Calling All Telco Data Leaders: Dial Up Your IoT Strategy
By Tony Velcich, Jun 29, 2022
How IoT and edge computing can help telcos future-proof their business.
Edge Computing and 5G are encouraging new revenue opportunities for communications service providers. Telecommunications companies that undergo a comprehensive digital and analytics transformation can see a 30 percent to 50 percent increase in cash flow, according to a report by McKinsey & Company, “The building blocks telcos need to create their digital-and-analytics DNA”. This transformation, however, is possible when data and applications are moved to the cloud.
Telcos play a pivotal role for organizations undergoing digital transformation by providing connectivity when networks are not available. And with edge computing and 5G networks, telcos can enable businesses and consumers to continue using technology to improve their work and personal lives — from connecting smart cities to improving patient monitoring from home.
Telecommunications customers have a wide range of options for both services and providers, and their expectations are requiring providers to design new customer experiences and processes. Analytics provide telcos with the data and insights they need to meet those expectations. When telecom data is trapped, the data has limited value and hinders a company's ability to derive value from that data.
With increased competition and low margins, telecommunications companies have been looking for ways to both improve revenue and cash flow and differentiate themselves from competitors. While many organizations focus on the process of data migration or the cost savings once migration is complete, telcos find that the greatest value of a cloud-based approach is the ability to use their data in ways previously not possible with on-premises data storage and solutions.
Tap your data assets for monetary gain
By moving to the cloud, telecoms can leverage the advanced analytics and AI capabilities available in the cloud to gain new insights from their data. For instance, customer service and operations can look at the overall data to determine that a high percentage of customer service calls are due to customers experiencing frequent dropped calls. By proactively addressing the issue, operations can reduce the number of customer service calls, which in turn reduces customer wait times.
Here are some ways that telcos can use data to grow their business after moving to the cloud:
- Consolidate subscriber data into a single database, decreasing customer wait times
- Exceed service-level agreements for large enterprise customers
- Activate new customers quickly, using real-time applications
- Create personalized customer experiences, such as custom marketing emails based on past purchases and upgrades
- Use analytics to detect fraud or reduce robocalls
- Enable further monetization by providing enterprise customers with access to relevant data
With 5G technology as a backbone, data leaders can activate all of their IoT and file data across edge systems, data centers, and clouds to perform analytics, AI, and machine learning. So which use cases matter to telecom industry data leaders? Which applications of IoT and edge computing are worth the investment and attention? Here are three use cases that are already having an impact.
1. Use case: Customer experience
Home is where the computer is
Telcos are increasingly making progress in the smart home industry by becoming third-party resellers of customized consumer applications and services — in which the brand advertisers pick up the tab for consumers’ data — in addition to providing network resources and bandwidth to connect the home’s “nervous system”: heating, utilities, air conditioning, alarms, locks, cameras, appliances, and more.
Comcast was one of the first telcos to enter this arena with the addition of Xfinity to its home entertainment portfolio. The service unites TV, Internet, mobile, and home management on a single dashboard.
To capitalize on the smart home today, telcos are forming partnerships with hardware and software vendors. One example is Telefónica Spain, who has partnered with Microsoft to create what both companies call the telco of the future. Their plans include building on Telefónica’s AI-powered digital assistant, Aura, to control Telefónica services by using Azure Cognitive Services and Azure AI services in combination with other Telefónica services. This initiative supports the telco’s vision of the home as a computer, in which the home becomes a computer-based ecosystem that offers third-party services to enhance the consumer experience. In this case, the ecosystem will be composed of Aura Living Apps built on Azure, which will run on all Telefónica home devices, such as smart TVs and mobile devices, that connect to the home’s Wi-Fi to allow customers to interact with their devices to do daily activities.
Telefónica’s aggressive play in IoT and edge computing is helping to accelerate revenue. According to a February 2022 earnings announcement, the company reported a five-fold increase in net income for 2021, roughly $8.5 million over the prior year. This growth is being driven in part by Telefónica Tech, which reported $1 million in annual revenue, a 33.6% increase over the previous year.
2. Use case: Business transformation
Putting the “smart” in business operations
A leading European telco, one of the world’s largest providers of IoT data and analytics services to enterprise customers, needed a cloud-agnostic tool to move an initial 18 petabytes of on-premises data to multiple public clouds to provide enterprise customers with access to IoT data and analytics.
Specifically, the company collects data from smart meters and loads it to an on-premises Hadoop cluster running Cloudera. The products they considered only supported their respective clouds and did not enable the automatic movement of data — static or active — to other cloud providers, leaving only the option of manually copying the data to devices and then shipping the devices to the data center. This option would have required additional project resources and custom code development for the migration, resulting in project delays and further costs.
The need to move this data at scale, even as the data is actively changing and without any system downtime, is critical. The telco selected WANdisco Data Migrator to automate the migration of Hadoop data to both Amazon Web Services and Microsoft Azure cloud platforms.
As a next step, the telco is working to move the data of one of its partners, a large operator of energy networks and energy infrastructure, to an Azure data lake to conduct analytics as well as develop dashboards that can be used for the energy operator and its customers.
Future plans include transferring the smart meter data directly from the smart hubs (edge platforms) to the cloud, providing an expected 50 percent growth in revenue from IoT. Some of that revenue is expected to come from smart meters that enable two-way communication between the meter and the central system, making it possible to engage with consumers in new and innovative ways and to deliver a higher level of customer service, such as providing business and residential customers with energy bills based on actual, not estimated, consumption. By improving the billing process, cash flow is also improved; less bad debt is incurred; and inquiries about billing and payments are reduced.
3. Use case: Revenue generation
Finding new data frontiers
Telecoms are exploring multiple ways to expand growth beyond their core businesses. Based on research from McKinsey, three new business archetypes are driving new opportunities: online data marketplaces, data analytics businesses, and ecosystems businesses.
Online data marketplaces
Markets for the sale of IoT data are called “data marketplaces,” which are estimated to unlock more than $3.6 trillion in value by 2030, according to Accenture. By the end of 2022, 35 percent of large organizations will be either sellers or buyers of data through online data marketplaces, according to Gartner.
Data marketplaces put telecoms in a prime position to monetize IoT data that flows over their infrastructures. A telco can earn revenue either from the goods it sources and sells itself, or from retailer partnerships, or from the commission it earns on transactions. One example is South Korea’s online shopping portal “11Street,” a subsidiary of SK Telecom (SKT). According to McKinsey, 11Street is the third-largest e-commerce player in the country by gross merchandise value (GMV), with revenue from multiple categories of goods accounting for 5 percent of SKT’s total annual revenue in 2020.
In 2021, SKT reported a three-fold increase in 11Street’s international GMV. The increase was the result of a strategic move by SKT to partner with more e-commerce players. In August of that year, SKT launched “T Universe,” a subscription-based brand that offers a variety of goods from companies such as Amazon, Starbucks, Google One, and AIA Insurance. Since entering the market, T Universe achieved a GMV of $280 million (KRW 350 billion) in just four months.
Data analytics business
By leveraging their data from customer interactions, telcos can offer big data services, business insights, and data consultancy services to corporate clients. Such data can help companies such as retailers understand the duration and frequency of physical and online store visits or help governments plan road traffic controls. One example is Indonesian wireless provider Telkomsel, whose large data analytics business serves customers in retail, banking, and telecom. Geolocation insights, predictive analytics, predictive customer insights, and credit scoring are just some of the products offered by Telkomsel.
Ecosystem businesses are portfolios of digital service businesses that drive new revenue while reinforcing a company’s core business. One example is the ecosystem built by the Turkish mobile operator Turkcell. Its portfolio includes Paycell, a leading payment platform in Turkey, and BiP, a communications platform developed by Turkcell that serves as a gateway for other Turkcell and third-party apps and services such as news, entertainment, and gaming. In 2021, Turkcell’s digital and financial services generated more than $150 million in revenues, accounting for 8 percent of total revenues.
Tips to dial up your IoT and edge strategies
Forbes Business Council outlined tips for how data leaders can make a successful shift to edge computing.
Infrastructure. Digital transformation on an industrial scale requires infrastructural development. Telecom companies should look for onboarding experts who can offer new-age infrastructure management services, from the implementation of new tools and technologies to the upgrading and integration of existing infrastructures.
Data centers. Telcos will have to implement state-of-the-art data centers to mitigate the challenges of geographically distributed business operations. Furthermore, identifying and including IT specialists and knowledge partners will be crucial to success.
Network. Creating a robust network is key to optimizing edge computing. Network edges — both fixed and converged — are crucial for telecom companies to move up the value chain.
Virtualization. By virtualizing computer hardware platforms, storage devices, and computer network resources, telecoms can quickly ramp up 5G networks.
Telecommunications companies that can forecast the needs of their industry will have to act quickly on edge computing. With the enormous amounts of IoT data that run over their networks, telcos are sitting on a gold mine of potential profit and related benefits — revenue, customer retention, and more.
Tony is an accomplished product management and marketing leader with over 25 years of experience in the software industry. Tony is currently responsible for product marketing at WANdisco, helping to drive go-to-market strategy, content and activities. Tony has a strong background in data management having worked at leading database companies including Oracle, Informix and TimesTen where he led strategy for areas such as big data analytics for the telecommunications industry, sales force automation, as well as sales and customer experience analytics.