Telecoms industry set to reveal its hopes and fears

It’s that time of the year when Telecoms.com once again conducts the signature Annual Industry Survey. Answering it will not only let us know what you think, but will benefit the telecoms industry as a whole, and in turn, yourselves too.

The 2019 Annual Industry Survey (AIS) has just gone live. True to its mission, this survey is designed to take the pulse of the telecoms industry, in particular of those topics most pertinent to operators, suppliers, technology vendors, analysts, consultants, and everyone else with a stake in the telecoms ecosystem. It’s my job to write collate the responses and present them to you.

This year’s survey covers many of the core technology topics the telecoms decision-makers are most interested in reading about, including Industry Landscape, 5G, Digital Transformation, IoT, and BSS/OSS. Undoubtedly the readers of this story, you, are in the best position to tell us, and the industry, how you see the current status of the industry and where you see it heading for. So, please, click here to answer it.

I was thinking about giving this story a title like “Your Industry Needs You”, but that would be too Kitchener-esque, plus I don’t have the beard to go with it. Instead, I’ll go full Churchillian: I have nothing to offer but a high-quality survey report for free, a sense of contribution, and the chance to win a new Apple Watch.

If this is your first experience with our AIS, or if you’re simply interested in finding out how correct (or incorrect) we have been with our understanding and predictions, feel free to check out last year’s results.

Another Vodafone billing fail hits roaming customers

Vodafone UK suffered yet another billing-related PR disaster as some of its customers piled up huge charges while roaming and were consequently disconnected.

The incidents took place over the weekend, just in time to make it onto mainstream media grateful for something to report on a Monday morning. One of the first Vodafone customers to flag the matter up on Twitter was David Maddison, whose trip to Malta was compromised by him suddenly being hit with five grand in charges that he wasn’t expecting.

After a few hours Vodafone tweeted that it was aware of the problem and promised customers would not be incorrectly billed. This was apparently insufficient for Andy Pearch, also travelling in Malta, who was seriously stressing out about being incorrectly billed. He was eventually placated by Vodafone, but remained unimpressed by the speed with which the problem was addressed.

“We are very sorry that yesterday, some customers could not use data or calling services when roaming abroad,” said Vodafone’s emailed statement. “This was due to a technical error, which we have now fixed. Any affected customer should restart their phone to ensure that services are resumed.

“As a result of the issue, some customers are receiving billing messages in error; we are working through these as an urgent priority and removing any errors from customer accounts. Customers will not be charged and do not need to worry about contacting us as we are proactively checking accounts and fixing any issues.”

Vodafone also explained that The spending limit cap was inadvertently triggered by a software change, which must have brought back bad memories of is major BSS fail three years ago. It added that it affected around 40,000 customers, but it’s now fixed. Hopefully for Vodafone this was an isolated glitch, and it’s bad luck that it happened on a Friday, but it still represents another setback for a company that has historically been criticised for its customer service.

5G pricing: the best is yet to come

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece, Jennifer Kyriakakis, Founder and VP of Marketing at Matrixx, explores best practice in the pricing of telecoms services in the 5G era.

The advent of 5G technology will bring a monumental shift in how traditional telcos operate their business. In the run up to full scale 5G deployments, many forward thinking telcos have launched digital brands. These are essentially 100% digital versions of their businesses packaged as a different brand. Many of them are using their digital brands to experiment with customer experience, service offerings, and business models that will become mainstream with 5G. The theorem: If we don’t have the pricing models and business infrastructure in place to properly extract value from a 5G offering, we’ll end up losing out to the next wave of OTT players. So let’s figure it out now, before the networks are in place.

As operators debate how best to price 5G, some early examples, such as Three in the UK are offering 5G at no additional cost to current 4G plans. The idea seems sound as a starting point, particularly as there is little 5G network availability and devices haven’t yet caught up. But does it make sense in the medium to long term, or do these tactics risk further devaluing the very asset that differentiates them? Are these early pricing models really strategies for 5G, or merely placeholders as telcos continue with transformation efforts that will set them up to compete with OTTs and digital players?

Operators have a powerful opportunity to create a competitive advantage with their 5G offering. Getting the pricing model right is a strong place to start. With the industry already throwing different pricing models at the wall, which one will stick?

The Pay-for-Speed approach

This approach started in some markets with 4G and while it’s simple and straightforward for the consumer, it also sets the precedence that speed is the only value lever telcos have to offer. For example, Vodafone became the first UK network to offer unlimited 5G data plans. Ditching the monthly data allocations, Vodafone offers three speeds; 2Mpbs, 10Mpbs and then the fastest speed possible. People have the choice on how fast they want to download or stream content.

If you are a super user or have a family of six who are always on their phones, it makes sense to pay for those faster speeds. If you are in retirement, don’t necessarily have a job in tech or could care less about YouTube, then having the choice for lower speeds may be a good option.

But is this model sustainable? When in the future, the amount of data – everything from gaming to connected home, health apps, IoT, streaming video and more -could outweigh the speed? Would an operator lose a revenue opportunity on super users who take advantage of accessing large amounts of data at the fastest speeds?

The Rewards approach

Others are taking an ecosystem approach banking on potential new revenue streams by creating value-added services, which often come to life through rewards-based programs. These programs offer incentives such as discounts, coupons and first-access to concerts and movies, to entice users and make the app experience more sticky. By building loyalty around an ecosystem now, as 5G services arrive they have established channel relationships with partners who will be leveraging 5G in the future for AR/VR services and are actively participating in the revenue chain.

Verizon’s Up Program is a great example of this, as they offer discounts and rewards on technology, dining, sports experiences and stage-side concerts. They tout deals monthly and even daily, driving people to check in on the app frequently. Once there, they encourage users to manage their services, often upselling them on new benefits.

By creating these rewards-based programs they are not only appealing to the next generation of users, but they are also creating a more valued relationship between consumers and their brand. This brand strategy is one that few operators have navigated successfully, but it is crying out for change in a new 5G era if operators expect to compete with OTT players.

The Marketplace & Bundled approach

Operators that create marketplaces are offering users opportunities to connect with friends, form inner social groups, gift data to friends, and also manage their plans in real-time. These marketplaces are highly sticky, driving customers to spend lots of time within the marketplace, which breeds more opportunities to sell products and boost revenue.

Another approach are operators who are choosing to bundle the price of data with a specific service. For example, if you want Netflix delivered in high-definition to your smartphone, you’ll pay a flat monthly fee for that service and the data will be included. These bundled-service options work well for a variety of value-adds, including VR gaming, augmented reality services, IoT of the home and more.

This sets the market up nicely for two-sided business models which will emerge with full scale 5G. Getting consumers used to paying carriers for services vs. network access is phase one to future multi-faceted models in which the carriage is monetized through different partners and models.

So have any 5G pricing models arrived yet?

While these offerings are all based on 4G today, they set the foundation for turning customers into high-engagement fans, in turn increasing their revenue streams.

5G introduces hundreds and even thousands of possibilities to utilize the network efficiently and generate additional revenue. Operators that are moving now to innovate and distinguish themselves from their competitors are setting themselves up to reimagine pricing for 5G and drive new revenue vs. defend against price wars and the resulting churn.

 

Pod 15 jul Jennifer croppedMATRIXX Founder and Vice President of Marketing, Jennifer Kyriakakis, brings deep expertise in both telecoms and software with roles ranging from complex systems delivery to technical sales to strategic marketing. Her 20 plus years of experience helping Telcos reinvent themselves has propelled the growth of MATRIXX into markets all over the globe.

Giffgaff managed to find a way to overcharge prepaid subscribers

UK telecoms regulator Ofcom has fined MVNO Giffgaff £1.4 million for double-charging some of its pay-as-you-go customers.

Giffgaff specialises in prepaid SIM-only mobile phone deals, in which subscribers buy chunks of data, etc, marketed as ‘goodybags’, in advance and then buy more when those are used up. Any data used when a goodybag isn’t active is charged at 5p per MB. It looks like there was some delay in properly recognising when a fresh goodybag had been purchased from a billing perspective, resulting in people continuing to pay the metered rate at the same time.

This resulted in 2.6 million customers being overcharged by a total of £2.9 million, which might seem like a lot but is only a quid per punter. Once Giffgaff realised what it had done it grassed itself up to Ofcom, which proceeded to spend the next ten months ‘investigating’ what it had already been told. This resulted in Giffgaff being fined £1.4 million, which would have been more if Giffgaff hadn’t fessed up and already attempted to refund the overcharging.

“Getting bills right is a basic duty for every phone company,” pronounced Gaucho Rasmussen, Ofcom’s Director of Investigations and Enforcement. “But Giffgaff made unacceptable mistakes, leaving millions of customers out of pocket. This fine should serve as a warning to all communications providers: if they get bills wrong, we’ll step in to protect customers.”

Thanks Gaucho, but didn’t Giffgaff tell you what it had done and hasn’t it already taken remedial measures? What, exactly, have you done to further protect customers other than spend ten months mulling over how much to fine them? Even regulators can never resist an opportunity to self-promote.

Giffgaff seems to have missed a PR trick here too. There is nothing on its website or social media addressing this, so people are largely left to interpret the background to the fine themselves. For a prepaid brand that makes a virtue of transparency and value for money, this apparent shiftiness and surrendering of the narrative could end up being far more harmful than the fine itself.

Vodafone Australia admits to misleading carrier billing service

After an Australian Competition and Consumer Commission (ACCC) investigation, Vodafone Australia has admitted misleading consumers through its third-party Direct Carrier Billing (DCB) service.

The investigation looked into transactions made between 1 January 2013 to 1 March 2018, though it is most likely Vodafone broke the rules upon the introduction of an Australian Securities and Investments Commission Act in 2015.

“Through this service, thousands of Vodafone customers ended up being charged for content that they did not want or need, and were completely unaware that they had purchased,” said ACCC Chair Rod Sims. “Other companies should note, money made by misleading consumers will need to be repaid.”

The service was first introduced in January 2013 allowing customers to purchase digital content from third party developers such as games, ringtones and apps, with charges being applied to pre-paid and post-paid accounts.

The issue which Vodafone seems to be facing is the service was automatically applied to customer accounts, with purchases being made with one or two clicks. As the customer was not suitably informed, the service has been deemed to be misleading.

Vodafone has already begun the process of contacting impacted customers and will be offering refunds where appropriate. The telco has phased out the majority of the service already, owing to an increasing number of complaints during 2014 and 2015.

While a final judgment has not been released just yet, a confirmation and fine will likely follow in the next couple of weeks, other Australian telcos have been found guilty of the same offence. Both Telstra and Optus have been fined AUS$10 million for their own misleading carrier billing services.

Although it is hardly rare for a telco to be found on the wrong side of right, especially in Australia where the ACCC seems to be incredibly proactive, such instances will create a negative perception at the worst time for the telcos.

In an era when the telcos are searching for additional revenues, carrier billing initiatives are an excellent option. Assuming of course the telcos don’t mess it up.

The digital economy is becoming increasingly embedded in today’s society though there are still many consumers who will begrudgingly hand over credit card details to companies with whom they are not familiar. This mistrust with digital transactions could potentially harm SMEs while providing more profit for the larger players who have established reputations on the web.

In this void of trust and credibility, the telcos have an opportunity to step in and play the intermediately as a trusted organization; how many people have an issue with handing credit card information over to a telco?

There are plenty of examples of this theory in practice; Amazon or eBay are the most obvious and most successful. These are online market places which allow the flow of goods and cash between two parties who may not have had a prior relationship. The consumer might have an issue paying Joe Bloggs Ltd. as there is little credibility, though many trust the likes of Amazon and eBay, allowing the third party to manage the transaction and take a small slice of the pie.

Carrier billing can be an excellent opportunity to add value to a growing digital ecosystem, using the consumer trust in the telcos to drive opportunities for those businesses which want to grow online. However, should there be a perception that the telcos do not act responsibly with a customers’ bill, this opportunity will dry out very quickly.

Aside from costing Vodafone a couple of million dollars, this also dents the credibility of the telco (and overall industry by association). This example suggests it is just as risky purchasing goods through the telco as it is an unknown supplier online.

Ofcom introduces text-to-switch

Thanks to Ofcom the days of being passed around a call-centre should theoretically be over, as new text-to-switch rules come into play.

Starting today (July 1) customers will be able to end mobile contracts simply by texting their provider. It’ll end an incredibly frustrating process used by all mobile operators to keep valuable post-paid customers from leaving their grasp.

It has been one of the biggest complaints against the telcos over the years; ending contracts is an incredibly painful process. While it might leave customers frustrated and infuriated, it does also help the telcos improve their churn. This is a system which is effectively loyalty through stubbornness, as the telcos enter a game of hide-and-seek with customers. It’s a competition of will and a perfect example of the telcos not understanding customer service.

“Breaking up with your mobile provider has never been easier thanks to Ofcom’s new rules,” said Lindsey Fussell, Ofcom’s Consumer Group Director. “You won’t need to have that awkward chat with your current provider to take advantage of the great deals available.”

Of course, while the majority of the telcos will be disappointed with the new rules, realising they will have to figure out new strategies to keep customers instead of forcing them into loyalty through the torture of hold-music, there will be some who are happy.

“I’m delighted that text-to-switch makes it easier and faster for everyone to get the best deal, helping people change to a new mobile provider with a few taps on their phone,” said Dave Dyson, CEO of Three.

“At Three, we’re making huge improvements to our 4G experience and preparing to launch the UK’s fastest 5G network, in more cities and towns than anyone else this year. This makes it the perfect time for people to consider the outstanding experience Three can offer, both now and in the future.”

Three might well be happy with the development considering the opportunity it has as we approach the era of 5G tariffs. Although the telco has not unveiled any pricing plans for 5G yet, the scene as been set for a disruptor to enter the fray and cause chaos.

EE has launched its 5G network and Vodafone is entering the small numbers in the countdown. Both have detailed tariffs on their websites, and both are charging a considerable premium for the pleasure of 5G. There is a massive opportunity for Three to undercut these two competitors on price, and with the new text-to-switch rules, it will be easier to lure potential subscriptions away.

In a perfect world, this text-to-switch initiative will force the telcos into a more customer-centric mind frame. Most businesses will tell you it is more profitable to cultivate customers first and chase new business second, but that have never really been the case for the telcos. Almost every business is geared towards acquisition first, leading the industry to its current position where it has one of the worst reputations for customer service and experience.

Perhaps these new rules will encourage the telcos to think about customers in a different way. The technology and data are certainly there to create a more valuable and informed customer experience, but only time will tell whether the telcos embrace it in the same way the OTTs do.

Monetising 5G is all about planning for the unexpected

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, Niall Norton, CEO at Openet, explains why question marks over the operator business case for 5G should be a cause for excitement, rather than concern.

5G is now a commercial reality. South Korea and North America are leading the world in bringing this new technology to market, despite ongoing industry cynicism on the lack of obvious monetizable use cases or supporting business cases. In this respect, 5G is merely following the same narrative that accompanied the arrival of 3G and 4G. The iPhone saved the blushes of 3G, then 4G saved 3G by offering the true mobile broadband capability that 3G promised. The industry was equally in the dark on how ROI would be gained – the networks were built regardless, and the customers signed up.

The truth is, very few can say with any real certainty that they know how they will make money from 5G, or what real consumer intention to sign up will be. But that hasn’t prevented tremendous excitement building for the technology. A recent Telecoms.com survey of telecoms professionals, looking at forthcoming 5G opportunities, revealed that 71% of respondents think 5G will boost ARPU. What’s more, nearly a third think it will be boosted by more than a margin of 10%.

5G positivity is further reflected by the 5G landscape in early adopter markets like South Korea. Just 50 days after its commercial launch in April this year, South Korea announced it already had 600,000 5G subscribers. It now has more than one million registered users. With monthly tariffs starting around the US$40-$50 per month mark, Korean consumers are paying premium prices for what they perceive to be a premium service. In most cases, this is double the current average Korean tariff for 4G and is seeing early 5G users consume more than three times the data. SK Telecom, for one, is trying to push this by creating ‘around 8,000 different content offers spanning UHD video, AR and VR’ to its customers, pushing a strong customer experience improvement message.

This vast number of available offers from SK Telecom for potential new 5G services illustrates how many other operators are likely to monetise 5G. South Korea has always led the world when it comes to mobile technology innovation. They have strong operator momentum behind 5G, with the larger players all launching 5G services concurrently. They also have 5G devices thanks to Samsung and LG, and endless potential content partnerships with global third parties. With so much industry support, and endless possibilities in terms of technology capability, there’s little surprise they can generate so many different offers and create so much choice.

This is precisely where 5G excitement is being generated. The more available offers and services, the more chance at least some of them will take off and enable operators to recoup 5G investments. The same level of choice simply wasn’t available with the advent of 3G and 4G because their limited technical capabilities throttled it. With 5G, operators, OEMs, content providers and ecosystem partners can all hedge their bets more effectively. Furthermore, the operator 5G opportunity goes beyond direct to consumer propositions and spans the enterprise and wider vertical markets, especially with the rise of industrial and enterprise IoT services.

But enabling a wide variety of 5G service choice, across so many sectors and opportunities also has its challenges. If operators are to capitalise on 5G, they need to be fast, agile, flexible and extremely opportunistic. Unfortunately, these are not terms commonly used to describe the BSS solutions most operators are hoping to use to monetise 5G services. I heard one operator recently bemoan the fact it currently takes a month to create a single offer, and get it configured and set up through its existing billing and charging system. By that reckoning, it will take the same operator more than 600 years to emulate SK Telecom’s 8,000 5G offers. Not quite the time-to-market advantage they’ll be hoping for, especially given the anticipated short shelf lives of some proposed 5G services.

Fundamentally, operators need to have the flexibility and the confidence to set up and launch their own 5G offers and have the speed to react to changing market sentiments and conditions. They need to simplify and automate the ‘plumbing’ and reduce the need for additional technical intervention. This is how operators will best plan for the unexpected and maintain strong commitment to offering broad 5G service choice and sustain the excitement that surrounds its potential.

 

Niall_NortonNiall Norton has been Chief Executive Officer of Openet Telecom Limited since September 2006. He served as Chief Financial Officer of Openet Telecom Limited since joining in February 2004. He served as the Chief Financial Officer and Company Secretary of O2 (Ireland) where he was responsible for O2’s financial control functions, business process re-design, strategy planning and wholesale. He also took the lead management role for the Ireland element of the BT Wireless demerger and O2 IPO process. He has been a Director of Openet Telecom Limited since August 2006. Mr. Norton holds a degree in Commerce from University College Dublin and is a Fellow of the Institute of Chartered Accountants in Ireland.

O2 UK first to exploit fairness initiative with Overpayment Estimator

Ofcom has been pressuring UK MNOs to stop ripping off their customers at the end of their contracts and O2 has been the first to act.

One of the secrets of success if you work in a regulated industry is turning new regulations to your advantage. When they can get away with it all operators rip off their customers whenever they can, whether it’s exorbitant roaming fees, punitive charges for going over your allowance or failing to let you know when you’ve paid off your handset.

The smart MNOs are the ones that make a virtue out of doing what they’re compelled to by the regulator and that seems to be what O2 has done with the launch of its Overpayment Estimator. It’s actually a fairly rudimentary tool that just asks you about your current contract, tells you what you could save if you switch to O2 when it ends and then invites you to set a calendar reminder to switch to O2 when that happens.

The fact that this is even a thing is an indictment of how UK MNOs treat their own customers. It’s surely not beyond the capabilities of modern BSS to create an internal calendar marker at the start of a contract that automatically notifies them when it has finished and yet that often doesn’t happen. The only plausible explanation can be that they want their customers to keep paying over the odds and that’s not cool.

“It is simply not right that consumers across the UK are being charged for a phone they already own,” said Mark Evans, CEO of O2. “You wouldn’t keep giving money to your mortgage provider if you’d finished payments and owned your house – so why should it be that way for your phone? The mobile industry does not have the best track record on transparent billing practices.  Our Overpayment Estimator is another positive move towards changing that.”

O2 has something called ‘custom plans, which it says don’t charge customers for their phones once they’re paid off and automatically lower their bills. If some of its competitors are still doing that sort of thing then O2 deserves some credit for exploiting this window of opportunity while it’s still open. The technology presumably exists to only charge people for what they use, but there’s no point in trying to walk before you can crawl is there?

Ofcom’s latest ruling underlines the need for proactive personalisation

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, Martin Morgan, VP Marketing, at Openet, considers the latest move from Ofcom in forcing UK operators to tell their customers when their contracts are ending, and points out why it is a blessing in disguise.

UK telecoms regulator Ofcom recently announced that it is to introduce rules to ensure broadband, TV and phone operators tell their customers when their contracts are coming to an end. This is intended to prevent consumers rolling back into largely uncompetitive ‘standard’ tariffs without them knowing. According to Ofcom, this practice typically sees UK consumers paying 20% more for the same service received during the initial term.

The end of consumer inertia?

Consumer inertia has always existed, across all industries in all countries. The fact remains that it is always easier to do nothing at the point of renewal, rather than shop around for the best deal. Times are changing, however. Telecoms operators, much like utility companies and financial services providers are having to endure consumer facing product comparison websites, a rise in third-party digital switching companies and generally, a greater consumer awareness of new offers. The truth is, it has never been easier for UK consumers to find and take a better deal from elsewhere. With Ofcom now forcing telecoms operators to tell customers it’s time to renew their tariffs, a lack of awareness will no longer be an obstacle to ‘shopping around.’

UK telecoms operators must embrace this significant opportunity. They must use the data they have on their customers to create targeted and personalised offers to them as renewal time approaches. If Ofcom forces operators to share the best deals available to their customers at the point of renewal, then this should be treated as the final link in the chain to encourage retention. The fact remains, operators will have a long window available to them, and have an individual usage and preference perspective on each customer that the competition won’t. This creates a significant window of opportunity for an operator to convince their customers that they truly value their business.

Coming out of the shadows

Telecoms operators in general have struggled to maintain brand awareness in recent years. Much has been said about operators being forced to accept utility-like status in the minds of their customers. Content providers, social media providers and OTT messaging communities hold most of the cards when it comes to mobile consumer engagement, with operators becoming an increasingly invisible part of the service value chain. This is incredibly surprising given that operators enjoy a regular monthly billing relationship with their customers, when most others don’t.

UK telecoms operators, much like their global peers, are looking to build or strengthen a series of partnerships with well known brands, to try and boost customer engagement and position themselves as the 5G operator of choice. These partnerships will include teaming up with content providers like Spotify, Netflix and Apple Music. They will include device partnerships with the likes of Apple and Samsung and, also include deals with the social media networks too. These partnerships will create differentiation but knowing where best to target this content and these services will be critical to drive the required levels of customer satisfaction and retention.

The technology exists to act

Operators have the data and the means to focus these offers to the right users at the right time. What is more, thanks to the agile and flexible nature of digital BSS technology, they can be quick to trial new offers, should some not have the desired impact at the first time of asking. Ofcom’s new rules will present UK consumers with more choice, while placing them in a buying mood – UK operators know exactly when this will take place for every one of their customers. Every customer that churns will herald a failure for operator marketing teams and underlying digital BSS technology. The solutions are available to help UK operators prevail. They must react positively to Ofcom’s rules and quickly, if they are to take full advantage of the enormous opportunity facing them.

 

openet-martin-morgan-BWMartin Morgan is the VP Marketing at Openet. With 30 years’ experience in mobile communications software, Martin has worked in mobile since the early days of the industry. He’s ran the marketing teams for several BSS companies and served on trade association and company boards. In that time, he’s spoken at over 50 telecoms conferences worldwide and had a similar number of articles published in the telecoms trade press and served on trade association and company boards. At Openet Martin is responsible for marketing thought leadership and market interaction.