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On Becoming Digital, Pt. 3: The Business Model for Mobile Network Operators

On Becoming Digital, Pt. 3: The Business Model for Mobile Network Operators

In Part 1 of this series, we discussed “becoming digital” is all about deeply “understanding the consumer” and developing capabilities to “engage the consumer”. In Part 2 we discussed “becoming digital” from a newspaper perspective. Part 3 extends these discussions to Mobile Network Operators (MNO’s) and Mobile Virtual Network Operators (MVNO’s).

Recently there have been numerous digital articles about reactions to the overarching power of businesses like Google/Facebook. At stake here is the US$9 billion per annum advertising revenue enjoyed mostly by these two companies.

In writing this series of blogs, I have come to one conclusion – It must be those businesses that have been disrupted in the formidable emergence of such global giants. The last blog talks specifically about newspapers. In this article, we focus on Network Network Operators. The same logic, however, can be extended to internet service providers and wi-fi operators. A good place to start is the Magic Quadrant discussed in Part 1.

Figure 1: The Magic Quadrant

The general public view is telecom carriers (and other utilities) have good knowledge of the customer. Let us investigate the customer’s journey when buying, activating, and using their mobile phone as portrayed in Figure 2.

Figure 2: The MNO/MVNO Customer Experience Journey

There are many handsets sold through a variety of retail outlets in every country today. Broadly speaking consumers buy their mobile phone as the first step. The consumer next signs up with a mobile network operator for voice and data services using one of the numerous plans offered by each service provider. At this point is a KYC where the demographic details of the consumer are checked and stored into the operator CRM as part of the activation process. The phones normally come pre-loaded the phone vendors browser and from this the consumer downloads all necessary apps from the relevant app store.

Let us now look at who collects what information on this journey:

  • Unlike a landline where the only function is a telephone call, most of the activities on the mobile are all mobile application related.
  • Based upon the phone's operating system and other utilities such as browsers vendors can be connected with the user at all times, collecting user data from user activities.
  • When an application is used, the mobile application publisher is collecting relevant app usage data.
  • Unfortunately, no such usage data flows back to the operator. The operator can still collect telephony-based information including location.

So logically one can conclude operators, both MNO’s and MVNO’s, know very little about the consumers other than demographics and telephony usage.

Ability to engage in the mobile “requires” a mobile application. A payment app is hardly attractive. Mobile apps using data now cater to all consumer needs of communication, entertainment, education and health. Operators are on the back foot due to the number of apps available in the leading vendors' app stores.

Hence, logically one can conclude mobile network operators have very limited ability to engage consumers in today’s mobile world.

In our Magic Quadrant, this means operators fall into the “general suppliers” category. Consumers have no loyalty in this quadrant and relationships are driven more by price and convenience than by value delivered. Churn is a common feature. Globally data prices are steadily reducing as the supply of data is further commoditised.

Armed with the above facts, let us explore options for the operator world.

A good place to start is in Figure 2. Google in this model is “always” connected to the consumer, collecting data from every interaction.

By emulating Google, let us assume the operator can collect usage data from the phone operating system, the browser, the app store, and mobile apps. If an operator then combines such data with the KYC and telephony data it already has, the operator will have far better data than anyone else to understand the customer. This as a concept is captured below in Figure 3.

Figure 3: The Enhanced MNO/MVNO Customer Experience Journey

I invite readers to review an article published in the Australian Financial Review recently that can be found at The article notes some interesting recommendations.

If the operator can now offer: Network+Phone/OS+Mobile Apps+Cloud in an integrated manner, this can result in the operator being connected with the user at all times. Currently, only the Network is owned by the operator.

Let us next explore this concept further:

  • With the technology available today, any operator (MNO or MVNO) can supply a mobile phone operating system through its own white-labelled “Virtual Operating System” (VOS) app. The consumer downloads the operator’s VOS app from their preferred app store or may come bundled with the phone. When the VOS app is installed, it forms an overlay on the phone's native OS and will be connected to the operator at all times.
  • The VOS app powered by existing technology is native and offers such all communication facilities like a telecommunication dialer, messaging, roaming and chat.
  • The operator may also host a white-labelled app store from where popular OTT applications such as Facebook, Instagram, YouTube, Twitter and others can be downloaded.
  • Leveraging the power of VOS which has built-in telecommunication dialer, messaging, roaming and chat, the operator offers the consumer “true digital services” of a modern age carrier, including: App-to-App calling & messaging; Free voice roaming for incoming and outgoing calls; Single mobile number when travelling anywhere in the world using the Zero1 eSIM feature; and will allow the consumer to switch between native operating systems as needed.

With this single step, the operator extends its control over just the network into the phone and its activities. A simple transformation from just being a “dumb pipe” to an always-connected smart digital operator.

This transformation will enable the operator to extract usage information covering network and mobile applications. Such data, when fed into a smart AI system, will enable the operator to profile the customer and deeply understand each customer relationship.

The operator can now put its deep knowledge of each consumers behaviour to earn incremental sources of revenues.

The operator is uniquely placed to offer “permissions-based” solutions that will enable its consumers to also participate and benefit from digital monetization.

However, the intention of the operator must go beyond the aspirations of a simple supply side publisher with an inventory.

To offer true value to advertisers, brands and agencies, “becoming digital” from an operator’s perspective boils down to three important core capabilities:

  • An ability to cost-effectively create and distribute content through its website and mobile consumer network by engaging and understanding consumers;
  • Having the right abilities to assist advertisers, brands and agencies to efficiently communicate with authenticated users; and
  • An ability to attract digital consumers.

The digital inventory of an operator with deep consumer insights and the ability to engage must be exposed intelligently to brands, advertisers and agencies in real-time.

Figure 4: The Enhanced MNO/MVNO Customer Insight Model

Such a real-time solution will offer advertisers, brands and agencies several advantages over the current programmatic processes. To be a true advertising ecosystem alternative, the operator must focus on artificial intelligence, machine learning and deep analytics to maintain the currency of its customer knowledge. This can be achieved by proper tracking through the entire advertising process.

Figure 5: The MNO/MVNO AI/ML Model

By better understanding their customers and coming up with appropriate contemporary solutions to engage them, the operator can migrate from being a “general supplier” to a proper “ecosystem” offering brands, advertisers and agencies a far superior alternative to the existing programmatic processes.

By tapping into these new advertising revenues, the operator can potentially offer more competitive voice and data services to consumers while increasing overall revenue share, especially so in super-competitive markets like India.

Operators have for too long concentrated on their ever more commoditised network infrastructure and operations. OTT applications and the growth and import of third-party mobile apps has severely affected the operator’s revenue. To capture back its eroded relevance, operators must develop strategies to evolve from simple network operators to ecosystem operators.

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