* Data from mobile networks is anonymised, pooled
* Telcos weigh up reputational risk vs. business opportunity
* Target markets include retailers, transport, governments
* Analysts see potential revenue in the billions
By Leila Abboud
BARCELONA, Feb 23 Last year's revelations over
the U.S. tapping of phone and internet data gave telecoms firms
pause for thought over whether they should sell their "big data"
for gain, but the commercial potential could prove irresistible.
Although figures are scarce, analysts think selling data on
mobile users' locations, movements, and web browsing habits may
grow into a multi billion-dollar market for the business.
Big carriers like Telefonica, Verizon,
Orange and Singapore's Starhub warn that
they are only just starting to test the waters and pledge to
market only anonymous crowd information to protect customers.
They are also promoting their big data products as being
helpful well beyond the realms of advertising - for credit card
companies wanting to detect fraud, for ambulance operators
plotting routes to avoid traffic, and for public health
officials responding to outbreaks of flu.
But while some carriers have decided to press on with
developing their data business since former U.S. National
Security Agency contractor Edward Snowden's disclosures, others
have started pitching themselves as their customers' best allies
in seeking to hide from any prying eyes.
Verizon's Precision Marketing Insights product, which offers
businesses statistics about mobile users in a given area, was in
commercial trials with sports teams and billboard owners when
the Snowden allegations hit. After fresh debate by top
management and the board on whether selling even anonymous data
on customers was a good move, the company decided to go ahead
with it, said Colson Hillier, a Verizon executive.
"Privacy is a hot button issue right now, but we think we
can take a leadership stance," Hillier said. "It's not a
reputational risk if you do it right and are pro-active in
communication with consumers and policy makers."
Other telecom companies took the opposite tack, casting
themselves as better guardians of customer data than internet
companies like Google, which use it to target
Deutsche Telekom, for example, last year launched
an encrypted "Email made in Germany" service and a secure
communications link for small businesses to ward off hackers or
spooks. "Protection of the private sphere is a valuable
commodity," its CEO said.
As they shift to treating customer data as an asset to be
mined instead of a mere incidental to running networks, telecom
operators must tread carefully.
People are used to giving Facebook and Google their
personal information and generally accept that the trade-off for
free services is that their data is used to target ads. But
people could be irked if tracking extends into the real world,
said a telecoms industry consultant who declined to be named
because of client sensitivities.
Surveys show people trust telecom providers more than
internet companies to safeguard their personal data, although
overall confidence in companies was very low. In a poll
commissioned by Orange, 41 percent of respondents said they
trust mobile carriers to keep their information safe compared
with 20 percent for social networks like Facebook or Twitter.
"All it takes is one mis-step on data monetisation for some
customers to decide they don't want to stay with you," the
To collect the data, telecom operators place probes in
mobile networks to capture the millions of records per day
generated when people send texts, make calls and surf the web.
The data is stripped of personal information then pooled so it
can be analysed for patterns useful for business or governments.
It identifies a person's location to about 200 to 300 metres.
Privacy advocates and regulators say that if the data is
anonymous and about groups not individuals, it is legal for
telecom companies to sell it.
Meanwhile companies are taking different approaches to user
consent. Orange collects data for its Flux Vision data product
from French mobile users without offering a way for them to
opt-out, as does Telefonica's equivalent service.
Verizon told customers in 2011 it could use their data and
now includes 100 million retail mobile customers by default,
though they can opt out online.
More intrusive programmes that drive location-based
advertising to people's mobiles usually require users to agree
and some companies offer rewards in loyalty schemes in exchange.
FINDING THE MARKET
In one project, Telefonica worked with Morrisons,
Britain's fourth-largest supermarket chain, to study where
residents of an area in southwest England did their food.
It parsed data on where shoppers at Morrisons' stores came
from and did the same for nearby rival stores, so as to identify
which households should be targeted for promotions.
Out of 11 million households in the area, Telefonica advised
Morrisons to send coupons to 400,000 of them, leading to a 150
percent rise in store visits without a revenue drop-off that
accompanies some discount schemes.
"We spotted postal sectors where there was a genuine battle
ground between Morrisons stores and their competitors," said
Phil Douty, who runs Telefonica's Smart Steps. "This was the
most fertile ground for their marketing efforts."
Smart Steps has dozens of clients in Britain, said Douty,
and the firm will start pilots in Brazil this year. Telefonica
speaks to regulators early so as to avoid a repeat of a flap in
Germany last year in which data protection regulators slammed
the programme before it was even introduced there.
Yet turning a data trove into a product companies will buy
is not easy for telecoms carriers, since they do not know
exactly what transportation, manufacturing, or travel companies
actually want in terms of data, telecom executives admit.
Some are turning to partners such as marketing specialists,
advertising agencies or consultants like IBM.
Verizon's Hillier said the carrier is now in talks with
advertising technology companies and other possible partners to
help with distribution and aimed to have a range of big data
products on the market in the second quarter.
German software specialist SAP is also in talks
with a number of telecom operators to have their data feed into
a centralised platform that businesses or advertisers would buy
subscriptions to access. Revenue would be shared between SAP and
the telecom operator.