Research Paper

Operator Survey
on the Move to Digital
Global Survey of 101 Operators

© Copyright Openet Telecom, 2015

White Paper - Operator Survey on the Move to Digital

INDEX
SURVEY INFORMATION 2
SUMMARY 3
A NEW MARKET DYNAMIC:
COMPETITION, DATA COMMODITIZATION AND NEW REVENUE SOURCES 4
Data Commoditization 5
New Revenue Sources 6
CUSTOMER ENGAGEMENT:
USING DIGITAL CHANNELS FOR PERSONALIZED INTERACTION 7
Increased Use of Apps: Operators Want More than Just Self-Care and Alerts 7
Customer Engagement – How Often Should Operators Push Sales & Marketing Messages? 9
How do Operators Compare with OTTs? 9
AGILITY: TIME TO MARKET, PRODUCT DEVELOPMENT & THE USE OF REAL-TIME DATA 10
The Need To Be Agile – The Biggest Challenge For 2016 10
Time to Market 11
The Use of Real-Time Data for Marketing & Customer Engagement 11
The Biggest BSS Obstacle in the Move to Digital 13
LAST WORD 13
ABOUT OPENET 14

SURVEY INFORMATION
This paper gives the results of a survey that Openet carried out in August 2015. There
were 101 completed survey responses from operators worldwide.
The regional breakdown of responses was:
Europe: 35%
Asia-Pacific: 29%
North America: 18%
Africa: 9%
Central and Latin America: 6%
Middle East: 3%

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White Paper - Operator Survey on the Move to Digital

SUMMARY
As operators move to provide new digital services and make increased use of digital
channels to engage with customers there are some significant challenges ahead. This
survey shows that operators have identified these challenges and are aware of how they
need to change their business models, systems and processes to be competitive in the
new market. Despite the changes that the move to digital presents there was a strand of
optimism running through the responses to this survey.
The operators see that their most fierce competition will come from OTTs (Google,
Facebook, Apple, Skype) and the majority of operators feel that they are prepared for this
competition. However when the issue of providing personalized customer engagement
was raised operators see their performance as worse than OTTs. Add into the mix the fact
that most operators see data becoming commoditized and it can be seen that operators
need to change how they develop and market offers. But the good news is that they are
changing. Operators are looking to provide a much wider range of offers – both developed
in-house and via partners to market and sell to their customer base. How they market, sell
and activate these offers is also changing. The channel to customers will also become
increasingly digital, as operators look to increase customer engagement on the device in
order to better compete with the challenge of OTTs.
The main findings from the survey are:
yy Significant danger that mobile data will be commoditized in the next two years
yy Multi-play offers will represent the most lucrative new revenue source for operators in 2016
yy The main challenge for operators in 2016 will be the need to become more agile -
reduce product lifecycles and get more products and services to market in a shorter
time period
yy The fiercest competition in 2016 will come from OTTs (Google, Facebook, etc)
yy Operators feel that they are quite well prepared for this competition
yy Operators view their networks as the main asset to compete with their competitors
yy Time to market should be measured in days not months
yy Real-time data can be used for better product development
yy Operators need to increase frequency and scope of customer engagement
yy Operator apps need to offer more functions than just real-time alerts and self-care
yy When it comes to customer engagement operators are worse than OTTs
yy In BSS the main barriers in the move to digital are lengthy billing transformation
projects and legacy system limitations

The survey results are classified in the following three main areas:
1. A New Market Dynamic: Competition, Data Commoditization & New Revenue Sources
2. Customer Engagement: Using Digital Channels for Personalized Interaction
3. Agility: Time to Market, Product Development and the Use of Real-time Data

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White Paper - Operator Survey on the Move to Digital

1 A NEW MARKET DYNAMIC: COMPETITION, DATA

COMMODITIZATION AND NEW REVENUE SOURCES

Competition: Where’s it Coming From & are Operators Prepared?

Operators see OTTs (such as Facebook, WhatsApp, Google, Skype) being their fiercest
competitors in 2016. On a scale of 1 to 5 (1 being least fierce competition and 5 being most
fierce competition) OTTs scored a weighted average of 4.02. Traditional mobile operators
came in with a score of 3.21 and the others all came in around 3. As can be seen from
Figure 1, the gap between OTTs and the others is significant.

Figure 1: Who will Provide the Fiercest Competition to Operators in 2016?

Should operators be worried about this competition? It would appear that most operators
feel that they are ‘quite well prepared’ for it. Less than 40% felt they were unprepared.

Figure 2: How Well are Operators Prepared for this Competition?

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White Paper - Operator Survey on the Move to Digital

When digging deeper to see what was behind this confidence a question was asked about
what operators see as their biggest asset. As can be seen from Figure 3 the answers were
a bit tighter, but the operators voted for their network as the most important asset they
have over the new competition. Customer trust came in second place and propping up
the field was existing systems such as billing, campaign management, customer care and
business intelligence.

Figure 3: Strongest Operator Asset over the Competition

Data Commoditization
There is a strong likelihood that data will become a commodity in the next two years. As
can be seen from Figure 4, 66% of operators feel that there is some danger or a significant
level of danger of data becoming a commodity. Only 10% of operators felt that there was
a small degree of danger of data being commoditized with two respondents seeing no
danger at all.

Figure 4: Danger of Data Becoming a Commodity in the Next Two Years

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New Revenue Sources

Given the likelihood that data will become a commodity, operators will need to start to look
at where new revenue is going to come from. When asked what the most lucrative new
revenue source in 2016 would be, there was a fairly even response with multi-play offers
emerging as top contender. This was just ahead of selling digital life offers to existing
customers closely followed by partnering with OTT and content providers. As can be seen
from Figure 5, mobile advertising presented the least lucrative opportunity.

Figure 5: Most Lucrative New Revenue Source in 2016

As outlined above operators need to sell more offers to customers to be able to survive
in an increasingly competitive market, where data services are in real danger of being
commoditized. In order to sell these new services, operators are looking at new digital
channels, which are more personalized and direct.

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2 CUSTOMER ENGAGEMENT: USING DIGITAL CHANNELS

FOR PERSONALIZED INTERACTION

Increased Use of Apps:

Operators Want More than Just Self-Care and Alerts
The move towards digital is more than offering digital life and content services. It is
also concerned with how operators interact with their customers. Like most businesses
operators want to have as much customer interaction through digital channels as possible.
This means enabling customer engagement for sales and marketing as well as customer
care and spend alert functions direct to an app on the device. As can be seen in Figure
6, the vast majority (81%) of operators have a mobile app. However in many cases the
functions available on this app are limited. In order to move to digital channels operators
want to provide increased functionality in order to provide smarter customer engagement
through apps.

Figure 6: Percentage of Operators with a Mobile App

When asked about the functionality of current apps, the main uses, by a clear margin, were
providing real-time usage and spend alerts (75%) and self-care / customer care (77.5%).
Figure 7 shows the range of current functions operators’ apps provide mapped against the
functions that operators would like to see on their apps.

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Figure 7: Functions that Mobile App Currently Supports and Functions that Mobile App Should Support

As expected there is a difference between current app functionality and what operators
want from their apps. As can be seen from Figure 7, the functions at the top of the wish list
include, the ability to enable customers to manage shared data and also provide a loyalty
management function for promotion and redemption of loyalty offers.

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Customer Engagement – How Often Should Operators Push

Sales and Marketing Messages?
As more customer engagement goes through digital channels there will also be an increase
in sales and marketing messaging going through the same channels. Every marketer knows
that there is a fine line between effectiveness and irritation and this varies from person to
person and segment to segment. In general most operators feel that they could increase the
frequency of direct sales and marketing engagement. Currently most operators engage with
their customers for sales and marketing purposes every 3 to 6 months, but would like to see
this figure come down to 1 to 2 months.

Figure 8: Frequency of Direct Sales and Marketing Contact

How do Operators Compare with OTTs?

As discussed, operators see OTTs as the main competitive threat and feel that they
are quite well prepared to meet this threat. However, when talking about customer
engagement they admit that OTTs are better at this than operators. 70% of operators
say that they are worse or much worse than OTTs when it comes to providing relevant,
personalized and timely customer engagement. On the flip side around 13% feel that
operators are better or much better than OTTs in this regard (see Figure 9).

100%

Figure 9: How do Operators Compare with OTTs at Providing Relevant, Personalized and Timely Engagement?

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3 AGILITY: TIME TO MARKET, PRODUCT DEVELOPMENT

AND THE USE OF REAL-TIME DATA

The Need to be Agile – The Biggest Challenge for 2016

When asked what their biggest challenge for 2016 would be operators voted ‘the need to
become more agile’ as number one. This includes reducing product lifecycles and getting
more products and services to market in a shorter time period. As shown in Figure 10, the
erosion of operators’ revenues by OTTs ran agility a close second.

Figure 10: The Main Challenge for Operators in 2016

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Time to Market
There is a clear view that operators need to improve on time to market for new products
and services. When asked how long does it currently take to build and launch a new offer
(e.g. a new bundle, a new price plan, etc.) on their BSS (business support systems) and
how long should it take to build and launch a new offer, the difference was significant.
Operators want a time to market measured in days, but at present it’s mostly measured in
months.

Figure 11: Time it Currently Takes to Build an Offer on BSS and the Time it Should Take to Build an Offer on BSS

Around 65% of operators say that it currently takes months to set up a new offer in their
BSS. Within this group the majority sit in the 1 -2 month timescale and a worrying 9% find
themselves in the ‘greater than 6 month’ timescale. As for the timescales that operators
want to see, the majority want to see days, not months as the measure. Most (31%) see 2
days to 1 week as the ideal time to market, 21% see 1 – 2 days and for 11% of operators the
process should be carried out in less than 2 hours.

The Use of Real-Time Data for Marketing & Customer Engagement

The desire to get more products and offers to market in much shorter timescales is
perhaps behind the wish to use real-time data for faster product development. When asked
if they used real-time data to create more targeted customer offers and services the result
was roughly split down the middle.

Figure 12: Operators Who Have Leveraged Real-Time Data to Create More Targeted Customer Offers and Services

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When asked about ways they could make better use of real-time customer data the top
response was for ‘better product development - identify usage behaviour to develop and
amend products’. As can be seen from Figure 13, all the options scored high indicating
that there is a strong desire in operators to make better use of real-time data. This covers
product development, marketing and customer engagement purposes.

Figure 13: Ways that Operators Could Make Better use of Real-Time Data

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The Biggest BSS Obstacle in the Move to Digital

From a BSS perspective the biggest hindrances in moving to digital is large billing
transformation projects taking too long and the problems of trying to adapt legacy systems
to cater for digital services. These were closely followed by CapEx and OpEx limitations
and the ever present IT issue of too many projects competing for too few resources.

Figure 14: Main BSS Hindrances in the Move to Digital

LAST WORD
What this research shows is that operators know they’ve a lot of work to do. They know
that they need to sell more services, have a faster time to market, better engage with their
customers and generally be more innovative. The question is can they innovate and deliver
fast enough before data becomes a commodity?

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ABOUT OPENET
Openet is the leading independent supplier of real-time BSS (business support systems) to
communication service providers.
Openet software ensures that more than 600 million mobile telecoms users around the
world enjoy the best network and data experience while enabling operators to monetize
data use in ‘real-time’.
Since its foundation in 1999, Openet has constantly been at the forefront of telecoms
software development and innovation. This is characterized by its open platform, domain
experience and engineering expertise. Its success is personified by the many long-term
relationships it has fostered with the largest, most progressive, and demanding operators
across the globe.
For more information, please visit www.openet.com

OUR BELIEFS
We believe that it is not the strongest of the species that survives, nor the most intelligent,
it is the one that is most adaptable to change. This is true for our customers and for our
own business.
We believe in our expertise and our people and that collaboration raises our performance
above others. We believe in “open” networks and systems as these enable our customers
to innovate, adapt and transform.
We deliver software solutions and services that reflect these beliefs.

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