MEGATRENDS
G20 Economies Best Practices
What Every Telecom CEO Needs to Know
Table of Contents
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5
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B. The New Megatrends: Global Best Practices Every CEO Needs to Know
1) Survival in a Post-Voice World
2) Big Data Transformation
3) National Secure Service by Government supported by Telecoms
4) Dealing with SIM Free Threats and Opportunities(Apple SIM)
5) Embracing the Industrial Internet Service (B2B IoT)
6) Smart ARPU with Wearable Devices (Consumer IoT)
7) Software Defined Everything, Pay per Use (no more Capex)
8) Carriers Revenue Model in 5G Age
9) Network Neutrality, Carriers vs Free ride Innovator
10) Customer Churn Management
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23
25
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D. Final Thoughts
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Network Neutrality,
Carriers vs Free ride
Innovator
Big Data
Transformation
Carriers Revenue
Model in 5G Age
Software Defined
Everything, Pay
per Use
(no more Capex)
Embracing the
Industrial
Internet Service
(B2B IoT)
The charts shows the level of impact and certainty in each megatrend by 2025.
The size of bubbles are entire market size of each megatrends in 2025.
5.0
5.0
*(7) Software Defined Everything, Pay per Use (no more Capex)
US$ 279 Billion
*(3) National Secure Service by Government supported by Telecoms
US$ 49 Billion
Level of Impact
Note:
Blue Bubbles are Opportunity
Red Bubbles are under Threats
Green Area : Business as usual
Pink Area : Immediate opportunity
Blue Area : Strategic opportunity
0.0
5.0
Level of Certainty
SURVIVAL IN
A POST-VOICE WORLD
The Modern TSP:
An Adaptive Shapeshifter
Despite the exponential growth in mobile and broadband
penetration and consumer demand for telecommunications
services, TSPs are increasingly being plagued with high churn
rates, declining mobile ARPU and declining revenue for the fixed
business model. The model of the traditional telco is
aggressively being revamped, propelled forward by consumer
expectations. Carriers are the modern shape-shifters, moving
from single-play wireless or wireline voice services to triple-play
or even quadruple-play offerings, bundling together voice,
broadband, television and wireless services. This represents the
next milestone for TSPs: the opportunity to gravitate towards a
future where they can act as content aggregators, streamlining
and converging practically every aspect of a consumers digital
experience.
CASE STUDY
SURVIVAL IN A POST-VOICE WORLD
Frances Free Mobile Pushes for Reinvention of the Carrier Model
In early 2012, Free Mobile was launched by the French entrepreneur Xavier Niel. Utilizing a blend
of Wi-Fi, HSPA+ 3G, femtocells and its all-fiber backbone, Free offers unlimited voice, texting and
data over the mobile networks. The company hit the market with a revolutionary offering: 3GB for
20 euros ($28) with unlimited calls and texts, plus no fixed contract term. Though the company
had limited infrastructure and leased spectrum from Orange to boost capacity, the offer struck a
chord with consumers: Free grabbed four percent of the market, or about 854,000 subscribers, in
just three months. As of the end of 2013, Free had 8 million customers, giving it a 12 percent
share of the French market, just behind Bouygues. The company's data plan is now even better,
as well: 20 euros for unlimited texts and calling, with 20GB of 4G data included per month. To top
it off, it's about to start selling contracts and activated SIM cards directly from vending machines,
as pictured below. Free has essentially positioned itself as a broadband service provider with one
unique exception: it believes that everything else from voice to IPTV to storage is just a
feature that rides on data service. This approach has helped it radically differentiate itself from the
rest of the telecom industry that has traditionally counted on metered minutes and billable items.
VISION FOR 2025: Telecommunications incumbents will see rising competition from small freeride innovators who stray away from traditional voice-focussed billing plans. While voice will
remain an integral communications component, consumers will be more inclined to select their
preferred operators based on the quality and cost of their data services, expecting high voice
service qualities to be a given. This shifting consumer preference will require telecommunications
operators to come up with unique and innovative pricing, bundling and marketing offers that are
centred around their double, triple or multi-play offerings such as data, TV or OTT content.
BIG DATA
TRANSFORMATION
Megatrends by 2025
Granular, focussed data that leads to actionable insights, when
paired with the automotive, deep learning capabilities of AI, can
cause tangible improvements in vast sub-industries such as the
contact center space. Considering the overall big data
landscape, faster movers such as Telefonica (Telefnica
Dynamic Insights) and Verizon (Verizon Precision Market
Insights), have created new business units to use big data as an
external service. A secondary tier of emerging developers in this
space are instead taking the approach of creating new
partnerships in the market research and advertising markets and
employing new big data analytics and data-as-a-service
platforms internally in order to accelerate their understanding
and revenue with new services. A third tier will soon emerge,
where TSPs rise beyond these use cases to use big data as a
catalyst for multi-stream domain aggregation with a smarter,
more focussed usage of the marriage between big data and AI.
CASE STUDY
BIG DATA TRANSFORMATION
Verizons Precision Market Insights Clear the Path for B2B Big Data
Through Verizons Precision Market Insights business line, Verizon is using data collected from
subscribers that have opted in to its Verizon Selects programme to provide access to microsegments of the market that are made available in the Precision range of data services. Verizon
Selects enables location, web browsing habits and mobile application usage data, as well as other
information including customer demographic and interest data, to create specific insights.
Verizon has two broad service types under this division. The first service uses aggregated
anonymous data for location, browser and mobile application usage habits to provide
segmentation information for use by marketing companies looking to address groups of
subscribers. The second service is built around a programme to make ads more targeted for each
subscriber, so when a subscriber sees an ad on a websites or in an app, the ad is especially
relevant. Verizons Precision Market Insights division began collecting and selling data on its
customers last year, but that information was mostly being used for analytic purposes, such as to
give stadiums and malls statistics and information about cellphone users in particular locations.
The company is now shifting its focus away from analytics, and specifically towards the targeting
and measurement of advertising.
VISION FOR 2025: Telecommunications providers will move from merely using big data insights
for their internal operational and customer-focussed agendas, but will evolve into central focal
points within a data-centric ecosystem. TSP incumbents will leverage their network resource
potential to harness large amounts of data from city/nation-wide networks, including millions of
connected industrial, wearable and utility-focussed (meters, sensors, etc.) IoT and consumer
telecommunications devices. The data harnessed would serve as a central repository for both B2B
sales as well as internal telco usage, harnessing stronger consumer insights for both telecomenterprise partnerships as well as telecom-government partnerships.
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NATIONAL SECURE
SERVICE BY GOVERNMENT
SUPPORTED BY TELECOMS
Building A Collaboratively Secure Future
The concept of security, particularly for IT industry veterans,
has always been partially two-pronged, with a firm line
separating physical security from cyber security. This line is, and
has for a while been getting thinner and thinner. Crimes
instigated by cyber perpetrators have transitioned into real,
tangible damage to physical assets, public safety and human
lives. From a defence perspective, this has lead into strong
revenue opportunities for partnerships between TSPs and
government organizations, in the mutual interest for public
safety. Leading TSPs, for instance, are winning more
government contracts for services such as secure public Wi-Fi
and defence due to the profitable synergies between local
governments and telcos.
Collaborative Infrastructure :
Security as a Shared Goal
2015 has ushered in an era where a higher
level of expectations lay on the part of TSPs
in securing their own networks to deliver this
reassurance to their subscribers. This
represents a forward momentum for national
policy, too, where government institutions are
making security a stronger part of their
legislative views. USA, for instance, has a
collaborative
framework
between
the
government and TSPs such as Verizon,
Sprint and AT&T for citizen security. UK is
another example: not only have nine of the
world's largest weapon makers and telecoms
providers (including British Telecom and BAE
Systems) teamed up to bolster the country's
cyber security, but BT was also entrusted with
delivering the entire network for Londons
2012 Olympics.
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CASE STUDY
NATIONAL SECURE SERVICE BY
GOVERNMENT SUPPORTED BY TELECOMS
Obamas IT Security Transformation: Call for Government Collaboration with
IT Sector
During a 2015 White House Summit on Cybersecurity and Consumer Protection, Obama signed
an executive order creating a framework for how companies can better share cyber data with the
government. The order creates "hubs" that will allow businesses to share security information with
one another and will also give corporations access to classified threat information that could
potentially help protect them. Reports of cyberattacks have increased five-fold since 2009, and
President Obama has made cybersecurity a priority in 2015. To that end, his administration
announced a new cybersecurity agency called the Cyber Threat Intelligence Integration Center,
which will be tasked with analyzing and quickly sharing intelligence information. This new
approach to IT security is built around the foundation of collaboration, and encourages U.S.
companies to partner both with each other and with government agencies. The order lays out a
framework for expanded information sharing designed to help companies work together, and work
with the federal government, to quickly identify and protect against cyber threats. Already, security
vendors like Palo Alto Networks, Fortinet and Symantec have banded together to form the Cyber
Threat Alliance to share threat intelligence.
VISION FOR 2025: Telecommunications operators will increasingly be regarded as a more
collaborative partner for national and local governments, instead of just service providers. This will
ensure that TSPs can, along with technology vendors, form a partner ecosystem to aid national
security goals, as well as generate more revenue from the public sector through government
contracts.
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CASE STUDY
DEALING WITH SIM FREE THREATS AND
OPPORTUNITIES (APPLE SIM)
The Apple SIMs Power to be a Gatekeeper for Carriers
In the US and UK, the LTE versions of the iPad Air 2 and iPad Mini 3 will come with a
reprogrammable SIM card the Apple SIM that can switch to different carriers via the Settings
menu in iOS. In theory, this allows consumers to switch between their AT&T contract and perhaps
a pre-paid T-Mobile deal, to get the best of both worlds. In the future, when the Apple SIM
inevitably rolls out to the iPhone, consumers might be able to open up Settings and select one
carrier for cheap international calls, and then switch back to their main carrier for data. When they
travel, rather than having to hunt down a local SIM card, Apple SIM would let them easily use a
local carrier for cheap data and calls.
Acting as a gatekeeper to the carriers could potentially give Apple an enormous amount of power.
For instance, until or unless Verizon gets on board, it could find itself hurting this holiday
season when people unwrap their brand new iPad Airs and try to connect them to the cellular
network. If Verizon isnt an option in Apples pull-down menu of carrier choices, Verizon loses its
chance at that initial connection. Apple could use that power over carriers to get better rates for its
customers or pit the carriers against one another during the initial provisioning process. With this,
the Apple SIM has brought with it the disruptive potential of transforming the telecommunications
space into one that is centred around software-programmable SIMs, which would prompt carriers
to amp up their competitive edge.
VISION FOR 2025: Telecommunications providers will have to guard their territories against
device manufacturers and technology vendors such as Apple and Google. Strategies such as SIM
lock-in might prove to be a losing battle around stealthy alternatives such as the Apple SIM, and
might only serve to further alienate customers who choose to pick service providers that allow
them further flexibility. However, the level of impact and certainty for disruptive threats like the
Apple SIM is low towards 2025: the likelihood of the Apple SIM being available for the iPhone in
the next 5 years is low it currently makes sense for the iPad which tends not to be subsidized by
the operators, but there is less incentive (for the networks) to offer this for the iPhone, as the
handsets true cost is usually subsidized and they want to lock customers in for 2 year contracts.
THE EMERGING MEGATRENDS
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EMBRACING THE
INDUSTRIAL INTERNET
SERVICE (B2B IoT)
Catalyzing the Internet of Future
with the Internet of Things
The underlying impact of the IoT trend centers around the
eventual probability that by 2025, the number of devices
connected to the Internet will aggressively catch up to, and
possibly outnumber, the number of people themselves. In
todays reality, telecommunications giants like BT, Verizon,
Comcast and Deutsche Telekom are moving fast: they all have
partnerships with white-label IoT vendors, propelling a B2B2C
model to provide IoT devices as a service directly to consumers.
Additionally, other carriers have launched a solid foray into the
B2B2B industrial IoT market. Case in point: SoftBank, which has
partnered with General Electric (GE) to license GEs PredixTM
platform for the Industrial Internet.
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CASE STUDY
EMBRACING THE INDUSTRIAL INTERNET
SERVICE (B2B IoT)
SoftBank-GE Partnership marks Significant Growing Potential in Industrial IoT
Marking the first step to monetize its Predix software platform, General Electric Company chose
Japanese telecom giant SoftBank Corp. as the first licensee for its Predix software platform that
connects industrial devices. The Predix software is designed to add intelligence to the Internet of
Things (IoT) applications. It allows companies to connect their machines, data and people and run
industrial-scale analytics. The software is installed in both the machines and the cloud, thus
allowing the devices to connect and communicate. Per the licensing agreement, SoftBank will
leverage GEs Predix software platform to develop targeted applications for industries like shipping
and manufacturing. The partnership will create apps, which will empower companies to forecast
failures in advance and optimize supply chains, product enhancement and distribution inventory.
GE has been expanding its partnerships for the global delivery of this platform. For example,
Cisco has already decided to deploy Predix software inside its networking products, beginning with
a specialized computer router for harsh environments like oil fields. Intel has built a reference
architecture that integrates Intel processors with the GE software. Verizon and Vodafone provide a
broad range of wireless connectivity solutions, which are optimized for Industrial Internet solutions.
GE also has an alliance with AT&T, Inc., which connects its machines and assets through the
AT&T global network and highly secure cloud.
Under the SoftBank-GE alliance, SoftBank will be using GE's Predix App Factory for the
development of the applications which are expected to be released in 2015.
VISION FOR 2025: TSPs will act as the middle-man between energy, utility and industrial
technology giants, and technology vendors, using their vast, city-spanning network resources.
Fast moving TSPs will be able to harness large and stable installed bases by 2025. For example
Comcast and ADT together already share a large percentage of the total smart home security
market in the United States, by reselling white-label technology from smart home security
technology vendors.
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can
increase
their focus
on
consumer
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CASE STUDY
SMART ARPU WITH WEARABLE DEVICES
(CONSUMER IoT)
The Organizational Wearable: BPs Incorporation of Fitbit into Corporate
Wellness Goals
BP in 2013 provided 14,000 employees, 6,000 spouses, and 4,000 retirees with no-cost Fitbit
trackers as part of a wellness program that reduced the company's health care costs to below the
U.S. average growth rate of 6%. A growing number of companies are issuing tracking devices to
employees, giving employees a means of tracking their own fitness and allowing managers to
keep tabs on the health of the firm as a whole. BP, which has partnered with StayWell Health
Management to offer employees the use of a Fitbit tracker, measures the number of steps taken
every day, among other things. A million-step challenge is one of the many facets of the BP
Wellness Program, encouraging employees to make physical activity part of their daily routine in
order to improve their health and earn wellness points along the way. The idea: BP benefits from
a healthier workforce both in terms of daily productivity and also in the context of rising health care
premiums, and employees benefit from the health effects of regular activity. This directly ties in
with BP's incentive strategy: to be eligible for BP's premium health care plan option, each
employee must earn 1,000 wellness points during the course of the year.
VISION FOR 2025: The telecommunications opportunity in the wear-ables market is huge; global
enterprises are already making devices such as the Fitbit an integral part of their corporate
strategy, capitalizing on employee wellness, retention and remuneration. When paired together
with central communications functions such as voice calls and data abilities, wearables will be a
natural line of business within the telecom value chain by 2025. However, by 2025, the level of
impact and certainty caused by this trend is lower than that of industrial IoT, as consumer
wearables are still not perceived as a necessity.
THE EMERGING MEGATRENDS
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SOFTWARE DEFINED
EVERYTHING, PAY PER USE
(NO MORE CAPEX)
From the Sandbox to the Market
As the hype around SDN dies down, realistic implementations
are beginning to crop up in service provider and enterprise
networks with the gradual maturing of the technology. While it is
still to early for enterprises to embrace SDN with a rip-andreplace mentality, many are evaluating how to automate network
provisioning and gain the error-free efficiency that virtualization
engineers can hugely benefit from. Automation is emerging as
the most profitable and feasible use case, a logical next step in
the SDN migration journey. TSPs are also beginning to work with
OSS/BSS vendors to adapt their back-end architectures for the
service assurance and performance management capabilities
required by SDN networks.
benefits
of
using
multiple
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CASE STUDY
SOFTWARE DEFINED EVERYTHING, PAY PER
USE (NO MORE CAPEX)
Deutsche Telekoms Software-Defined Migration to All-IP Next Generation
Networks
DT introduced TeraStream: an all-IP network that delivers triple-play and other services from the
cloud, as a model for next-generation operator networks. DT created this model to satisfy their
need to move to dramatically simplified networks to be able to match the Internet services giants,
particularly OTT players who have the advantage of being able to move very fast as they are
software-oriented. With TeraStream, DT aims to move to drastically simplified IP networks,
IP/optical integration and an infrastructure cloud model (carrier datacenters) that hosts all manner
of functions, applications and content.
The TeraStream model consists of a simplified IP backbone infrastructure supported by softwaredefined networking (SDN) and network functions virtualization (NFV) capabilities. DT's
fundamental decision at the start of this process was that it needed to break away from the
proprietary world that telcos have worked in for so long and build new networks on open standards
technology, not proprietary software. The ultimate goal is that the next-generation network will
become less of a burden and free up DT to focus on services, to be programming services,
instead of re-architecting the network and the OSS. DT has so far been testing out its TeraStream
model at Hrvatski Telekom, its regional operator in Croatia.
VISION FOR 2025: Tier 1 telecommunications incumbents are already in the fast-mover status in
terms of SDN technology, with a significant number of leading operators already running test
implementations of SDN. By 2025, SDN will be perceived as a competitive necessity, instead of a
mere innovative R&D venture, with SDN-enabled operators being able to provide a wider range of
competitive services and enhanced network qualities with lower CapEx.
THE EMERGING MEGATRENDS
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CASE STUDY
CARRIERS REVENUE MODEL IN 5G AGE
AT&Ts 5G Vision: Modelling the Future of the Wireless
AT&T is in the process of building it's 5G strategy. Their 5G roadmap includes not only high speed,
high bandwidth requirements that come with AT&T's LTE Advanced, but also the Internet of Things
requirements for low-powered low-data devices, ultra-long battery life plus dense capacity in urban
areas. AT&T recognizes that these requirements probably won't be handled with just one air
interface or one spectrum band, and plans to create a 5G-fuelled network of networks to handle
these requirements.
AT&T will still be using LTE Advanced along with things like Wi-Fi, potentially a low-powered
network, potentially a millimeter wave network that will add capacity in the millimeter wave band in
the 10+ Gig range. And then it will likely have SON HetNet capabilities to provide seamless
interoperability between those networks. 5G will also touch on contextual awareness. It will have
different requirements and no single air interface will provide all those user expectations across
the board. It will be a different definition from the 2G, 3G and 4G definitions.
AT&T's LTE Advanced is planned to be a big part of what 5G offers, as will Wi-Fi. Small cells,
DAS, SON capabilities that interface those will be a part of 5G. Antenna technologies like massive
MIMO that will give AT&T high capacity and spectral efficiency and venue locations, and AT&T
plans to deliver all those in a 5G scenario.
VISION FOR 2025: By 2025, 5G will be capitalized on less for providing high overall network
speeds and more about providing the services people need at the appropriate quality of service.
By 2025, billions of new devices with less predictable traffic patterns will join the network, including
cars, machine-to-machine (M2M) modules, video surveillance that requires 24-7 bandwidth, or
even a biohazard sensor that sends out tiny bits of data each day. Hence, by 2025, Operators will
be focusing on using 5G to match the right speed to the right application, which will define
operators competitive value propositions in the incoming IoT age.
THE EMERGING MEGATRENDS
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NETWORK NEUTRALITY,
CARRIERS VS FREE RIDE
INNOVATOR
Short Term Struggle; Long Term Gains
Operators, while actively resisting net neutrality in the present,
can stand to indirectly benefit from it in the long run. If an
incumbent TSP could kill incipient or potential competition by
leveraging on biased network lays, that would kill both innovation
and competition. Innovation is what will create the data
revolution that the next level of telecom transformation heavily
requires. Digital cities, e-governance, financial inclusion, nextlevel advances in education and healthcare all these depend
on ubiquitous, high-speed broadband and innovation in the
universe of applications and services that can be accessed by
broadband. Net Neutrality underpins all this, and operators would
not necessarily benefit in the long run by thwarting this to focus
on short-term revenue.
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CASE STUDY
NETWORK NEUTRALITY, CARRIERS VS FREE
RIDE INNOVATOR
Netflix: From Underdog to Pay TV Challenger
Since Netflix launched its streaming service seven years ago, it has evolved to become more than
just an aggregator and distributor of other people's content and more of a programmer, which has
helped catch subscribers' attention with high-profile original programs such as "House of Cards"
and "Orange Is the New Black." Netflix has a wide range of partners who have continually helped
it develop into both a content aggregator and a provider of mass-appeal original content. Partners
IMAX and Weinstein Co., for instance, will produce "Crouching Tiger, Hidden Dragon: The Green
Legend" for 2015. Comedian Adam Sandler has signed a deal to make four feature films.
Dreamworks will produce 300-plus hours of programming for kids. Which such projects are likely
to increase overall costs, Netflix is seeing rapid progress as these initiative achieve returns on
their investment with a strongly growing subscriber base and increase cord-cutting or cord-shaving
from amongst its pay TV customers. Netflix models itself as a permanently flat-fee, commercialfree, unlimited viewing option, as opposed to having ad-supported or pay-per-view content. It
doesn't see itself as a generic video company that streams news, shorts, user-generated content,
music video or reality. Rather, it's "a movie and TV series network". Netflix is also unique in its
approach to customer service, customer care and user experience: for instance, it uses algorithm
technology to recognize personal choices its subscribers make -- such as turning off a show after
a few minutes or watching one over and over -- and tailors options for subscribers. This has
increasingly prompted rising demand for such tailored services from customers, particularly from
their existing communications service providers and pay TV operators.
VISION FOR 2025: By 2025, major telecommunications incumbents will either directly enter the
CDN business, or indirectly carve out a stake in the CDN landscape by strategic mergers and
acquisitions in this area. This will go directly head-to-head with independent local OTT vendors.
Customers, however, will have a strong incentive to choose operator-provided content (for
example, Shaw Communications success with its video-on-demand service, Shomi, in Canada)
due to their attractive pricing and bundling offers with existing communications offerings.
THE EMERGING MEGATRENDS
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CASE STUDY
CUSTOMER CHURN MANAGEMENT
T-Mobiles Churn Rate Reduction Using Analytics
In order to fully use all of their data, T-Mobile USA decided to combine a lot of subscriber and
network data together among multiple databases and source systems. They used several tools to
store all the data, analyse it, search it and visualize it. Drilling down to the specifics of this
systems, churn rates are optimized by using a tribal customer model. This model is based on the
fact that there are people who have high influence on others due to their large social network and
who are well connected to different (online) groups. If one of these customers switches telecom
providers, it could cause a domino effect and lead others in his or her network to do the same. For
each of these customers, an additional metric called the Customer Lifetime Value (CLV) is
calculated, based on level of influence on other customers. This new CLV allowed T-Mobile USA to
determine to most valuable customers.
Next to that, the churn expectancy of a customer is based on three different analyses: billing
analysis, drop-call analysis, and sentiment analysis. These different analyses are combined into
an integrated single-view for customer care. This system, called Quick View, offers agents and
retail store associates multiple key indicators including the customer lifetime value in a splitsecond on one screen. Additional information regarding high-value subscribers is sent
automatically to the agent as well as customer-specific offers such as a new service plan.
This approach by T-Mobile caused a drop in monthly leaving customers. From almost 100,000
customers leaving in the first quarter in 2011, they managed to bring it down to 50,000 lost
customers in the 2nd quarter in 2011.
VISION FOR 2025: By 2025, leading CSPs will be treating data-enabled churn reduction as a key
operational tool rather than a sandbox-grade R&D effort. Consumer retention will be a key
strategic goal and KPI for big data analytics platforms, where consumer loyalty will be a defining
factor for customer care and targeted marketing initiatives.
THE EMERGING MEGATRENDS
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27
FINAL THOUGHTS
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