3 questions telecoms companies should ask themselves before selling customer data

Since George Orwell published his dystopian vision of a future where a totalitarian ruler ("Big Brother") maintains power through constant surveillance and propaganda, the public has been both fascinated and frightened at the prospect of any entity having access to so much information.

Yet, today we’re closer to that vision than at any other point in history. Consumers are growing increasingly accustomed to their online behaviours being tracked and used for commercial gain, such as when Google tracks online searches and serves up targeted advertising to an individual.

But, they’re also increasingly concerned about the implications of companies using that information for commercial gains or nefarious purposes. For telecommunications operators the situation is particularly acute as operators can track not only online behaviour such as web browsing and app usage, but also information about their subscribers in the "real world"(such as where they are physically located at any given point in time).

This information can be useful to commercial entities such as retailers as it can provide insight into the behaviours of consumers that was either impossible or exceedingly difficult to obtain. Spain’s Telefonica, for instance, worked with British supermarket chain Morrisons to study where the company’s shoppers came from in order to more accurately identify who should receive promotional offers. As a result of Telefonica’s recommendation, Morrisons sent out 400,000 vouchers leading to 150% rise in store visits.

But it’s not just commercial entities that can benefit from the availability of telecom customer data. There are public benefits to the insight that telecommunications can provide based on their users’ habits. For instance, trends in subscribers’ whereabouts can help traffic and city planners with traffic flows (understanding peak times, historical analysis of the impact of big events, etc.), thus enabling them to put in place strategies to mitigate against traffic gridlock. Additional benefits could include logistics tracking and/or emergency location services.

But as telecommunications companies seek ways to profit from the vast amounts of data that they have about their subscribers, there is growing debate among regulators about the legalities of selling data about subscribers to third parties. Meanwhile, within the telecommunications industry itself, the topic is hotly debated.

With both potential benefits as well as risks, here are 3 questions telecommunications companies must ask themselves before selling customer data.

Question #1: Will the benefits of selling subscriber data outweigh the risks?

The jury is still out on whether or not selling customer data is the best strategy for monetising big data. The benefits of being able to sell data for telecommunication companies are manifold: the creation of new products/services to diversity the business offering and being able to directly track the contribution of data to the bottom line.

However, if customers feel that their privacy has been violated in any way by an individual company in any way, the public relations and customer retention implications could be immense.

Companies need to determine whether selling data is a model that they feel comfortable with, and ensure that they have taken steps to minimize reputational risks.

Question #2: How will I maintain customer trust?

Consumers are growing increasingly wary of how telecommunications and internet companies use their data. At the moment, telecommunications companies come out ahead of social networks like Facebook or Twitter with 41 percent of people reporting that they trust mobile carriers to keep their information safe compared with only 20 percent for the social networks, according to a poll commissioned by Orange.

"With advanced data analytics technologies, virtually all user’s movements, locations, communications, interests, habits, schedules, etc. can be tracked," wrote Andrew Ton and M.Saravanan from Ericsson Research on their company blog earlier this year.

"As more and more consumers show concerns about their privacy breaches and with the drastic increase of data in both magnitude and diversity, protecting privacy in big data analytics has become critical more than ever, especially to Telcos. Failing to protect privacy of the users hurts not only the users but the data publishers as well."

Telecommunication companies can employ a number of specific tactics to maintain consumer trust. Both the industry and regulators generally agree that any data that is sold should be anonymised so that no individual subscriber is directly identifiable.

Additionally, telecommunications companies must make their privacy policies clear to subscribers and could consider offering an "opt in" service rather than an "opt out" clause to subscribers to avoid situations such as when US network provider AT&T provoked a customer backlash in 2013 when it announced changes to its privacy policies. The resulting customer feedback can still be seen in the comments section of the company’s blog.

Question #3: How will I manage data security?

Data security has been firmly thrust into the spotlight with such high profile data losses as the 2010 release of U.S. State department diplomatic "cables" through Wikileaks and the more recent release of thousands of classified National Security Agency documents by Edward Snowden. If even the US government is susceptible to such large scale data losses, the risk to all organisations remains high.

Selling data onto third parties increases the likelihood of unacceptable breaches of data security as data is made available to a greater number and variety of stakeholders / entities creating a greater number of points of failure. Telecommunications companies must ensure that they have the right processes, procedures and technology in place to ensure that customer data is secure at all time.