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Big Data and Analytics Telco Strategies, Investments and Use Cases
Big Data and Analytics Telco Strategies, Investments and Use Cases
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Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Summary
Telecoms operators are embracing big data analytics (BDA) with enthusiasm, but while many report that BDA is
fully operational and already contributing benefit to their organizations others are still at the exploratory stage of
addressing its potential.
The key challenges operators face are a lack of BDA skills, organizational issues and siloed data. It is clear that
to be successful there needs to be a cultural change within organizations, with leadership coming from the top.
However, operators are taking different approaches to their implementations, some opting for a centralized
approach, others for a decentralized model, while a minority has set up a separate business unit.
A range of use cases for BDA exist in the telecoms environment including network optimization, fraud detection,
customer experience management, churn reduction and data monetization. Customer satisfaction / churn
reduction is the most important driver of BDA implementations and linked to this is the ability to personalize
services for individual customers which is the next most important rationale.
Operators are striving for increased revenue as well as cost reductions and in many use cases both can happen
in parallel. An operator that uses BDA to prioritize the roll-out of a 4G network to areas of highest demand can
do so more cost effectively while optimizing revenue growth potential, for example. Data monetization based on
the sale of data to third-parties is more complicated in some regions of the world because of data privacy
legislation and for this reason operators in the US and Asia seem to be further ahead as those in, say, Europe
and Australia.
Set against the backdrop of an unprecedented challenge facing operators to differentiate themselves from the
competition it is clear that those operators who make BDA work for them can put themselves at a significant
advantage over their competitors. While operators are very reluctant to quantify to what extent they have
benefitted already in terms of revenue generated or costs reduced it seems clear that potential benefit is huge.
But of course all operators cannot benefit in equal measure. The extent to which BDA implementations are
successful is set to be a significant factor in determining who the winners are and who will lose out.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Catalyst............................................................................................................................................................................ 2
Summary ......................................................................................................................................................................... 2
BDA to play increasingly important role in helping service providers address challenges of today’s marketplace .......... 6
Global telecom services increasingly commoditized and competitive, customers value experiences more .................... 6
Telecoms operators typically work with top vendors and service providers when implementing BDA ............................. 7
Regulation and privacy legislation are key issues, particularly when selling data externally ........................................... 8
Churn reduction driving BDA, investment & RESULTS MIXED as challenges remain ...................................................... 10
Survey of participants in BDA in the telecoms sector shows different stages of implementation ................................... 10
A number of factors drive telecoms operators to implement BDA but customer satisfaction/churn reduction most
important........................................................................................................................................................................ 10
Customer satisfaction improvements the key perceived benefit for operators when implementing BDA ....................... 13
AT&T has a long tradition of groundbreaking research and development and BDA now plays a central role in this effort
...................................................................................................................................................................................... 16
Orange is leading the way in harnessing BDA to monetize data, impressive given European data privacy laws .......... 16
Transport.................................................................................................................................................................... 16
Tourism ...................................................................................................................................................................... 17
Flux Vision counts more than 70 businesses and communities as customers .............................................................. 17
SingTel's BDA initiatives focus on improving customer insights in a retail setting ......................................................... 17
SingTel has earmarked significant funds to invest in analytics-driven initiatives involving advertising, mobile video,
cyber security and smart cities ...................................................................................................................................... 18
Through M&A and partnerships Telefónica has demonstrated a commitment to embrace BDA ................................... 18
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Fraud detection less popular use case for BDA implementation than others, but an important application nonetheless
...................................................................................................................................................................................... 19
Using analytics to improve customer satisfaction can result in additional revenue opportunities .................................. 19
Some BDA providers harnessing technology to provide services their customers can use to service their own ........... 20
Conclusions....................................................................................................................................................................... 21
BDA will play a major role in helping operators differentiate themselves ....................................................................... 21
Successful implementations of BDA requires operators to change their traditional internal culture .............................. 21
Customer satisfaction / churn reduction is the most important driver of BDA implementations ..................................... 21
Operators need to recognize that BDA can play a role in helping them survive while others fail ................................... 21
Appendix ........................................................................................................................................................................... 23
Sources ......................................................................................................................................................................... 23
Disclaimer ...................................................................................................................................................................... 24
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Potential benefits include greater efficiency, cost reduction and new revenue generation models. In the past few years
CSPs across the world have been working with technology providers and consulting firms on a range of BDA projects.
While there are strong indications that virtually every CSP has a BDA initiative, the dearth of case studies and insight into
the outcomes of these projects suggests that this it is still early days for BDA in the telecoms sector.
With saturated markets and the differences in services provided diminishing, consumers are valuing overall experience
more than the services themselves. Customer experiences are driving customer loyalty and churn; 51% of consumers in
IBM’s 2014 Global Telecommunications Consumer Survey, for example, stated that a positive experience would increase
loyalty to their provider and 90% said they would consider competing offers after a poor experience with their service
provider. Operators need to focus on winning customer loyalty through enhancing customer experience in the saturated
global telecom market. To accomplish this many operators around the globe have adopted loyalty programs and social
media strategies powered by big data analytics.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
25.0 22.63
21.78 21.96 22.04 21.90 21.70
20.0
15.0
5.0
0.0
2015 2016 2017 2018 2019 2020
Many of the major players in these traditional ICT markets now have leadership positions in the BDA market. In addition
to these, the BDA ecosystem now includes hundreds of smaller companies. New start-ups are added every year.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
The US and Asia have seen more data monetization initiatives with the telecoms sector because privacy legislation is
less restrictive than it is in Europe, for example. In Europe there are major differences between the attitude to privacy in
Germany and the Nordic area on the one hand and the UK and Southern European countries on the other.
China Unicom and Telefónica recently set up a joint venture that will extend Telefónica’s Smart Steps initiative to China
and will sell big data services to organizations involved in transportation, urban planning, tourism and other industries.
This is in contrast to Germany where Telefónica withdrew the Smart Steps program from the German market as early as
2012 because of pushback from the government. The likelihood is that Germany will exert considerable influence on any
effort by the EU to relax privacy legislation.
Operators cannot rely on legislation changing in their favor in order to facilitate the sale of consumer data, whether
“anonymous” or not. They must address the issue of privacy at every stage of the development of new service offerings.
Measures could include more secure storage of data, the use of encryption and an effort to obtain “opt-in” from
subscribers with regard to their data.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
The findings show that there are two main waves of adopters:
A “first wave” for whom their implementation is fully operational and contributing to their organization, and a “second
wave” that are currently exploring the possibilities. The sample is fairly evenly split between the two.
More surprisingly, the wish to provide BDA services to customers comes next in the list. Lower down the list but still rated
four or five by a majority of respondents in each case are network traffic optimization and fraud detection.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
33%
40% Investment equating to a
considerable percentage
(10%-30% of annual IT
budget)
Very significant (30+% of
annual IT budget) multi-
10% year
17%
Don't know
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
6.7%
Decentralized
20% 33.3%
Centralized
Business Unit/Profit
Center
Other
40%
Organizational issues and the fact that telecoms operators tend to have very siloed data are more difficult to address.
One of the key findings of the broader research for this report is that these are still key challenges that operators must
overcome.
Looking further down the list it is evident that lack of budget or buy-in from senior management have presented much
less of a challenge. It further suggests that even with these in place there is not guarantee of success if the culture in the
organization cannot be changed to allow the right people, those with the right skills, to have access to the data they
need.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Other 23%
Other 17%
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
This is particularly good considering that many organizations are still at the exploratory stage of their BDA deployments.
The fact that a large proportion is “neither dissatisfied nor satisfied” reflects this. This strongly suggests that for many it is
too early in their deployment to make a robust calculation.
Improved customer satisfaction is key driver. Customer satisfaction / churn reduction is the most important
driver of BDA implementations among the firms surveyed. The ability to personalize services for individual
customers is the next highest and also linked to revenue generation. Of importance too as a driver but less so is
network optimization, which is focused on cost savings.
Scale of investment is small for the majority. In the case of 40% of organizations the level of investment did not
exceed 10% of IT’s budget. However, a third of respondents did not know the size of the investment. Very few
made a significant, multiyear commitment to BDA investment.
No pattern to how BDA is structured within organizations. A total of 40% opted for a centralized approach when
setting up the BDA function in their organization. A third opted for a decentralized approach while just 20% set
up a separate business unit.
Customer satisfaction is a key expected benefit. Just as it was the key driver of BDA for the majority it is also
the benefit that most respondent organizations expect to see from their deployments.
Satisfaction levels are good. Between 40- 50% of respondents either “satisfied” or “very satisfied” on most
measures. This is particularly good considering that many organizations are still at the exploratory stage of their
BDA deployments.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Siloed data ownership: Telecoms firms produce lots of data, more than most industries, but it also tends to have the data
distributed in different parts of the organization. Billing data sits in one area, network traffic data in another. This can be
accentuated by mergers and acquisitions resulting in multiple billing or CRM systems within the same organization.
Creating a structure where data “owners” buy in to the initiative is another hurdle.
Availability of skilled staff: Another challenge facing not just the telecoms industry but every industry intent on embracing
BDA is the global shortage of skilled personnel. There are, of course, consultancies and BDA service providers who can
provide certain skills during implementation but from the very start telecoms operators need to have their own people
capable of establishing an in-house analytics unit that builds, over time, an understanding of the very specific nature of its
data sources and how analytics can work best for the organization.
Technology: The technological requirements of conducting BDA are considerable and nowhere more so than in the
telecoms industry where the volumes of data for analysis are vast. Many of the analytics tools being used now have been
around for years and the thing that has facilitated the current popularity of BDA is the falling price of the hardware
required to run it all. Large volumes of data can be analyzed using commodity servers, albeit in large number. Despite
this, telecoms operators embarking on BDA initiatives need to be fully aware that there will be a steep learning curve for
the non-specialist staff in particular who become involved in the analytics activities within the organization.
Set achievable goals at the beginning. While the appointment of a BDA leader and evangelist is important, another key
factor in a successful implementation will be to demonstrate success at an early stage. With this is mind it is essential
that the organization does not fall into the trap of setting too many goals and trying to please everyone at once. Even with
senior level support for the initiative and a senior person leading the project it is important to be able to show positive
results in order to fully demonstrate the benefits of the process. Conversely, by taking the analytical process in small
steps it allows the team the flexibility to change direction if any early objective isn’t achieved.
Avoid falling foul of privacy issues. Operators need to always keep in mind the challenge of maintaining subscriber trust.
Key dangers are security breaches where private data becomes public or changes in legislation which makes things
more difficult. This is particularly true for operators who are selling data to third parties. Data needs to be anonymized
and there needs to be transparency with subscribers about how their data is being used. Some operators are doing this
successfully already and their example can be a guide to others.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
AT&T partnered with IBM to combine their analytic platforms, cloud and security technologies with a view to developing
solutions which support the Internet of Things initiatives, mainly for city administrations and mid-sized utilities companies.
AT&T also leverages a tool it developed named Mercury, which uses analytics to help the telco understand network
health after planned maintenance. Another tool, MINT, helps in the identification of the location of the problem in the
network and the cause for it.
- Connected Corridors project which leverages anonymous data to forecast traffic patterns in Los Angeles.
- Smart city project in northern California where BDA can help determine the best place to build ride share parking lots.
The key verticals leveraging the product are transport, tourism and trade and distribution.
Transport
Orange offers insights related to travel patterns and schedules, traffic by transport line, comparisons of traffic by mode of
transport between two cities, real-time information on traffic congestion points (section, station), delays etc. to the
transport agents. In addition, Orange Applications for Business (the digital services company of OBS) is helping
passenger transport companies improve passenger flow patterns on their networks.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
The operator has a successful BDA monetization project ongoing with Chamonix Tourism where its Flux Vision product
allows its client to:
Regularly receive statistical reports about the behavior of tourists using data on the mobile network
Use this data to improve its tourism offer and make informed decisions
Orange offered trial of Flux Vision to Bouches-du-Rhône Tourisme to analyze tourist activity. After the success of the
trial, National Network of Departmental Destinations (Rn2D) has signed an agreement with Orange Business Services to
deliver the Flux Vision solution to all ADTs (French Tourism Development Agencies) showing its potential for businesses
and local authority clients.
In addition SingTel is using BDA in a customer care capacity. When a customer calls the care center the person taking
the call is provided with guidance on what the customer might be calling about based on BDA output.
SingTel launched a cloud-based video analytics solution for the retail industry. Singapore-based analytics solutions
provider KAI Square Pte Ltd (KAI) has developed a solution, Video-Analytics-as-a-Service (VAaaS), for SingTel. This is a
subscription service that leverages analytics to extract information from video images. With this technology, businesses
can gain insights into customers’ in-store behavior and configure their operations to better serve customer needs.
SingTel used its Cheer Aggregator data analytics platform to power Team Singapore for the Southeast Asian Games
2015. It aggregated and analyzed online sharing, conversations and sentiments to derive unique insights for the team.
The platform is powered by Amobee Brand Intelligence insights and tracks what people say on social media platforms
and the digital content they consume. It identifies and ranks the audience’s interests by trending associations, such as a
specific topic, athlete or sport.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
China Unicom and Telefónica have set up a joint venture, Smart Steps Digital Technology Company Limited, in China
that will sell big data services to organizations involved in transportation, urban planning, tourism and a range of other
industries. The JV is 55% owned by China Unicom with the rest held by Telefónica.
The investment is designed to enhance the return on Telefónica’s future capital investments (more than $7.5bn in 2014)
and help transform the company into a major market player in areas such as next-generation networks, big data and
machine learning, and the Internet of Things.
Collection and Storage: A range of systems and storage, on-premises and in the cloud, facilitate the ingestion of large
volumes of data. The falling cost of access to this technology has played a major role in allowing the type of analytic
activity that is being done in the telecoms sector at present. Many of the other tools such as structured databases and
BDA software have been around for many years but are now more accessible.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Vodafone has 450 million customers. Vast amounts of data are generated every day by mobile traffic. Argyle Data
implemented a solution for Vodafone to apply a big data stack to analyze mobile traffic data in real-time to detect
anomalies. Traffic data is streamed into a data lake at a high ingest rate and BDA technology capable of analysis of
hundreds of millions of times series is used. Fraudulent activity can be identified in three to four minutes, which would
have taken 24 hours previously. The ability to conduct this sort of analysis is facilitated by the lower price of (commodity)
hardware that it runs on as well as the BDA technology.
MTS invested in a BDA solution which included HP Vertica with the aim of reducing customer churn and allowing the sale
of additional services to clients. The system gathers information from pre-pay users primarily with a view to offering close
to real-time offers based on their usage.
By rewarding customers with additional minutes or data it increased its conversion rates for purchases of additional
services from an industry-average of 3% to 6.5%. In addition the BDA solution has helped reduce overhead cost in the
business operations area. The marketing function can now develop their offerings without engaging with the IT function
for each one.
XO Communications, a US operator, began to focus on reducing churn rates among its customers. Its aim was to look at
a range of data on each customer and to use that insight to increase retention. Solution: Recognizing that churn is a very
complex thing XO began to use a mix of IBM products to identify and analyze a greater level of data about their
customers. This data ranges from dealings with a sales team to any customer service issues they might have had. The
insight is then used by both customer care and marketing departments to assign a “churn score”.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
A key aim is to look at the ways in which the major social media firms like Google, Facebook and Twitter deal with
customers and replicate some of this for their clients. Though Sprint is the key investor, the company works with other
operators too.
Other clients, as well as the operators, are advertising agencies and brands. The company has plans to develop a major
revenue stream for its major investor in the coming years in a context where Sprint is under increasing competitive
pressure in its core telecoms markets.
Telefónica set up Dynamics Insights as a separate business unit with the aim of delivering revenue from BDA. It was one
of the first BDA initiatives by a telecoms operator that was focused beyond internal processes. An early product was
Smart Steps, which aimed to analyze crowd behavior and was targeted at the retail sectors offering to assist them to
localize offering for existing stores and identify locations for new ones.
This migrated to analysis of consumer “journey” data which was then targeted at rail operators in the UK. Similarly, data
on car journeys was targeted at transport consultancies that plan infrastructure / passenger services initiatives for the
public sector. The value of this type of data has now been fully established. The business unit continues to look for new
markets for data monetization. Since this is very different from the normal operation of a telco the key to success has
been to focus on the task, bring in the necessary skills and remain flexible. From the beginning data protection has also
been a key focus with data anonymized and aggregated at all times
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
There are two “waves” of adopters of BDA currently, one group whose BDA implementations are up and running and
already contributing to the organization and another group who are at a more exploratory stage of development. Access
to BDA skills is considered by operators as a key challenge in addition to the internal cultural challenge cited above.
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
Further Reading
From token loyalty to meaningful relationships: How loyalty programs and Big Data Analytics are facilitating CRM in the
retail sector – MarketLine Case Study
Agriculture and Big Data: Will Big Data technologies be the next big leap for industrialized agriculture – MarketLine Case
Study
Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016
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Big Data and analytics: Telco strategies, investments and use cases ML00022-024/Published 06/2016