TMN Quarterly Magazine Issue 14 by The Mobile Network

The Mobile Network // www.the-mobile-network.com

ALSO FEATURING Making sense of the world’s mobile networks

35 N ETWORKED WORLD: FINANCIAL SERVICES 18 L TE ROLLOUTS: IT’S ALL DOWN TO THE NETWORK 2016 // Issue 14

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EDITO T S E U G

K R A L C O Y M R C A e s M Syniver NG LOCKI B D A W AME ED: HO THE G BLOCK S E G CHAN

IVACY M R P E TH DRU N U N O C

TUAL : X E T N CO ES C I V R AL E S SENSU N O C L XTUA

TE G CON N I K A M

ISSUE

REGULARS

COUNTRY PROFILE: BRAZIL // ANATOMY OF A MOBILE OPERATOR: TELEFONICA

#14

CONTENTS

GUEST EDITOR FEATURES ///////////////////////////////////

45m

RESTART

25m

B LO CK ED

There is little more important issue in the industry than that of privacy. How can user data and privacy be respected, while the industry develops richer services?

LTE networks underpin the advances many expect. But operators need to square an investment business model that leaves them with little room for manoevre.

The debate rages on. Should operators take a position to protect consumers, or should consumers be left to make their own decisions?

Mobile operators have the capability to deliver services that are enriched by user context. But what is contextual must first be consensual.

Privacy

LTE Rollouts

Ad Blocking

Contextual Services

REGULARS ////////////////////////////////////////////// 06

Telefonica’s goal of digital transformation.

Mobile money exposes a divided world.

Anatomy Of A Mobile Operator: Telefonica

4 TMNQUARTERLY

Networked World: Financial Services

FEATURE

MORE REGULARS ////////////

Hi!

GUEST EDITOR

It’s been exciting to serve as the publication’s first-ever Guest Editor for this issue of TMN Quarterly. The experience presented me with an opportunity to address issues that are crucial to the future of the industry that Syniverse serves. They are issues that we must recognise, debate and resolve if operators are to thrive and prosper, as I believe they can, as digital service providers. Mobile has a potential like no other medium to transform lives and business. For operators to unlock that potential — Country Profile: Picture Story: by building personalised and customised services that enrich Brazil — The Low Power our lives — they must first meet head-on some of the most recent challenges that have emerged. And key among these Not Playing Games Wide Area IoT are consumers’ distrust around data privacy and brands’ On the Rio Olympics Visualising the use cases intrusion into their daily lives. Our features on user privacy, and the aim to build and requirements for Low on contextual services and on ad blocking are all inter-linked a lasting network legacy. Power Wide Area IoT. analytics discipline It’s as much people as process 3 Developingina network Seven things I know about… that they ask in some way: How can operators and brands At Polystar we have learnt that building a network analytics And once that happens, it quickly becomes clear that discipline requires both focus and flexibility. It takes an the biggest change catalyst for extracting benefits re-establish trust with the consumer, for themutual benefit? ability to focus on the key operational targets that you want from a flexible network analytics platform are the to achieve and design the data analysis regime accordingly. people within an operator itself. Once staff members operators’ ability to toact asthatdrivers of this mobile Yet alongside this focus Finally, you require flexibility. There’s no such are exposed data sets make sense to them, thing as an apply once, use often cure-all because, although then they want to do more, and get more creative you are deriving insights from a common data source, learning in their use of network analytics-based data. foundational You start transformation will be determined by the what you look for and how you deliver those insights is all about to both feed and harness the desire of your staff to do flexibility. It has taken the networks analytics industry a long a better job for their customers. It’s a virtuous loop. layer ofarethe network, which is why we explore the ongoing time to learn this lesson, and some yet to learn it. investment in LTE and, in the future, 5G networks that The future of the network Data is a firehose, filter out the useful is analytics-fed and analytics-led underpin the service environment. 7 Things The reason some have been slow to learn this lesson is that you look at the direction of change in our industry, in many cases the application of network analytics started Although have been Ifwhether the most involved Robert Eriksson, at the networkclosely layer or in the transformation in, and was closely tied to, the network andItechnical I Know About... outdepartments of network operators into digital service providers, Director Customer within an operator. These are the functions used the foundational of everything is analytics. to working with largein the core features network management and monitoring above, thelayer TMN team also allowed Experience Management, Automated, programmable networks rest upon a new systems, requesting and analysing thousands of KPIs to help Polystar Group. Network Analytics level of network, service and application visibility that, them assess network performance. So the analytics tools me an opportunity to contribute to the selections for their Here’s what I have learnt in turn, requires network analytics embedded into were designed to map the existing lists of KPIs, and there were the edge and core of the network. Giving new IoT thousands of them, that the network ops teams had asked for. about how to truly deliver the benefits regular features sections. For use these, Telefónica was chosen and subscriber cases an outstanding experience of network analytics across an operator, How operators can Networks analytics developers were creating views requires sophisticated analytics capabilities at the equipping them to meet their future of the data that were predicated on the discovery and analysis service layer. Transforming of the operator into being for the operator portrait, because its impressive efforts deploy business challenges. network analytics on thousands of data sets that were of little relevance a customer-centric business requires the delivery to, and made little sense to, other business units within of data across the organisation. to grapple the operator. This slowed down development,with integrationdigital transformation offer important in the business. and implementation, and made them operationally complex. Focus and lessons. flexibility filters out the usefulthe from For countryFINALLY, profile, had be Brazil, because I KNOW it THAT MANYto OPERATORS the data firehouse, delivering only relevant information But beware those selling HAVE ALREADY MADE THE FIRST STEPS Network analytics is so in right now to business units. 2 network analytics as the cure-all of the fascinating impact of the FIFA World Cup and the Rio TO EMBED THE BENEFITS OF NETWORK ANALYTICS ACROSS THEIR BUSINESS. Olympics on that country’s mobileAREnetworks. And for the last THESE OPERATORS ALREADY BUILDING Working in networks analytics over the last two to three years, we’ve seen There’s no doubt that network analytics has A COMPETITIVE ADVANTAGE AS THEY FACE the momentum of the market move towards us in a radical way. Key megatruly arrived as a key capability in the network, THE FUTURE. trends such as automation, virtualisation and analytics-fed orchestrators feeding and enriching the whole gamut feature, we see financial services as a key networked world It’s about who knows what, and network controllers, the rise of the IoT, and most crucially, the advent of functions within the CSP. But while there not just what you know for the mobile industry and explore that. of CEM as a core strategy — with its aim of building a holistic view of the are indeed many business functions that vertical customers experience — have all driven the requirement for the delivery can benefit from network analytics, there’s of real-time network analytics across the operating environment. Once you have liberated network analytics from this a danger that the term itself becomes technically-focused straitIt’s jacket,been you truly startenlightening to see overused, as if merely invoking the term can to see the issue come together. the benefits of democratising data across an operator. cure all the symptoms operators are trying Companies with the ability to access some part of the network data Democratisation of data means giving a much broader range to address. If you are using network analytics picture have scrambled to add analytical capabilities, harnessing Of course we hope that this issue is just the start of, of functions and people access to data based on networks as a foundational capability to introduce more the capabilities of “Big Data” platforms, leading to a growing convergence analytics. This can mean your customer care team being able personalised services, more targeted marketing, between IT-based data analytics companies and network visibility vendors. and part of, ongoing conversation between to understand a customer issue much quicker, oran you marketing quicker response times in customer care, This growth shows no sign of slowing down — with the network analytics team being able to structure offers based on network usage more efficient network operations, or to feed market estimated by one analyst to grow from $768 million in 2015 and performance, orSyniverse your C-suite gaining a real time but network controllers and orchestrators, then it is to £2.3 billion by 2020, with communications service providers by far and our customers and partners. condensed view of key revenue-impacting events in the network. www.polystar.com important to understand the disciplines involved. the largest investors in the capability. To continue this conversation, please join us at @syniverse and synergy.syniverse.com.

SPONSORED FEATURE

NETWORK ANALYTICS 16

Polystar enables Communications Service Providers to achieve excellence in CEM, Big Data Analytics, Service Assurance, Network Monitoring and high-performance testing. We help operators to simplify their CEM strategies to deliver a seamless customer experience across multiple touch-points. Polystar’s realtime Network and Customer insights deliver the goldmine of Big Data analytics to CSPs.

16 TMNQUARTERLY

TMNQUARTERLY 17

Commercial Director: Shahid Ramzan // shahid@the-mobile-network.com Editorial Director: Keith Dyer // keith@the-mobile-network.com Creative Direction and Design: Francesca Tortora // info@francescatortora.com © 2016 TMN Communications Ltd.

TMNQUARTERLY 5

ANATOMY OF A MOBILE OPERATOR: TELEFONICA

OPERATOR PROFILE

Digital is more than a name Operators are often told they must become Digital Service Providers but efforts to do that have resulted in misfires and false starts. Telefonica has been one of the most high profile operators on that journey, with a high profile retrenchment from a dedicated digital division. But its digital efforts are far from over. USERS

322,000,000 90,500,000 35,600,000 7,900,000 6 TMNQUARTERLY

CUSTOMERS MOBILE CONTRACT CUSTOMERS LTE CUSTOMERS FIBRE CUSTOMERS

When Telefonica said, in 2014, that its dedicated Digital unit was being moved back into its main business, it stressed that “nothing had changed in terms of the vision and strategy”. The reason for the change was to “remove the barriers to moving fast”. The company said that the reorganisation was because it needed to bring ‘digital’ activities much closer to its central operating businesses. In other words closing a dedicated digital division was more of a promotion for digital, by integrating it within the overall organisation. But it felt like a climbdown — after all its digital division had been established and nurtured with a good deal of fanfare, with planned launches into payments, advertising, OTT voice and messaging apps and more. Expensive premises had even been acquired in central London, and Silicon Valley businesses acquired in central, er, Silicon Valley. The operator also claimed that its digital unit had been a success in terms of growing revenues, increasing value to the company and helping to create

ANATOMY OF A MOBILE OPERATOR: TELEFONICA

DIGITAL LEADERSHIP JOSE MARIA ALVAREZ-PALLETE CEO a ‘digital DNA’ across the company. However, now was the time to embed this more deeply in the main organisation. In practice it meant the following: • A re-structure of the whole Telefonica organisation. Eduardo Navarro would be in charge of revenue growth. A new Chief Global Resources Officer would be in charge of cost efficiencies, global platforms and procurement, with an objective to create savings of EUR 1.5 billion. • Telefonica Digital, Europe and Latam were moved into the Global Corporate Centre with global leaders for Consumer, Enterprise and New Digital business. • Video moved into the Consumer group led by Michael Duncan, M2M/ Cloud/Security would move into Enterprise, and all other digital activities (advertising, health, home, financial service etc) would be transtioned to a new digital group. • There would be more focus on ‘Big Data’ and business intelligence.

• There would also be more focus on IP Communications: a ‘key battleground for telcos’, important to ‘protect the core’. In this unit, Telefonica would use the capabilities of TuGo, Topbox and Jajah. As already stated, despite Telefonica’s insistence that the unit had been performing well, the move was read as an attempt by Telefonica to bring the ‘Digital’ activities closer to the Spanish power base and, implicitly, an indication that that the Telefonica Digital business unit was not performing as well as management would have liked. A blog post by Telco 2.0 said that the move was “also an indication that Telefonica Digital’s ‘smorgasbord’ approach to service development and delivery was not working. The business unit covered everything from core Telco services such as hosting, cloud and enterprise communications to non-Telco digital activities such as OTT communications, financial services, health, advertising, OTT content etc. Everything in the middle — security, IPTV, customer data etc. was also part

EDUARDO NAVARRO Chief Commercial Digital Officer IAN SMALL Chief Data Officer

of Telefonica Digital’s remit. The result was a lack of focus. Too much going on, too many priorities. A culture clash. The core telco services require traditional infrastructure skills, partnerships, metrics whereas the digital services require new software and marketing skills, new partners and opex- rather than capex-based metrics. Putting the two areas together in Telefonica Digital meant that the business unit was not, quite frankly, digital enough. Despite Telefonica’s spin on the transition, Telco2.0’s view was that by spinning off more traditional telco services into the operating businesses (both consumer and enterprise), it had reduced the Digital unit’s scope. Some proof of this is that, in fact, although the operator talked about integrating digital, infact the “true digital services” were being ring-fenced.

TMNQUARTERLY 7

ANATOMY OF A MOBILE OPERATOR: TELEFONICA

“Digital life is life itself, and technology is an essential part of being human. We want to create, protect and boost connections in life so people can choose a world of unlimited possibilities.”

OPERATING COUNTRIES

Mexico Guatemala El Salvador Nicaragua Panama Costa Rica

ACQUISITION TRAIL

2010

2014

HANSENET (Germany)

E-PLUS (Germany)

JAJA (Israel — service closed 2014)

DTS (Canal+) (Spain)

TUENTI (Spain)

GVT (Brazil)

United Kingdom Germany Spain

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ANATOMY OF A MOBILE OPERATOR: TELEFONICA

In fact, recently, many of the leading entities within Telefonica’s original digital push - payments, marketing, OTT services based on the TuGo brand, have since seem to have been backgrounded in favour of more cloudbased security and software offerings. So how does the Digital Unit now look, two years after this disputed move? In the first quarter of 2016, Digital Services revenues grew 19.0% year-on-year with video revenues totalling 665.4 million euros, up 17.3% compared to the first quarter of 2015 and improved by 3.3 percentage points their year-on-year change vs. the fourth quarter of 2015. Pay TV “accesses” totalled 8.4 million at March 2016, (4.5 million satellite TV), 7% more than at March 2015. Per country, the year-on-year growth is worth noting in Hispanoamerica (+12%), followed by Brazil (+5% year-on-year), and Spain (+4%). In Spain, work continues on the production of original series and in February the exclusive channel ‘#0’ was launched. In Security, January-March revenues (70.5 million euros) accelerated

the rate of year-on-year growth against the previous quarter by 4.4 percentage points to 27.2%, something the operator attributed to the continued integration of these solutions in the commercial offering. In the consumer segment, accesses with security products reached 11.8 million (+48% year-on-year) and more than 6 million customers are storing their digital data using the “Personal Cloud” service. M2M revenues totalled 42.5 million euros in the quarter and increased by 41.7% year-on-year. The operator also created a global “Internet of Things” (IoT) department focused on driving the development of M2M connectivity solutions and added-value E2E services in various sectors. In the JanuaryMarch period, Cloud revenues increased by 15.7% year-on-year to 87.2 million euros and the Company continued to advance in its strategy to provide cloud solutions to companies. At the same time, new partnerships were signed with Amazon and VMware and SAGE.

GROUP REVENUES

10.7 billion 28.8% Non SMS data revenues up 28.8% Q1 2016 YoY

DIGITAL SERVICES GROWTH

VIDEO

63% of digital services revenue

SECURITY

7% of digital services revenue

41.7%

CLOUD

8% of digital services revenue

Q1 2016 M2M revenue up 41.7% YoY

WEVE — THE LAUNCH AND THE BUYOUT OF A MOBILE ADVERTISING BUSINESS

After launching a fully-fledged advertising offering in early 2014, Weve found itself 100 per cent back in the fold of O2 (which had previously been the most determined of the operators to launch a media arm) a little over 18 months later, and now it is going it alone. Weve’s subscriber base, which numbers 31 million, now exceeds O2’s actual mobile subscriber numbers, a feat achieved primarily through the roll out of O2 Wi-Fi, which gives O2 the details of subscribers to rival networks (in addition to its own) in return for using its public Wi-Fi network. Weve is now working with mobile ad exchange Axonix — a sister entity given the fact that Axonix’s major investor is O2-owner Telefonica — to give advertisers further insight to its 31 million-strong audience base, and better enable programmatic trading. This means advertisers can load Weve’s audience insights into Axonix’s platform, then use it to bid on display advertising inventory using the ad tech partners of their choice, is the first significant product development since Weve was taken 100 per cent into O2’s ownership. Such a partnership would have likely been hampered under Weve’s earlier stakeholder arrangement over potential fears of customer data leakage to a direct competitor, not to mention fears over kneejerk reaction from subscribers, or a regulatory intervention. TMNQUARTERLY 11

FEATURE: THE GREAT PERSONAL DATA SWINDLE

Privacy campaigners typically reckon consumers are getting a raw deal from mobile network operators. They argue that a wide range of personal information is being used for operators’ financial gain — to glean insights for internal marketing, for example, or by selling ‘anonymised’ and ‘aggregated’ data to third parties — yet customers see little in the way of return.

THE GREAT PERSONAL DATA SWINDLE? Mobile operators stand accused of not sharing big data benefits with customers

by Ken Wieland

12 TMNQUARTERLY

FEATURE: THE GREAT PERSONAL DATA SWINDLE

“In many cases, customers are totally unaware of the extent that operators use and process their personal data,” says Javier Ruiz, Policy Director at Open Rights Group (ORG), a UK-based organization that seeks to protect digital rights. A recent ORG report entitled Cashing in on your mobile? — with the provocative strapline of How phone companies are exploiting their customers’ data — shows O2 and EE as each having sophisticated mobile analytics divisions to help with internal marketing and build up money-spinning relationships with third-party. Neither operator, however, gives consumers the ability to opt out (although Vodafone does). Ruiz argues that most EE customers would be concerned to learn that the operator’s mData platform collects not only location and demographic data, but also their internet traffic — website history up to the first slash, and all http traffic from mobile apps. The ORG man worries, too, about what he sees as a lack of transparency between Telefonica-owned O2 and Weve, a mobile marketing platform also owned by the Spanish giant. According to ORG research, many O2 customers are simply not aware that their demographic, location and traffic data — who they call, for example, and for how long —

is passed along to Weve. The information is then used to produce marketing and research products. Aside from location and traffic data, mobile operators, if they have the right infrastructure in place, can also share — in effect — customer credit ratings with banks and content owners. Openwave Mobility, a US-based software firm specialising in mobile data monetisation, recently added Smart IdManager to its suite of subscriber data management tools. It allows third parties to see how long a visitor to their website has been a customer of a mobile operator (indicating payment track record) and what type of billing plans he is on (indicating spending power). “This can all be done without revealing the actual identity of the customer, which gets round any privacy concerns,” claims Aman Brar, VP Global Business Development for SDM at Openwave Mobility. “It can be extremely useful information for third parties.” According to Steffen Sorrell, an analyst at Juniper Research, third-party relationships of this sort are nonetheless in their infancy. “Historically, operators have used consumer data in order to upsell, or to optimise the network,” he says. “The emphasis has not been selling that information to third parties.”

LEGALITY AND LEGITIMACY According to EE and O2, they are keeping within the boundaries of current legislation. E-privacy law, a European directive, says operators are not allowed to process consumers’ traffic and location data without consent. But since that data is anonymised, they claim, there is no legal obligation to ask for permission to use it. Ruiz is not convinced, however, that data is always fully anonymised. “While operators may remove certain identifiers, to avoid direct identification, you can build detailed profiles on age, gender, buying habits and website history. We don’t think that fits in with current privacy legislation — it is more like semi-anonymous.” He argues, too, that because detailed profiles typically include location history, it makes anonymizing data even more difficult as movements are completely unique. “There is also a question of legitimacy,” adds Ruiz. “Consumers pay good money to receive a service, but operators are also making money by analysing our data and creating secondary products. We don’t think that’s fair. Consumers should get something meaningful in return if they consent to data being used.”

TMNQUARTERLY 13

FEATURE: THE GREAT PERSONAL DATA SWINDLE

WHAT IS YOUR BIGGEST CONCERN ABOUT SHARING PERSONAL INFORMATION WITH [YOUR FAVOURITE BRANDS, MOBILE OPERATORS, FINANCIAL INSTITUTION, TRAVEL COMPANIES]? 30% 27

25%

24 22

20%

15%

12 10

10% 5% 0%

60%

OPERATOR TRAVEL COMPANIES BANKS AND FINANCIAL SERVICE COMPANIES FAVOURITE RETAILERS WHAT PERSONAL INFORMATION ARE YOU WILLING TO SHARE VIA MOBILEMOBILE IN ORDER TO IMPROVE THE EXPERIENCE PROVIDED BY [YOUR FAVOURITE BRANDS, MOBILE OPERATORS, FINANCIAL INSTUTION, TRAVEL COMPANIES]? 57% 54% 57 54

50%

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39% 37%

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35% 32% 40% 31% 35

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experience by [your favourite brands, mobile operators, financial They will sell my Iprovided don't trust them to I don't trust them to I don't want them to I'm worried aboutinstution, I have no concerns personal information keep my personal know that much target me with oﬀers how that information about sharing travel companies]? Choose all that apply. to third parties information secure about me might be used in the personal information future with these entities

60%

30%

6 the What personal information are you willing to share via mobile in order to improve experience provided by [your favourite brands, mobile operators, financial instution, travel companies]? Choose allvia that apply.in order to improve the What personal information are you willing to share mobile

50%

40%

17%

2016% 20 16

13% 13

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My contact Details of my Details of my Details of my Details of my Access to my I'm not willing willingany of my Access my I'm not of my Details of my Details My contact previous Details of my Details to share current socialtomedia browsing travel details any current social media browsing travel details previous personal location proﬁles (likes,to share history patterns shopping personal location proﬁles (likes, history patterns shopping information dislikes, (places I've habits dislikes, (places I've habits with my networks of information visited with my networks of visited favorite contacts on recently etc.) favorite contacts on recently etc.) Facebook, retailers retailers andand Facebook, Twitter etc.) brands brands Twitter etc.)

ANDAND FINANCIAL SERVICE COMPANIES FAVOURITE RETAILERS BANKS FINANCIAL SERVICE COMPANIES FAVOURITE RETAILERS BANKS

MOBILE OPERATOR MOBILE OPERATOR

TRAVEL COMPANIES TRAVEL COMPANIES

Graphs: Syniverse: The Mobile Privacy Predicament

14 TMNQUARTERLY

FEATURE: THE GREAT PERSONAL DATA SWINDLE

SHORT CHANGED Ruiz’s views are echoed by a recent global study conducted by Aimia, a marketing and loyalty analytics company. While it found that 80% consumers around the world were willing to share key pieces of personal information with brands — the study was not exclusively tied to mobile operators — only 8% felt as though they were receiving better offers from companies as a result of sharing their details. There is a sense, too, that consumers recognise the true worth of their personal information to companies, with 68% ranking their data as “valuable”, and 31% judging it “highly valuable”. The high value of personal information, even when anonymised and aggregated, is borne out by Morrisons, a supermarket chain, which uses Smart Steps — O2’s analytics platform — as a cheaper alternative to loyalty card schemes to try and lure more customers through its doors. By targeting coupons at households in specific postcode areas (living far enough away from competitors) and by using analysis of journey-patterns (to avoid sending offers to existing customers), they were able to ramp up footfall significantly. According to the supermarket chain, obtaining this kind of data with loyalty cards would take around ten years. Brar from Openwave Mobility agrees with Ruiz that mobile operators have not done a good job at giving meaningful value to customers — either to those who are willing to share their personal data, or to those who might be open to persuasion. “They need to think more along the lines of being entertainment or information companies, rather than just connectivity,” he says. “They could offer movies at a discount, for example, if streamed later in the night when traffic loads are not as heavy on the network. Internet companies like Facebook have shown that consumers are willing to share personal information, provided they get something in return.”

You could extend that observation to a wide range of brands beyond mobile operators, from retailers to financial services providers to the travel industry. According to a ‘State of the Internet of Things’ study conducted by Accenture in 2014, 80% of consumers surveyed said they had privacy concerns with wearables. But half of those same consumers said they would be willing to share personal data collected by such devices with third-party retailers if they got a coupon or discount. Even better if that offer was personalised to what they wanted. Coupons and discounts based on their lifestyles, for example, or information on better workouts and best foods to reach their particular goals.

PRIVACY PARADOX The Accenture study, highlighting privacy concerns surrounding Internet of Things, is not an isolated example of consumer caution. Another study by the GSMA, the operator’s mobile industry association, found that 79% of UK mobile internet users had concerns about sharing their personal information when accessing the internet or apps from a mobile. The overwhelming majority, 90%, wanted to be asked for their permission before third parties could use their personal information. What is notable from detailed research carried out by Syniverse as part of its Mobile Privacy Predicament report is that some consumers are willing share basic information about themselves, with 33% on average willing to share this information (age, gender etc) with mobile operators in exchange for improved services. However, 30% are still unwilling to share any information at all, and research conducted by Alessandro Acquisti,

a behavioural economist at Carnegie Mellon University in Pittsburgh, suggests a consumer paradox. They cherish privacy on the one hand, but freely disclose personal information — in certain contexts — on the other. A playfully designed site, for example, can apparently nudge more consumers to reveal personal information than a serious-looking one. They can be easily manipulated. Consumers, it seems, may turn out to be their own worst enemies when it comes to privacy. We are attracted to the benefits of better quality or personalised services, but wary of sharing data even if we then betray that caution at the prompting of a prettily designed site. So how can operators and brands operate within this paradox? There are three key ways brands/ operators can bridge the trust gap — by addressing consumers’ three key concerns of . security, transparency and control. The Mobile Privacy Predicament research found that 25 percent of consumers surveyed don’t believe their personal data will be kept private or secure, while 21 percent worry about how their data may be used in the future and 19 percent of consumers surveyed are concerned their data will be sold to third parties. Addressing these concerns is the only way for operators, and other brands, to offer more personalised services without users feeling their privacy has been infringed or endangered. The data handling and sharing strategy must be transparent, and security of data assured. Consumers can be offered back control, and reassurance. Without these steps, with more security breaches and more intrusive marketing, optout campaigns by the likes of the ORG will continue.

Privacy concerns are the biggest barrier to operator’s mobile engagement ambitions. Join the conversation

#Syniversetalkingpoint Contact: talkingpoint@the-mobile-network.com

TMNQUARTERLY 15

SPONSORED FEATURE

Developing a network analytics discipline

At Polystar we have learnt that building a network analytics discipline requires both focus and flexibility. It takes an ability to focus on the key operational targets that you want to achieve and design the data analysis regime accordingly. Yet alongside this focus you require flexibility. There’s no such thing as an apply once, use often cure-all because, although you are deriving insights from a common data source, learning what you look for and how you deliver those insights is all about flexibility. It has taken the networks analytics industry a long time to learn this lesson, and some are yet to learn it.

Data is a firehose, filter out the useful The reason some have been slow to learn this lesson is that in many cases the application of network analytics started out in, and was closely tied to, the network and technical departments within an operator. These are the functions used to working with large network management and monitoring systems, requesting and analysing thousands of KPIs to help them assess network performance. So the analytics tools were designed to map the existing lists of KPIs, and there were thousands of them, that the network ops teams had asked for. Networks analytics developers were creating views of the data that were predicated on the discovery and analysis on thousands of data sets that were of little relevance to, and made little sense to, other business units within the operator. This slowed down development, integration and implementation, and made them operationally complex. Focus and flexibility filters out the useful from the data firehouse, delivering only relevant information to business units.

It’s about who knows what, not just what you know Once you have liberated network analytics from this technically-focused strait jacket, you truly start to see the benefits of democratising data across an operator. Democratisation of data means giving a much broader range of functions and people access to data based on networks analytics. This can mean your customer care team being able to understand a customer issue much quicker, or you marketing team being able to structure offers based on network usage and performance, or your C-suite gaining a real time but condensed view of key revenue-impacting events in the network.

It’s as much people as process And once that happens, it quickly becomes clear that the biggest change catalyst for extracting the benefits from a flexible network analytics platform are the people within an operator itself. Once staff members are exposed to data sets that make sense to them, then they want to do more, and get more creative in their use of network analytics-based data. You start to both feed and harness the desire of your staff to do a better job for their customers. It’s a virtuous loop.

The future of the network is analytics-fed and analytics-led If you look at the direction of change in our industry, whether at the network layer or in the transformation of network operators into digital service providers, the foundational layer of everything is analytics. Automated, programmable networks rest upon a new level of network, service and application visibility that, in turn, requires network analytics embedded into the edge and core of the network. Giving new IoT and subscriber use cases an outstanding experience requires sophisticated analytics capabilities at the service layer. Transforming the operator into being a customer-centric business requires the delivery of data across the organisation.

FINALLY, I KNOW THAT MANY OPERATORS HAVE ALREADY MADE THE FIRST STEPS TO EMBED THE BENEFITS OF NETWORK ANALYTICS ACROSS THEIR BUSINESS. THESE OPERATORS ARE ALREADY BUILDING A COMPETITIVE ADVANTAGE AS THEY FACE THE FUTURE. Polystar enables Communications Service Providers to achieve excellence in CEM, Big Data Analytics, Service Assurance, Network Monitoring and high-performance testing. We help operators to simplify their CEM strategies to deliver a seamless customer experience across multiple touch-points. Polystar’s realtime Network and Customer insights deliver the goldmine of Big Data analytics to CSPs.

www.polystar.com

TMNQUARTERLY 17

FEATURE: LTE ROLLOUTS

Operators that want to change from being connectivity providers to digital service providers need to start with the network. And that presents them with a conundrum, Keith Dyer reports.

18 TMNQUARTERLY

FEATURE: LTE ROLLOUTS

LTE fact file

We have come so far, so quickly, that it is sometimes hard to remember that progress in mobile services is not automatic. The core underlying technology refreshes at the approximate rate of once every ten years, and each refresh requires a deep financial and operational commitment from mobile operators. Yet all the while the consumer experience has belied that underlying pace of change. Consumers have seen rapid developments in device hardware capabilities — with smartphone flagship releases every year or six months introducing new screen, camera, audio and graphics capabilities. The invention and then acceleration of the app economy has been another revolution for the consumer. Yet the pace of change of the devices that consumers hold in their hands, and what they can do with them, has tended to mask the role that the network has played in supporting device and application capabilities — delivering higher order video and audio codecs for increased quality, reducing latencies to support gaming, increasing downlink speeds for downloads and video streaming. That disconnect, between appreciation of the device capabilities and the network has been reflected by a detachment between operators’ investment in the network and their ability to fully monetise their investments. Outside of core voice and data tariffs,

the greater part of the value raised by the majority of services delivered over LTE networks — transactional elements, marketing and advertising, and perapplication revenue — has nearly always headed not to the operator, but to some other party. Google, Facebook, WhatsApp and the rest are all good examples. Operators have spent years heavily investing in their network infrastructure — 422 operators have deployed LTE networks in 143 countries, according to the GSMA. So LTE is fast becoming the norm and offering high-speeds is no longer a differentiator among operators. Instead operators must start to roll out a wider range of valued LTE services for customers that can be monetised, as they transform to become digital service providers. If they don’t, the value in the network itself will continue to be harvested by others. And so operators are faced with a conundrum. To reach the next level of service opportunity, they need to invest further in LTE networks, yet that investment comes fraught with technical and business challenges. They have little choice but to press on.

KEY CHALLENGES The key business challenge facing mobile operators in most mature markets, certainly those in Europe, North America and South East Asia is that traffic volume continues to increase but revenues, and profitability, do not.

494 422 51 21

494 LTE NETWORKS ARE COMMERCIALLY LAUNCHED IN 162 COUNTRIES

422 OPERATORS DEPLOYED LTE USING THE FDD MODE ONLY

51 OPERATORS DEPLOYED LTE USING THE TDD MODE ONLY

21 OPERATORS DEPLOYED USING BOTH LTE FDD AND TDD MODES

The obvious answer is to find new business models that will enable operators to recoup more value from their investments. Finding partnership models that drive value both for the operator and partner is one example. Vodafone’s strategy at its LTE launches in Europe offers one example. By bundling Spotify and Sky (TV) subscriptions into its LTE tariff Vodafone offers more value to subscribers, giving them an added incentive to port to LTE, and it also brings those customers to its media partners. But to deepen such relationships by delivering more granular and segmented offers, operators will need to get not just faster, more prevalent, networks, TMNQUARTERLY 19

FEATURE: LTE ROLLOUTS

but smarter networks. Accordingly, operator Capex in the network has not shifted down in absolute or relative terms in recent years. Even companies, such as Vodafone, that have made significant investments in acceleration programmes like Vodafone’s Project Spring now say they may need to keep investing at these enhanced levels. This imperative is one reason why operators are so keen for network rollouts to get more economical in terms of cost per bit delivered, leveraging virtualisation and automation where possible, as well as new methods of extracting more from their existing spectrum holdings.

That disconnect, between appreciation of the device capabilities and the network has been reflected by a detachment between operators’ investment in the network and their ability to fully monetise their investments

AFTER ALL, IT’S VOICE Another route for operators is to be able to build more advanced services on their own platforms. Chief amongst these, somewhat surprisingly, is voice. Despite delivering a large proportion of operator revenue, voice has been increasingly demoted to commodity status. However the focus on LTE has pushed operators’ plans for voice services into the spotlight — this includes Voice over LTE (VoLTE). The intention to pursue VoLTE is backed by the significant advantages offered to the operator community. The biggest benefits are monetisation through service differentiation and efficient use of spectrum; and compelling cost savings through consolidation. Juniper Research recently predicted that VoLTE will account for $100 billion in revenues for operators — with more than one billion VoLTE users

globally by 2018. So it isn’t hard to see why a flurry of global launches have been hitting industry headlines of late. Even in markets that have dragged behind in VoLTE deployments, momentum is now apparent. In the UK, which has had LTE services for years but no VoLTE, EE, Vodafone UK and O2 UK have all announced live service; while Three had already become the first operator to officially launch a VoLTE service in the UK. In the USA T-Mobile recently announced that 33 per cent of its voice calls are now transmitted using VoLTE technology, having only launched its service in late 2014. The other hope for VoLTE is that the core network capability that enables it will act as a platform for operators to be able to offer a range of enhanced

communications services. These include contextual voice, where voice is launched from within a web page or app, conversational video on a one-toone or group basis, and rich messaging services that are truly interoperable between networks and devices. Many of these services mirror capabilities present at the moment in OTT apps, and in certain markets, often those where operators have a very high brand value, the operators hope to dominate these experiences where previously Skype, WhatsApp and Facebook have dominated. Yet VoLTE is far from simple to deploy. It brings with it a large requirement to optimise the radio and core network. SK Telecom has gone so far as to say that radio network optimisation is a critical

175 127 126 175 LTE OPERATORS ARE INVESTING IN LTEADVANCED DEPLOYMENTS, STUDIES OR TRIALS IN 76 COUNTRIES

20 TMNQUARTERLY

127 OPERATORS HAVE COMMERCIALLY LAUNCHED LTE-ADVANCED OR LTEADVANCED PRO NETWORKS IN 61 COUNTRIES

126 OPERATORS IN 60 COUNTRIES ARE INVESTING IN VOLTE DEPLOYMENTS, STUDIES OR TRIALS

FEATURE: LTE ROLLOUTS

component in ensuring consumers get the experience they expect with VoLTE. SK Telecom started VoLTE services in 2012, but only saw a steep rise in customer satisfaction with the service from 2014 and 2015, after the company had re-optimised its radio access network for VoLTE, according to Chloe Lee, Director of IMS and Project Manager for HD Voice at the carrier. Petrit Nahi, of VP of Mobile Access at Tektronix Communications, a NETSCOUT company, also has longer experience than most of VoLTE — having supported Metro-PCS (as was) with its VoLTE launch. He tells TMN that the speed of LTE rollouts itself can create problems in delivering VoLTE. “LTE operators are often rolling out aggressively and fast and that often means a lot of rehoming — and that affects handovers,” Nahi said. The issues operators have had with VoLTE illustrate that although it is easy to state that operators must invest in the network to achieve new service capabilities, the reality is complex and challenging. Other network investment priorities highlight the requirement for increased operational efficiency, as operators extract the maximum performance from their spectrum holdings. For example, if you look at the next stage of LTE network technology — what the 3GPP has decided will officially be known as LTE Advanced PRO — its features are all focused on extracting increased spectrum efficiency, or increased spectrum usage, from what is already available to operators. Improved radio

55 OPERATORS HAVE COMMERCIALLY LAUNCHED VOLTE-HD VOICE SERVICE IN 34 COUNTRIES

capabilities will make mobile broadband services more efficient, providing higher quality and enabling new sets of services on top of LTE networks. The 3GPP described the enhancements of the latest release, R13 in these terms: “The developments will enable the Programmable World for billions of connected Internet of Things (IoT) devices, vehicular communication for Intelligent Traffic Systems (ITS) and public safety/critical communications. LTE-Advanced Pro raises user data rates to several Gbps, cuts latency to just a few milliseconds, gives access to unlicensed 5GHz spectrum and increases network efficiency. It also maintains backwards compatibility with existing LTE networks and devices.”

CONCLUSION Operators know they must deliver a network that can support a new generation of capabilities which will enable them to offer enhanced services to users, often in partnership with other parties. The delivery of that network will bring with it new challenges, and nothing shows that more clearly than VoLTE. But the end game, a high capacity, higher speed network that is visible, responsive and consistent will truly enable a transformation in service delivery, going beyond voice to a host of new markets. And when that happens, operators will truly have achieved the transformation from connectivity to digital service providers.

The end game, a high capacity, higher speed network that is visible, responsive and consistent will truly enable a transformation in service delivery

Can operator investment in the network be rewarded by increased revenues? Join the conversation #Syniversetalkingpoint Contact: talkingpoint@the-mobile-network.com

1,800

1800MHZ BAND 3 SPECTRUM IS IN COMMERCIAL SERVICE IN 104 COUNTRIES ON 226 LTE NETWORKS (LTE1800) REPRESENTING OVER 45% OF ALL LTE NETWORKS GLOBALLY

TMNQUARTERLY 21

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pe chine Ty (LTE Ma C T -M E LT e GSM), network Coverag mobile d e e d th n ) T te x d Io -GSM (E se rrowban With EC A) IoT u -IoT (Na B N d n rea (LPW a A ) s e n id o W ti ncia hnical ower Commu PWA tec et Low P L e l a m ti n to pote ced well pla the only eir key are not could be s k r o , and th tw s e e s n a r c la e T us ut cellu LPWA Io cases. B e some r tu ic p Here we enabler. ment. require network

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CROP/SOIL/ IRRIGATION MONITORING

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Wide coverage Brief message mode

SMART ENERGY Two way communication

INDUSTRIAL CONTROL Low latency

USE CASE

Network requirement

22 TMNQUARTERLY

THE TECHNOLOGIES 3GPP EC-GSM (2G) LTE-MTC (4G) NB-IOT (LTE) SigFox LoRa Weightless (TV White Space) Ingenu Telensa

SMART PARKING

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CONNECTED HOME Lowest cost

TRANSPORTATION SYSTEMS Highly secure

WATER FLOW /QUALITY MONITORING Long lasting, rugged

TMNQUARTERLY 23

Empowering our customers to become

ISIONARIES

JDSU is now Viavi Solutionsâ&#x201E;˘ Viavi provides the actionable insights your business needs to become a forward-thinking organization ready to adapt, transform, and thrive. We work with you throughout the entire network lifecycle to understand your needs so we can deliver the right solutions to help your business succeed. We see things differently so that the people who power your business can, too. Learn more about our approach at viavisolutions.com/visionaries or +49 7121 86 2222.

JDSU Network and Service Enablement, Network Instruments, and Arieso are now Viavi Solutions.

FEATURE: AD BLOCKING

UH OH!

You served an intrusive pop-up ad

WAIT A TURN

Deal with content provider

HOW AD BLOCKING CHANGES THE GAME FOR MOBILE CONTENT DELIVERY by Guy Daniels 26 TMNQUARTERLY

RESTART

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FEATURE: AD BLOCKING

It doesn’t take much to spoil the user experience when viewing media on a smartphone. But network connections are only one factor in quality of service for content delivery; a far more widespread problem is the way web pages are delivered. In particular, it’s the thirdparty serving of display advertising, especially video, that appears to be causing the biggest issues. These ads are far more intrusive on smartphones than they are on larger desktop pages. They are also far more of a burden on page loading times, and certain ads — especially videobased ones that are set to auto-play — can quickly race through a user’s cellular data plan allowance, often without them being aware of the fact. All of which leads to an unsatisfactory user experience, for which mobile operators tend to unfairly receive the blame. Hence the rather controversial arrival of ad blocking software for mobile devices. The New York Times reported that almost 200 million people now use ad blockers worldwide. Such software is not new, and has been around for years in the desktop environment. A report published by PageFair and Adobe claimed that ad blocking is expected to cost publishers more than $21.8 billion in 2015 in lost revenue — 14 per cent of global ad spend.

By the end of 2016, it predicts the global cost of ad blocking to almost double to $41.4 billion. “We messed up,” said Scott Cunningham, SVP at the Interactive Advertising Bureau (IAB), in blog post last year. “As technologists, tasked with delivering content and services to users, we lost track of the user experience.” Almost overnight, a number of ad blocking solutions sprang up, operating at both device level and network level. On the one hand you have software that end-users can install or enable that blocks ads from appearing in browsers, whilst on the other you have mobile network operators that are imposing ad blocking on all their customers. In September 2015, Caribbean-based operator Digicel became the first telco to start deployment of ad blocking technology at the network level, working with Israeli start-up Shine Technologies. Shine’s solution blocks display and video ads inserted by ad networks in both mobile browsers and native apps. Although the IAB’s Cunnningham conceded that it was the user experience that the ad industry had lost sight of, it wasn’t immediately apparent that user experience was Digicel’s motivation for blocking ads. Rather, Digicel is playing the digital divide card, claiming it needs this revenue share from the content

Scroll down flash advert?

companies in order to extend its network to the under-served, especially those in the least developed countries. It’s also going to block by default, rather than offering the service as a user-selected option, although some local news sites will be exempt. “Companies like Google, Yahoo and Facebook talk a great game and take a lot of credit when it comes to pushing the idea of broadband for all — but they put no money in,” said Denis O’Brien, Chairman of Digicel Group. “Instead they unashamedly trade off the efforts and investments of network operators to make money for themselves. That’s unacceptable.” Shine estimates that, depending on location, ads are eating up between 10 and 50 per cent of a user’s data plan. It uses the example of a gaming app and says that whilst a 5-minute session with mobile ad blocking consumes about

B LO CK ED

NICE WORK! You served a permission notice

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FEATURE: AD BLOCKING

50KB, the same session with ads eats up 5MB. “There will be causalities, absolutely, but I know I’m not losing any sleep knowing remnant inventory ad networks will disappear,” said Roi Carthy, Shine’s chief marketing officer. Mobile operator Three has followed Digicel’s lead and has announced that it will implement ad blocking in the UK and Italy, with other group operations to follow. Three says it has no intention of eliminating mobile advertising, as it believes it can be beneficial to its customers, but rather it wants to give them more control and transparency over what they receive. To that end, it has stated three objectives for its ad blocking strategy: • T hree’s customers should not pay data charges to receive ads — they should be borne by the advertiser; • Barring mobile ads that extract user’s data without their knowledge or consent; • Allow customers to receive advertising that is relevant and interesting to them — so long as their mobile experience is not degraded.

“Irrelevant and excessive mobile ads annoy customers and affect their overall network experience,” said Tom Malleschitz, Chief Marketing Officer of Three UK. “We don’t believe customers should have to pay for data usage driven by mobile ads. The industry has to work together to give customers mobile ads they want and benefit from.” There is, though, recognition within the ad industry that things need to change. James Hilton, Global CEO for M&C Saatchi Mobile, used this year’s MWC event to question why operators are blocking ads. “One of the reasons is they are struggling to deal with the bandwidth,” he suggested. “Ads are taking up huge amounts of bandwidth, and ultimately operators are paying the price. They will do anything they can to reduce bandwidth requirements.” Yet adopting a network-level blocking solution is seen as step too far by others. “My concern is at this blunt instrument,” added Nick Hugh, VP EMEA at Yahoo, referring to Shine. “You’re blocking ads at a network level, but at a publisher level, some are very good. If you block everyone, you destroy the value exchange and ecosystem.” So what can be done to fix the situation? Research from IAB UK found that over half of consumers don’t understand the link between free content and viewing advertising,

suggesting it’s the responsibility of publishers to educate their users about this “value exchange”. If users can be more aware of the value of the content they are receiving, they are more likely to perceive their relationship with the publisher in a positive manner, and that in turn leads to a better user experience for the user. Faced with an ever-increasing use of ad blockers, it would appear that the advertising industry has three choices: • F ight the ad blocking, either through the courts or with technology; • Convince users that online content costs money, and that they will have to pay for it one way or another; • Make better ads that offer users more value, and enhance their experience. There have been some legal moves against ad blocking; none of them yet successful. A recent action against Adblock Plus ruled against the publishers and declared the practice legal. And publishers continue to look at ways of countering ad blocking at a technical level. Later this year in Sweden, twenty publishing companies (90 per cent of the market) plan to prevent users with installed ad blockers from viewing content. German publisher Gruner+Jahr has announced that recent efforts to limit ad block rates through messaging, content locking, and ad recovery.

Data and tracking extraction PRIVACY VIOLATION!

You made a BET TER AD RESTART

28 TMNQUARTERLY

FEATURE: AD BLOCKING

FINISH

WINNER! B LO CK ED

RESTART

VIDEO AD Too much bandwith!

Fair value exchange

EXCELLENT!

Ad recovery is the name given to a series of technical workarounds that look to bypass the block lists of adblocking tools by a series of measures. This can include making ads look like content, or be served from the same place as content, as well as encrypting “call” for the ad or even rotating domains to beat the block lists. G + I says its efforts have been successful, decreasing ad block usage by around 40 per cent. Beyond these technical steps, it hopes to engage with users and offer them a choice of how they compensate the publisher for content — either via a paid subscription, or by watching a video that will “unlock” content or by opting in to “targeted” adverts. As for creating more mobile-friendly ads that don’t annoy users… we will only know if it is successful when the use of ad blockers declines and network operators decide against physical intervention. For that to happen network operators must feel confident that they are protecting and enriching their customers’ experience online. Blocking is a crude

tool, and they would much prefer to develop meaningful relationships with content providers so that ad content can be delivered that users would engage with and not object to receiving. The “useful” advert could include coupons for or alerts about products that are back in stock in online stores. Competitions that introduce an element of fun and interaction, or take advantage of user context such as the user’s location — to offer targeted ads — can also be more engaging and a positive experience. (This theme of contextual communication with users is explored in greater detail in our next feature.) The genie is well and truly now out of the bottle, but the battle is not lost. In some respects the ad blocking debate has raised the important topic of how online content is paid for and the user experience protected. Consumers are more aware that free content still comes at a price, and publishers are more aware of their responsibility to protect user data and the user experience. Mobile operators, intermediaries in many respects, now realise they have an opportunity to enhance engagement between brands and end users. Ad blocking may yet lead to a realignment in mobile engagement.

How can mobile operators get past the block, and act to build trust between consumers and publishers? Join the conversation

#Syniversetalkingpoint Contact: talkingpoint@the-mobile-network.com

TMNQUARTERLY 29

FEATURE: CONTEXTUAL SERVICES

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WHAT CUSTOMERS REALLY WANT Can operators ever know what their customers really want? Probably not, but they can know a good deal about what they may need, and provide services that are founded on knowledge of a customer’s context to deliver personalised services.

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FEATURE: CONTEXTUAL SERVICES

A contextual service, as it sounds, takes known facts about a customer’s situation and uses that information to enable delivery of a service relevant to that context. These facts could include location or shopping preferences. Of course, what operators and brands do with what they know about their users can be controversial, and on Page 12 of this issue we have a whole feature looking at the privacy implications of the discovery and usage of customer data and context. But let’s assume here that data is anonymised, and/or being used with users’ consent, and is being brokered and stored in a highly secure way. If we assume that, then we can start to look at how contextual services can be built. The idea of the contextual app or service is not new. For example, collaborative applications utilise presence context so as not to interrupt someone who is busy. So an element of putting information in context is whether a user is typing, reading a text or an email, or taking a call. Mobile operators too have long been aware that they are in a position to act as originators of this sort of contextual information about their users: location-based services have been an opportunity on the table since the late 1990s. What is new is that new network technologies such as better location identification, combined with data analytics

techniques, have created the potential for the mobile network to play a new role as a broker of information to other parties that then use that information to enrich the services they offer to their customers. The model could also see space for a broker to enter the chain between the mobile operator that is originating information and brands that are then using that data to deliver or assure services. This broker may well be more able, or have more dedicated capability, to reconstitute that data in a way that makes sense to brands and enterprises. Paul Berney, of engagement specialist mCordis, says, “The mobile channel offers brands the best opportunity to deliver highly contextual, two-way, real-time engagement with target audiences. Only mobile can combine who, what, where and when together simultaneously. What marketers need to do is figure out how that ability could transform not just advertising but every stage of the path to purchase.” To take an example of this combination of contextual information, by combining location data, knowledge about a mobile user’s identity, and the ability to communicate with those users on a global basis, operators could provide services such as validation, fraud protection, and assurance and secure enterprise mobility. In fact, Syniverse itself has developed

TMNQUARTERLY 31

FEATURE: CONTEXTUAL SERVICES

a service validation capability that can provide multi-factor authentication to enterprises, app companies and service providers that are leveraging operator networks. An example is a service being run by MasterCard that ensures mobile users’ credit card transactions will be enabled no matter where they travel, and will only validate use of a card when the user’s phone is switched on in a certain location. Because the service knows where a customer should be, and where the customer actually is, the service not only prevents transactions from being declined unnecessarily when a customer travels to another country but also keeps payment cards from being used without the customer’s permission. Under the program, mobile users are also offered various prepaid data packages they can purchase directly from their phones when they arrive in a foreign country. One of the earlier examples of using location information to offer customers localised deals came via Telefonica O2 UK’s Priority Moments campaign. This campaign used cell-ID-level information to send users a text from participating brands when a user entered a set radius. So, for example, a local coffee shop would send a customer that entered the zone an offer via SMS. But more recently, location context has gotten more granular and more accurate. Indoor technologies such as beacons and in-venue WiFi IDs can pinpoint users to a specific area of a shopping mall, for instance. Many of these solutions are provided by WiFi operators or other service providers, and there are still issues with delivering services in a way that accords with customer comfort. Mike McGuire, Senior Analyst at Gartner Group, says, “There remain some issues with beacons and how marketers in retail and, say, hospitality can fully leverage them in a customerfriendly manner. However, beacons and proximity technologies have

32 TMNQUARTERLY

demonstrated value to marketers in retail or hospitality as these technologies provide insight into how customers with a mobile device are moving through a store’s or a hotel’s locations.”

HYPER-LOCAL SERVICES IN MADRID What if mobile operators themselves could broker location information to make services get really local? How about down to the nearest 50m? Vodafone in Madrid is trying just that, using technology from Astellia, a company whose technology is usually used to provide information about network performance. Astellia bought RAN optimisation specialist Ingenia two years ago. Although the main driver for the acquisition was to add Ingenia’s RAN visibility to Astellia’s core network probes, one aspect of the company’s RAN optimisation technology — its ability to locate users very accurately within a cell — offers another business opportunity for operators. By using radio call traces — measurements from different cells which are reported by the handset to the network — Astellia can build up RF fingerprints of specific locations that are then correlated with a geographic position provided by drive-tests or from handsets with GPS. It can then create a “map” made of these fingerprints to locate users to about 50m accuracy. Vodafone has been running a trial of Astellia’s geo-marketing technology and services in central Madrid. As user devices move through an area, they are sent marketing offers that are very specific to their location. A dashboard can show users moving through the city centre, highlighting the partner offers that are available to be served in each case. As Astellia also has dashboards which let operators generate quite detailed segmentations of their subscriber base, there is further potential for a mashup between highly accurate location and the customer profile. Customers

THE CONTEXTUAL SERVICE OPPORTUNITY

FINANCIAL IS THE USER WHERE THEY SHOULD BE? IS THE USER WHO THEY SAY THEY ARE?

IS THIS TRANSACTION UNUSUAL OR SUSPICIOUS?

RETAIL WHERE IS THE USER? WHICH WAY ARE THEY HEADED?

ARE THEY A CUSTOMER OF YOURS? ARE THEY LOOKING FOR A DEAL?

TRAVEL TRAVEL INFORMATION AND UPDATES THERE’S A PROBLEM OR DELAY — BROADCAST AN ALERT YOU’VE BEEN HERE BEFORE — AUTOMATED CHECKIN

COMMUNICATE INFORMATION TO COMPANY/CORPORATE TRAVELLERS

FEATURE: CONTEXTUAL SERVICES

The operator can act as a broker of information between the customer and brands, in a way that is genuinely additive of value, rather than intrusive.

could be pushed contextual offers based not only on location and direction of travel, but on a database of subscriber information — as long as the customer has opted in for offers, say as part of a loyalty programme. Another major mobile network trend — known as mobile edge computing (MEC) - is expected to distribute computing platforms, now normally sited in centralised data centers, to the edge of the network. By taking advantage of virtualisation technology, these cloudlets can host analytics and service platforms that are very near to the users in a cell, and can be aware of local user and radio conditions. The hope for MEC proponents, such as

NTT DoCoMo and Vodafone, is that app developers will be able to design apps to MEC APIs, taking advantage of very granular information to deliver services based on a combination of network and user context. In this instance the operator can act as a broker of information between the customer and brands in a way that is genuinely additive of value, rather than intrusive. We may not know what we want, and we may even want to be left alone. But data about what surrounds us, filtered through the prism of the mobile network, can be turned into light that shines a light on our current context. And context is all.

45m

25m

30m

Is the delivery of contextual services an achievable goal for mobile operators? Join the conversation #Syniversetalkingpoint Contact: talkingpoint@the-mobile-network.com

TMNQUARTERLY 33

FEATURE: NETWORKED WORLD

A TALE OF TWO WORLDS

Mobile is now the preferred method for consumers in some Western markets to interact with their banks and financial service providers. And mobile payments and mobile money is the catalyst for financial inclusion in developing economies. But the role of the network itself in this service is really up for debate. Picture credit: Philip Mostert. www.pmphoto.co.za

Even mobile operators themselves have stopped listing financial services as a key strategic area where they can grow non-core revenues. Time was, every operator results presentation identified mobile money, payments and banking as areas where they could extract value as a key part of the value chain. But that slide has been deleted from the powerpoint in most markets, as mobile payments action has coalesced around the banks, card providers and dedicated apps themselves. Recently, for example, Norway’s Valyou money service, backed by Telenor, was closed, with owners Telenor, DNB and SpareBank blaming a lack of NFCenabled payment terminals and support from their fellow banks and telcos for their project’s failure. Telco Telenor and local bank DNB first teamed up back in 2008 through the creation of a 50/50 joint venture called TSM Nordic. A payments pilot project began in 2011 in Oslo and SpareBank1 was added as a minority partner before Valyou was finally launched late last year. At the time, the JV said that its wallet worked at over 400 stores and promised the support of Skandia Bank, yA Bank, Fana Sparebank and EnterCard in 2015. TMNQUARTERLY 35

FEATURE: NETWORKED WORLD

In other markets, too, operator-backed mobile payments services have faltered. Weve in the UK dropped its payments ambitions. AT&T, T-Mobile, and Verizon nearly five years ago came up with their own NFC-based mobile-payments entry, originally called Isis but rechristened Softcard. And when Google Inc. in 2011 launched a rival wallet for its Android platform, carriers were able to hobble it by keeping it out of their network of stores. “In Softcard’s case, the uptake was massive. 2014 into 2015, it was a very big number,” says Spencer White, a former AT&T executive who left Softcard in February to become chief operating officer at Atlanta-based Sionic Mobile Corp. Yet NFC deployments in some cases can now brush aside carrier control by using host card emulation, a cloud-based variant that bypasses the secure element, a chip embedded in the phone that stores payment credentials and usually belongs to either the MNO or the phone manufacturer. And many payments, banks and app providers would rather not be tied to operator rollouts or control. To many observers, the balance of power in mobile payments has plainly shifted away from the mobile networks, and the idea of consumer financial

The balance of power in mobile payments has plainly shifted away from the mobile networks, and the idea of consumer financial services as a great opportunity for mobile network providers has past.

36 TMNQUARTERLY

services as a great opportunity for mobile network providers has past. The network exists to provide coverage and access, where necessary, and that is its only role. So that’s it for mobile operators then? Well, no. Some, such as industry expert Dave Birch of Consult Hyperion, think that the operators might not be done in payments after all. There may be a role for them in critical businesses such as transaction security and user authentication. And some observers argue they could expand their stake in carrier billing as well, so they still have opportunities to do something in the mobile transactions world. Birch says, “Of these opportunities, I would say that if you can authenticate the device and authenticate consumer then you can help everyone else in the value chain to deliver a more secure transaction infrastructure, and that has some value.” And users are more and more using the mobile for banking and payments. According to a recent Accenture survey, 52% and 38% of Millennials and higher-income households use contactless payments at least once a week, respectively. In the UK, research from CACI for the British Banking Association (BBA) shows that customers will use mobile devices to check their current accounts 895 million times in 2015, more than the 427 million branch interactions. By 2020 they are forecasting that customers will use their mobile to manage their current account 2.3 billion times — more than internet, branch and telephone banking put together. That all adds up to 1.3 million text message alerts sent by banks to their customers each day. All of those transactions require a role for someone to provide identity management and security, a trust architecture, if you will, based on identity. The mobile operator already has all that in place.

By 2020 it is forecast that customers will use their mobile to manage their current account 2.3 billion times — more than internet, branch and telephone banking put together. RESEARCH FROM CACI FOR THE BRITISH BANKING ASSOCATION (BBA) So perhaps it is as a broker of identity that the operator can provide value in the financial services space. The operator can authenticate the consumer’s identity and also their context and location. The network also offers a built-in security architecture. Putting this together could offer a useful capability to other players in the transaction chain. Anthony Browne, Chief Executive of the BBA, says, “Biometric security features will allow us to get hold of our money faster and without going through the rigmarole of passwords and PIN codes. The possibilities of using data analytics to give customers greater insight into how they spend their money and the best offers, services or products is very exciting too.

FEATURE: NETWORKED WORLD

HOW THE GSMA SEES OPERATORS FITTING INTO THE MOBILE PAYMENTS LANDSCAPE Mobile payment Mobile can be used to pay for goods, services, digital content, transit and for person-to-person transfers at physical (point-of sale terminals) or remote (internet transactions) locations. Payments can be initiated via NFC chip, SMS, QR code and cloud technology and funded by credit or debit card, bank account, charged to mobile phone bill, or with a prepaid account. Mobile contactless payment Supported by all the major handset manufacturers, near field communications (NFC) is the most widely used mobile technology for payments at point-of-sale (POS) terminal, which are used in the same way as contactless cards. NFC payment services have been piloted and commercially launched around the world, and there are more than 240 NFC-enabled mobile device models, and a growing number of contactless card payment terminals. SIM secure element for secure mobile payment The SIM secure element solution for mobile contactless payments is based on the provisioning of smart card payment applications, including the sensitive payment credentials, inside the SIM secure element. The payment app performs the contactless payment transaction with the NFC payment terminal, which acts like a contactless payment card with the terminal. A mobile app also resides on the handset (outside of the secure element) which provides the user interface to the consumer, while the transaction is managed by the application running in the SIM.

FLIPSIDE IN THE DEVELOPING WORLD In the developing world the emphasis is very different. Here the mobile operator is a true enabler — allowing people to take advantages of financial services for the first time — such services include depositing, withdrawing, sending, saving and transferring money as well as making payments. In Tanzania there is a recentlysigned interoperability agreement between three of the major Mobile Network Operators — the first of its kind in Africa. Orange has committed

The role of mobile as an enabler of financial inclusion is, in these markets, very different from the western markets, where the majority of users already have relationships with banks. to acting as a bank in several of its African regions, buying licenses where appropriate. Kenya is probably the most well known success story for mobile financial services, with the renowned M-PESA now a core part of the country’s economy. Transactions valued at 87% of the country’s GDP passed through M-Pesa alone last year (Kenya’s 2013 GDP was $55 billion), according to Safaricom. Mobile money makes up a large portion of Safaricom’s annual earnings, grossing in $333.73 million (32.63 billion ksh) over the last financial year largely through fees.

The Kenyan regulator has also authorised three mobile virtual network operators (MVNOs) to begin offering mobile money services. Equity Group Limited, one of Kenya’s most profitable banks, providing free SIM cards in October 2014. Mobile pay (which launched a service under the name of ‘Tangaza’) and Zioncell were was given a license through its subsidiary Finserve and began granted licenses. All three use Airtel’s mobile network. Initiatives have spread across the world — into Bangladesh and South Asia via GrameenPhone. In Latin America, services spread too. As of May 2015, there were 37 live mobile money services across 17 markets in the region, and 18 further planned services. The region now accounts for 14.9 million registered mobile money accounts, of which 6.2 million are active on a 90day basis. The customer active rate in the region is 42% – 7.5 percentage points greater than the global average. Today, we also see more services achieving scale – 5 services in the region have more than one million registered customer accounts and 3 services have more than 1 million active customer accounts. The role of mobile as an enabler of financial inclusion is, in these markets, very different from the western markets, where the vast majority of users already have relationships with banks and app providers and have top end devices and access to a payments infrastructure. In other countries, financial services is much more of a key vertical for the mobile network.

37 live mobile money services across 17 markets GSMA

TMNQUARTERLY 37

10th

Wire & Cable Conference 2016 Energy + Communication 20-22 June 2016

Westin Palace, Milan, Italy Delivering authoritative insight into power, telecom, OEM and structured cabling markets

Reasons to attend:

3 3

Hear first-hand analysis from Prysmian, Nexans, Siemens, ZTT, Futong, Fujikura, El-Sewedy Electric and Ducab HV Gain in-depth insight about copper, consolidation, submarine cable, G.Fast, energy transmission, renewable energy projects, smart grids and much more Network with over 200 senior executives from more than 30 countries

Site Visits: Visit 1: Unique opportunity to visit Continuus-Properzi manufacturing plant where you will see rod production plant manufacture and the company’s first continuous extrusion machinery Proform (Properzi Forming) in operation Visit 2: Take the opportunity to visit Lamborghini assembly lines and museum followed by a presentation on SAMP and the Gruppo Industriale Maccaferri plus a tour of the Samp Sistemi facility. Places are strictly limited to registered delegates on a first come first served basis.

Sponsors:

Confirmed speakers for Wire & Cable 2016 include: • • • • • • • • • • • • • • • • • •

Jon Vail, CEO, Ducab HV Giovanni Romano, Co-ordinator for Radio Access Standardisation, Telecom Italia Carlo Scarlata, CCO, Prysmian Italia Ahmed El Sewedy, Chairman, El-Sewedy Electric Akira Saita, General Manager, Fujikura Ltd Thomas Neesen, Secretary-General, Europacable Bernhard Schipper, Head of Technical Council Cables, Siemens Michael Weiss, Senior Director, Purchasing Category Project Materials, Siemens Bart Verheule, Head of Marketing Energy, Borealis AG Jan Schindler, Chair Market Intelligence Committee, FTTH XU Jianzhong (Greg), Member of the Board, Futong Group Max Yates, Industrials Analyst, Credit Suisse Bernard O’Connor, Managing Partner, NCTM Chaoyang Guo, Manager, Research Department, Zhongtian Technology (ZTT) Submarine Cables CO., LTD Damien Polansky, Global Associate Marketing Director - Electrical & Telecommunications, Dow Dario Giordani, European Product Manager Fire Safety, Nexans Jean-Arnold Vinois, Advisor, Jacques Delors Institute Toni Bosch, Vice President Telecom Solutions, Prysmian Group

Supported by:

To book your place visit www.wireandcableconference.com

COUNTRY PROFILE: BRAZIL

With mixed performance during the 2014 football world cup, Brazil’s operators can’t afford to mess around in the run up to this year’s Olympic Games, as hundreds of thousands of visitors descend on the country.

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COUNTRY PROFILE: BRAZIL

20%

7.5 MILLION TICKETS ARE BEING SOLD

THE BUDGET IS ROUGHLY $1.8 BILLION

Our first profile of Brazil’s market was exactly three years ago, as the country geared up for the 2014 football World Cup. Network performance analyst OpenSignal, said the competition was “a trial by fire for Brazil’s fledgling 4G networks”, and added that “there were plenty of complaints levied against the country’s operators about the quality and consistency of their service during the month long sporting extravaganza”. So can the operators improve for Rio 2016? Of course, one major difference between the two events is that the Olympics is far more localised. The football event was spread out across the vast country, taking in dozens of airports, urban centres and stadia. The Olympics is, of course, more centred on Rio and the surrounding area. Even so, the event will see 306 Olympic events taking place over 17 days in 37 different venues, which are often quite distant — the Maracanã stadium is about 30 km (18 miles) away from the golf course.

Hopefully one lasting legacy can be the performance of the country’s mobile and fixed networks.

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20% OF THAT IS BEING SPENT ON INFORMATION & TELECOMMUNICATIONS TECHNOLOGY With Brazil having already supported a major global event in recent years — the 2014 football World Cup — it can lean on its experience of handling the sort of data usage it saw during that event. For example, the total data traffic carried during the 64 matches of the tournament reached a record-breaking 26.7 terabytes, according to Ericsson’s 2015 Mobility Reports. 75,000 spectators generated 1.5 TB of data traffic during the final match — a rate 5 times higher than the average busy hour traffic and equivalent to 9 billion social media posts. Despite a data traffic increase of 80 percent compared to a similar large tournament in 2013, 75 percent of visitors to the 2014 football world championship rated their experience as the same or better than their everyday mobile experience. In 2014, 3G networks handled 70 percent of mobile data traffic, while 30 percent was on 4G. Per subscriber, 4G users consumed 70 percent more data than 3G users. Two years later, with LTE more established in the user base, and networks more densely and widely deployed, the traffic profile will skew further to LTE. Another aspect to consider is that sporting events generate vastly more uplink traffic. The ratio of uplink versus total data traffic volume was 50 percent during the 2014 final, compared to the usual 12–17 percent average in Brazil. This is important when designing and dimensioning mobile networks. The impact of an Olympic Games on fixed and mobile networks can

50%

3G/4G TRAFFIC DATA IS FORECAST TO BE 50% HIGHER THAN IN THE LAST SUMMER OLYMPICS 4 YEARS AGO be gauged by what happened in London in 2012. BT‘s London 2012 network carried 1150 terrabytes of information over the period of the Olympic and Paralympic Games, with traffic peaking across the network at just over 6.71 GBps. During the Games the Olympic network which connects 94 locations (including 34 competition venues) carried 961 TerraBytes of information. Around 13.2 million minutes (or 220,000 hours) of BT Wi-fi were used across the Olympic Park venues. Over 500,000 WiFi hotspots were enabled by BT across London, and mobile coverage was provided by multiple Digtial Antenna Systems that were shared by all the UK’s major operators. When you consider that LTE was still new in the UK in 2012, and apps such as Twitter and Instagram less wideley used, then it is understandable that for Rio, 3G/4G traffic data is forecast to be 50 percent higher than London. Accordingly, the budget for the Rio 2016 Olympic Games is roughly $1.8 billion, and a surprisingly high 20 percent of that total is being spent on information and telecommunications technology. Claro is responsible for the event’s 358-kilometer fiber optic network and promises free Wi-Fi in 60 Olympic facilities. The company plans to implement 180 mobile base stations and 40 dedicated coverage stations to handle the 27 million voice calls and 3 million SMS messages that it forecasts will be sent during the competitions. Another sponsor,

COUNTRY PROFILE: BRAZIL

BRAZIL’S OPERATORS

TOTAL MARKET SUBSCRIBERS 73.2M 66.2M

ESTIMATED 27 MILLION VOICE CALLS WILL BE MADE

ESTIMATED 3 MILLION SMS MESSAGES WILL BE SENT

Cisco Systems, is in charge of overall network infrastructure (Cisco also supplied the 2012 WiFi infrastructure to BT for London 2012). Cisco is implementing 50 tons of dedicated equipment, including more than 7,000 dedicated Wi-Fi access points and 100,000 LAN portal networks. It is also a key partner in leveraging the Games to transform Rio de Janeiro into a more connected city. In addition to a Cisco IoE Innovation Center in Rio, it is involved in other civic projects including the Urban Innovation Initiative in Porto Maravilha, designed to revitalise Rio’s 5 million-square-meter port area with a R$8 billion project that includes new hotels, housing, office complexes, leisure space and a light-rail transit line. Cisco’s role includes deploying urban smart solutions and a platform offering citywide Wi-Fi via a shared network infrastructure, location analytics for smart city services, collaborative public platform and remote access to government and tourist services. Sepura is providing critical communications and public safety infrastructure in four stadiums and two airports, and is carrying out a $10 million upgrade to state police networks. Brazil’s mobile market has seen a lot of change recently, and its politics and society is in some degree of turmoil. Not everyone is convinced hosting these major sporting events has been a net gain for the country, but hopefully one lasting legacy can be the performance of the country’s mobile and fixed networks.

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OPEN SIGNAL’S STATE OF THE MOBILE NETWORK REPORT: BRAZIL Using data gathered from more than 80,000 mobile subscribers, OpenSignal took a deeper look at the major Brazilian data networks and found some surprises. Brazil’s main LTE rollout didn’t get underway until 2013, but its operators have considerable 4G progress in the intervening two years. As the 2016 Summer Olympics’ official sponsor, Claro has the most to gain or lose in this global showcase. In August, Claro outpaced its competitors in raw 4G bandwidth, delivering average speeds of 17.82 Mbps. But by February 2016, Vivo was the fastest with an average LTE download speed of 15.3 Mbps. Meanwhile Claro’s average speeds dropped to 1.4 Mbps. A drop in average speed can be a sign that networks are getting more loaded, as 4G subscriber numbers rise. Open Signal said that since its August 2015 report, measured

download speeds on Vivo’s network have dropped by nearly a megabit. TIM and Oi saw their speeds hold relatively steady, but overall average connections for the country are trending lower. All four major operators made improvements to their 4G footprint in 2015. 4G customers on Vivo, Claro and TIM were able to connect to an LTE signal more than 50% of the time in OpenSignal’s latest tests. But Brazil still ranks fairly low among its global and South American peers in terms of coverage. While Brazilian operators may be struggling with nationwide coverage, they’ve boosted network reliability in Rio de Janeiro just in time for the Olympics. Three of the five Rio 4G providers had coverage in the host city of 60% or greater, while speed in Rio is on par with national averages.

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