Survival in a mobile future: It’s time for telcos to gatecrash their own party

We live our lives though our apps and devices but where is the telco in our view of the digital world?

For many telecommunications companies right now it must feel like they have thrown a fantastic party only to find themselves looking in through the window while everybody drinks their beer, eats their food and generally has a great time. The party’s going on right there in our pocket, on our smartphone. Think of all the amazing and essential things we do on it. And to think we can even use it to make calls!

And that’s the problem. We love our smartphones because they are actually powerful, Internet-connected computers that allow us to do so much, with little thought for the company that provides the means for it all to happen. How many of these cool things — from working to running our social lives to shopping — have anything to do with the company we pay each month for our mobile connection?

With the plethora of instant messaging apps we don’t even have to eat into our bundled SMS allowance. There’s little money to be made from calls. So that leaves data — with 5G on the way — as the obvious growth area, but even here it represents the means and not the ends as far as the telcos are concerned.

On our mobiles and computers we think of Facebook, Twitter, Instagram, WhatsApp, Snapchat and any number of other communications channels that get a free ride on the back of that data service. Other apps take care of health and wellbeing, music, maps, browsing . . . you name it. On our TVs — and increasingly on our mobile devices — we look to Amazon, Spotify and Netflix. We’re not thinking about the company with billions invested in the cables, masts and transmitters — the network. That’s a given; it’s the very least we expect.

We love the things the network brings us: content.

And we will expect the network to continue to exploit the very latest technology so that all this content arrives super-fast and ultra-reliably, meaning the telcos are committed to further investment even as their return on infrastructure spending levels out or even declines.

Giving other players’ content a free ride

No, telcos are mostly very much in the background, upstaged at every turn by the apps and platforms they play host to, and even by the handsets some of them sell. In the main, their business models involve charging users for the things they care less about and take for granted — data usage and connectivity — which, while vital, are not what get consumers excited. The excitement comes from content and the cool, shiny device they use to get it. That leaves telcos with a choice: to compete with each other on price in an aggressive race to the bottom, or to join the party and find new ways to engage their customers.

The increasing focus on quad play offerings — mobile, TV, fixed line and broadband — is driving acquisitions in the sector, including BT’s plan to buy EE and Three poised to take O2, making clear the importance of content. That extra content will drive demand for underlying services but it won’t necessarily put the telco front and centre in the customer’s mind.

In its recent Telecommunications Trends strategy report, pwc stated that telecom providers “must completely redefine their relationship with their customers”. “They must work to monetize the mountains of data that flow through their networks by shifting to experience-based pricing, phasing out unlimited and free data plans, and promoting the consumption of data-heavy content.”

The report goes on: “Rather than competing on price — the model virtually every company has followed in the past two decades — operators must figure out how to optimize revenues from different customer segments, especially those segments that are less price sensitive and that value service quality and superior customer experiences.”

The prescription, according to pwc, is for telcos to “enter the right partnerships” and then provide the means for those partners to create the apps and services that will open the door to data-driven markets.

Legacy systems and products of the bigger, more established players in the market give more agile start-ups something of an advantage when it comes to quickly responding to emerging opportunities. But there is no reason why innovative telcos can’t tap into those same opportunities as they set about trying to differentiate themselves. The good news is that they are sitting on a mountain of quality personal data, which is the key ingredient in any attempt to better engage customers. The problem is, that’s the bad news too. Telcos are required to collect and retain certain information on calls and Internet activity. However, they can’t just use that to develop new products and services — there are tight restrictions on what they can do with it.

Furthermore, that amount of potentially sensitive data represents something of a liability. Telecommunications companies have to take security very seriously or else risk big penalties and the potentially more damaging impact on brand trust. And trust is something in seemingly short supply. Research by Synverse reveals that trust in mobile operators and brands has fallen to 50% in three years. When it comes to personal data, 71% said they don’t trust mobile companies to handle it with care.

When hackers last year attacked the UK quad play operator TalkTalk, the headlines screamed of the potential threat to the company’s four million customers. The fact that only 157,000 were affected was of little comfort to executives in terms of damage to trust and reputation. Security is clearly something every major player must place at the very top of their priorities. Beyond that, though, there’s no reason why trust shouldn’t just be the other side of the personalisation coin. Businesses can build trust — and long-term loyalty — by genuinely offering consumers greater control over how their data is used.

Give customers control over data

Announcing Telefonica’s new strategic vision at the end of last year, Executive Chairman César Alierta stressed the importance of such consumer control as a key element of the company’s plan for more personalised services. He said: “Customers have to recover their digital sovereignty, to own their digital footprint and consciously decide how they want to make use of their data.” Key to this, he said, was “placing our defence of the customer’s interests at the centre of our stance, which will focus on three concepts: Digital Trust, Open Internet, and Digital Access”.

In an article on how telcos can improve performance, consultants McKinsey suggests “the ability to gain a 360-degree view of the customer (within the bounds of consumer privacy laws and regulations) allows marketing, sales, and other customer-facing functions to make more precise, data-driven decisions that cut down on guesswork and wasted resources”.

That all makes perfect sense, but throws up privacy and regulations as potential hurdles that stand in the way. There remains the uneasy business of gaining that deeper insight — essential to creating new, valuable products and services — without overstepping the line. Doing so not only upsets the law-makers and regulators but also seriously undermines consumer trust.

The broad consensus among industry analysts and forward-looking telcos, such as Telefonica, is clearly that a focus on the customer through greater personalisation is the way to go, although approaches differ and none really go as far as offering a real answer.

Perhaps it’s a question of looking down the wrong end of the telescope. Rather than simply making the customer the focus of enhanced product and marketing efforts, why not place them at the very centre? Help the customer to take ownership of their own data and give them control over it. This potentially opens up a wider, richer set of data that must surely be more valuable to any business. Access to it depends on clearing only one hurdle: permission.

Gaining that permission should be straightforward if the value proposition is worthwhile and the way in which data will be used is made crystal clear. The explicit permission of the owner of the data not only means there is nothing sneaky going on, it would also satisfy the laws and regulations designed to offer protection to the individual.

The rocket in our pockets

It is clear that telcos face considerable challenges in how to position themselves in a market that has shifted, not least because of the lead taken by major players such as Facebook and Google in establishing relationships with the same set of users. But the opportunities could be even greater. The personal data economy is growing all the time. Telcos need to find ways to make use of what could be a clear advantage when it comes to personal data. They have vast amounts of information on their customers but face restrictions that can hinder them.

With the ever-growing ubiquity of the smartphone, they are already right there with their customers all the time, quite literally in their pockets. By offering a value proposition that makes it worth those customers’ while to share that data they can position themselves at the very forefront of their digital lives.

As author, academic and Internet visionary Doc Searls told Internet of Me recently: “The controls need to be on our devices, which are extensions of ourselves. Personal devices are critically important for the Internet of Me.”

Telecommunications players are perfectly placed to make this happen, enabling them to not only join the party but to be its life and soul.

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