Telecom operators are in a prime position to monetize the data they generate from their clients. To do so they must take important strategic choices to formulate the right value proposition, business model, and go-to-market approach for this endeavor.
Data monetization normally entails collecting and processing information from customers and selling it in some form to third parties. The anonymized data, in categories such as age, location, or ethnicity, is either sold directly to clients or to aggregators, which combine data from multiple providers to improve their accuracy. The eventual beneficiaries of this information, private companies or government organizations, use it to improve their own performance through refining their understanding of customer behavior, and by boosting the success rate of commercial decisions.
Companies from many industries currently sell their data to clients. These could include insurance companies passing on bundled data on healthcare claims to pharmaceutical companies, or automotive firms providing car speed data to municipalities.
Nevertheless, telecom companies have several natural advantages over their peers when it comes to monetizing data. The greatest is the breadth and quality of the information they possess. Due to frequent interaction with customers, and near-continuous data on the whereabouts of phones, they hold richer information on customer profiles, locations, and communications usage than potential competitors such as over-the-top content providers.
There are three main ways to monetize data (refer to Figure 1). The first is through using the raw data. This could involve selling the raw information on its own, or after aggregating it with data purchased from third parties such as market research organizations or data analytics specialists. Alternatively, the telecom operator can sell its data through online marketplaces or application programming interfaces (APIs), which both allow for specific information in a desired format according to client need.
The second is by using applications. Telecom companies can provide a platform for third parties to host their own data and gain access to the telecom company information. Clients can build their own applications on the platform to profit from these data, perhaps through the targeting and segmentation of clients. Or telecom operators can develop their own applications that manipulate the data and help clients accordingly. For example, relevant applications could enable public transport authorities to plan and manage their services based on real-time traffic information.
The third is to monetize data through providing analytics services. In this approach, telecom operators sell the services of their own specialist data scientists and consulting professionals to clients.
Many telecom companies throughout the world have already started to capitalize on the opportunities afforded by data monetization. For example, Singtel has used data on customer profile, behavior, and location to help clients in Singapore identify the most productive positioning for their billboard adverts, and the most favorable timing of digital adverts for various products. Similarly, Telefonica has worked with retail operators to make the most of offerings and promotions in stores, and determine the optimum location for new branches. In the MENA and GCC region, telcos have started monetizing their data; for example, STC and Zain are building their big data analytics solutions to tackle specific use cases for enterprises.
With governments throughout the GCC now placing big data at the heart of their modernization agenda, its impact on the regional economy is only likely to grow.
It is up to each telecom operator to settle on the most appropriate way to monetize its data, either selecting one particular path or a combination. They have typically started by providing data APIs and developing applications to meet their clients’ specific commercial goals. However, some have branched out to become end-to-end service providers, offering a one-stop shop of raw data, solutions, and other services.
Before finalizing their plans for data monetization, telecom operators must be able to answer a list of important questions regarding the value proposition, business model, and go-to-market strategy. What type of datasets should be offered? Should the data be sold directly to clients or to aggregators? Should a dedicated business unit be established for data monetization? What pricing system should be adopted? Which industries should be targeted?
Once telecom operators have successfully grappled with these and other issues, they can then set about exploiting their natural advantages in monetizing data, a commodity that is set to be increasingly valued throughout the GCC economy over the coming years.
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