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October 02, 2013

Turning Big Data Into Big Money

Telecommunications operators today face a stark fiscal reality. Convergence (News - Alert) is introducing new competitors into their backyards, formerly unique communications services are becoming increasingly commoditized, and network traffic and usage steadily climb without a corresponding rise in operator revenue. These all point to the same daunting concern: margins are eroding in core business areas. 



Operators’ decision-makers are, by necessity, always in search of new revenue streams

The rise in mobility, explosion of social networking and increasingly powerful analytical tools have all produced an unprecedented data glut, and while data storage costs are dropping, innovative companies are in search of ways to reap value from the exponential growth of data.

Telecom operators hold a treasure trove of big data, and have a unique opportunity to turn the resource into revenue. Customer interactions (voice calls, data usage, apps downloads, network access) all can be analyzed and mined for valuable insights. The fact is, using data for monetization purposes is a goal within reach for companies that can successfully convert structured and unstructured data into robust, rich market insights.

Gartner (News - Alert) estimates that, with the financial demands of storing and managing big data, 30 percent of businesses will directly or indirectly monetize their information assets by trading, bartering or outright selling them. In addition, according to Accenture research, the overall information services market is expected to exceed $600 billion by 2015. This could represent a sizeable and attractive market for telecom operators, if they are willing to start looking at data monetization as alternative revenue streams, given the challenges of their core and traditional businesses.

With these challenges in mind, let’s review examples of how some telecoms operators can convert big data into big money – and take a look at some that are already moving in that direction. For example, telecom companies can help banks improve fraud detection through geolocation-based data. Fraud detection algorithms can incorporate the location of a customer’s smartphone when making online transactions. If the location is different from a customer’s transaction location, a potentially fraudulent incident has occurred and can be flagged.

Telcos can also provide real-time, geolocation-based customer data to retailers, providing much more dynamic and updated snapshots of customers than decades-old stale insights such as census figures for broad postal codes.

Some telcos are early innovators of this discipline. Precision Market Insights from Verizon (News - Alert) helps brand marketers, media companies and event venues understand unique behavioral insights about audiences for their products and services, enabling clients to reach their target audiences in a more meaningful way than they can with today’s existing models. For example, it provides out-of-home media planning capabilities where advertisers can analyze the demographic, geographic and psychographic makeup of an audience in proximity of a billboard’s physical location. Advertisers can use these insights to select the ad units that will most effectively reach their target audience and customize the message to be relevant to that audience. This is just one example of how these types of insights can enable advertisers to ensure the right message reaches the right audience.

Also, Telefonica (News - Alert) and GfK partnered to launch Smart Steps, a tool public and private entities can use to analyze “footfall”, the number of people visiting an area over a given period of time. This data processing capability can be used for everything from urban planning to sports facility redesign to changing the way advertising is bought and sold.

These are early examples of big data monetization by telco operators. For many, monetizing big data presents a tantalizing option. For telcos who hope to consider big data monetization, here are some guidelines to consider:   

Choose Your Area

Rather than selling raw, unprocessed data, inherent value increases by moving up the chain to selling insights and recommendations. As a result, telco operators should consider this space, since there is significant potential value and opportunity to generate revenue.

Build a Progressive Product Roadmap

The same underlying data can be applied to multiple industry verticals, which can be packaged into different products to maximize revenue. Once a common analytics platform is established, the same pie can be sliced multiple ways without significantly changing the core ingredients. Telco operators should therefore build a progressive product roadmap that begins with a core set of reusable data that can be applied to multiple industries.

Understand Your Gaps

By definition, entering into new undertakings necessitates new skill sets. Apart from analytics, telcos need skills to develop strategy and planning, products and partnerships, and technology platforms, and drive organization changes. For example, significant effort is required to ensure data is clean and data validation algorithms are accurate. Operators will need to find the right talents and skill sets to achieve those goals

Anticipate Any Limitations

Data governance and privacy are key, and operators must be mindful of aspects including any applicable local laws regarding the utilization and monetization of data. Opt-in/opt-out strategies must likewise be carefully planned both to address legality concerns as well as to remain ever mindful of the customer experience. Data privacy concerns must be ironed out prior to any program implementation and before the first bit is collected.

Spend Money to Make Money

Like any new endeavor, processing big data requires investment in new tools – scalable technology infrastructure that can employ the latest management systems. Instead of asking, “How much will this cost?” forward-looking executives ask, “How much will this investment yield?”

Although the various ways telcos could monetize big data are still emerging, there are certainly opportunities to generate revenue. To do so, telco operators would be wise to follow a mandate of “pick a strategy before it picks you,” and proactively develop a clear strategy and differentiated offers designed to minimize risk and maximize success in the dynamic and fast-changing arena of big data.

Montgomery (Monte) Hong is managing director – Global Communications Industry and Asia Pacific Communications Industry lead, Accenture (News - Alert); Lee Joon Seong is managing director – Accenture Management Consulting, Sales & Customer Services, ASEAN region.




Edited by Rachel Ramsey
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