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More notes from MWC2013: Monetizing “Big Data” in the communications industry

March 15th, 2013 |  Published in Digital and Mobile Technology, Mobile World Congress 2013, Telecom and broadband

Big Data telecommunications

 

15 March 2013 – In the history of business, data has never been more important than it is today. Knowledge has always been key, but we’ve never before been able to access, manage and act on so much real-time information. The systems we are developing and deploying all over the world are helping enterprises understand and use all this ‘big data’ to make really smart decisions. It is becoming clear that businesses able to transform themselves can take advantage of these new big data and analytics capabilities and gain a tremendous competitive advantage.

Ok, this isn’t news, but in all of its dimensions – volume, velocity and variety – big data is making new knowledge available and new processes are emerging to take advantage of what it offers. At the same time, new questions and challenges are emerging. What are the security threats and implications of having so much data available? What about data protection and privacy – how do we protect the data from misuse? How do we assure customers’ ownership of their own data, especially as laws, customs and expectations in different parts of the world are not the same? As investment grows, so too do the expectations of returns on it. Yet the road is littered with the scarred remains of ‘science projects,’ or attempts to do things with data that were intuitively interesting, and even intellectually compelling, but too remote from business objectives to be operationalized.

Monetizing data has grown from this desire to see a return on investment. It isn’t just about selling data as part of a revenue-generating transaction, often through third parties. It’s primarily about internal monetization, connecting data-oriented processes to improvements in the business. The concept of external data monetization has gained currency in recent years.

Data is an extremely powerful asset for communications service providers. By more efficiently collecting, storing it and then providing the right tools to analyze and mine that data, CSPs can better prevent profit margin erosion. With effective analysis of application and network log data, subscriber usage data, network data and customer “interaction” data, a provider can begin to move faster and deliver what customers want with improved service levels.

Communications carriers have been looking at their networks, and customers, and considering what broad, significant contextual insights can be derived. The relevance of the data to other industries is clearly something that we should be able to make money from, and we have seen businesses begin to take novel and interesting approaches to the problem.

We spent a lot of time at MWC with those polymaths at IBM and E&Y and McKinsey, as well as telecom reps from France, Spain, Turkey and a myriad of other geographic locations.  There was a lot to learn.  Take vertical market opportunities. This area focuses on making information in the enterprise available to third parties so their businesses can execute better on the digital platform. Opportunities could include advertising, but it’s also about machine-to-machine (M2M) communications, smarter cities, and a smarter planet. Combining data about location, with usage, purchase patterns and preferences can provide a rich picture of consumer behavior so third parties can deliver more relevant, personalized services.

For instance, Istanbul now plans its traffic infrastructure better because it has access to location-based analytics. M2M businesses collaborate with communications service providers not just because they have the infrastructure to provide connectivity, but because the carrier can also offer data and insights about network performance and behavior to help M2M companies run their businesses better.

There are also more direct opportunities with commerce, and in particular with digital advertising. While the communications business has experimented with mobile advertising for some time, it has proved difficult to scale. Advertising on mobile platforms – particularly with the rise of the smartphone and emergence of tablet computing – is growing, and will continue to grow, but it is not clear how big a role the network operator will play. In the broader area of digital advertising there is massive growth in programmatic buying, with integrated, seamless, real-time bid-for advertising that demands huge quantities of data. It is growing to include established platforms like TV and radio, which are themselves becoming digital. This is a direct commercial opportunityfor the communications industry, with network operators allowing their data to be used for analytical modeling of buying and selling options for advertisers and publishers alike.

And consumers are going through an adjustment process right now.  A recent work by Pew Research (note: one fabulous thing about MWC – vendors awash in studies, white papers, etc. free for the asking) suggested two thirds of people still feel negatively about targeted advertising. This is changing. Enhanced personalization of advertising combined with the integration of other media will help this market mature, opening up opportunities for communications companies. By connecting data processes directly to sales and marketing, communications service providers can build a deeper return on their investment profile. They can justify incremental investment in the domain once they can demonstrate internal monetization.

The communications industry can monetize value despite the ongoing commoditization of its core services. Alongside all these developments, we are entering what IBM calls “the Cognitive Systems Era”. A new generation of computing systems is emerging with embedded data analytics, and managed, automated, data-centric architectures in which the storage, memory, switching and processing are moving ever closer to the data itself. In today’s programmable epoch, computers essentially process a series of “if then else” equations. In the future, cognitive systems will “learn”, adapt and ultimately hypothesize and suggest answers. This will require a fundamental shift away from how computing has progressed for decades, and at the same time it will also open up myriad new ways for communications service providers to drive data-based revenue streams.

We are only at the beginning of the digital monetization path with all these opportunities on the horizon.

For our full Mobile World Congress 2013 coverage click here.

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