Wednesday, 18 July 2018

Facebook's mishandling of customer data presents a huge opportunity for telcos

By Chris Kelly, Total Telecom
Friday 13 July 18

New research published by Openet reveals that customer trust in OTT providers is at an all-time low – we look at the opportunities this might present for the ever-evolving role of the telco

This week the UK's Information Commissioner's Office announced that it intends to fine Facebook £500,000 for its role in the Cambridge Analytica scandal, prompting a resurgence of vociferous grumbling on the way companies handle their customer's data. While the fine represents the maximum amount permitted by the ICO, the derisory penalty is unlikely to give Facebook CEO Mark Zuckerberg too much food for thought about his company's future conduct. Indeed, such is the enormous wealth of the social media giant, that you would be forgiven for thinking that Facebook could probably rustle up payment of the fine by cobbling together the loose change that has fallen down the back of its boardroom sofa…

This week the UK's Information Commissioner's Office announced that it intends to fine Facebook £500,000 for its role in the Cambridge Analytica scandal, prompting a resurgence of vociferous grumbling on the way companies handle their customer's data.

While the fine represents the maximum amount permitted by the ICO, the derisory penalty is unlikely to give Facebook CEO Mark Zuckerberg too much food for thought about his company's future conduct. Indeed, such is the enormous wealth of the social media giant, that you would be forgiven for thinking that Facebook could probably rustle up payment of the fine by cobbling together the loose change that has fallen down the back of its boardroom sofa.

There is, however, more at stake than money. The damage to Facebook's reputation caused by the data mishandling scandal has been huge, and new research indicates that consumers may be preparing to reject OTT providers, in favour of more trusted brands.

"Since the Cambridge Analytica scandal, around 20 million people have deleted their Facebook account and 60 per cent of the people that we surveyed have changed their privacy settings. It's not just the social media companies, there has been a huge toxic knock on effect to other OTT service providers," said Niall Norton, CEO at Openet.

"The question you have to ask is whether the network operators are also going to get nailed with this mistrust, or is this a branding opportunity for them to jump in as an established, trusted brand? The evidence would suggest that they have a real opportunity here," he added.

This climate of mistrust of OTT providers is coinciding with a concerted effort by network operators and other telcos to transform themselves into digital service providers, as they attempt to reinvigorate the revenue streams that drive profitability. So, OTT operators' loss could become a net win for telcos across the world – assuming that they can capitalise on brand loyalty and trust levels in their customer base.  

"I think that network operators and telcos in general have already got a degree of that consumer trust, in the sense that people don’t think twice about giving them their banking information. Telcos have been in the position to be able to look at what websites you are visiting for years now – but they haven't abused that position. There hasn't been that one invasion of privacy moment to grab the headlines," said Norton.

"I think that they already have the seeds of trust.  What they don't have yet is very much credibility about being a digital service provider. Any of the telcos could have launched Watsapp years ago, but they chose not to. It's a bit like watching your dad dancing at a wedding when you think of it – are telcos really going to manage to be as cool and innovative as the likes of Facebook? Probably not! But they could partner up with other players in the industry and build from there," he added.

As telcos transform their traditional business focus areas towards a more digitally focussed portfolio of services, customer trust and brand loyalty will be the currency used to buy success. Openet's research shows that 92 per cent of consumers surveyed said that they would be open to using digital services from their mobile network provider, providing that they were marketed in a transparent manner.

“Mobile operators have traditionally had a much more conservative approach in their use of subscriber data, despite having an abundance of it. For a long time, this conservative approach to data use has been used as an unfavourable measure for operators’ digital efforts, especially in comparison to other digital-first companies. But times are changing and it’s clear that consumers expect more if they are to hand over personal data in exchange for services. Mobile operators have earned the right to answer this call. But to be successful, they must learn from the mistakes made by social media and digital service companies alike. Transparency around data collection and opt-in processes are now top priorities for consumers. Operators must bear this in mind when seizing new digital opportunities,” Norton added.

As telcos continue to evolve their portfolio of products and services, they will naturally impinge on the natural hunting grounds of the OTT provider. By cultivating their position as trusted brands, telcos may well be able to fight the OTT providers on a new front, opening up a range of new business opportunities in the years ahead.

"54 per cent of people surveyed said that they would rather go straight to their network operator than an OTT provider to buy digital services. The biggest reason for this is the perception that operator's do not mess around with, or resell, their customers' information.

"Look at the success of Orange bank in France. Data doesn't get more sensitive than your personal banking data, so if people are willing to trust a telco with that, what else would they do," Norton concluded.

 

Friday Review – 13/07/2018   

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