It’s always fun to speculate about the future.
History is of course littered with men who made predictions which were ever so slightly wide of the mark: my favourite is the prediction of Thomas J Watson, IBM president in about 1950 who opined: “I think there is a world market for maybe five computers.” To be fair to him, that was probably true of the computers of the day, but even so it was a bust flush by the time the fifth was delivered.
To take great leaps of imagination about the more distant future is relatively safe. I could aver that by 2100 we will be taking holidays on Mars, and we might agree that this is an interesting speculation, but since both I and my audience will be dead long before then, it is not exactly sticking my neck out.
Looking at the near future, extrapolating from the world today is more interesting: it is possible to get pretty close to what is likely to happen, but getting the timing right is much more difficult. For example, the use of mobile handsets to run non-telephony applications has been not only long predicted, but operators have been trying to go there for some years now. Only recently however has this started to become the norm with modern high spec smart phones now reaching the mass market.
Now I started to think again about predictions as we seem to be debating the future on several related communications issues. We have the concerns about delivery of television programming, and the (this time predictable!) self-interested complaints from Mr Murdoch; we have comments about the potential demise of newspapers due to competition from digitally provided news; there’s discussion about how we deliver faster broadband across the country (and who pays), and meanwhile the mobile operators are at last moving their services into information provision (or at least enablement for third party information providers), fuelled largely by the surge in smart handsets – thank you again, Apple, for the stimulus of the iPhone.
I’m sure we can draw some strands out of these trends. Here then are my top five predictions.
1. Broadcast TV is doomed.
The BBC iPlayer is the first step in this process. Essentially, we will all move more and more towards watching what we want, when we want it, from the internet – even for live events: not home in time for kickoff? See it from the start when you do get home.
This would mean the TV channel companies becoming more aggregators of content, probably published on a daily or weekly basis, rather than to a serial timetable like today. Content providers will be like the TV production companies or film companies today, and may well start publishing directly since they don’t need airwaves.
I would not be surprised to see the BBC therefore become more a channel to market for published content, including pay per view (which is much easier to arrange on the internet), and focusing its production efforts more on information and news services.
Of course, all this requires adequate high speed internet access – and a lot of it will be mobile. The government no doubt will be slow to give up on TV due to all that investment in the digital switchover, but the frequencies can no doubt be put to other profitable uses, including more wireless internet services. I wonder what Sky will do with all those satellites?
2. Telephony is doomed.
OK, I’d better qualify that a bit. What I mean is that making and receiving voice calls over a switched network is already looking outdated. Skype is pointing the way: internet based voice traffic (VoIP) is increasingly how both business and personal calls are made – unless a mobile is used. And in the case of mobile, with more handsets becoming WiFi enabled and mobile broadband aware, I see VoIP increasingly the way in the mobile world as well.
What this really means is that both fixed and mobile networks will evolve into data only networks delivering just broadband service, with old fashioned switched voice dying a death. It already irks that there is a complicated tariff for voice calls, and in order to attract customers they have to build even more complicated products to give a lot of it away again. Very little call traffic nowadays actually needs individual call pricing: premium rate numbers perhaps, where the operator is collecting a fee for the called party, and – er – well, nothing else really. Even calls to other operators’ networks – including international – could be covered by inter-operator agreements given the low cost of carriage over IP.
This will change all sorts of areas. Billing systems can be much simplified with no need to price most calls, and with effectively all bills becoming prepaid monthly service charges. Quite a lot of things will change in the networks, with no further need for voice switches and IN platforms – ‘calls’ will still need some form of processing but not through this technology. Even the needs of security forces will be impacted – phone taps are different in VoIP networks!
3. Books are doomed.
Alright, I don’t really mean it, but I do think that we are close to the point where eBook readers will become mass market. I doubt we will see dedicated eBook devices, but I do anticipate that smart phones and notebook PCs will quite soon start to become the devices of choice for books (and, indeed, whatever passes for newspapers in the new digital age). As people become accustomed to taking these devices everywhere, thanks to the ‘internet anywhere’ attitudes now emerging (maybe this should be a prediction too? – no, it’s already happening), no-one will want to carry a large paperback as well when it can just as easily be downloaded for no extra weight.
This will have considerable ramifications for the publishing industry. Anyone will be able to publish their latest novel; the only value the publisher will add will be the marketing organisation and revenue collection – oh, and the ability also to produce the hard copy version (which I’m sure will still exist, albeit in reduced form, much like CDs today alongside MP3 downloads).
4. The ‘core network operator’.
It has been interesting to note the growing proliferation of Virtual Mobile Network Operators (MVNOs), buying their airtime in bulk and then addressing everything from tightly focused market sectors to broad spectrum markets. In addition we have the recent coming together of Orange and T-Mobile in the UK.
In effect what is happening is that we have a saturated market – no likely significant growth in the overall subscriber base – and a steady erosion of revenues as services become commoditised and competition drives prices down. The operators are trying to push up the added value chain with triple and quad plays and data services, but network costs are a significant issue for them. One of the significant factors for the Orange/T-Mobile merger is in network savings.
Now in effect we have only two national local loop wireline networks in the UK: BT and Virgin Media (other networks from the likes of COLT are local and business oriented). Virgin’s network is of course dominated by television; but BT is increasingly losing out on telephony service delivery to many other wireline service companies, such as Talk Talk. This ecosystem nevertheless continues to be sustained on the single local loop network that BT runs as a regulated service.
But we still have four mobile networks, effectively providing the equivalent of a ‘mobile local loop’. Now I can see continued cost pressures reducing that number further – even perhaps to one regulated core network? Wouldn’t it be better for the network operation to become a separate business, delivering service through as many MVNOs as wish to set up in business? There’s plenty of market space for the likes of Virgin Mobile, Tesco, and so on to compete for the end user, so why should a mobile operator sell them air time, only to compete with them for customers, and all the while groaning under the cost of maintaining an expensive national network? Might it have made sense for Orange and T-Mobile to combine and float off their networks and continue as separate retail companies?
5. A wallet on my phone
The advent of the electronic purse has been predicted for a long time, but progress has been slow. Mobile operators have explored how this might work for several years, but trial services like buying your can of cola from a machine have not been wholly successful – the palaver of texting to make a payment is so much more long-winded than sticking a coin in a slot. Operators have shied away from serious solutions partly because of concerns about straying into the territory of banking regulations, money laundering and so on.
This is an area where more advances have been made in developing countries – particularly in areas like the Philippines – where banking is less well developed or accessible to ordinary people. Services are now available there for transfer of small amounts of cash, using the mobile phone account as a kind of purse. This is another key development – it’s one thing to use a phone to pay a retailer, but the ability to pay small amounts to friends and family is what will make this into a mass market service.
I am not an expert in financial regulation, but I suspect the pressure to be able to deliver such services in the UK will lead to ways being found before long.
So in conclusion, I don’t think these are particularly outrageous predictions; however getting the timing right may be tricky. I don’t think I’ll stick my neck out there...
Showing posts with label mobile. Show all posts
Showing posts with label mobile. Show all posts
Thursday, 17 September 2009
Wednesday, 2 September 2009
Why is Customer Care so hard?
Network operators and service providers are uniquely positioned amongst all industry sectors, in that they have the data that describes exactly how all their customers use their services, through call and data records. Every single time a customer uses the network, there is a record logging this.
All this data is painstakingly collected so that bills can be produced. And what else is done with it? Well, not enough in most cases. It will be used to ensure quality of service thresholds are being met, where appropriate, and it is aggregated to help with network planning and optimisation. No doubt various other reports are spewed out of data warehouses to tell directors if the number of call minutes has gone up or down this month, and other pertinent management information, but as to using the information to manage individual customer relationships – well, er....
One of the problems for telcos pretty much ever since number portability became mandatory has been that of churn. Estimates of churn rates vary wildly, and even those that the operators will admit to are difficult to compare, since what constitutes churn can be defined and measured in different ways. Nevertheless it is likely that a mobile operator in the UK will lose as much as 30% of its customers every year, and for ISPs it is even higher, perhaps as much as 50%.
Now these are pretty eye-watering numbers. Some churn is inevitable – people move away from the coverage area, or even die, companies may cease trading, and indeed some customers (such as bad payers) might even be encouraged to leave; however this would be a core churn rate down in the single figures. Something is not right!
Clearly it is much cheaper to retain a customer than to have to recruit a new one as a replacement, and add to the recruitment cost the loss of revenue stream from the existing customer and it all adds up to a significant cost of operation.
Now telcos do make efforts to identify potential churners through data mining and pattern analysis, but clearly these efforts are not bearing significant fruit as yet. The trouble is that the main actions of these operators is to find more attractive products and tariffs, such as double and triple plays which (in theory) are more difficult to churn from. But this simply fuels churn, as the ‘arms race’ between operators means that there is always a more attractive offer out there if you can find it. People are not entirely driven by slightly better deals elsewhere, however, especially as this requires effort on their part – there is usually some other reason why they are ready to move.
One survey by Pitney Bowes identified the three top reasons why people change supplier, and found that these are consistent across Europe and the US. They are:-
1. not being recognised as a valuable customer (all countries average – 55%)
2. unhelpful staff (all countries average – 47%)
3. ineffective call centres (all average – 42%)
Now although this research is almost 2 years old, I very much doubt the position is significantly different today. This should be giving COOs sleepless nights – this implies that better or cheaper deals may dictate the operator a customer switches to, but the trigger for leaving the existing supplier is poor customer care.
Take the first point: the worth of a customer should be apparent to an operator very easily – we are back to the fact of a complete data record of a customer’s activity. Of course a customer will have an inflated view of their own value, but take into account both revenue streams and cost of losing the customer, and most customers are valuable enough to merit effort to retain them. The second and third points above are simply variations on the theme of bad customer care.
And we all know from personal experience how frustrating these companies can be. Not just the call centres, which seem to specialise in getting you through to any department which can’t solve your problem, but also the web sites for self care, which are often impossible to navigate around and find what you want without resulting in dangerously elevated blood pressure.
The problem isn’t the people: they are usually trying to help you as best they can. The problem is partly in the technology that supports them (back to ways of analysing and understanding that customer data), partly the result of poorly designed processes and business flows, and partly the corporate structure, which stove-pipes customer care and treats it as a business cost to be handled as cheaply as possible.
Communications companies have to be better at treating customer care and customer value holistically, or these high churn rates and costs will never reduce - and as consumers we all pay the price.
All this data is painstakingly collected so that bills can be produced. And what else is done with it? Well, not enough in most cases. It will be used to ensure quality of service thresholds are being met, where appropriate, and it is aggregated to help with network planning and optimisation. No doubt various other reports are spewed out of data warehouses to tell directors if the number of call minutes has gone up or down this month, and other pertinent management information, but as to using the information to manage individual customer relationships – well, er....
One of the problems for telcos pretty much ever since number portability became mandatory has been that of churn. Estimates of churn rates vary wildly, and even those that the operators will admit to are difficult to compare, since what constitutes churn can be defined and measured in different ways. Nevertheless it is likely that a mobile operator in the UK will lose as much as 30% of its customers every year, and for ISPs it is even higher, perhaps as much as 50%.
Now these are pretty eye-watering numbers. Some churn is inevitable – people move away from the coverage area, or even die, companies may cease trading, and indeed some customers (such as bad payers) might even be encouraged to leave; however this would be a core churn rate down in the single figures. Something is not right!
Clearly it is much cheaper to retain a customer than to have to recruit a new one as a replacement, and add to the recruitment cost the loss of revenue stream from the existing customer and it all adds up to a significant cost of operation.
Now telcos do make efforts to identify potential churners through data mining and pattern analysis, but clearly these efforts are not bearing significant fruit as yet. The trouble is that the main actions of these operators is to find more attractive products and tariffs, such as double and triple plays which (in theory) are more difficult to churn from. But this simply fuels churn, as the ‘arms race’ between operators means that there is always a more attractive offer out there if you can find it. People are not entirely driven by slightly better deals elsewhere, however, especially as this requires effort on their part – there is usually some other reason why they are ready to move.
One survey by Pitney Bowes identified the three top reasons why people change supplier, and found that these are consistent across Europe and the US. They are:-
1. not being recognised as a valuable customer (all countries average – 55%)
2. unhelpful staff (all countries average – 47%)
3. ineffective call centres (all average – 42%)
Now although this research is almost 2 years old, I very much doubt the position is significantly different today. This should be giving COOs sleepless nights – this implies that better or cheaper deals may dictate the operator a customer switches to, but the trigger for leaving the existing supplier is poor customer care.
Take the first point: the worth of a customer should be apparent to an operator very easily – we are back to the fact of a complete data record of a customer’s activity. Of course a customer will have an inflated view of their own value, but take into account both revenue streams and cost of losing the customer, and most customers are valuable enough to merit effort to retain them. The second and third points above are simply variations on the theme of bad customer care.
And we all know from personal experience how frustrating these companies can be. Not just the call centres, which seem to specialise in getting you through to any department which can’t solve your problem, but also the web sites for self care, which are often impossible to navigate around and find what you want without resulting in dangerously elevated blood pressure.
The problem isn’t the people: they are usually trying to help you as best they can. The problem is partly in the technology that supports them (back to ways of analysing and understanding that customer data), partly the result of poorly designed processes and business flows, and partly the corporate structure, which stove-pipes customer care and treats it as a business cost to be handled as cheaply as possible.
Communications companies have to be better at treating customer care and customer value holistically, or these high churn rates and costs will never reduce - and as consumers we all pay the price.
Wednesday, 26 August 2009
Whither WiMAX?
There are strongly divided opinions about WiMAX.
Its supporters have a vision of a world where many devices are wireless mobile enabled, so that for example a camera can take a picture and have it automatically and immediately uploaded to the photographer’s own picture archive on a server somewhere, gaming devices can use mobility and geography as part of the game, a phone can make a freed VoIP call, or the expected new generation of digital notebooks as well as laptops can access videos, books, online newspapers, and social networking sites seamlessly. Access to the web anywhere on any device at high end broadband speeds.
On the other hand, observers point to the approaching ‘Long Term Evolution’ (LTE) standard for transforming 3G mobile networks (UMTS) into 4G networks based on IP. These will offer speeds in excess of current WiMAX technology, but less than next generation WiMAX (and both are in excess of speeds likely to be achievable over current fixed wire local loops). They say that there is no business case to build a WiMAX network when the mobile companies can deliver the same through the current mobile networks enhanced to 4G.
So should the title to this article be “Wither WiMAX?”
The position in the UK is not promising. At present, Ofcom has only licensed two operators to provide fixed point services based on the 802.16d standard. This has limited capacity and does not enable mobility (802.16e is ready for deployment and enables mobility including cell handoff). Therefore at present WiMAX can compete with fixed broadband services but not mobile – yet mobile is the raison d’être of WiMAX. Meanwhile the WiFi hotspot operators and GSM/3G operators are signing up mobile broadband customers as fast as they can, which is mopping up all the pent up demand that would otherwise be potential WiMAX customers.
If this particular cork were removed, how would WiMAX operators respond? They are broadly ready to deploy 802.16e technology but face significant problems in getting a return on investment.
Firstly, it will be a major undertaking, and investment, to build out a network of base stations to support wide area coverage. Mobility is not an easy sell unless coverage extends to at least the main areas a mobile user may go to – this means at least metropolitan cover in the area you live and work, and probably most of the main metropolitan areas in the country to be a convincing proposition. The big issue in base station building is in acquiring sites appropriately located for WiMAX frequency and wave propagation characteristics, which are much more significantly affected by topography and are less able to penetrate buildings than are GSM frequencies. The mobile phone companies on the other hand already have all their base station sites, and therefore cost of deployment is much less and the speed of deployment much greater – even though LTE is behind WiMAX in terms of development, it may be able to overtake WiMAX on deployment.
Secondly, the WiMAX-enabled user devices are not by and large on the market yet. Smart phones and PDAs on the market today are WiFi and GPRS/UMTS enabled but not WiMAX. The latest laptops are starting to be deployed with WiMAX as well as WiFi built in, but the rest of us will need to buy a dongle transceiver.
Thirdly, the technology is still on the leading edge, and despite deployments elsewhere in the world – most notably by Sprint in the USA – is not yet routine in terms of deployment, network management, or coverage prediction.
And finally, can the services offered by differentiated – and priced – competitively with both WiFi and GPRS/UMTS? On the one hand, it may compete for speed, especially uplink (WiMAX is a symmetrical service, unlike wired broadband, so uplink is very fast compared with normal domestic broadband), so this might suit those needing capacity to upload large files on the road, such as photos or videos, or even some fixed location users for similar reasons; but this advantage is offset by the very limited coverage until a lot of network building has taken place, which will take years not months.
It seems to me that WiMAX has its greatest potential where mobile (especially mobile data) is less well developed, particularly in developing countries, and where fixed broadband is not universally available; but with regret I have to conclude that the odds against WiMAX succeeding in the UK are long.
Its supporters have a vision of a world where many devices are wireless mobile enabled, so that for example a camera can take a picture and have it automatically and immediately uploaded to the photographer’s own picture archive on a server somewhere, gaming devices can use mobility and geography as part of the game, a phone can make a freed VoIP call, or the expected new generation of digital notebooks as well as laptops can access videos, books, online newspapers, and social networking sites seamlessly. Access to the web anywhere on any device at high end broadband speeds.
On the other hand, observers point to the approaching ‘Long Term Evolution’ (LTE) standard for transforming 3G mobile networks (UMTS) into 4G networks based on IP. These will offer speeds in excess of current WiMAX technology, but less than next generation WiMAX (and both are in excess of speeds likely to be achievable over current fixed wire local loops). They say that there is no business case to build a WiMAX network when the mobile companies can deliver the same through the current mobile networks enhanced to 4G.
So should the title to this article be “Wither WiMAX?”
The position in the UK is not promising. At present, Ofcom has only licensed two operators to provide fixed point services based on the 802.16d standard. This has limited capacity and does not enable mobility (802.16e is ready for deployment and enables mobility including cell handoff). Therefore at present WiMAX can compete with fixed broadband services but not mobile – yet mobile is the raison d’être of WiMAX. Meanwhile the WiFi hotspot operators and GSM/3G operators are signing up mobile broadband customers as fast as they can, which is mopping up all the pent up demand that would otherwise be potential WiMAX customers.
If this particular cork were removed, how would WiMAX operators respond? They are broadly ready to deploy 802.16e technology but face significant problems in getting a return on investment.
Firstly, it will be a major undertaking, and investment, to build out a network of base stations to support wide area coverage. Mobility is not an easy sell unless coverage extends to at least the main areas a mobile user may go to – this means at least metropolitan cover in the area you live and work, and probably most of the main metropolitan areas in the country to be a convincing proposition. The big issue in base station building is in acquiring sites appropriately located for WiMAX frequency and wave propagation characteristics, which are much more significantly affected by topography and are less able to penetrate buildings than are GSM frequencies. The mobile phone companies on the other hand already have all their base station sites, and therefore cost of deployment is much less and the speed of deployment much greater – even though LTE is behind WiMAX in terms of development, it may be able to overtake WiMAX on deployment.
Secondly, the WiMAX-enabled user devices are not by and large on the market yet. Smart phones and PDAs on the market today are WiFi and GPRS/UMTS enabled but not WiMAX. The latest laptops are starting to be deployed with WiMAX as well as WiFi built in, but the rest of us will need to buy a dongle transceiver.
Thirdly, the technology is still on the leading edge, and despite deployments elsewhere in the world – most notably by Sprint in the USA – is not yet routine in terms of deployment, network management, or coverage prediction.
And finally, can the services offered by differentiated – and priced – competitively with both WiFi and GPRS/UMTS? On the one hand, it may compete for speed, especially uplink (WiMAX is a symmetrical service, unlike wired broadband, so uplink is very fast compared with normal domestic broadband), so this might suit those needing capacity to upload large files on the road, such as photos or videos, or even some fixed location users for similar reasons; but this advantage is offset by the very limited coverage until a lot of network building has taken place, which will take years not months.
It seems to me that WiMAX has its greatest potential where mobile (especially mobile data) is less well developed, particularly in developing countries, and where fixed broadband is not universally available; but with regret I have to conclude that the odds against WiMAX succeeding in the UK are long.
Subscribe to:
Posts (Atom)
