and run multi channel campaigns on highly targeted segments and have visibility on the performance of campaigns in terms of responses/conversions etc.

It is essential for operators not just to build innovative products and services around mobile devices but also to create an advertising ecosystem that enables not just promoting their own services, but also connects brand advertisers directly with the largest consumer segment that could be reached via any medium. Operator has a critical role to play in providing consumer access to every service, including advertising that that has been made impossible to provide for lack of traditional infrastructure.

Enabling African Mobile Advertising Growth

Flytxt has extensive expertise in providing technology solutions, services and campaign innovation in mobile advertising space across Europe and APAC region. Flytxt is now closely working with some of the largest operators in highly competitive African markets such as Kenya, Nigeria, Uganda and Congo. With an expertise of managing over 50,000 campaigns for 150 million subscribers across the world, Flytxt is well placed to well-positioned to work with mobile operators in creating a successful mobile advertising ecosystem.