Context-aware Computing

Telcos to leverage context-aware computing

Kamlesh Bhatia, Principal Research Analyst, Gartner explains the relevance of context-aware computing from a telco’s perspective and the trends in the Indian market

If we look at context-aware computing in terms of telecom carriers, they provide services which are not individualized or personalized in any way. These are basically mass market services such as launching a call plan or data plan.

Going forward, as the market becomes more competitive, carriers are moving towards a market that is flattening in terms of growth. They are looking towards establishing a competitive differentiator. Currently, the competitive differentiator is clearly price. However, the window of opportunity is small with price as the competitive differentiator. If a telecom carrier comes out with a certain pricing strategy, competitors soon catch up and roll out a similar offer and ultimately, the whole advantage is lost.

There has to be a solution which is more sustainable and unique. This is where context-aware computing fits in. Typically if you look at telecom operators, they have certain exclusive information about the users with them but the challenge is that all this information is in their back office or systems. Apparently, they don’t have the necessary capabilities to process this information to bring out the part that is needed and that they can use to personalize or make their services more relevant.

Context-aware means all the information you have about the user in terms of identity, situation, community, environment in the context of the user. It is also about how you can create services that leverage this information to offer something which is more personalized and more relevant to the user namely context-enriched services.

Indian market scenario

If you look at the Indian market, the story is around subscriber growth at the moment. With the number of subscribers coming on board having been so numerous– the operators have not yet reached farming mode. Instead, they are still in hunting mode. They are just trying to bring subscribers on board and better the numbers.

Nevertheless, gradually the focus will shift to farming because we are already seeing the kind of results that operators are getting. Average Revenue Per User (ARPU), which is an indicator of revenue growth, is declining and at the same time, margins are under pressure because of all the per second billing plans in the market. With new operators joining the league, the competition is really going to be fierce in this segment.

All-in-all, we are seeing the sort of market dynamics which are going to call for something that is more sustainable as a competitive advantage. The Indian operators are not high on context-aware computing at the moment, as they remain focused on acquisition as a strategy. Having said that, they will soon switch over to sustainability.

Since there has been a slowdown in the growth of subscribers largely because the market is flattening out and the addressable segment is nearing an end, these issues along with falling ARPU and the need to bring changes will lead operators to adopt context-aware computing.

Here, I would like to point out that context-aware computing has definitely created a buzz in the Indian market at least within the marketing circles in the operators segment. Today, they have realized that one mass marketing effort is not going to draw in the crowd.

Today, telcos are using the static promotions and offerings, which is just one part of context. However, context in its real sense is the most powerful concept when acted upon in real time. So, we are looking at real-time information which is also more comprehensive.

The handset market has become far more interesting from the point of view that handset manufacturers have realized that users are going to use handsets for tasks beyond just making voice calls. Most handsets are evolving to deliver content-based information these days. However, the manufacturers lack a direct connection with the end-users, which the operators have. It is because operators own subscribers and not handset manufacturers.

Content-based information which is produced in the handset uses software called mobile device management that capture the usage on the device and sends it back to the operator who can then use it to identify things like what content is being served, what a user is doing at any point of time etc. This parameter which comes out from the software is being used to devise the larger picture which shows the overall customer experience from the service.

For telecom operators, context-aware computing creates up-sell opportunities immediately within their existing subscriber base. They can create business models or opportunities wherein they can build a more personalized relationship with their subscribers and generate revenues. Operators can also work with third-party providers. For example, Verizon collect information about all its subscribers at any point of time, randomizes and supplies this information to a third-party partner who is a Web site provider for real-time traffic monitoring.

Future course of action

Context-aware computing remains in its infancy, wherein we are seeing static segmentation. Operators are investing in technologies that can aid in gaining business intelligence such as data-mining systems. We are seeing investments in the core systems that are used to build context-enriched capabilities. 2010 is clearly the year when we expect a lot of operators to start getting focused towards the back office and try and use IT as an enabler to grow their business.

Context-aware computing doesn’t call for a huge transformation program as we are seeing in the mature market segments, but it will certainly call for investment in the right areas that deal with information management. Operators will not have to go in for all new systems. Instead, they will have to focus on systems that can take out the intelligence and focus on one key attribute of context-enriched services that is real-time.

The telecom industry hasn’t really been affected by the economic slump as compared to some of the other industries. As such this industry is heavily driven by IT. Some of the programs could have been affected, but I think programs that focus more on the strategic side of business and have a long-term view usually continue because this is the competitive advantage for tomorrow. All your projects and investments that promote you and help in achieving a competitive advantage tomorrow are going to continue. Context-enriched services really fall in that bucket for me.

It will be largely driven by the marketing side of the operator that will realize that static segmentation or carpet-bombing is not going to bring in the desired results. High competition will definitely drive operators to look at alternate revenue or revenue from non-traditional sources. Consumers are becoming more aware and want personalized service as against just a blanket offer. Another trend is around 3G that will open up a lot of opportunities around content and high value services. Investments in service delivery platform, real-time convergent billing, and real-time CRM kind of platforms are some of the areas that will promote the uptake of context-enriched services.

The awareness of this concept is certainly rising. Operators in mature markets have already implemented some of their services and offerings based on context and that is being seen in other parts of the world as well.

As told to Nivedan Prakash