The crisis of the traditional business model leaves mobile operators a little chance to avoid a dumb pipe. In this situation, the companies’ management casts its glance at the giant, even just unimaginable data stores that have been already accumulated and go on accumulating within the operators’ networks.
This data is a valuable asset to monetize. First, this is information as it is, and the source of knowledge of any kind. Second, this data is already arranged and collected. Third, this data describes the behavior or other features of the absolute majority of residents. That is to say, we are not talking about ore, though upgraded, but about intermediate products suitable for direct consumption by various organizations.
Nevertheless, the numerous experiments of the operators around the world have not been provided a breakthrough yet. As before, we are talking just about separate projects. It still fails to take the solution of such problems to the assembly line, to create a market based on the operators’ Big Data. The reasons for this are well known, so I am not going to dwell on them in detail.
In brief, the problem is seated in the very nature of operator business. A typical mobile operator is a huge corporation, among the largest ones in a single country. It does not trust anyone and takes every dollar in the customer’s pocket as its own. And it needs many dollars, lots of them. The operator’s conventional calculators do not have any key with fewer than four zeros. And if this is the market leader, so even a key with five zeros. As a result, operators are trying to deal with data analysis themselves, and for big money. This cuts off the vast majority of potential customers, as the demand for business analytics has a very flexible price. Customers who are ready to pay a thousand hryvnias are hugely more (by a factor of dozens and hundreds) than those who are ready to hand out 100 thousand or a million.
As a result, operators come to conclusion that it is necessary to look for a model to work with data that meet the expectations of customers, and not their own Wish List. In late October, it became known that the Telefónica formed a new unit to promote services in the sector of large bulk of data. The unit was called Luca and would deal with three individual data analysis business areas.
First, within the Business Insights concept of the Telefónica’s “subsidiary”, customers in different countries will be offered an option to work with pre-arranged data sets collected in their networks. It should not be left unmentioned that the company produced a good deal of products with all sorts of Insights. These are Big Data Insights, Dynamic Insights, and actually Business Insights. As a matter of fact, it is not a very good sign.
On the one hand, this is the Telefónica to be the pioneer in terms of Big Data monetization on the European continent. The Telefónica’s unit Dynamic Insights appeared in early 2015 to become the first public initiative of this kind. Then, six years ago, in the lengthy interview with Lorraine Stone, UK Country Director, Telefónica Dynamic Insights, there was a lot of glare and highlight statements. “The turning point in the history of the industry”, and so on. Nevertheless, the company presents a few success stories: one in the transport sector, one in the retail sector, and another couple in the media analytics and tourism. They are few indeed.
In the interview mentioned above , Lorraine Stone details how the enthusiasts’s original intentions twisted. For example, the company was bound to admit the so-called “Granularity” of its data, or simply put, of their limited value for customers in many instances. No wonder that the company’s approach assumes that a customer has access to the data of only one operator even without serious presence in some countries. As a result, this data has to be extrapolated, which is always a sticking point. The interview is worth reading, since it has a lot of food for an inquiring mind. Another serious obstacle turned out the legislation regarding personal data that forced the units’ operation out of the German market.
The answer to these and many other questions, the Telefónica considers the second Luca’s activity, namely big data analytics in-house and consulting. It will be provided by a team of the Spanish company Synergic Partners, which the Telefónica acquired a year ago. These people were integrated into the global BI&BD unit (Business Intelligence & Big Data), to become “a key contributor to the development of projects both in Spain as well as in the rest of Europe and Latin America”.
This fact draws attention, as just one team aims at covering a whole activity in the vast region without any exaggeration, where the world’s fifth mobile operator is represented. Just think of it, we are talking about 240 million subscribers and over USD 50 billion dollars of annual revenue. At that, at the moment of publication, the Synergic Partners accounted for 70 employees a year ago. However, the Business Insights employed fewer than hundred people, and their number reduced to 35 close to the acquisition of the Synergic Partners. It seems that we are still not talking about any significant market segment. As a comparison, the joint Big Data venture with China Unicom intends to employ “several hundred” people.
Curious are the details of the Synergic Partners’ history. It was founded in 2007 and at the same time one of the Spanish banks bought 25% of its equity stake. At that time, the company announced its plans to make EUR 12 million in 2011. In fact, even three years later, in 2014, the company’s revenue amounted to only EUR 3.1 million with its net profit of EUR 409.000. This gap between expectations and reality is a constant background to deploy gradually the work with “big data” in operator companies.
Finally, and this is the most interesting part of that announcement, the Luca intends to provide Big Data services as a Service (BdaaS), using the Telefónica’s cloud infrastructure. Customers’ independent work with data, both provided by the operator, and of their own, has long been tempting the minds of the Telefónica’s visionaries. As far back as 2013, in their presentations, the company’s representatives mentioned that concept (see screen №8). The above mentioned interview with Lorraine Stone also expressly states that the original idea that later materialized as the Dynamic Insight, was “to provide retailers with a self-service look-up tool, and a lot of that capability was put into play”. Of course, operators will never manage monetizing their data without such tools, like they say, truly.
Searching information about the current situation with Big Data at Telefónica brought many interesting things. Let us take the agenda of the conference “Data-driven decisions”, where the company announced the Luca’s appearance. The conference was inaugurated and closed by Mr. Chema Alonso, Chief Data Officer at Telefónica. Oh, yes, operator companies actually introduced the position like chief data officer. Chema himself is a really cool dude (I think this definition is relevant to him). When you look at him, he immediately reminds you a charismatic maestro Rodrigo in the comedy series “Mozart in the Jungle”, being also Iberian and fan of extravagant outfit.
But even more interesting is the position of José Luis Gilpérez: Global Big Data B2B Director and Defence, Security and Big Data Director for Telefónica Spain. The mobile operators can address a wide range of national security tasks, including commercial security, law enforcement and military (relative to the military competence) areas. As one of the mobile market leader in terms of innovation, the Telefónica has long identified those areas as its priorities. However, these distinct tasks in the field of national defense, corporate security and data analysis under command of one manager set you thinking.
Amusing is that the two gentlemen, or rather señores, scarcely use English in their profiles on LikedIn. This brings to mind one of the speeches of George Friedman, the founder of the intelligence agency Stratfor. He states that the Western Hemisphere, including the Latin America, becomes a new center of global civilization. According to him, there was developed a self-sufficient economic and political system that can effectively compete with Eurasia, sank into own problems. The refusal of English in professional communication of one of the most globalized industries confirms this opinion.
At any rate, the Telefónica invests year by year significant funds into areas relative to the operator data analysis. During this time, the policy was corrected several times: some ideas and suggestions were rejected, others were put in arsenal. These experiments resulted in the company’s Smart Steps concept as an open platform that provides previously anonymized, aggregated and extrapolated data for independent work. Apparently, this is the very State of the art in this sector today.