In-depth articles, interviews and debates covering local and global topics related to the Experian business expertise.
"Despite the challenging economic environment, opportunities to grow will always exist"
Experian Panorama Editor
Tim Barber heads up the Telecoms Market for UK & EMEA at Experian. In this role Tim is responsible for driving Experian’s telecoms market strategy across the organisation’s broad portfolio of products and services in Europe, the Middle East and Africa. The telecoms sector is key for Experian, as eight of the top 10 mobile operators in EMEA are Experian clients.
Tim has extensive experience gained from working closely with major telecoms operators throughout EMEA, and prior to joining Experian he was EMEA General Manager at SpinVox.
We interviewed Tim Barber just after the 5th International Telecom and Multimedia Forum, which took place last June in Portorož, Slovenia.
Hello Tim. First of all, the mandatory question. How was this year’s International Telecom and Multimedia Forum? Based on your experience on the event what are your impressions on the Telecom market?
The forum was a great success. This year for the first time the forum focussed on combining our offerings in the areas of marketing and risk management, because we see a convergence of these two business challenges occurring in the market. The business strategy of many telecoms companies is shifting from a simple drive to acquire market share and driving up average revenue per user to an equal focus on the profitability of customers, or average margin per user. In order to do that, risk needs to be considered in the marketing strategy. One of our speakers put this very succinctly: ‘The sale is not complete until the revenue is collected and in the bank.’
What do you think Telecoms were most interested in when they came to the year’s International Telecom and Multimedia Forum? And when they left?
The key things that customers are asking us to assist them with are:
- Managing and reducing bad-debt levels, which are increasing across the industry as a result of the current economic situation.
- Reducing customer churn (i.e. customers who switch to a competitor). They need solutions that help them segment their customer base, identify their most valuable customers, and create strategies to keep them, and sell them additional services where appropriate.
- Identification and reduction of fraud, which we learned can be improved through collaboration, both between departments in the telecoms operator, and also collaboration between telecoms operators.
- Creative ideas and new ways of generating revenue, for example from advertising.
What are the main lessons that marketing and risk should learn in order to work better together? What they can get from working together?
We learned that despite the challenging economic environment, opportunities to grow will always exist. The key to this is to figure out how to ‘do things differently’, and also to ‘do different things’. The structured approach to credit risk strategy, using data, analytics and scoring can also be applied to marketing strategy. At first this idea might sound counter-intuitive – how can a structured approach enhance creativity? However customers who are using external marketing data to enrich their knowledge of customers, and create ‘behavioural scorecards’ to improve decision making, are finding that this brings new insight and understanding of their market that can give them a competitive edge.
Based on your knowledge of the market and the conversations and presentations held in the latest International Telecom and Multimedia Forum event in June, what would you say are the biggest challenges that telecoms face right now? Is the current economic situation affecting mobile virtual network operators (MVNOs) more than traditional telecom companies?
The recent proliferation of MVNO’s in many markets around the world is in a sense the industry coming ‘full circle’, back to a situation where the ‘service provider’ is separate to the ‘network operator’. The logic for this is that network operators core competence is the management of the network technology and associated systems, and not necessarily in retailing, marketing and customer management.
This model has many other attractions for the network operators, and some, such as the newly formed ‘EverythingEverywhere’ in the UK (the merger between Orange and T-Mobile) have stated their strategy is to be the network operator of choice for UK MVNO’s. This division between service and network certainly brings the challenge of credit risk much more into focus – MVNO’s have to pay the network operator irrespective of whether they collect their revenue from customers or not, so it is more important than ever to manage the risks associated with bad debt.
How is fraud affecting Telecoms in the current economic context?
Fraud continues to be a challenge for the industry. Where telecoms companies have come together to share fraud data, working with independent third parties such as Experian as facilitators, fraud levels have been significantly reduced.
During the International Telecom and Multimedia Forum event it was said that “Banking and Telecoms are converging at a rapid rate". How and where are these two seemingly disparate industries converging?
I have always found it interesting that the same basic technology is used to make a SIM card for a phone and a Chip and Pin credit card. Technically there is nothing to stop a phone being used for secure banking and money exchange, and there are multiple models and examples of the two converging all around the world.
In the world today I can buy a mobile phone contract from my supermarket, as well as take out a loan or car insurance from them. I can get a pre-paid credit card from my mobile phone provider, I can charge things I buy on the internet to my phone bill, I can pay for my taxi journey via SMS from my ‘mobile wallet’.
Ultimately all these industries have one thing in common – they are mass-market consumer industries, and their goal is to create a brand that I associate with and feel comfortable spending money with – across an ever broadening set of services. These are all examples of companies thinking creatively – ‘doing different things’ as I said before, in order to create opportunities for growth.
Regarding fraud, during the International Telecom and Multimedia Forum event it was said that it was “an industry wide challenge and collaboration was essential”. Which steps are Telecoms taking in order to collaborate?
In some markets today, such as the UK, operators share data relating to fraud in order to combat it at an industry level, and this is working. For example the National Hunter, a solution from Experian that collates fraud data in real time from across the industry, is being used to combat even the most sophisticated organised frauds. Other markets remain less open, and where possible we are working to educate both operators and regulators that to allow collaboration is a positive step forward.
Which effect is having the smartphone revolution having in Telecoms? On one hand, they spur sales, while on the other they tend to consume much more bandwidth than cell phones.
It is great to finally see the bandwidth that operators have put in during the past few years finally being used! Indeed, it has created a whole new infrastructure product category called data network optimisation.
The issue is not really bandwidth consumption per se, it is how to make money out of it. Recently we have seen some operators taking a step back from flat rate ‘all-you-can-eat’ data plans in recognition of this. This in turn puts the focus back onto credit risk management – smart phones and laptops are expensive pieces of equipment, and high-value data plans create a different risk profile when offered on a contract basis. Smart phones demand a more systematic approach to credit risk management, with a more sophisticated approach to customer segmentation that incorporates an assessment of risk.
In 5 years, mobile internet connection is expected to surpass desktop internet access. Could digital and mobile advertising and marketing begin to be a significant source of revenue for Telecoms? Will they start to become key players in the marketing and ad industry?
In some emerging markets, India for example, where PC ownership and fixed line infrastructure are under developed, mobile internet access already surpasses desktop internet access.
It is important to remember however that mobile advertising is a complex area – where access to the internet is through the operators portal that is one thing – here the operator can control the serving of adverts into this channel, but increasingly as people use their smart phones to directly access the internet through traditional on-line portals such as Google and Yahoo, that is something different – in that scenario today the operator is simply a pipe, and has no control over the media channel.
If operators want access to this potentially lucrative revenue stream they need to do three things:
- Add value to the advertisers. This they have the potential to do, since they have access to a lot of unique data about their customers that would be valuable to advertisers.
- Provide an infrastructure equivalent to that in other well established advertising channels (e.g. print media and TV) that make it easy for advertisers to incorporate the mobile channel into their strategies
- Figure out a commercial model with the online media portals that works for both parties.
Which opportunities are in mobile payment (both offline – in store- and online – through mobile access and apps)?
There are lots of really interesting initiatives in mobile payment and mobile banking springing up all around the world, some really innovative stuff – examples of ‘doing different things’.
Perhaps the most interesting is the concept of using the mobile network and its support infrastructure of agents to create a banking and micro-payments infrastructure in emerging markets, such as Africa and Asia. Safaricom in Kenya is a good example – I read recently that they now have more than 6 million customers, and mobile micro-payment is now just a standard part of their way of life.
Experian recently launched a new initiative in this area, to help financial services companies and mobile operators to collaborate in building the necessary infrastructure in this way to bring reliable financial services to the world’s un-banked.
How telecoms see the new app economy that is subverting the way we access content on mobile networks? How do they feel about that lack of control?
I don’t think there is a lack of control. It is another example of the changing world. Telecom is a terrifically dynamic and fast moving industry. We have a phrase that sums it up: co-op-ertition.
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