Telefónica has provided a welcome boost to the industry by announcing the creation of a new global business unit aimed at deriving revenue from Big Data.
Telefónica Dynamic Insights will come under the auspices of Telefónica Digital and focus on providing analytical insights to companies and public sector organisations.
The organisation has launched with one product, Smart Steps, which will use what it promises is fully anonymised and aggregated mobile network data to help companies “to measure, compare and understand” what factors influence the number of people visiting a location at any time.
Specifically, Telefónica said the insights could help retailers tailor local offerings for existing stores, and determine the best locations and most appropriate formats for new stores.
The operator said a number of retailers are already helping with product development by providing user feedback.
In addition, Telefónica said market research firm Gfk, with whom it has signed a strategic partnership, would also help with product development – initially in Germany, the UK and Brazil.
The news is the first public announcement of a European operator actively engaging in a Big Data initiative that goes beyond in-house processes.
Analysys Mason’s Carlos Pinto told European Communications that the news could be a turning point for the industry.
“Other large operators have already looked into this but Telefónica is the first player to publicly reveal its intentions,” he said.
“Unlocking the potential of customer data should provide a brand new source of revenue.”
The proof will naturally be in the pudding, but the operator, which has been the most forward-looking in Europe this past year, should be applauded for jumping into what are potentially troublesome waters.
More on that in a second.
Telefónica's announcement is line with the findings of European Communications’ Big Data Special Report in Q2 this year.
However, nearly two-thirds did not feel they have the right number and quality of staff in place to pursue it, while a lack of understanding of Big Data more generally was viewed as the biggest challenge.
Pinto agrees with the thrust of these findings.
“The organisational challenge is one of the most important that Telefónica will face. Big Data is a completely different type of product to what they are used to and it needs to be packaged in a different way,” he said.
However, he said the partnership with Gfk would help to “fill the gaps” to ensure that Telefónica gets the know-how it needs to sell knowledge to corporate clients.
GfK’s COO Dr Gerhard Hausruckinger, added: “We are constantly working to help our clients understand the impact of technology on changing consumer behaviour, and particularly the unique challenges and opportunities presented by mobile.”
The news will bring Telefónica into direct competition with the likes of Google and Facebook; whether the operator's data will be more relevant and/or valuable than those of its OTT rivals is perhaps the most interesting area to watch moving forward.
Certainly, they will face some of the same issues, most visibly that of customer privacy.
Telefónica Digital CCO Stephen Shurrock said Big Data must be “approached in a smart and responsible way”.
Given the troubles Google and Facebook have encountered this past year, Telefónica will want to avoid any data protection wrangles at all cost.
Confirmed Pinto: “Operators should never dispose of customer data directly: it must be packaged up anonymously in a way that protects the consumer but is appealing to corporate clients.”
The telecoms industry has been rightly accused of being behind the curve on Big Data, but Telefónica should be applauded for being first out of the blocks.
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