Opinion: Why mobile operators are still slow off the mark in the digital service race, March 2016
By Timo Ahomäki, CTO at Tecnotree
The arrival of Facebook, Netflix and Square, among other content providers has changed our lives exponentially.
We can now share video clips with friends, watch the latest movies and must-see TV box sets and pay for goods and services all through our smart phones or tablet devices. While this allows us to access content on the move and make our lives easier (not to mention, more enjoyable), it’s raised the benchmark high for mobile operators to compete with these digital disruptors.
It’s no longer about voice plans, text messages and offering attractive mobile data packages. Operators need to transform and up their game to become content service providers themselves.
While the industry is aware that change is required, research* conducted among mobile operators, by Tecnotree in partnership with MobileSquared, reveals that they lag behind their speedy competitors. An overwhelming 89 percent admit that OTT and other digital content providers can rollout new services in just 1-6 months, while nearly a third say it takes at least a year for them to do the same. What’s more, demand for these services is only set to increase. Sixty nine percent of operators expect to see a rise in the usage of digital from customers travelling to Europe, as a result of EU roaming legislation.
In order to benefit from this, operators must rapidly utilise these developments in order to redefine their service offering, prevent churn and ensure that data remains in their networks.
Operators are fully aware of the lucrative rewards on offer. Three quarters have noticed an increase in ARPU from digital or digital content services over the last 12 months. And, action has been taken to make the most of this.
Earlier in February, an Alliance was formed between nine operators to bring digital products and services to customers in quicker time. But while the industry is starting to take steps to boost revenues, it won’t beat its nimble rivals overnight. This is because there are a number of challenges on the track.
In order to better compete, operators must strive for a much higher level of customer interaction, with greater quality of service as well as quicker delivery.
One of the biggest hurdles is around Business and Operational Support Systems (BSS). Almost half of mobile operators in our survey still need to update various legacy BSS infrastructures every time they want to deliver new digital services to their customers. And, just 21 percent have made the move to fully integrate billing functions within their digital product set.
However, the time it takes to replace all, or significant parts, of the stack with a new BSS present a further challenge with 37 percent of mobile operators saying it takes at least a year. This problem has many parallels to a similar survey we carried out in 2013, indicating that limited progress has been made to solve this.
Customer profiling brings additional hurdles. Nearly half of respondents believe an off-the-shelf product enables faster time-to-market in offering digital and digital-content services.
However, while they recognise the importance of providing a personalised service package, or product catalogue that is more relevant to customers, 30 percent of mobile operators say that CRM and profiling issues are the biggest barriers to achieving this. This was identified by respondents as an issue in the 2013 survey too, although to a lesser extent.
It requires among other things, a different approach to data analytics. Rather than relying on ‘traditional’ big data approaches only, they need to concentrate more on 'small' or 'smart’ real-time transactional data in order to keep customers engaged.
Mobile operators have their work cut-out to overcome the digital challenges of today. Customer profiling and the number and complexity of legacy billing systems are the biggest issues to contend with.
Three years ago, operators told us the exact same thing, along with problems around cost and integration of separate BSS/OSS, yet little progress has been made to rectify this. Operators therefore require a more agile approach to their IT systems as well as access to smarter data in order to seek digital transformation and win in the race.
*About the survey
The online survey comprised 29 questions and was open between 19 January and 1 February. A total of 46 operators participated in the survey with 39 completing. Job functions included CMOs, COOs, CTOs, Managing Directors, Marketing Managers, Product Managers, Strategic Planning, Business Development and Value Management. A total of 64 percent of respondents had their main area of business in Europe, followed by 18 percent in the Middle East, eight percent in Latin America and five percent each from North America and Africa.
This piece was originally published in European Communications.