24 February 2023
Totogi warns telcos and MVNOs at Mobile World Congress Barcelona (MWC) that the industry is missing out on core opportunities to use public cloud-based software to develop data-driven innovation that creates a more personalized customer experience and grows average revenue per user (ARPU).
“The move to the public cloud in the telco industry is well underway. Yet we still see telcos and MVNOs hesitate in moving the majority of their workloads to the public cloud. The delay in adopting truly cloud-native applications will result in a loss of competitive market share and hinder companies from capitalizing on the next wave of innovation in smarter data use and artificial intelligence (AI) within the industry,” says Danielle Royston, acting CEO, Totogi. “To succeed in data-driven innovation, telcos must invest in creating value with data rather than devoting time and resources to managing and maintaining on-premise solutions. It takes a telco up to two years to transform its technical applications for the public cloud. To take advantage of the next wave of ARPU growth, the industry needs to embark on the journey now.”
Telcos and MVNOs must find new ways to attract and grow subscribers. Traditionally, telcos have used the advent of a new network generation, such as 5G, to grow ARPU. However, both 4G and 5G failed to deliver on the ROI C-suites promised to owners and shareholders. MVNOs in highly competitive markets have used lower prices, resulting in even less loyalty and high subscriber churn. Both types of organizations must look to new methods, like using AI and machine learning (ML), to develop new, innovative ways to grow their business.
“Telcos can better monetize 5G network investment by using analytics to personalize the subscriber experience. Telcos must create an upsell opportunity the moment subscribers want something by creating a rich set of offers that can be more effective and dynamic than monthly unlimited plans. In our research across 15 markets, customers who receive more offers and a richer set of offers can lead to about 15-20% ARPU uplift for that telco, but it requires them to create real differentiation, it needs to be personalized,” according to McKinsey Partner Ferry Grijpink, founder of the McKinsey Center for Advanced Connectivity.
According to McKinsey research, only around 5% of telcos were unlocking the full potential of analytics and data-driven personalization to achieve true competitive advantage and to maximize revenue growth. Harnessing the full potential of analytics-driven customer value management will be the key driver of future growth.
“Telcos have historically relied on long planning cycles to develop offers and plans to increase ARPU, but advancements in predictive AI and ML offer an untapped opportunity to programmatically design personalized next-best offers. Despite the abundance of subscriber data available, most telcos are unable to effectively use this data due to vendor-specific data models that restrict access to real-time insights,” said Royston. “By using software that is built on the public cloud, organizations now have the scale and tools to handle vast amounts of data and then use world-class AI software to put together highly personalized, micro-targeted offers. Tech companies like Uber, Apple and Amazon have been doing this for over a decade and have successfully proven this can create additional revenue. Once you understand your subscribers, you can tailor their experiences and create offers that drive brand affinity. Switching from commoditization to building loyalty will change behaviours and the way people think about telecom.”