Like Google and Facebook, telcos have access to data which could be used to paint a near complete picture of our lives. However the industry has approached data monetisation with much more caution than its technology counterparts.
The regulatory grey area surrounding data ownership and competitive forces are a major reason for their caution, argues Nikhil Batra, senior research manager at IDC.
The telco analyst told Which-50 the industry “generates huge amounts of data,” like which apps you are using, the content you’re viewing, where you are and how many people in the household are connected to the internet.
That behavioural data sits on top of the customer data held in its systems when you sign up for the service, such as name, age, gender and address.
All that information gives telcos valuable insights that could be sold to the advertising industry or used internally for the company’s own hyper personalised promotions. For example a highly engaged Youtube viewer could be persuaded to switch contracts if offered a deal on free Youtube data.
In the US Verizon’s Precision Marketing Insights uses location and CRM data correlated with third-party data and some mobile behaviour tracking to profile the typical crowd at Phoenix Suns basketball games in order to target likely season ticket buyers.
While there have been some examples of US and European telcos venturing into data monetisation, Batra says a lot of service providers haven’t pursued it.
“There has been discussions around data monetisation but things that have not really gone very far for the industry,” Batra said. “Often where telcos stumble is the regulatory uncertainty.”
In many cases it remains unclear who owns the data and to what extent are telcos allowed to use this data. The prospect of having to pass external audits on data use is also seen as a challenge.
“In a lot of countries there is no particular regulation that exactly spells out how this data is to be used and what you can and cannot do with this data. This often acts as a detractor for a lot of telcos getting into that data monetisation space,” Batra said
A recent IDC survey found only 10 per cent of teclos in APAC view this data as a competitive asset and said that monetising data was the top priority for them. Respondents cited security and regulatory uncertainty as the two major drawbacks.
“I have direct feedback from some of the CIOs in Asia Pacific where they don’t even want to get into these conversations because it’s very difficult to earn the trust back off the end consumers in an industry which is as competitive as the telco industry.”
Unlike Facebook and Google, which provide users with a free services and dominate the digital advertising industry, telcos operate in a very different competitive environment. The margins are thin and the churn rate is high, meaning there’s a premium on retaining existing customers because the cost of acquiring a customer is often very high.
When they are already in the “bad books” with many consumers, Batra says they don’t want to risk getting burnt by regulators and consumers by chasing additional revenue.