The New Telco Choice Mass Customization or Mass Alienation

By Grant F. Lenahan
Moving away from the old one-size-fits-all business model, some service providers have realized that their future depends on the ‘mass customization’ of services to millions of people who have their own needs and desires. The goal is a grand one: greater loyalty, higher ARPU, higher margins and greater overall customer satisfaction. Not only are these worthy goals, but competitors — especially those coming from web backgrounds — are already starting to provide competitive services that will someday be true substitutes for telephony, cable TV and other services that are core to our industry’s revenues. But to get there, they’re going to need to design subscriber policies that help them better understand their customers’ needs, and surpass them.

These policies will enable networks to personalize services and subscriber experiences in real time, tailoring news delivery, content screening rules, display preferences, pricing, and an almost limitless number of options to fit individual preferences, requirements and lifestyles. By basing policies on individual needs, operators stand to gain a significant new source of revenue from better targeted marketing and advertising, as well as develop the deeper relationships with their customers that businesses in other sectors have had for years.

Take manufacturing for instance. This sector has moved away from ‘mass manufacturing’ of products which are compromised by their need to appeal to the widest — and blandest — audience possible. Flexible design and manufacturing processes have facilitated instead the ‘mass customization’ model that telcos must follow. There are a number of clear trends in how policies can be implemented that offer direction to operators looking to establish a new rapport with their subscribers.

For example, there are preference policies that allow parental controls over their family’s mobile service consumption. There are marketing advertising policies that allow subscribers to receive targeted promotions and messages that truly appeal to them. There are content management policies that can protect minors from adult content or restrict business users from downloads not related to their job function. There are even seamless handoff policies that govern how different subscriber segments may opt for either better quality or lower price network access, depending if they’re a business user or a student. In all cases, the experience so far points towards a better experience for the subscriber that the traditional operators need to sit up and pay attention to. The success of the MVNOs points the way.

Virgin Mobile USA saw under-served youth and weak prepaid plans. kajeet saw a lack of family-friendly mobile service for “tweens”. Movida saw a Hispanic market in the U.S. with a wide range of unmet needs, from attractive international calling to native language support and convenient distribution channels.

Flying-J may be the most innovative — or perhaps unusual — of the MVNOs. As the largest North American truck stop operator, it recognized the unique needs of over-the-road truckers for communication, news, and alerting services that it is uniquely positioned to meet. Trade in your CB radio for a mobile? These are markets that most large network operators simply don’t have the familiarity with or the time, resources, and creativity to address.

Thanks to the MVNOs, some U.S. analysts think that the prepaid market will grow to about 12% or roughly $14 billion of the overall market by 2012. Yet this is simply the tip of the iceberg. Just as web providers offer on-demand, personalized content and information, and just as Google, Blyk, Virgin Mobile and others promise alternative payment models, operators are showing signs of personalizing their services — from mobile plans to video offers to ad sponsored and hybrid payment models. The question is “how far and how fast?”

So, the interesting news here is that subscribers are willing to pay for the personalization they demand. The question is, are the operators ready to take the next step to mass customization, or will they risk mass alienation?

Grant F. Lenahan is Vice President and Strategist, IMS Service Delivery Solutions at Telcordia Technologies, Inc. For more information, visit www.telcordia.com.

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