US consumers need more than incremental gains from 5G

The last few years has seen an increasing number of consumers hold onto devices for longer, and the trend does not seem to be changing right now.

According to research from NPD, the second-half of 2018 saw the number of consumers in the US holding onto devices for longer increase yet again. The global slowdown in the handset market has been well documented, and this report demonstrates the difficulties users are having to dig deep into pockets to fork out for much the same.

“Rising price tags, extended longevity of new generation devices, and lack of innovative features beyond imaging enhancements, are a few factors reducing consumer motivation to upgrade,” said Brad Akyuz of NPD.

“The emergence of 5G could help to accelerate upgrade cycles, as consumers will look to leverage faster speeds for mobile entertainment, but despite strong consumer awareness, this is expected to be a longer-term result.”

When asked how old devices were, 29% of US consumers said at least two years old. Less than 20% of the respondents indicated they were ready to upgrade their device in the first-half of 2019.

This is perhaps not the news many in the industry were looking for. 5G is supposed to be a shiny new red ball to get the consumers excited, but NPD does not appear to believe it will be enough to turn current trends.

The issue which many in the consumer world seem to be facing is a lack of innovation. New devices are appearing each year, but there doesn’t seem to be anything new. The camera is better, the battery lasts longer, the device is lighter and shinier. But these are all incremental upgrades perhaps not justifying the price increases. Unfortunately, 5G seems to be falling into the same trap.

What does 5G offer you according to the telcos today? Faster download speeds. An improvement, but not exactly the breakthrough many were hoping for, especially when you consider the incredibly limited coverage maps. It is being sold as another incremental upgrade right now, and that clearly does not get the consumer excited anymore.

Heading back to the research, only 33% of consumers stated they would have an interest in purchasing a 5G device when it become available. Note the word ‘interest’ here; the actual figure is likely to be a lot smaller when the realities of handing over money come into play.

Although these reports are far from gospel, they do indicate market sentiment and give the industry a nudge in the right direction. 5G is being sold as an incremental upgrade on speed alone and that doesn’t seem to be good enough. Admittedly, there is little more which can be sold at the moment, but telcos and the handset manufacturers will have to dig deeper into the creativity mines if they are to turn the trends of the last few years.

Samsung is already planning for 6G leadership – report

Samsung has reportedly announced the formation of the Advanced Communications Research Centre, which will have the mission of creating a 6G leadership position for Samsung.

5G is barely with us and we’re already talking about 6G. This should come as little surprise, such is the length of time it will take to bring the technology to fruition. According to the Korea Herald, Samsung has begun it’s 6G mission as part of the wider Samsung Research business unit.

A currently un-named official announced the news, stating “the current team on telecommunications technology standards has been expanded to start leading research on the 6G network.”

What 6G actually is remains to be seen, but such are the rewards in leading each generation of mobile technology, it would appear it is never too early to cast an eye on the horizon.

Unfortunately for Samsung, it is not the first to the party. In January, LG Electronics and KAIST announced a joint 6G Research Centre in Daejeon. LG has said it wants to use the research centre to pre-emptively secure technology for 6G.

Work has already started for 6G standards. In March, a small group of scientists gathered in Levi, Finland, to host one of the first global summits on the 6G Wireless standard. This was not the most of complex of meetings, though it was aiming to start work on the most important questions; why does the world need 6G?

The answer is relatively simple for the moment; we don’t know.

The technological and business case for 6G will emerge eventually as 5G gains more traction around the world. As with 5G in the 4G era, forward-thinking engineers predicted the demand for increased speed, more efficient spectrum use and efficiencies to drive profitability. 5G does of course offer more, but you only need a framework to build on to start with.

This is what the initial 6G forays will be based upon, but it is important to understand what the short-comings of 5G are. The problem needs to be understood before a solution can be crafted, otherwise, what’s the point?

Security is a concern, especially as it can hit bank accounts now

New research from EY suggests British businesses are more concerned than ever about security. Funny that, considering there’s now a whopping fine to worry about.

Security is one of those areas which is constantly discussed but little is done to address. Irrelevant as to how many CEOs tell you its top of the agenda or how many statements start with the phrase ‘our customers security is our number one concern’, it’s an aspect of the technology world which has been swept aside. But not according to this research from EY.

“It’s not surprising that businesses are most concerned with the threat of cyberattacks,” said Adrian Baschnonga, Global Lead Telecommunications Analyst at EY. “The introduction of 5G will help organisations unlock new growth opportunities, but this transition comes at a time when fears regarding data breaches and network security are especially pronounced.”

While you always have to take statements like this with a pinch of salt, it might be right this time. Why? Because if you want to make executives care about something aside from their annual bonuses, you have to fight fire with fire.

Under the General Data Protection Regulations (GDPR) brought into play last May, any company which is found to have inadequately protected customer or employee data are subject to fines of 3% of annual turnover or €20 million. GDPR fines are proportionate to the risk posed by a breach, allowing flexibility for regulators to tackle the problem, but it certainly seems to have caught some attention.

According to professional services firm RPC, in the 12 months prior to September 30 2018 (the period in which GDPR was introduced) the Information Commissioners Office issued fines totalling just over £5 million, a 24% increase on the previous period of 12 months. Considering the ICO only had a couple of months to swing the GDPR stick at offenders, it would be fair to assume the watchdog is fully embracing the new powers offered to it.

This also seems to have hit home with those investing in new technologies. 40% of respondents to EY’s survey are worried about 5G and cyberattacks, while 37% saw IoT as a risk. These numbers aren’t particularly high, but they are the biggest concerns.

Another factor to consider is the consumer. While many will have been blind to the risk of data breaches in by-gone years, this does not seem to be the case anymore. Recent Lloyd’s research claims 44% of UK consumers believe there is a risk to personal safety in the sharing economy, perhaps indicating they would be hard-pushed to share data. If enterprise organizations are going to benefit from the data boom, they’ll have to convince customers that their personal information will be safe.

Whether this translates to appropriate security investments remains to be seen, as there seems to be a lack of ownership over security overall. Enterprise organizations are looking to suppliers for security to be built into products, while it is perfectly reasonable for suppliers to ask enterprise organizations to do more. Security should be built into products, but if an individual buys a front door, the manufacturer cannot be blamed when it is left open or an inadequate lock is used.

More often than not the carrot is used to incentivise business, but it seems the GDPR stick is an effective tool in bringing security to the front of executive’s minds. Hopefully now there will be less pandering for PR headlines and more affirmative action.

Gartner claims people are warming to AI

The power of artificial intelligence is unquestionable, but what remains unknown is how long it will take for the technologies to be considered mainstream. Are people afraid of the power of AI?

With every technological breakthrough it takes a considerable amount of time for mainstream adoption. There are of course early adopters who will reap the benefits of AI, but bell curves exist for a reason; the vast majority will be slow to react, scared of the unknown, resistant to any form of change or dismissive of the benefits. Despite this pretty much being an inevitability, Gartner is confident adoption is going pretty well.

“Four years ago, AI implementation was rare, only 10% of survey respondents reported that their enterprises had deployed AI or would do so shortly,” said Chris Howard of Gartner. “For 2019, that number has leapt to 37% – a 270% increase in four years. “If you are a CIO and your organization doesn’t use AI, chances are high that your competitors do, and this should be a concern.

“We still remain far from general AI that can wholly take over complex tasks, but we have now entered the realm of AI-augmented work and decision science – what we call ‘augmented intelligence’.”

This is where some of the biggest benefits can be realised according to Gartner. With a continued shortage of IT skills (and also in some niche/highly qualified professions) throughout the world, AI can be introduced to ensure the chasm of ability does not negatively impact revenues. How this idea has been implemented across the ecosystem does seem to vary quite considerably.

The research indicates 52% of telcos have deployed chatbots to assist with customer service operations, while 38% of healthcare providers rely on computer-assisted diagnostics. Fraud detection and IT security are other areas which have seen AI implementation, while the breadth of services will only increase across 2019. With the smart home, and smart speakers in particular, becoming increasingly normalized in the eyes of the consumer, this looks like a blossoming space.

Interestingly enough, today also marks the day the UK Office of National Statistics unveiled employment numbers for the year. The number of people now employed in the UK has reached an all-time high of 32.54 million, while the number of job vacancies rose by 10,000 to a record 853,000. Although the early adopters, those with extraordinary technology ambitions, will focus on the added value benefits of AI there will of course be those who use such a breakthrough to reduce headcount.

This is the reality of AI which we will have to meet head on. Jobs will be replaced by automation and software, people’s livelihoods will be made redundant, unless retraining is offered. But, for retraining to be a realistic ambition first there has to be an acceptance of the negative consequences of AI.

The Fourth Industrial Revolution will be incredibly painful for some, but industry and politicians don’t seem to want to admit this, instead just focusing on the benefits. Every Industrial Revolution has been painful for those who have not adapted for the future, but somehow the rhetoric seems to be this one will be different. Putting PR spin on the issue will not help in the long-run, we need to be realistic.

Huawei R&D faces export ban in Silicon Valley

The US Commerce Department has refused to renew an export licence at a Huawei subsidy in Silicon Valley, meaning China cannot access new developments at the site.

According to the Wall Street Journal, Huawei R&D outfit Futurewei was informed over the summer that the US Department of Commerce would not be renewing the license meaning some of the technologies developed at the site, but not all, could not be exported back to China. It’s a new strategy in the conflict between the US and China, but it could prove to be an effective one.

Silicon Valley is not the hotspot of the technology world because of the favourable climate or the presence of helpful regulations, it has one of the most talented workforces around the world. There are of course challengers to this claim emerging, India or Eastern European for example, but companies flock to Silicon Valley to open up R&D offices to tap into this resource. Such a ban from the US Commerce Department means Huawei is going to miss out on some of these smarts.

The block will prove problematic to overcome as there does not appear to be any logical way to combat the move. The rationale behind the blockage is quite simple; national security. Seeing as Huawei is currently being trialled and punished without the burden of evidence, there seems to be little the vendor can do to combat such passive aggressive moves by the US.

This is of course just another stage is the incrementally escalating conflict between the US and China. The tension between the pair does seem to have escalated over the last few days following a minor hiatus at Christmas. Rumours are circling the Oval Office concerning an all-out ban on Huawei and ZTE technology in the US, while suspicions will only increase following the arrest of a Huawei employee in Poland on the grounds of espionage.

With all the drama before Christmas and the hullaballoo kicking off again now, perhaps we should expect some sort of retaliation from Beijing. The Chinese governments has not been anywhere near as confrontation as the US, though there might be a breaking point somewhere in the future.

US sees bigger threat from AI than immigrants – move the wall!

Research from Northeastern University claims 73% of Americans believe AI will lead to a loss of more jobs than it creates, while 58% say the technology is a bigger threat to their job than immigration.

The second statistic is an interesting one as perhaps it will have an impact on the political propaganda campaigning which we have been victim witness to over the last 18 months. Being a bit more specific, the Brexiteers mission to tarnish the reputation of those horribly cultured Europeans and President Trump’s fearmongering mission to isolate the dastardly work-conscious Mexicans.

According to the data, 12% of Americans are worried about losing their job to an immigrant while 23% are more concerned about AI; the politicians have got it wrong, we shouldn’t be looking across our borders in trepidation, we should be pointing the finger at those nefarious geeks in California. Perhaps Trump can use the promise of building a wall around Silicon Valley as the foundation of his next campaign; American jobs for American HUMANS.

Interestingly enough the research also states the American people are not being bought out by the shallow and presumptuous claims from governments and technology firms that there will not be a downside to the technology. The table below, from the research, demonstrates there is a sense of realism about the technology.

Job Creation

AI has the power to be an incredible catalyst for positive change, but this positive change will come at a cost. The incorporation of ‘intelligence’ has been billed as the fourth industrial revolution, and just as there was with the other industrial revolutions there will be job losses, redundancies and the displacement of people. Right now not enough is being done to reskill those at risk or create an education system to allow people to take advantage of the information age.

These are the two areas of risk. Firstly, AI will make huge numbers of people redundant. It will of course create some new jobs for data scientists who can use this insight, but the data processing jobs which will be lost to create this analytical position will out-number the gain. The next question is how many of these redundant individuals will be qualified for the newly created position?

We doubt there will be many right now, as if they were qualified they would be working as data scientists not in a data entry position; it’s not like this isn’t a position in demand right now. The government has a responsibility to ensure these people are not simply left out in the cold when the AI revolution gains some traction as the companies themselves will probably start looking towards universities for talent as opposed to in their current operations. Are there enough initiatives in place to help these people transition to the digital economy? We do not believe so.

The second area of risk is in an individual’s education. We are going to take this slightly out of context right now as we are based in the UK, however national curriculums are not preparing students for the digital economy. Looking at the compulsory topics in schools right now it isn’t too dissimilar to what your correspondent had to endure during his earlier years. A huge amount has changed over the last decade, and a lot more will change over the next one; are we preparing our youngsters correctly?

IT is a compulsory topic, but these lessons are pretty basic skills. Almost every company is now reliant on technology, with software now being at the heart of this revolution. If governments are serious about protecting the best interest of people and their livelihoods in the long-term, surely coding, data analysis and other digitally relevant skills should be prioritized.

The industry and government has to be realistic about this technology. Yes, it can bring benefits but there will also be pain. New revenue streams and value add initiatives will be brought to an organization, but it is also an efficiency technology. Efficiency generally means fewer overheads, and in the business world the biggest expense is the payroll. Of course there are going to be redundancies if there is a technology which can do it cheaper and quicker; this is just a sensible business decision.

The negative side of the technology cannot be avoided, but the acceptance that it exists and is going to be much bigger than anyone is currently giving it credit for is a good starting point. The sooner the facts are accepted, the more effectively the challenge can be managed.

How about giving customers a better experience?

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Orla Power, Head of Marketing for Brite:Bill (an Amdocs company) explores some research into CSP customer expectations and what can be learned from it.

Mobile operators and the telecoms industry in general have never been known for excellent customer service and for many that’s an understatement. However, as generations Y and Z start paying for their own telecoms services, a new type of customer with different preferences and expectations is entering the market place.

We have found that this has presented operators with an opportunity to reset the customer relationship with these new customers. Typically, generation Y and Z are service- oriented customers who are willing to change providers frequently and will do so if they are not having a good experience. In addition, they want to interact in ways that suit them, utilising all available channels. They value increased personalisation and being recognised as an individual with specific preferences.

This is all very different from the traditional telecoms approach of communicating via traditional monthly – most likely paper – bills and offering a call centre interaction for those who are prepared to wait. Now, the interaction is multi-channel and much more aligned to the rapid resolution of customer issues and desires.

Yet, we know that operators are still in the process of transforming their systems to enable them to serve customers effectively and all too often the integration points fail to work smoothly, giving customers inconsistent experiences and exposing operators to the risk of customers leaving at key churn points in the customer relationship.

Brite:Bill has recently conducted extensive research with our operator customers across the world and, as part of this, we gathered valuable insights from respondents. Key challenges that were highlighted from the research are similar to the issues we here from the Communications Service Providers (CSPs), including the existence of various churn points. Among these, operators were keen to point out that customers receiving their first bill can be a churn point.  It’s one they are aware of and can quickly address if the customer feels the first bill doesn’t match their expectations.

Another key issue is the lack of personalisation in customer on-boarding communications. For customers that have been promised a tailored, personalised experience, receiving what are clearly standardardised form communications, using this less-favoured channel is an obvious source of discontent.

This is also highlighted in inconsistencies between the customer acquisition process and the on-boarding process. In the retail environment, the operator communicated its brand values as an exciting digital enabler and its capabilities to meet the needs of individuals. If the on-boarding resembles the experience your parents had getting a 2G voice phone in 1999, it’s clear there’s a gap between the promise made and the reality delivered.

Further irritations that CSPs are aware of at this early phase include the variety of different operator systems sending disparate notifications to customers. Some may be duplicated across channels such as SMS and email, while others might be about the same issue but use a different tone of voice or be untimely, for instance, telling them their router is on its way when, in fact it has already been installed.

These issues highlight the on-boarding challenges that operators face and clearly demonstrate the scale and scope of the customer communications challenges. In our research, we uncovered that 36 per cent of customers have switched operators in the last two years and, of those, 16 per cent switched because of billing issues. In saturated markets that’s a big issue and we estimate that for an operator with ten million subscribers the cost of churn is likely to be more than US$400 million.

This churn is not necessarily because the bill itself is wrong, it may be that the costs outlined are not clear to understand or the likely costs had not been properly explained at the time of sign-up. Our research uncovered that 68 per cent of customers say their bill is not clear or easy to understand. This has led to almost one-third of customers contacting their CSP because of billing issues.

More concerning, 18 per cent of customers said their first bill was more than they expected, causing the relationship to get off on the wrong foot and creating a climate of mistrust around the entire relationship. The fact that customers are still being surprised by the cost of their services and feel the need to interact with the call centre is costing operators significantly – both in the cost of call centre operations and in the likely increased churn because of dissatisfaction.

Our research also found that three quarters of customers currently have no interest in the information provided in their bill. However, this doesn’t mean they aren’t interested in receiving additional, relevant information via this channel. 56 per cent of customers want their bill to tell them how to save money while 29 per cent want the bill to tell them about relevant services.

Ultimately, customers want to receive the more personalised experience they get from other types of service providers. 29 per cent want their bill to include interactive graphs and icons so they can monitor and manage their consumption and 44 per cent want the bill to include what services they are spending the most or least on.

New technology, such as chatbots, will add another channel and dimension to customer communications and the bill will cease to be a static communication that simply states costs incurred. 39 per cent of customers say they would like access to a chatbot for bill enquiries, which rises to 50 per cent for generation Z customers, and almost a third (29 per cent) of all respondents think chatbots are a good alternative to a customer care line.

The new customer is enthusiastic and engaged, looking for more personalised relationships with their operators. As growth from new customers slows in saturated markets, the exciting news is operators already have valuable information about their customers and the tools in place to better serve them. They just need to utilise these more effectively to transform communications with the clarity and personalisation that customers expect.

Everyone thinks telcos are utilities except the telcos

It’s a trend which the telcos have been fighting hard to resist, but the growing wave of commoditization is seemingly starting to swallow them up.

The telcos continually deny they are utilities, but the fact they seem unable to branch off into value added services with any notable success is a damning trend. New research from The BIO Agency is just another stick to beat them with.

Let’s start with the most painful statistic; nine out of ten correspondents, all of which were UK consumers not necessarily industry figures, perceive their telco provider as a utility. According to this research, it’s not just journalists, the tech industry, regulators, enterprise organizations and vendors who view the telcos as utilities, it is Joe and Jane Blogg on the high street as well.

To support this claim, 64% of the respondents also consider there to be little or no difference between the telco. And to be completely honest, when it comes to selecting a new provider, your correspondent will tend to agree with the 64%; decisions are based on price alone. Sure, there might be the added bonus of content thrown in, but experience to date says this content isn’t very good. Excluding sport of course, but this isn’t something produced by the provider, just relayed to the consumer. And it generally costs extra as well.

Should the telcos want to continue this battle against commoditization, the perception of the brand and the business certainly needs addressing. Content is an area they thought this could be done, and quite frankly it hasn’t worked, perhaps the smart home is an area where this could be done, facilitating the relationship between the customer and the range of new services which will be prominent before too long.

Whatever it is, some value added service needs to be created, as you can guarantee the race to the bottom (in terms of data pricing) is certainly not going to change. Data is no different whether it comes from O2, EE or Three, the only thing which might differ is the quality of accessing it, which varies depending on where you are. Certainly sounds like a utility.

The final area we would like to draw attention to is the following:

  • 76% of people would not switch their telco provider if they had the opportunity
  • Though only 27% are likely to recommend their current telco provider

What this says to us is that customers can’t be bothered about going through the painful process of changing provider, but they certainly don’t give a monkeys about where their data is coming from. In this sentence, ‘data’ might as well say water or electricity or gas, the same attitudes are seemingly present.

The telcos are losing the battle of perceptions, but we’re not 100% sure this is one which they will be able to win.