Telecoms: Who owns the customer?

If you think your contract with Telecom NZ, Vodafone or 2degrees means you are their customer, think again. Behind the scenes there is something of a battle for your business – and it is a battle where the stakes are incredibly high, measured in the millions of dollars.

New research from Amdocs, a company which provides back-end systems used by telecoms companies to manage customers and operations, explores attitudes toward partnering between three groups that define the customer experience: communications service providers (that'd be your Telecom NZ, etc), 'over-the-top' (OTT) players (such as streaming video providers) and device manufacturers.

The research found that each of these groups acknowledged the importance of forming strategic partnerships to achieve business growth – even though each is heavily invested in owning the customer experience.

Asked if the research has revealed anything new, or if it has merely confirmed the direction in which the industry is heading (where partnering is essential to create differentiation and customer appeal) Erwann Thomassain, Head of Marketing - Asia Pacific at Amdocs, says 'yes and no'. "A number of trends are confirmed, mainly around the fact that APAC service providers are more open to partnerships than the rest of the world is."

But what Thomassain believes is most noteworthy is the contention over who should own the customer. "The service providers say they definitely must own customer experience. The OTT players are saying the same thing even stronger. This is where the battle is shifting: it is around the ability to provide innovative services which sit on top of the service providers' assets."

Of course, there is a potential '3rd way'; can the service provider and the OTT players both own the same customer from their different perspectives? "That's not necessarily something that was asked in the survey, but based on discussions [with market players], it is typically the service provider which enjoys a more 'trusted' relationship with the customer," says Thomassain.

He adds that the service provider is currently in a position of strength in terms of owning rhe customer: "They tend to be more involved, especially since they own billing information. Customers will typically call a service provider if they have a problem, or use a self-service platform – they are unlikely to have this level of a relationship with an OTT player or with a handset maker."

What will win the game, though, is the ability to 'wow' customers; again, the service provider holds the trump cards given the information they typically hold (which includes location, usage habits and more) and the leverage they enjoy through the closer relationship already established. But creating that 'wow' often depends on the innovation of – you guessed it – the OTT player (and perhaps to a lesser extent, the handset maker). "Mining and examining data stores allows for differentiation; partnerships open a value exchange opportunity particularly between the service provider and the OTT players," Thomassain says.

Key findings

The battle continues over who owns the customer: 66% of service providers (77% in APAC) say they must own the customer in any partnering agreement. That's a problem, because only 13% of device manufacturers and 14% of OTT players are prepared to envision a future in which they cede ownership of the customer experience

Everyone agrees on service providers' unique core assets: While it's not surprising that service providers rate their brand strength, network quality and customer data as core assets, the survey found that OTT players and device manufacturers largely agree. The broad consensus on service providers' key assets bodes well for services providers and provides a solid foundation for partnering.

Service providers increasingly see OTT players as potential partners and sources of innovation: The survey found that 70% of service providers view OTT players as potential partners, rather than a threat. 64% percent of service providers say OTT players bring innovation to the industry. And yet, 42% of service providers said they could offer any service an OTT player can deliver – but better.

A cautious willingness to share core assets: The three groups are willing to offer and expose their core assets to achieve partnering goals: 74% of OTT players and 73% of device manufacturers are willing to expose and share their core assets. Even more notably, 56% of service providers are also willing to do so.

What's in it for me? Different players have different reasons for partnering: Partnerships are universally seen as a means to raise revenues and cut costs; however, there are also separate motivations. 40% of service providers are looking to extend network reach through partnerships, while 34% view partnerships as a tool for developing new products and services. Device manufacturers ranked the ability to deliver a seamless experience as well as quality of service (QoS), a key service provider attribute, as a key value in partnering, and 69% of OTT players cite QoS as important to their ability to compete and survive.

It's a whole new partnership landscape for service providers, says Ian Parkes of Coleman Parkes. "While service providers used to form partnerships mainly for roaming and with device manufacturers,today they must navigate a more complex environment full of OTT, Internet, financial-settlement and other players. Our research goal was to explore this new world, and we were surprised that service providers view OTT players as an opportunity, not a threat, and by the broad agreement on the value of service providers' core assets."

The survey is based on quantitative research involving 100 telephone interviews among executive decision makers at service providers, OTT players and device manufacturers across North America, Caribbean and Latin America, Europe and Asia Pacific. The research was conducted between June and July 2012.