In Business Model, Internet Access, Mobile

Privacy rules might well affect how much mobile service providers can monetize customer behavior. People tend to understand that mobile and other service providers have mined their data to improve operations. Perhaps the bigger question is where, and whether, they can leverage customer data to create revenue upside as well.

Xandr and Verizon Verizon Media Group provide evidence that at least some telcos believe they can leverage data to support advertising revenue streams. Just how successful they might eventually be is yet open to question, as app providers lead the digital advertising business.

In the U.S. market, for example, it appears internet service providers ISPs can record and sell customer  browsing history, data on which apps and services are used. How valuable that might be is among the questions one might ask, in the same way that one might question the value of call detail, in an era where most of the insight is related to internet content behavior.

Telcos process and possess lots of data. But some might question how much data telcos actually can use to support advertising and marketing services, given privacy regulations and the sorts of user actions they can track.

There seems to be less doubt about ability to use some of that data to improve operations. AT&T has mined data for years to wring business value on the operations side of the business (network management, fraud detection, perhaps churn management, customer service). What seems less clear is whether there is significant revenue-affecting upside.

Obviously call detail records, mobile location and data related to customer use of internet access services is the potential mine for revenue-generating or revenue-impacting value.

The issue is how much granularity is available for the internet and app use parts of the data mine, compared to calling or text message behavior.

In developed countries, most people are online daily. By some estimates, 78 percent of customers are online everyday, but telcos typically reach less than one percent of people digitally on a daily basis.

Most Europeans use the mobile internet daily. But one might question how much of the total digital footprint is accessible to mobile operators, compared to app providers, mobile phone suppliers, operating system and other participants in the internet ecosystem.

It would be fair to say that Xandr and Verizon Media Group have some obvious advantages, including direct customer relationships and advertising inventory (linear video and digital content assets).

To oversimplify ownership of digital footprint, Google knows your location, the content of your emails, your search terms, in some cases your contact list and calendar, and websites you visit.

Facebook knows who your friends are and has some idea of what you like. Amazon knows what you buy. So do credit card companies and other financial institutions.

So as connectivity providers look for some way to leverage their own digital footprint assets, what have they got? Your location; who you call and text, who calls you, and sends you messages; what websites you visit and some high-level details about what content you consume.

In addition, AT&T, the largest provider of linear video subscriptions in the U.S. market, has local advertising inventory that it can sell, as well.

How valuable that data might be, and how it can be used, are questions, though. Up to this point, many telco data mining efforts have focused on operating problems such as fraud, not revenue generation.

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