How the mundane world of utility companies and the adrenaline-soaked world of media forged an unlikely future together. Anil Malhotra explains
The market for Direct Carrier Billing is huge, as shown by the most recent report by the GSMA, ‘The Mobile Economy 2022’. In 2021, there were 5.3bn unique mobile subscribers globally, and by 2025 this will have grown to 5.7bn at a Compound Annual Growth Rate (CAGR) of 1.8%. The Association also says that the penetration rate, as a percentage of the population, will go from 67% in 2021 to 70% in 2025. The percentage of smartphone connections, excluding licensed cellular Internet of Things (IoT), will surge, too – from 75% to 85% by that year. In 2025, there will be 23.3bn IoT connections, while the GSMA predicts that mobile operator revenues will reach $1.16tn.
The opportunity is great – particularly as the world’s population has reached at least 7.9bn people, according to Worldometers.info. So, the room for even more growth is significant for everything, from 5G smartphone connections and usage and mobile app growth, to mobile payments and direct carrier billing. The GSMA Mobile Economy 2022 report comments that 5G continues to grow in pioneer markets, due to rising 5G handset sales, network expansions and the overall marketing efforts of the mobile operators. However, 4G is far from dead. In its report, it says,
“4G still has room to grow in most developing markets, particularly in Sub-Saharan Africa, where 4G adoption is still below a fifth of total connections and operators are stepping up efforts to migrate existing 2G and 3G customers to 4G networks. However, rising 5G adoption in leading markets, such as China, South Korea and the US, means that 4G adoption on a global level is beginning to decline. Globally, 4G adoption will account for 55% of total connections by 2025, down from a peak of 58% in 2021.”
With regards to the opportunity for Direct Carrier Billing and unique mobile subscriber growth, my company Bango (AIM: BGO) – a company that is listed on the London Stock Exchange and a provider of unique purchase behaviour technology – knows that every one of these subscribers has a payment relationship with a mobile operator. This means that, technically, they can pay using carrier billing – no setup, no entering new payment credentials – just click and pay onto the existing mobile account.
Credit card ownership varies across the globe and Bango finds that less than 20% of subscribers have a credit card. Telcos, utilities and media companies have to offer different ways to attract and retain their customers in an increasingly competitive market. The challenge is that telcos are commoditised. They need to offer a value-added experience to differentiate themselves.
Many promotional bundles look the same. This means Telcos and utilities firms are trying to differentiate through third-party services. For efficiency, they want to become a single point of access, and affordable. Media services want more users, while utilities, such as Telcos, need to stand out. By partnering to package-up services in cost-effective bundles, consumers get the best of both worlds. Much of this is achieved through Direct Carrier Billing, enabling utility companies to increase customer acquisition, retention and monetise new market technologies.
Key data asset
Direct carrier billing provides a key data asset for mobile operators. Customers with a clear history of carrier-billed payments are their highest value subscribers: you know how much each customer typically spends – what time of day, week or month they spend most and the types of games, apps and media they buy. This information is important for CRM and is valuable for app developer marketing. Furthermore, hundreds of mobile operators and telcos worldwide enable over-the-top (OTT) purchases from third-party merchants to be placed on their customers’ bills.
By leveraging a network of world class brands, operators can deliver attractive content and services to acquire new customers and engage existing subscribers. For example, bundling a communications service with Netflix is becoming universal because telcos can’t differentiate on price alone. So, what makes BT better than Sky? It’s hard to notice the difference. However, telcos and particularly mobile operators have the advantage of having access to millions of customers.
Verizon, for example, has 140 million customers. AirTel in India has 400 million customers. Their customers are potentially a captive market. Telcos often have poor differentiation while having access to a massive customer-base. Telcos are, then, attractive to media companies that want more customers, and so opposites attract. They are unlikely bedfellows. Quite often, you wouldn’t think that companies, such as Disney and T-Mobile , would complement each other. However, their distinct differences are precisely why they do complement each other.
The value proposition to the Verizon consumer is about getting the bundles cheaper and to go through them as a telco provider. Why? Well, quite often the telco has subsidised their cost. They also offer convenience through Direct Carrier Billing – offering the ability to manage billing through one bill, rather than having to cope with six bills. To attract and retain interest, other things will come along, which might be a bundled offer of 3 months free of Apple TV. Meanwhile, with SingTel you can get discounts on clothing and home cookware. So, the breadth of potential offers is huge.
Add-ons verus bundling
The more advance telcos are doing add-ons, rather than bundling. Free Spotify might, for example, apply to students. Add-ons allow more of a pick and mix. The first examples of telcos bundling things involved their own products and services. In each of the mobile telco stores, you may be offered a phone, a data bundle, unlimited text messages, etc. It looked like it was good value. That was Version 1 of bundling.
Bundling text messages quickly became insufficient to impress customers, particularly with the growth of WhatsApp. So instead, they bundle 3rd party services, for example, Sky subscriptions. This model is the prevalent one today.
With Version 3 there will be a choice. Savvy consumers will get better deals if they go through telcos, and this experience is enhanced when the way they manage services is made easier through the offer of managing them through one interface. Providing customers with choice is also becoming the key to success – both in terms of retaining them and with respect to attracting them.
Customers: sharing purchase data
Thankfully, consumers are more willing to share data than they used to be – particularly if they receive value-added benefits. Michael Feeley’s article for New Digital Age cites a report by the Global Data & Marketing Alliance (GDMA), in partnership with Acxiom and the DMA UK, the 2022 ‘Global Data Privacy: What the Consumer Really Thinks’ report.
Feeley writes that the report “reveals that the vast majority of global consumers (82%) are prepared to engage with the data economy in 2022. Over half of surveyed consumers (53%), across 16 countries, agree that the exchange of personal information is essential for the smooth running of modern society.”
“Trust in an organisation remains the most important factor driving consumers’ willingness to share personal information with a company. Across the countries surveyed, 38% of consumers rank ‘trust in an organisation’ in the top three factors that make them happy to share data with an organisation.”
Opposites attract – making this work
With opposites attracting telcos, utilities and media companies, and with the growing volume of payment data being available for analysis, an invaluable opportunity of purchase behaviour targeting can’t be ignored. Organisations that use payment data to better target users and customers, include du, the leading UAE mobile operator.
It used Bango Boost to identify and target relevant customers with a DCB re-engagement message. Within two weeks of launching the campaign, 20% of the segment had re-engaged and made at least one purchase with carrier billing. Baseil Zaki, Head of Value-Added Services, Devices & Loyalty, du Consumer Services comments: “The success we have experienced with the latest Bango technology is significant.”
On the telco side, where previously telcos may have managed some payment connections themselves, it is time and capital-intensive. Pressure mounts to continue delivering new growth, outsourcing to a platform provider like Bango is a better solution. Coupled with the fact that bundling third-party subscriptions with their first party services is proving a great customer acquisition and retention tool, so connecting to a platform with hundreds of merchant connections is increasingly appealing.
Working with third-parties also makes sense to media companies as part of their ongoing growth. Together, they can work on simplifying the customer experience, widen customer choice rather than offering take it or leave it bundles, and find new ways to achieve differentiation. With DoCoMo’s d Points, this involves encouraging customers to use their connectivity, to spend more on their bill to gain access discounts on third-party services through a single interface, such as one platform and one bill. With purchase behaviour targeting, they can also improve their offering and remain relevant.
Anil Malhotra is CMO and Co-Founder of Bango