A Pre-MWC analysis: mobile carriers must introduce user-selectable pricing to overcome customer frustration, data bandwidth constraints and lack of profits
"I am fascinated by understanding technologies, then explaining how to apply these within enterprises -- while still retaining common sense."
Charles Brett is VP and Principal Analyst at Constellation Research, Inc.. His primary focus is on all aspect of mobility and the use of mobile technology in the enterprise. For 25+ years Charles Brett has focused on delivering common sense to the application of technologies, especially software ones, in organizations of all sizes around the world.
While concentrating at Constellation Research on mobility and its management in the enterprise (sometimes known as MDM or Mobile Device Management) he also addresses:
mobile app development and deployment
mobile apps and associated data management
BYOD (Bring or Buy Your Own Device…...
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During one day of this week, the week before Mobile World Congress (MWC) 2013, a triple coincidence occurred: Telefonica signed with NICE to introduce Mobile Reach (to address customer issues), the ‘TSAV 8 to Barcelona’ event was held in Tel Aviv and I (by coincidence) had arranged to vist NICE in order to understand Mobile Reach. In thinking through the implications of all three events, I perceive correlations with significant relevance to all customers, whether enterprise or individual.
‘TSAV 8 to Barcelona’ is an annual event embracing hi-tech diplomacy hosted in Tel Aviv, primarily for Israeli companies expecting to be at MWC. One presentation stood out, from Gil Sharon, CEO of local mobile carrier Pelephone. He commented that almost all mobile data carriers are struggling with mobile data usage because they are constrained by limited (government assigned) bandwidth. In his presentation he asked the assembled technorati for help in 3 areas:
- squeezing more from the existing bandwidth
- improving the customer experience
- dealing with the explosion of video over mobile data networks.
In considering his appeal, prima facie a reasonable one, the though occurs (and re-occurs) that many mobile carriers that offer mobile data and complain about being constrained still do not understand what their businesses should be offering.
This is a big assertion. But the similarity to the perilous situation British Airways (BA) found itself in by the mid/end of the 1980s seems all relevant.
By the late 1980s BA was an airline with a dreadful reputation, racked by poor service, poor quality — and it was basically unprofitable (yes, the similarity to many mobile carriers is entirely deliberate). Customers hated BA. So bad was this that the then Mrs. (now Lady) Thatcher brought in a new Chairman (Lord King) and Managing Director (Colin, later Lord, Marshall) to sort out the business — which they did with great success.
Arguably they had one master insight. This was that BA was:
- not in the business of flying planes (which had been the conventional wisdom of most state-owned airlines, including the previous BA management)
- instead in the business of transporting people to where they wished to go.
BA’s turnaround is now a matter of history. Its focus on seeking to satisfy different types of customer with what those customers sought (one simple example being its introduction at its Heathrow home base of shower facilities for selected — premium — customers on arrival after long haul flights) has meant that BA has continued to innovate (although not always with complete financial success) ever since.
After the main sessions at ‘TSAV 8 to Barcelona’ I spoke with Mr. Sharon, suggesting that most mobile carriers:
- still behave as if they were ‘running networks‘ rather than trying to understand that they are (or should be) in the business of ‘selling customers the ability to communicate in the ways the customers want to choose (and pay for)‘
- if they took a page out of BA’s experience, they would have a good chance of significantly addressing his first (bandwidth) constraint and in so doing also do much to address his second — and profitably.
Naturally he said that Pelephone was not one of the dinosaur network-centric companies (though he offered no evidence to support this assertion), which, if true, begs the question as to why Pelephone is asking for assistance.
What then is the connection to NICE’s Mobile Reach and Telefonica?
Mobile Reach provides a way to embed multi-channel support within existing apps running on mobile devices (smartphones and tablets). Telefonica, the owner in Spain of the Movistar mobile network, has a richly deserved reputation for appalling customer service. Trying to do something as simple as move a mobile phone from a Movistar contract to a Movistar prepaid one can take more than 20 human to human interactions (the cost of so many failed transactions must be huge to Telefonica, as well as demanding extraordinary customer commitment). 19 of those 20 interactions failed (and some might even have been classed as deliberately misleading).
With a reputation so dismal is no wonder that Telefonica/Movistar has decided to invest to try to address the second of Mr. Sharon’s issues. It seems that, with NICE’s Mobile Reach, Telefonica believes it will introduce a tool to delivering better service to its customers, thereby reducing its support costs as well as improving customer retention and the overall customer experience.
Movistar customers will be ecstatic if this occurs. Mobile Reach has multi-channel capabilities (embracing all of voice, data, messaging, video, photos, images, etc.) which can be incorporated within existing (or new) apps on smart devices and has the potential to change the nature of customer/contact agent interactions:
- customers can use the capabilities of their smart device camera to (for example) take a photo of an invoice or a screen and send this within the multi-channel communication when talking to the contact agent (or the latter can send written instructions while talking as to what the customer may need to do)
- the customer/provider context is retained on the smart device running the app as well as on the carrier’s host server; if a customer has been trying to do something via ‘self service’ on the carrier’s web site and reaches that point where no further progress can be made except to call the carrier, the agent when connected to the customer is able to see all the previous web interaction detail: in other words the customer does not have to start from scratch for each interaction (as happens for all 20 of the interactions referred to above)
- furthermore, if that customer is interacting with (say) Movistar and discussing his or her problem (or other service issue) and the connection goes down, when the connection is re-established that customer and the same contact agent can be reconnected and can still see all that they have been discussing before (and this can even be done 2 or more days later if, sya the customer has to find out some detail).
The potential improvement in customer service is huge. There is even the potential to promote sales. One can well understand Telefonica’s decision to introduce Mobile Reach.
All this said, improving the customer experience of dealing with a carrier is only one part of the whole mobile data carrier challenge. Back to the BA example…
Most mobile carriers think that they know what their customers want. I argue, and will continue to argue, as one of those customers (both as an individual and as one representing business clients), that this is a self-serving delusion.
What most mobile carriers want to deliver is what it suits them to deliver, not what customers want. This is at the root of the explosion in data usage. Poorly designed service offerings, which are ‘simpler’ for the mobile carrier to introduce, indice weird usage patterns.
Mobile data carriers:
- think primarily in terms of bandwidth and network management issues (just as BA did about its fleet of planes)
- avoid consudering what customers want, or about price flexibility and substitution and how this may affect the carrier business for the better.
Theresult is that they (the carriers) offer bizarre service combinations that are opaque and suit the operational inflexibility of those mobile carriers, because they are still thinking in network terms and not in customer terms. These bizarre offerings, however, are what often produces the very lack of customer loyalty that carrier complain about as well as the unpredicted bandwidth usage. Fundamentally mobile carriers are the source of their own problems; it is not their customers nor governments that are to blame.
Part of the answer is doing what BA did — and changing. What are needed are flexible service and price combinations from which customers can choose as the customers need and are willing to pay.
This is akin to road pricing. If you want to drive at peak commute times you pay more. If you use road capacity when there is little traffic, then you pay little. In the airline context passengers weigh up choices from a myriad of options — depending on urgency, convenience, comfort, leg-room, refundability, reduced pricing for Saturday night stays, number of connections, on-time performance, etc, etc.
This is what mobile data customers (enterprise and individual) want from mobile data carriers. They want to know what they are paying for and when; they want to make their own choices and if offered this they will pay, becaus ethey can choose what to pay. For example a 1GB upload to go to a client maybe hyper-urgent ; in this case (just as with buying a business class airline seat) the customer will accept paying a substantial premium to do it now (in peak usage hours) — or may decide to do the transfer at a 1/10th of the peak usage price if done in the early hours when network usage is low. (There is a precedent here. In one African country, super-low connection costs were introduced after midnight, when network usage was at its lowest. Rapidly, price-sensitive customers started to use the network when they could talk for longer for less. This not only used the network more efficiently but removed usage from previously congested hours.)
Just as road pricing is the logical (if often politically unacceptable) way to charge to drive around, because the customer chooses and, if the economics, are correct then all benefit, so mobile network usage pricing that customers can understand and decide upon is what makes logical sense. It would:
- release network capacity
- improve the customer experience
- reduce back-end costs (all those servicing of calls to contact centers are a burden on carriers)
- open up income opportunities.
Customers — enterprise and individual — would not object because, as with an airline, they would be in the driving seat when deciding what they wish to pay for and when.
The key point here is an old one — understanding how and what your customers will pay for. Mobile data is hugely important (allegedly 4G will add GBP20B to the UK economy alone over 10 years, at least according to Ofcom). Mobile data carriers are accustomed to their established network-centric view of the world, that was adopted for voice. This is now irrelevant.
Today, opportunities exist for smart players to make a killing at the traditional mobile carriers’ expense. Yet, the irony remains: if mobile data carriers satisfy customer desires with user-selectable usage pricing, many of the network challenges raised by Mr . Sharon will likely subside (though never go away entirely) because usage pricing encourages appropriate economic allocation of resources.
Will MWC 2013 address any of this. The indicators are not good. This is a traditional trade show where maintaining (in this case) the mobile carrier status quo seems more important than the end consumer (whether the individual or the enterprise). That said I hope I am proven utterly wrong.
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