Falling profit margins from voice, messaging and data services are driving mobile operators to find ways to monetize Big Data, thereby turning their existing information assets into new sources of revenue.
New competitors, increasing competition
The competitive environment for mobile operators is radically different to the market place in which they first launched their services. A new breed of competitors has arisen as a result of a blurring between traditional device and service lines, and companies such as Apple and Samsung control whole areas of the app space.
In addition, a raft of OTT players are driving the commoditization of basic services, and a wave of messaging, music and video providers are winning the battle for consumer mindshare and hence taking increasing revenue share.
As network costs continue to increase, while traditional revenues stay flat, margins are getting squeezed. Intense competition from multiple directions is therefore driving the operators to seek new sources of revenue.
New lines of business enabled by Big Data
In order to assert their position in this new competitive world, mobile operators are pursuing new lines of business that have the potential both to monetize the value of their big data assets and to entrench the operators as a pivotal player in their markets.
Customer insights – aggregated and anonymised mobile subscriber data has extreme value for a wide array of commercial and public services organisations: retailers (store location planning, campaign design), local government administrations (urban planning), advertising companies (outdoor media mapping), sports and entertainment venues (audience profiling).
Data hosting – by virtue of their service provider legacy, strict industry-wide regulatory framework and data protection obligations, the mobile operators have developed very strong trust relationships with consumers and businesses alike. This opens up the prospect of operators utilising their data assets in order to host security and authentication-based services on behalf of financial institutions, government agencies and e-commerce companies. Identity management, access control and user authentication are all part of the service portfolios being developed by the leading US and European operators.
Third party applications – rather than viewing companies which provide digital services over the network as competitors, increasingly operators are seeing them as business partners. In principle, any service that requires a set of enabling utilities such as customer billing, problem resolution, security and authentication services can be interfaced directly with the host systems and databases in the mobile operator environment. The demand for these hard-wired services will grow rapidly as e-commerce, mobile healthcare and machine-to-machine (M2M) applications become ubiquitous.
Moving towards a two-sided business model
The incumbent network operators therefore have the opportunity to create a ‘two-sided’ business model, whereby they leverage the latent worth of their unique assets – namely their captive subscriber data and their accumulated reputation capital.
- Firstly, they create more intimate relationships with their existing ‘downstream’ mobile subscribers, through a relentless focus on customer experience management and service personalization
- Secondly, they form ‘upstream’ strategic partnerships with both private and public sector organizations, underpinned by a new product and service portfolio founded on the principles of privacy, trust and security
Executed well, this two-sided approach is virtually impossible for any communications service provider without a self-provisioned network to emulate successfully. The pathway for the network operators to assume the central position in the rapidly-evolving mobile services eco-system is wide open.
Our approach for putting the customer at the center of this business model is outlined in our Monetizing Big Data page.