Telecom’s Big Opportunity in the Data Economy

Have you ever really thought much about it? When you pull into any gas station, you insert your credit card into the pump to pay for your gas. Essentially putting an ATM machine onto a gas pump enabled the modern pay-at-the-pump, self-service gas station. This was a major cross-industry innovation when it first appeared at a gas station in Abilene, Texas, in 1973. 

But for some reason this innovation was slow to gain traction. Even two decades later, only about 13% of convenience stores offered pay-at-the-pump service. However,  less than a decade after that, by 2002, the percentage of convenience stores with pay-at-the-pump service jumped up to 80%. According to the Petroleum Service Company, it took collaboration with a totally different industry, telecommunications, to truly scale the innovation.

This example illustrates how telecoms are the connecting fiber (pun intended) of the economy—a true catalyst for innovation. Now, with the explosion of the data economy, the opportunity for telecom providers to connect other industries, brokering and monetizing data sources and insight services, is enormous. 

The current economic conditions produce the perfect storm. The demand for data is accelerating; companies are acquiring data from more sources and spending more to get it. According to a recent survey by data science company Explorium, 44% of firms acquire external data from five or more providers.

That’s up from only 9% the previous year. Budgets for external data are significant and growing. In the same study, 22% of respondents said they were spending over $500K on external data, with 13% saying they spent over $1M (up from 7% in a similar survey in 2021).

Diverse data delivers richer insights into decisions that improve the customer experience and increase operational agility. Knowing who and where your customers are allows companies to react more quickly and serve customers more effectively. And, that’s great news for telecom providers, who have seen their B2C revenues stagnate. 

According to a recent TM Forum study, revenues from core consumer telecom products grew by just 2.5%. While for most telecom providers, B2B revenues have yet to take off, a few stand out. Spark NZ leads the pack with over half of its revenue from business services; Telia comes in at just over one third. Now more than ever, the B2B data opportunity is ready for takeoff. 

One way to start taking your data to market is from the inside out. Consider a telecom service provider with data from network traffic, call data records, and customer demographics. The service provider might use this information to determine its retail locations (Where are there concentrations of subscribers?). And, then the data might inform the types of products and services it makes available at these locations (Are the subscribers in the area mostly professionals or are they families?). In one case, you might offer international roaming plans and top of the line phones; in the other, maybe family plans with parental controls or starter phones. Internally, data has informed these decisions for many telecom service providers.

The next question is whether other companies or organizations might benefit from this data on crowd density and subscriber demographics. Yes, they would! Here are a few examples:

• Retailers want to better optimize site selection and drive business to a new store, bank branch, or restaurant with targeted, location-specific merchandising and offers.
• Public transportation authorities need to better understand traffic patterns to optimize routes and frequency of buses and trains, or the placement of bikes and scooters.
• Outdoor advertisers and brands seek new locations for ad placement and insights to better target messages for higher returns, for both the ad buyer and seller. 
• Events organizers want to understand movement patterns, arrival times, and demographics to improve traffic flows, personalize offers, and enhance fan experiences.  

Location data is a gold mine with application across many industries. 

Subscriber data can be mined with care

Telecom service providers have volumes of information about subscribers as well. The sharing of personally identifiable information is obviously highly sensitive and heavily regulated. Deriving insights from large volumes of aggregated network traffic data alleviates some privacy concerns. In other cases, such as preventing credit card fraud with location verification or alternative credit scoring, subscribers happily opt in. 

Another option is sharing data without showing it. Privacy-preserving data clean room technology makes this possible by enabling the analysis of data without exposing it to other parties. “Is that possible?” you ask. Absolutely! In the early 1980s a professor posed that very question: how would two millionaires compare their wealth without revealing exactly how much each had? Mathematicians demonstrated that the exercise was possible with pages and pages of lengthy mathematical proofs. Fortunately, modern computers can perform the same task much more efficiently. Snowflake uses governance features to protect data and allow access only for specific queries that generate responses that can’t be re-identified. For example, brands can find out how many prospective customers (based on demographic segments or personas) are in a specific location to inform ad placement. 

Let’s take a look at a specific use case. Imagine a coffee brand wants to place outdoor advertisements relevant to specific customer preferences on bus stops across a city. For example, let’s say the city is Barcelona, where nearly 90,000 professionals from many industries were recently attending Mobile World Congress. A local telecom provider would know where subscribers spend time based on network traffic. A data clean room would allow the two parties—the coffee brand and the telecom provider—to identify common customers with specific preferences in targeted neighborhoods. The results of the query would not deliver exact names or personal information, but only the number of those personas or segments in a specific location. As the table below shows, the coffee brand would see that 8,000 of its cold brew-drinking customers could be found in the El Poblenou neighborhood, and that’s where it would place its ad. 

Large media outlets use data clean rooms for premium ad placement. But the opportunity to incorporate location data is specific to the telecom provider. With many providers moving into television, these ad services deliver even more value with converged insights from fixed, mobile, and media properties. 

We’ve witnessed massive growth of connected devices and the emergence of IoT offerings among telecom providers. Yet, according to TM Forum, the share of telecom revenues from IoT remains small—only 1.4% of total revenues. The data opportunity, however, offers promise. IoT solutions extend from pure connectivity to industry-specific end-user applications. By embedding device usage, location data, weather data, and other sources into these applications, telecom providers can deliver more business value and take a strategic seat at the table.  

The possibility for data-enriched IoT applications extends across all industries with the ability to: 

• Drive customer personalization by building consumer profiles, optimizing devices and services, and predicting anomalies based on device usage and user behavior patterns.
• Optimize retail sales by analyzing shopper traffic patterns, and monitoring inventory with sensors to improve cross-selling, optimize shelf space, plan staffing needs, and predict supply to meet anticipated demand.
• Improve patient outcomes by monitoring patient health and analyzing data from fitness bands and medical devices and by delivering insights to patients, providers, and payers. 
• Improve fleet efficiency and ensure driver safety by analyzing vehicle telemetry such as engine data, speed, acceleration, and location.
• Advance energy efficiency and water conservation by monitoring water, electricity, oil, and gas sensors and delivering insights that power smart cities, optimize utility companies, and more.
• Improve building management by monitoring and controlling smart devices such as door locks, security cameras, smoke detectors, lights, thermostats, and sprinklers. 

With the scarcity of data and analytics talent in the workforce, many B2B customers would likely welcome the help in delivering targeted business insights to their organizations.

Telecom service providers can build and deliver new data and insights services, and it’s time they did. This is an opportunity to drive and diversify revenue streams. Back in my time as an analyst, my research explored the talent shortage and the need for consulting and advisory services. Forrester defined a new category of insights services providers that “combine business knowledge, analytics and data science expertise, and technology skills” that companies don’t necessarily have internally, or don’t have time and resources to develop. 

At the time, among telecom providers only Telefonica was recognized as one of these early insights services providers, leveraging data assets from global networks and a massive subscriber base across 17 countries. Other telecom providers have started to offer similar data and analytics services, yet as I mentioned earlier, overall B2B revenues remain low. What are they waiting for? 

That all telecom providers are sitting on valuable data is not a new revelation. Increasing connectivity accelerates data creation. The challenge and the opportunity for telecom providers is to derive value from that data—for themselves and their customers. It’s beginning to happen. To learn more, check out the Snowflake telecom webinar series How Telecoms Are Accelerating Digital and Data Transformation. This three-part series discusses how telecom service providers can accelerate their digital transformation initiatives to deliver actionable intelligence and insights—for themselves and their business customers.