A new business model for the network

Lyn Cantor, president of network diagnostic and service assurance solutions provider Tektronix Communications outlines a new business model that will enable operators to stake their claim in the future.

The challenge of the ceaseless growth in data usage, is transforming the telecommunications industry. How operators maximise use of data could also significantly change the characteristics of their business. It’s a race both against time and the continuously firmer footprint that over-the-top (OTT) providers are stamping across the network.

Smarter data in a smarter world

The days of the network being a relatively simple conduit for the transmission of voice and SMS are long gone. The data days are now here, placing pressure on operators to monetise an asset of enormous value and to avoid losing out to OTT players. What once seemed far off in the future has finally arrived. This is perhaps nowhere more evident than in the rapid development of machine-to-machine communications; promising to hum quietly and unobtrusively in the background, streamlining the life of the individual and enriching the enterprise landscape. Soon connected devices will be enabling better healthcare procedures, ensuring safer motoring, and making one-to-one marketing more feasible. It also won’t be long before LTE dominates the connected world, further putting pressure on the need for a new management approach to the growth of data as well as the economics behind it.

The fundamental input to all these innovations is data; how it is transmitted and how it is used. Since all of this data is pushed through the network, the network is a very hot place to be right now – a springboard to connected capabilities being explored and developed around the globe. The big winner in the race for fresher, newer, deeper and richer applications and connections could be the network operator. This will only happen, however, if technologies and strategies are implemented early enough and the operator’s data focus is aligned to the needs and possibilities of lifestyles and enterprise goals. ‘Big data’ is not the issue. It’s probably even a misnomer. The focus is no longer on big data, it’s to make smarter use of data instead.

Data is the fact. Using it to benefit the network, is the issue.

The two-way data stream the network now serves has implications on how carriers can improve their interaction not only with customers, but also with businesses and major organisations looking to harness the capabilities of mobile devices. Operators can use and offer a rich source of business intelligence that can be used in two ways. Both are equally valuable in helping them to monetise their assets – particularly as LTE takes over – and generate significant returns on their investment in network infrastructure.

A platform for more intelligent marketing

Firstly, the network needs eyes to look inside its own operations to guarantee accuracy, security and the quality of new data sets coming on stream; total visibility and control to streamline the services it provides. The performance of the infrastructure is pivotal as new users come on with an expectation of nothing less than the highest quality of service. Users’ early experiences of voice, video, and data have to be good if operators are going to avoid churn. A connected world offers enormous choice to mobile device users and they’re becoming increasingly promiscuous between service providers and ever more competent at switching from one to the next.

Understanding the data, and how subscribers are using the network, depends on an end-to-end view of network KPIs as well as adopting the approach so effective amongst OTT service providers – looking at application usage to help market additional services that can enable users to broaden their social network experiences. It’s less about being reactive – fixing issues as they occur and responding to opportunities as they emerge – and more about being proactive.

A powerful tool for joint marketing initiatives

The second way of using data more smartly, as a rich source of business intelligence, lies in appreciating and realising its value as a marketing tool. It provides potential flexibility to enable a wide range of personal services which will soon impact daily life far more fundamentally than just by making shopping easier or serving as tools for social contact.

This is where the new business model comes in – looking at data as a commodity to be sold and entering into discussions with organisations that can use the data, or that crave access to the insights it creates. Initiatives of this nature can expand the role of the network operator from provider of the pipe to key facilitator of a wide range of next generation services. It should also be said that any strategy based on data collected form individuals depends both on data protection laws from territory to territory and opt-ins from subscribers. These are operational issues that will always need to be understood and complied with which but should not detract from the bigger picture.

This approach is based on looking outward, reaching out to other organisations and companies to find new ways of working together. Network operators are poised to take a lead role in the development of such partnerships and are also on the brink of realising the potency and the high-level commercial value of the data they have access to and can provide others with access to.

For example, it will not be long before machine-to-machine communications connect patients to their healthcare providers and automatically provide data on vital health issues to another machine which might then suggest remedial actions if alarms are triggered. This data depends on the network. We will soon see the introduction of the connected car and the connected house, the growth in mobile payment technologies and the mobile device as a wallet. Users will check the status of their home appliances whilst away from the house; for example turning on the heating before they return. The data for all these innovations depends on the network.

Closer to the here and now, operators in Asia Pacific are already using data to study demographics and the flow of large groups of people. An area in which data might have one of its most obvious and immediate uses is in the provision of location-based services. Consider the large influx of mobile device users to the UK during the Olympics. Networks, in situations such as this, can maximise use of the data to broker with tourist organisations, hotel chains and retailers.

The critical driving force is that networks have the data, it is their bread and butter. The focus is both on keeping it flowing through the pipe successfully and then using it as a platform for intelligent marketing.

The network has end-to-end control of the connected device. The new business model is based on accepting that data, big though it may be, smart as it certainly is, is not merely a problem that operators have to contend with, but an opportunity they can maximise.

Lyn Cantor was appointed President of Tektronix Communications in April 2011. He re-joined the company after being SVP and General Manager of Visual Network Systems (VNS). Prior to his appointment at VNS, Lyn was VP of Worldwide Sales, Service and Marketing at Tektronix Communications.