HomeAutomation/AIThe cost of data: Mobile operators’ privacy challenge

    The cost of data: Mobile operators’ privacy challenge


    How can they continue to be relevant while balancing the growing privacy demands of customers?

    Mobile operators have long relied on data to personalise the experience and retain customers. But with regulation such as the EU update to General Data Protection Regulation (GDPR) and recent privacy changes made by Apple, consumers are starting to demand more safeguards around their information. This poses a challenge for mobile operators:

    According to research from McKinsey, getting personalisation right helps firms gain a competitive advantage. Companies that excel in the area generate 40% more revenue from those activities than average players, McKinsey’s data found.

    However, in the mobile industry, there’s a disconnect between how well operators think they are doing and how consumers view their personalisation efforts. While 80% of operators say they are doing a good job of personalising customers’ experience, just 40% of consumers agree, according to a report published by Intent HQ in partnership with Mobile Europe.

    Trust is a major concern, with 47% of consumers worried about their operator’s ability to protect their privacy. At the same time, 31% of consumers want greater transparency about their operator’s data collection and storage practices.

    In the highly competitive telecoms industry where churn is high, trust is a key point of differentiation. If operators can get the balance right, customers will be much more likely to hand over their data so it can be used to personalise their experience.

    “With global telecom markets so saturated and competitive, the ability to offer personalised services at scale will be key to achieving future growth,” says Dr Sachiko Scheuing, European Privacy Officer at Acxiom.

    Consent in line with regulation

    Data protection regulation such as the GDPR and UK Data Protection Act outline strict rules about the collection and sharing of customer data. In line with the regulation, it should be easy to add or remove consent; to request a copy of data; and to exercise the right to be forgotten, says Bronwynne Stoddart, CEO of telecoms customer data and personalisation start-up Ikue.

    Operators are usually good at ensuring applying for consent is a seamless one click process, she says. However, the same cannot be said about removing it. “They put up barriers in the form of multi-step, multi-channel processes to remove consent. This approach perpetuates the murkiness that surrounds big data in the minds of many consumers.”

    Stoddart says operators should “have a grown-up conversation with their customers” regarding what data they wish to retain and for what purpose. “If they strike the right balance, they will find customers consent to the use of their data for the purposes given. If not, operators need to rapidly review their proposition and make adjustments accordingly.”

    Gaining trust

    To gain trust, Adrian Baschnonga, Lead Analyst at EY Global Technology, Media, Entertainment & Telecommunications, says operators need to clearly communicate how data will be reused by third parties.

    In addition, they should provide “simple ways to control shareable data”, and make terms and conditions easier to understand. “Mobile operators must take heed and adjust their interactions with customers to get the balance right between privacy and personalisation,” he warns.

    Operators need to be “as clear as possible in setting out what kinds of data they’d like to gather, what they’ll use it for, and the benefits to customers” says Scheuing.  “Most of us expect organisations will collect and use data about them in reasonable ways, such as to maintain services, or recommend other products, services or tariffs a customer might be interested in.

    “What’s crucial is that telcos do this in the most transparent way possible, finding ways to actively improve services by using the data consumers have shared.”

    Data in exchange for incentives is an option to explore. Many consumers will be willing to share their data to support personalisation if there is an incentive to do so, says Tim Bowes, Associate Director, Dufrain. “Discounts and free gifts always work well, but telcos should not treat all their customers in the same way.”

    Instead, he says, companies should break down their customer base by segment – “such as lifestyle, age, or stage of life – and target the incentives accordingly.”

    Valuable insights

    An open and honest dialogue is key to winning consumers’ trust and persuading them to hand over their data – which in turn will help improve their overall experience through better personlisation.

    In a world driven by data and increasingly impacted by privacy regulation, it’s easy to get it wrong, as big tech companies such as Meta’s Facebook have discovered. Big tech offers “valuable insights” into the pitfalls of getting consent management wrong, says Stoddart. “GDPR and other regulatory approaches are a response to an industry that did not apply the checks and balances earlier in the cycle.”

    If telcos want to get customers on board, they need to start with privacy in mind, says Natalie Cramp, CEO, Profusion. As part of this, she says, mobile operators need to “review what data tracking is being undertaken, whether the customer has been clearly informed about it and whether they can easily opt out of future tracking”.

    If telcos want to offer personalised promotions to customers based on their app or geolocation activity, they have to clearly communicate this, she says. “Building this approach into all communications will go a long way to getting current and new customers on board.”

    In order to gain trust and retain customers, Scheuing warns mobile operators to make sure their processes and services are “as transparent as possible”, using privacy by design – a key part of best practice under the GDPR.

    This includes providing the information and tools for consumers to make choices easily and quickly about their privacy, says Scheuing. While mobile operators can’t control the privacy terms and conditions online service providers and app developers use, they have the opportunity to become privacy champions. They can do so by developing their own applications and documentation to educate users and give them ways to manage and protect their privacy.”