Latin American telecommunication operators are in the process of deploying big data solutions, though monetization of those efforts remain a challenge.
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The advancement of direct and indirect competition in the telecommunications market is impacting revenue growth rates and the profitability margin of traditional operators worldwide. Telcos are having a hard time monetizing over-the-top services, value-added services and cloud as they try to move away from the traditional connectivity and capacity business. This is why Latin American telcos are so enthusiastic about big data and what this technology can bring to the business.
Latin American telcos are in an initial phase regarding big data, focusing first on optimizing their infrastructure, and then planning to transform their business with predictive analytics, next generation of applications and advanced use cases.
Telcos are rethinking their organizational structure and the portfolio they offer to their clients. Some of them have created a special unit to specifically define roadmaps focused on their digital and innovation strategies in order to re-invent business operations and enable new services.
According to Frost & Sullivan’s new analysis “Big Data Telecommunications Market Evolution in Latin America,” the total capital expenditure or big data telecommunications services in the Latin America market reached $633.3 million in 2016. The investment is expected to reach $1.779 billion in 2022, led by Brazil and Mexico.
Top priorities for implementation include improving customer experience satisfaction based on deeper customer understanding, prediction of issues based on extensive and more accurate network analysis, and revenue creation based on identified sales opportunities.
Big data solutions will be initially focused on internal needs, with the next step on the sale of big data solutions to end users. Telcos have been using big data to allocate resources to technologies, geographies and high-value customer segments. These investments are mainly focused on 4G coverage in new cities; 3G capacity; backbone and backhaul expansion; new fiber-to-the-x footprints; and customer premises equipment for new homes connected. Telcos are also creating a “data lake,” concentrating in a single repository a wide variety of information transiting through the network and transactional systems. Telcos are looking to to offer infrastructure bundled with big data consulting services, analyzing data in order to deliver insights for end customers. Anonymous, aggregated consumer data helps advertisers reach target audiences through mobile devices for retail, tourism and transportation verticals. The financial vertical is also important for telcos with several use cases in initial phase.
Data purchased in the form of big data analytics forms the basis to fine tune the way products and services are offered to consumers. Currently, telcos sell the functionality offered in the form of a service, receive recurring revenue in the form of subscription and focus on operational expenditure. The data products-as-a-service business model is emerging with the sale of insights in the form of subscription services; aggregated and anonymous data; and focuses on building an ecosystem rather than single products. Telcos are quickly understanding they need to shift from selling connectivity to selling data products.
As telcos still face budget limitations for the deployment of a full big data platform, justifying a return on investment with a real incremental profit impact after investments is not easy. There is resistance from some business areas to adopt big data because of the lack of knowledge. The governance and struggle to define the focus of big data initiatives are the key restraints in the market. The lack of data sharing policies regarding privacy and promotion of ethical and safe use of data are also important restraints for big data implementation. Telcos also need to address regulation about data privacy, especially in one-to-one marketing efforts.
As part of the digital transformation, big data will become a new revenue source for telcos who are preparing to take advantage of new business opportunities. Data from users, services, networks, locations and management sources could be monetized through product promotion, targeted advertisement, new sales opportunities, quality of experience and network optimization. The question for telcos is not only how to implement the technology, but how to effectively set the value it will extract.
