Customer Data and Privacy 2.0 – Telco Goldmine?

Key to many of the value-added services opportunities presented by the ‘two-sided’ telecoms business model, the presentations on customer data and privacy were some of the most inspiring and intriguing of those at the Telco 2.0 AMERICA Executive Brainstorm in Orlando in December and the EMEA Brainstorm in London in November. It is also the focus of the Privacy 2.0 Forum in February 2010. Below are videos and analysis of presentations on:

– whether Telcos could be the bankers of the information economy, by Marc Davis, Partner, Invention Arts and former Chief Scientist at Yahoo! Mobile

– the opportunity in the US and globally, and technical solutions for operators to give customers the ability to control and interact with their ‘digital self’, by Cody Bowman, Head of Business Solutions at Telco 2.0 Partners Nokia Siemens Networks (NSN)

– the four steps for operators to unlock the value of customer data, by Paul Magelli, Head of Subscriber Data Management, NSN

Telcos: the bankers of the information economy?

‘Personal data is hot’ said Marc Davis, Partner, Invention Arts, and former Chief Scientist at Yahoo! Mobile. Marc practices ‘invention by design’, identifying technological investment opportunities 5-7 years out and designing IP for them.
He drew the analogy that user data is the “broken currency of the information economy” and is not yet managed or traded like money. He said that the first companies to build the institutions for trading information currency will be ‘big winners’. Could this be a profitable role for telecoms operators?

No shortage of demand

Many commercial and government institutions want to access and use this data, and privacy is an increasing concern for customers. Telcos, along with internet companies and others such as financial services institutions, are contenders in this space. But do they have the right approach to succeed?

No shortage of power

The power of available declared, observed and inferred data is significant in the hands of expert analysts. Marc cited the example of the ‘best face recogniser in the world’ that doesn’t even look at the photos, but at the contextual data – when and where it was taken, who by, and the connections related to these pieces of information.

No Shortage of Competition – or Regulation

The use and management of customer data is consequently an area of regulatory concern, and information held or used without the user’s implicit or explicit consent is increasingly subject to regulatory scrutiny.

Internet companies such as Google and Facebook make money by matching what people enter on their websites with their consumer behaviour. These organisations capture and make sense of as much customer data as they can and increasingly must obtain explicit user consent to do this. They are therefore starting to take a different approach to managing it, granting users rights of portability and control to their own data.

Could telcos compete as ‘Information Institutions’?

Despite the richness of the data they hold (primarily for the purposes of delivering communications services, charging for them and complying with legal requirements), telcos’ legal approach is typically a combination of ‘your data is ours’ and ‘it’s too sensitive to handle’. Their technical approach is usually to hold the data in silos, and their operational approach is often to avoid using it at all costs. This will need to change if they want to compete as an ‘information institution’.

Is it a realistic opportunity for operators?

At the US brainstorm, Cody Bowman, Head of Business Solutions at Telco 2.0 Partners NSN, talked about technical solutions for operators to give customers the ability and control and interact with their ‘digital self’, and described the opportunity as realistic both in the US and globally.

Operators have some significant assets

As well as the raw data, a strength of operators is that they are trusted partners, and that customers are used to them providing secure services such as billing. A recent NSN survey covering 14 countries and 9,200 respondents showed that communication service providers (CSPs) are in a good position to protect customers’ privacy, and that customers want an active solution – they want to be able to set their own policies on how their digital data is used.

But it needs a different technical approach

To do so requires a different ecosystem and operational structure in order to aggregate the data, and give consumers the means to make informed choices on what is done with the data.

Four Steps to unlocking the data

At the EMEA brainstorm, Paul Magelli, Head of Subscriber Data Management NSN, described four normal steps for operators to unlock the value of customer data:

Step 1. Recognising the value of the data.
Step 2. Collecting and managing customer data as an asset.
Step 3. Improving and personalising the services they deliver.
Step 4. Helping the customer exchange that data in the info economy

NSN’s strategy is to provide the infrastructure to help manage the data and build information exchange.

Paul thought that ultimately there will be market level information exchanges because it will be difficult for some individual operators to provide this. He also said that there is a window closing on the potential value available to operators as many other networks – phone, location, internet social communities, and internet companies that are moving in this direction and could outflank the operators if they don’t act effectively now.

Yes, it is a Goldmine – but you have to dig to extract the value

Information is valuable and increasingly tradable. Some customers already know this. Some of them see it as an opportunity, others are fearful.

Crooks know this, which is why they steal identities. Governments know this, which is why they are huge investors in invasive technologies to defend national interests. Brands and businesses know this, which is why they spend $ billions trying to obtain, refine and use it. Internet companies, phone makers, and telecoms vendors know this, and many of them are adopting increasingly refined strategies to evolve their own positions in this new economy.

The social, government and economic needs will ultimately be served by the market. Telecoms operators have many of the assets and a central position in the digital economy. Operators also have the offer of technologies that could enable them to participate in the solution, and can benefit from other immediate benefits of making better use of their data such as improved customer loyalty.

Many operators are increasingly aware of the opportunity, but they do not have unlimited time or an uncontested field, and have not yet acted effectively to address it. Will they get there in time?

Read our latest analysis and insights on our telco research hub here.