MARKET | Oct 6, 2016

Telcos can compete with OTTs, thanks to Big Data

Roberto Vicentini interviewed by Stefano Palumbo

Roberto Vicentini, Director of Engineering’s Telco and Media Division, was a member of the panel that drafted the “TLC 2025” scenario. Research has examined the issues of digital transformation both on the side of its implications for the business of this sector and in terms of major social and economic issues. And it is on a very broad theme that we started to talk.

The investigation we have just concluded stresses that in the coming years we will experience, also in Italy, an explosion of data production. Home automation, smart cities, smart cars, digital transactions and, generally, the digitization of a large part of services will provide increasingly sophisticated tools for profiling people. This will give rise to a growing possibility of influencing consumer preferences and choices in a customized way. Is Big Data about to become the “hidden persuader” of the 21st century?

I would not speak of hidden persuader. Large databases have existed for some time, but today we also have the techniques and skills necessary to combine them in an original way, to process them and interpret them, building information bases on the basis of information that often comes from different sources but which, taken together, can describe a trend and also express a decision-making value. From various points of view, the result can be beneficial for the consumer, because it can be of support in the decision-making process, from both the point of view of logics of purchase and of the relationship that the consumer has with the supplier, the telephone operator, in terms of loyalty. The consumer does not need to gather information to make his/her own decisions, because it is conveyed in a targeted manner on the basis of data analysis.

The collection of information is carried out by asking for the consent of the customer, who is thus informed that the service provider is collecting data about him/her. Furthermore, we have very strict privacy laws in Europe. However, downstream of collection is the use of data for market purposes. What Facebook or Google do is collect detailed data about me (the books I searched news about, the issues on which I read newspaper articles, the phone book of my smartphone, the places I went to) and use them to send entirely customized advertising-type messages about what they assume interests me. So, I am no longer reached by messages related to my target (man, graduate, between 50 and 60 years old, etc.) but by messages designed for me as an individual. This makes them extremely more powerful, more persuasive, to be precise.

Yes, but the marketing operation conducted thanks to the data is not hidden. It is an influence that the consumer may perceive, and for which consensus was sought. The advantage for the consumer is to be not bombarded by advertising messages entirely disconnected from their ideas, tastes and needs. The fact that one starts from the data that the consumer produces and then proposes consistent stimuli to him/her is not in itself invasive, detrimental to his/her privacy.

According to research, Telco in Europe will remain constrained by regulations, crushed between rules and OTTs. Do you recognize yourself in this prediction? Is it inevitable that it will be only the OTTs to take advantage of Big Data and so the “deposit” available to TLC operators remains prey to incursions from overseas?

The starting point is that the datum has value. OTTs are obviously well aware of these things. Through the consensus they seek from the customer at the time of downloading the app, OTTs are able to detect and use all forms of consumer behavior that the customer puts into effect through their phone. In this way, they build a customer profile (what they buy, where they go, etc.) and they sell it.

Operators have the same information but cannot use it; or rather, they feel they cannot use it because of the problems of privacy. But the customer experience, enriched with other kinds of information, can also become sellable information. Operators have a cultural tendency to consider the data processed by them as a “sensitive datum”. It is understandable that this happens, because they have often been judged on this issue by the Data Protection Authority or the Communications Authority for behavior that could be detrimental to customer’s rights.

You say operators have the feeling of being constrained by privacy. However, it seems to me you are not convinced this is so. Why do you think there this feeling and why it is wrong?

Beyond the concerns about regulatory compliance, organizational elements also come into play. In fact, within the Telcos, there are various sectors that manage customer data. One part of the data comes from network maintenance; other parts are related to the commercial dimension, to the direct relationship with the customer through the CRM; still others are consumption data, which are sensitive data and which operators are required to safeguard, also in function of the demands of justice. Who in the company safeguards data tends to have a very cautious attitude in this area. So the various sectors that hold different types of data tend, to some extent, to use them in a separate, fragmented way.

We at Engineering believe that, in the field of Big Data, Telcos are losing a great opportunity. In actual fact, data can be made anonymous and thus managed in full compliance with privacy. If operators were to use all the data in their possession, the “customer experience” could be reconstructed in a very refined way, by combining consumption data (how many phone calls, for how long, to how many people, etc.), commercial data (the extent to which the customer is loyal to the operator, or tends to change it frequently; but also what contacts there are with customer care, how frequently and with what results, and so on), and technical, network data (problems of coverage, of line, etc.). With this information, it is possible to come up with a profile of the consumer. These are all data that a telephone operator possesses, because they come from their system. Today, however, the operator uses them in a very partial way.

You have developed an offer of services that aim to support Telcos in data management. How has this offer been conceived?

To begin with, it should be noted that the skills necessary for data analysis are not generic, easily transposable from one industry to another. The Data Scientist must have market expertise: if they work for a telephone company they must understand quite well what the phone problems are, because they have to know what kind of correlations to look for and the type of algorithm they must implement. So, to offer services to this sector, you have to know it. And this is a quality that we have, because today we already provide services for customer data management, and we have a thorough knowledge of the industry.

In this sector, a company like Engineering can have three roles:

  • be the one that deals with finding and systematizing data that someone will then analyze (a professionalism that comes from expertise on old data warehouses);
  • develop system integration projects for creating platforms that make it possible to process the data;
  • or – and above all – there is the possibility of expressing a specific expertise on the data that one wants to produce and supply the service of collection, correlation, analysis and interpretation of the data, providing a series of insights useful for the customer’s market choices: a finished product, in short.

As I said, the Data Scientist is able to add value to the information on which they operate through their ability to enrich the interpretation. On this aspect, we are positioning ourselves as providers of information and services, rather than of platforms.

Offering the operator an already increased value datum – based on the information that the operator already has in-house, but enriched with additional correlations – can provide them with indications useful, for example, for the development of a new service, or new tariff systems, targeted to specific customer profiles.

Operators are behind time, they have not yet fully perceived the value that the datum possesses. In actual fact, someone in Telco has perceived this, and has launched some projects based on Big Data. But often it is different sectors that do this, and everyone does it for their data, with little coordination or none at all. In other cases, there is an attempt to sell services based on the use of the data, but commercial capacities are still weak. Thus Telcos still leave much space to OTTs, even though they potentially have the ability to compete with them on this ground.

Basically, it is possible to help Telcos be more competitive with OTTs in the area of Big Data enhancement.

Of course, and this could also promote their service capabilities. Because today they are pressed on the safeguard of connectivity and do not have enough presence on the content of the communications and so on the offer of content and services. It is not necessarily inevitable that the domain of video content be left to Netflix or the domain of communications – even those of voice, by now – to WhatsApp.

Stefano Palumbo