This blog is by Claudio Frascoli at Nokia Solutions and Networks.
In the aftermath of revelations about NSA covert data collection practices in the US, it is no surprise that privacy has become a major concern for any industry dealing with customers’ data – and telecommunications is no exception. A customer in Asia recently shared its views while discussing the opportunities big data would bring to its business, and it was very clear in pointing out privacy and regulation as major hurdles to be overcome. Operators, however, have had access to a wealth of customer data for many years and this has generally been well accepted by consumers everywhere. So what has changed? Let’s take a look.
The incredible success achieved by companies like Amazon, Google or Facebook is built on the possibility to monetize data from millions of customers. For this model to be successful, we as end-users need to willingly give up part of our privacy and accept being virtually “tracked”. What we get in return is value, be it in the form of an optimized shopping experience, exciting internet-based services, or simply the possibility of accessing a virtual community that allows us to feel closer to our loved ones.
According to the typical internet business model, this value is provided for free – and is a fundamental aspect that reduces our secrecy concerns regarding our personal data. You give me want I want and I pay you back with some of my data. You give me value, I give you my data – provided I can still be in control and ensure you don’t abuse it. It’s win-win!
Double standard or double the value?
The situation changes when the same model is applied by a mobile service provider or by a more traditional retailer. Many companies are gearing up their big data capabilities to collect information from their customers with the intent of re-selling it in the same way as Google and Facebook do. However, the reaction of consumers in these cases is often completely different and characterized by a negative sentiment. While some may think this is a double-standard, I believe this simply reflects the different value proposition that underlines the relationship between a service provider and its customers, who are already paying for a different service and don’t perceive any desired return in exchange for their data.
That isn’t to say that a return doesn’t exist! There is great value in a better customer experience and this is where mobile operators are increasingly focusing their efforts. In most markets, mobile penetration has peaked and differentiation is tightly linked to the ability to provide a better and more personalized experience to end-users. In order to define, measure and optimize the experience of their customers, service providers need to collect, analyze and correlate amounts of data that are increasing on a daily basis. This is where big data technologies and analytics skills come into play, making possible today what could not be economically achieved just a few years ago.
So, while monetization of customer data is a very interesting and promising area for mobile operators, the real value today comes from using customers’ data to provide them with a superior experience and personalized services. Think about the service provider who is tracking the location of its customers to proactively optimize their service experience or the one who monitors various social media and uses those as effective customer care tools. These are two simple examples of what is happening today and they just scratch the surface of what could be done.
This is the type of value that end-users expect. And this is the trade-off they’re willing to accept in exchange for their personal data. Raise your hand if you would like your mobile service provider to go the extra mile to make sure you always get the best experience. I can guarantee that both my hands are in the air… and I’m sure I’m not the only one.