By: Jesse Cryderman

Man can’t live on bread alone, or so goes the old adage. But what about CSPs—could they exist on Big Data alone? And can it become the bread-and-butter staple of the telecommunications business?

While it might sound crazy, preparing for such a future could be a wise idea. As traditional service revenues are increasingly cannibalized by over-the-top (OTT) services like WhatsApp and Viber, the network is becoming a commodity as it’s simultaneously turned into a “dumb pipe.” Recent news from WhatsApp, which initiated OTT voice services in August, revealed that more than 300 million people actively use the mobile-messaging app each month. To put this figure in perspective, that’s a larger user base than AT&T, Verizon and Sprint combined. Similarly, Skype, now part of Microsoft, serves a user base of around one billion, who spend an average of two billion minutes a day engaged in communication with each other.

This trend shows no sign of slowing down, and try as they might, it seems CSPs can’t keep pace with the agility and innovation on display in the OTT sector. The UK analyst firm Ovum estimates that CSPs lost $13.9 billion in messaging revenue to OTT apps in 2011, bled $23 billion last year and by 2016 will be losing $54 billion a year. While an industry-wide Rich Communication Services (RCS) platform is on the horizon, it could be too little, too late. “OTT players are changing consumers’ messaging preferences, and the pressure they are exerting on operators’ messaging services is forcing them to offer increased SMS bundles and to experiment with messaging pricing models, further dampening revenue growth,” said Ovum analyst Neha Dharia late last year.

As service revenues erode and connectivity fees and transit revenues decline, where do CSPs stand? This is where Big Data comes into play: provided the right tools are used, CSPs could live on Big Data alone.

Turning data into income

Telecom operators possess and manage the most valuable databases in the world, which capture and contain customer preferences, billing data, location information, and much more. This data can be leveraged for everything from location-based advertising and personalized incentives to business intelligence and customer experience management (CEM). Since revenue and traffic have become increasingly dissociated with time, as illustrated in figure 1 below, the ability to extract value from the telcos’ Big Data repositories becomes more and more vital.

Some service providers are already cognizant of this possible future and are laying the groundwork for a shift in operational strategy.

“We could make a living just out of analytics,” said Von McConnell, director of technology development and strategy for Sprint, at Broadband World Forum last year in Amsterdam. He added that although service providers are in the business of selling metered usage and devices, the business’s true value lies in massive databases. CSPs must evolve, said McConnell: “We’re going to have to move to a more data-scientific approach.”