The Telco journey - the multi-billion dollar business opportunity

The Telco journey - the multi-billion dollar business opportunity

5G networks will enable data to move more seamlessly between businesses, locations, platforms and enable new ecosystems. The Web 3.0, or next version of the internet, will create decentralised networks and enable telcos to address the biggest challenge they are currently facing – the steady decline in core service revenues.?We have seen how big tech companies have monetized data on the internet, and for the Telecom company, a data lead business model presents an opportunity for those who look to increase their valuations and future revenue streams.

5G ecosystem data can play a dual role. On one side, analytics support the critical roll out of 5G and network operations; and on the other side, analytics can provide information for precision market insights. This journey from a telecommunications (network) operator to a technology company (Techco) is a path that many telcos have started to embark on.

“International Data Corporation (IDC) estimates that 30 percent of Global 2000 company revenue will derive from industry ecosystem shared data and applications by 2026. We think that is conservative based on what we have witnessed to date as customers mobilise their data in the Snowflake Data Cloud” says Will Cage, Global Head of Telco & Tech, Snowflake.

Data insight as a service for businesses

Telcos have the potential to leverage information from their movements, spend profile and socioeconomic indicators to media and advertisers. 5G could be a means to push targeted and segmented advertising that can easily extend to all digital ecosystems. We’re seeing telecom companies start to pivot into advertising, win digital banking licences or look to get more integrated into health or smart city platforms.

“Enterprises considering 5G, edge computing and internet of things have to start with their business model,” says Alex Vaxmonsky, Director of Global Networks, Equinix. “Are there opportunities for training, failure diagnosis, preventive maintenance, real-time inventory management, anticipating customer needs or improving customer experience?”, continues Vaxmonsky.?

Aggregated, anonymized data?can help telcos enter the business of customer profiling and segmentation, a task that is carried out today through market research which does not rely on the actual knowledge of behaviour. Data on movements can provide real time and personalized opportunities to engage with customers as well as help mobility services for example, they can be used to analyse town layout design and better map and anticipate people movements.

To capitalize, telcos will have to transform?

Telcos’ customer databases hold valuable information such as, facts on customer profiles, usage patterns, location data, app downloads, click stream analysis as well as, their network capacity planning and optimization. This information is valuable to other sectors including health, advertising, retail and banking as it offers a new and potentially lucrative revenue stream. To meet changing customer demand and capitalize on the opportunity this brings, telcos need to develop operational capabilities for functions such as, embedded payments and event-based marketing. This is why we are seeing all global cloud players actively targeting telecom operators - to assist in their data analytics offers.

The global market for telco data as a service is a multi-billion dollar opportunity

Data and information will support new interactions previously not thought of. For example, when consumers request a relocation of their internet service to a new home, this presents an opportunity to market to the homeowner for IoT, security cameras, home speakers etc. We also see telcos looking at offering home insurance bundles which can also be offered when a customer moves home.

Marketeers across industries have a keen interest in telco data as it is tied to events or life stages that other industries can benefit from. This, along with super apps providing broad services, has accelerated sector convergence and monetization opportunities. There is, however, potential for resistance from privacy advocates. Telcos will need to ensure that non-personally identifiable, anonymized information is provided for data/customer protection purposes.

However, there are alternate approaches that leverage this data arbitrage equation. Simply put, as the data shared is worth more than the Telco service itself, permission-based sharing can allow customers to get ‘free services’ from the telco who can then extract more value from the data sharing models. This has created new thinking about the lifetime value of customers when they share data.

Laying the groundwork towards maximising data analytics

There are three key components to build and transition to these new Techco service models:

1.??????The strategic ambition to enable the company to pivot towards a data first organization.

2.??????Data source and data democratization – leverage structured, unstructured data within and outside the company.

3.??????Capability builds to foster ideas, innovation and create value for various personas.

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All three components must work together to maximize returns. This has spawned opportunities for companies and sectors to create their own private 5G networks to own and monetize data opportunities within their own ecosystem.

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“Private 5G networks can provide enterprises with value similar to that of content delivery networks: real-time or near-real-time app execution,” says Joe Zhu, Founder and CEO, Zenlayer. “A private 5G network can provide near-instant analytic insight for process control, industrial use cases and apps using extended reality, for example” Zhu continues.

Future opportunities?

Telcos that approach their future business from a data first approach have started to explore new sectors such as banking, insurance, health, retail and transport. Those on this journey have started to relook at open data models - to push and pull data internally and outside their organization.

Companies that see the benefits of a data-first approach and are able to transform over the years can not only play a stronger role in real-world digital lives but also provide future growth opportunities for their shareholders. Customers and end users can also benefit from products and services being presented to them in ways that can provide added value to them during moments that matter.

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5G articles series by Technology, Media and Telecommunications Leaders, KPMG Asia Pacific.

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This is the final article in a series of five. In the first three articles, we explored how 5G enables future business models, how 5G enables the B2B journey for enterprises, importance of data security with the emergence of 5G and how 5G can transform the world we live in (5G use case factory) Have a read in case you missed these!