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Demographic analysis
Christopher Cherry describes how using location and demographic intelligence can lead to smarter network planning
A lot has happened over the past few years to increase – by several fold – the role that geographical information plays in all or our lives. Think about it. How many times per month do you make use of an online mapping application today compared to how often you unfolded a paper map just five years ago, when paper maps were the only option?
This trend is only magnified in the business world; according to IDC, the use of GIS technology by businesses is expected to grow by 20 to 30 per cent a year for the next three years. To be sure, more than 90 per cent of all enterprise data carries a location component. Whether it's a customer's address, a store's location, or the location of a cell phone caller, location is ingrained in almost every enterprise database and application. Given the scenario, it is little wonder that huge software providers like MicroStrategy recently moved to add geographic querying and visualisation capabilities to their business intelligence platforms.
To top it all off, there are few industries today in which location is as important to business operations as it is in the telecommunications sector. Yet, even though there is a strong natural link between communications and location, the available information is rarely used together to realise its full potential – and carriers are losing out on market opportunities and revenue as a result.
Network expansion
Now, let's be honest: wireless carriers have many tools available to grow and manage their networks today. Network tools such as Marconi's Planet EV allow carriers to visualize all sorts of information regarding current and potential network coverage, performance, and capacity. Variables such as topography, DEM data, canopy DEM, clutter, and building height data are modeled and evaluated when considering network expansion. Network design teams also consider wireless license area boundaries, E-911 PSAP areas, back haul networks, and even the underlying local exchange infrastructure: they all combine to make the wireless network landscape. But some of the most important and most neglected data available to wireless carriers during the network planning process are the advanced demographic data sets for both consumer and b2b markets.
Let me give a few examples.
How do carriers determine where to add additional coverage these days? A carrier can collect anecdotal information from customers (or their own customer service or sales teams) regarding a need for new coverage. Or they evaluate system performance and capacity and add coverage to alleviate traffic issues. But how can they truly validate where to expand network coverage to provide the most significant incremental revenue and ROI? Simple. Demographics. Imagine integrating demographic information within the network modelling tool. Visualizing population numbers is just the beginning. You can compare residential population with daytime population to evaluate peak verses off-peak potential. You can examine drive-time analysis to determine the impact the new coverage will have on high traffic corridors. You can analyze your existing customer base, determine the characteristics of your most profitable customers, and then determine where more of these high value customers can be found. Now that is market driven network planning.
New service introduction
Demographic analysis is not restricted to RF expansion, either. New services can be intelligently introduced, based upon market potential. As carriers race to offer innovative new services to create new revenue streams and increase stickiness, they know all too well that all services do not appeal to all consumers. High-speed data, mobile gaming, push-to-talk, mobile communities, location aware services, ring tones, and wallpapers are available through many carriers (or will be soon) and all carry the promise of additional revenue. But where will this revenue come from? Will high-speed data service provide significant revenue everywhere? Will mobile communities appeal to all? Is mobile gaming for everyone? Most likely not. Carriers must be able to identify the target customer for each new service – and then locate pockets of high-density clusters of these target customers.
Perhaps the ideal high-speed data consumer is a businessperson over the age of 40. Or perhaps the ideal mobile gaming consumer is a twenty-something fresh out of college, working their first job. Perhaps culturally, a particular service is more appealing in one area of the country verses others. Either way, demographic analysis can determine where these concentrations exist, and allow the carrier to offer services within each market area that maximize the take rate and revenue stream.
MVNOs
While MVNOs rely on their partner carrier to manage and provide RF, there is still a significant demographic component to their business. MVNOs must hitch their business plan to the partner they select. If an MVNO plans to cater to a particular customer type, they must ensure that they partner with the carrier that provides maximum coverage within that customer type. If the MVNO business plan targets young consumers and includes significant revenue from mobile gaming and ring tones, the MVNO needs to ensure that they perform the necessary analysis when selecting a partner carrier. Of course, the ongoing use of demographic analysis for marketing to the targeted consumer type is just as critical.
The bottom line
With UK mobile telecommunications revenues reaching £13.1 billion in 2005 with a virtually saturated market, the stakes have never been higher. Carriers are increasingly looking towards new coverage and new services to increase revenue. As the market crowds with seemingly limitless new capabilities, customers attention spans can absorb only so much. New infrastructure and new services, however, need to pay for themselves quickly and efficiently. Carriers need to be able to focus new services and capabilities where they can achieve maximum result. Incorporating demographic analysis into the very core of network expansion analysis will assist carriers in making deployment decisions that go straight to the bottom line.
Christopher Cherry is the Strategic Industry Manager-Communications at MapInfo Corporation
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