Carriers face challenges building out infrastructure while keeping profits high. Find out how ItsOn is expanding in South Africa.
I wrote last September about the decline of unlimited mobile plans, an article which discussed how US carriers are shifting away from unlimited to capped data plans. In my article I related a discussion with Robert Oberhofer, vice president of product marketing at ItsOn, Inc. in which he spoke about the challenges carriers face trying to build out their infrastructure while maintaining profitable revenue streams.
Oberhofer outlined some of the ways carriers are trying to improve the customer experience as unlimited plans decline, such as offering certain data packages which match their usage needs. I concluded by stating that "unlimited plans will be phased out, but other benefits and conveniences are sure to take their place as carriers compete to provide the strongest options for customers."
Those of us in the US are familiar with our carrier options and procedures, so it's interesting to take a look at
how things work elsewhere in the world - and where improvements are being made. ItsOn, Inc. recently signed an agreement with MTN Group, Africa's largest mobile carrier, which provides services to over 230 million customers, in order to help bring new capabilities to mobile users through better plans and carrier apps. I spoke again with Oberhofer regarding their plans.
Robert Oberhofer: "We will be deploying the ItsOn solution in South Africa first. Last time we talked about unlimited plans and death thereof - there are no unlimited plans in South Africa. Most people use prepaid plans whereby everyone buys access in chunks or gets charged per minute or KB; this is the default experience for 98% of subscribers in the market. Most of them have to add money to their account and then make voice calls. The money is then deducted as they call. This continues until they get a message notification that they are low on funds and to please fill up their account again. They have no control over the plan and don't even know the price they are being charged and the remaining balance.
We are introducing a new model where consumers buy their communication bundles at a price and terms that are simple and clear. As a way of example, instead of making an international call and only finding out the cost of the call after it is finished, customers will get a notification when they try to dial saying 'you don't have this calling destination as part of your plan, here are the options for adding this. You get 100 minutes at a price of X,' so they know what the cost is beforehand. They also get the bundle at that locked-in price. Once they make their call they can see in the app how much of that plan has been used. The user is in control, is not surprised by the charge, and made a conscious decision to make the call based on the given rate. That's the kind of shift in user experience we're driving with MTN."
TechRepublic: "It sounds like this involves a voice-oriented infrastructure. What about data? Is there a shift underway from voice to data? Is texting part of this?"
Oberhofer: "Voice is dominant in South Africa. Texting is only provided to people without a data plan. Otherwise people are using WhatsApp for texting. This effort is mainly about voice and data plans. MTN's goal is getting as many people as possible onto smartphones and leverage the capabilities of the ItsOn platform to provide data plans that fit their customer's needs. The future will be based on data packages - getting people to use more and more data over time since that's where the high-end packages are now.
TR: "Are these efforts geared at consumers or businesses?"
Oberhofer: "We are working with consumers first. There is another interesting thing about the South African market - remember how you could buy games, ringtones and ringback tones (whereby if I call you, I hear the audio file ringback tone you purchased) and music apps directly from your carrier here in the U.S.? South Africa is very much driven by that now and is doing well with all these add-ons. The way to find them is very difficult, however. Smartphones will have a self-care/discovery app as part of our solution, so customers can search for these and easily purchase them from their phones. MTN can do a lot more upsells if people can find the content easily. It allows a different type of service experience as an end-user, making it easier to find and purchase content."
TR: "Is this based on a flat fee or tiered data pricing?"
Oberhofer: "It's tiered based on volume. The higher you commit to volume, the cheaper the per-unit price of these bundles will be. In addition to that, the carrier will run campaigns and promotions to help people get a great deal. Right now carriers are 'spamming' people with offers to top off their account, add extra data, etc. These messages happen many times per day. People are price-conscious and don't have much loyalty to carriers, so carriers entice people this way so they commit to buying with them.
We want a shift in user perspective to increase user control and trust in their carrier. This will entice the user to remain loyal. At present people in South Africa switch back and forth between carriers constantly, sometimes on a weekly or bi-weekly basis. Sometimes they use two SIM cards so they will make a call with one or the other card. This is very complex to keep track of."
TR: "What about the infrastructure involved here? Are you building new or utilizing existing?"
Oberhofer: "We are working with the existing infrastructure. Our efforts involve helping customers manage their plans, allocations and quotas. If they purchase a 1 GB plan there are two components - the first one counts the packets and connects to the network to let packets move from tower to base station to core network. Then there is an inventory piece; how many packets and what their value represents. We manage the business function of what's happening, integrate with voice/text/data to manage quota units and what's been purchased by the subscribers.
What's interesting is we did a 'clean room' implementation of a modern business back end for a mobile operator. We built it in the way Internet players do - cloud-based and highly integrated. Most carriers have systems starting back 10, 15, or 20 years to manage these business functions and are having a hard time keeping up with the experience expected today. That's why carriers are struggling to keep up. This 'clean room' stack is part of what we're doing with the user experience, client involvement, and notification of plan components.
TR: "What about customer service? What's new there?"
Oberhofer: "A lot of customer service is about unexpected charges, so we're changing that dynamic. We're bringing more information to the client. If you make the call you know what it costs, etc. Bringing that capability to the device brings the transparency and control, as well as the ability to change plans from the device. The volume of calls to customer service drops significantly. The average customer service call costs the carrier $15, so giving the customer more control reduces the customer service involvement.
TR: "Will there be a customer service app available for users?"
Oberhofer: "It depends on the carrier. One carrier we're working with is trying to eliminate voice calls and have customers use messaging to contact customer service representatives. It also depends on the customer base we're targeting. In MTN, onboarding users onto smartphones is a goal. Thus having them as well chat via smartphone for customer service care is probably too much of a leap right off the bat. Another carrier is targeting the millennials who are so used to not having to talk to someone and would rather do so via chat. If you target that kind of demographic it makes sense to avoid voice customer care interaction.
TR: "Can the app handle upgrading/auto-purchasing packages?"
Oberhofer: "Yes, that's what we support today. You can go in a Wal-Mart, buy a Virgin Mobile Data Done Right phone and walk out with no interaction with the carrier. You unwrap it then boot it up. You then select your plan. As part of the initial onboarding sequence, you enter your name, address, credit card number, and whether you want to port an existing number over. Then the app references your credit card to complete the purchase. You can set the credit card as the default and auto-pay as you go. As long as your credit card approves the transaction this continues to work. You have a pre-paid environment where you're in control, purchases are pre-authorized and you don't have to deal with paying a bill at the end of the month."
TR: "What about security? What happens if the phone is lost or stolen?"
Oberhofer: "You can associate a password with the account and set it up so you need to enter a password to make purchases. If you lose your device you call the carrier and they can lock the account on all transactions. If you password protect the phone and it wipes itself, then someone might be able to set up the phone again to use it with the carrier, but it won't be with your account. However carriers can also add stolen devices to a database to make it unusable - it can't connect to any network - so thieves can't sell them. This initiative was based on a law out of California, actually. This will change the process so people will steal fewer phones.
TR: "Anything else to comment upon?"
Oberhofer: "We're expanding into other areas - we are working in other regions but haven't announced it yet. Another thing to point out is that onboarding customers onto a smartphone experience can be kind of tricky. Data users don't have the level of control that you do with voice. Whereas you can make a conscious decision to use or not use voice or text capability, data usage and connectivity can occur in the background if you aren't completely familiar with what your smartphone does, driving up unwanted data usage.
To help with this we allow the end-user to buy app-based plans or bundles. For instance, they can buy a social media package whereby Facebook access is unlimited for a day or week. Now as an end-user you don't have to think about the megabytes involved but rather the experience itself. This helps the user keep track of usage and reduce surprises based on how much the data costs. The ability to have selective app-based plans is an important principle. From a price perspective, if you prevent usage of these heavy media apps off the bat and tell new smartphone subscribers 'here's the plan for that and this is what it will cost' it will help - you can have a data plan quickly be overwhelmed by a few YouTube videos. These capabilities are why MTN is excited by the prospects.
In the US people are educated enough about data to understand this, but there is still frustration about unexpected data bills. Imagine that in an emerging country where people use their phones for voice calls and first data experience is the smartphone.
In the end our efforts are based on a combination of all these ideas: increasing loyalty, trying to find ways to get users comfortable with their devices, plans and app usage, offering the ability to discover content and making the price competitive."