Customer Centricity and OTT Service Alignment
Since the mid 1990s, QoS has been marketed as an ideal way to generate more revenue through tiered services while also making more effective use of infrastructure. In 2000, QoS received a make-over and was bundled with telecom services in triple-play offerings which bundled data, voice and video. This was the first commercial recognition of offering different levels of quality paired to specific services. Sometime around 2005, QoS was redefined yet again under a more business savvy moniker Service Quality Management. Realizing that tiered services based on quality alone was incredibly difficult to sell to end users given the subjective nature of data, SQM was meant to proactively use QoS as a telco tool to improve the customer experience using QoS mechanisms. This approach has since matured into the Customer Experience Management (CEM) solutions that we see today.
Essentially using a combination of application aware QoS and bandwidth management techniques, CEM can combine real subjective service information with objective, algortihm based modelling, to derive an approximation of the service level being provided to a user. Having real-time CEM data allows an operator to manage VIPs as well as Very Annoyed Persons (those who haven’t complained but are experiencing poor service and likely to churn). Ultimately quality of service is still at the heart of CEM and has matured to allow service differentiation based on location, device, time, application, policy, package, etc. CEM currently offers telcos the ability to significantly improve customer experience and with it a reduction in churn.
On the other side of the coin, and the current reality, is the use of unlimited data plans. Originally unlimited data plans were offered to attract new customers to data services. Unfortunately with the huge uptake of these services, operators came to realize that their networks quickly became over-utilized by a small percentage of bandwidth hogs. One tool used to combat this problem and provide more effective bandwidth sharing across users is the fair-usage policy. A fair-usage policy simply throttles subscriber bandwidth after a preconfigured data cap has been reached. In reality this means the level of service delivered at the beginning of the month may differ significantly from that delivered towards the end of the month. Virtually every operator currently employs a fair-usage policy to effectively cap high usage subscribers. Reading the fine print shows significant differences in policies across operators with some allowing more than 10GB per month before policing while others start to impede service at as little as 100MB.
Ovum recently released a report exposing unlimited data plans in which they indicate a transition from the use of data caps to legitimately allow better sharing of resources to data caps as a means of soft tiering. Further, the term unlimited is being misused and no longer means unlimited in the sense of an uncapped service. Rather, unlimited in current terms means throttled with a data cap but without overage charges. Technically these services are not unlimited since it is easy to add the data cap to the new throttled bandwidth x the time used. As an example, a service with a data cap at 5GB with throttling to 64kbps would mean a maximum monthly data download of:
5GB + 64kbps*60sec/min*60min/hr*24hr/day*30day/mth = 26GB
While this seems like plenty of data, it is not practical bandwidth for real subscriber usage since even a basic music streaming service requires more than 100kbps. Likewise it is equally as frustrating for bulk torrent downloaders.
It’s important to understand both sides here. First, customers interpret unlimited as meaning all you can eat, any time of day. Unlimited avoids bill shock and should effectively provide the same level of service throughout the billing month. Often subsribers gravitate towards unlimited offerings since logically they seem to be the best compliment for service subscriptions like Netflix or Pandora.
Ironically for an operator, unlimited means unlimited download but with no bandwidth guarantee. More importantly, it means a data cap and throttling will be applied as a means to protect resources and ensure reasonable service to all users.
More recently unlimited plans have been abused by both sides. Many heavy users abuse unlimited plans by tethering multiple devices and running them 24/7. Operators, looking to incent users to upgrade to more lucrative soft tiers use unlimited with data caps set unreasonably low. The real problem here is that there is little to no relationship between bandwidth and total data usage in the eyes of the user. Internet services function on the premise of bandwidth, yet telecom packaging is based on data usage.
The dicotomy here is that while telecom operators are striving to become customer centric with heavy investments in CEM and OTT partnerships, they are actively enforcing packages that are totally misaligned with customer experience and Internet services. Where unlimited services were originally marketed with the best of intentions to attract users, they now offer the highest levels of customer dissatifaction and are the most misaligned with real customer behavior.
More users are adapting to digital content and service subscriptions for everything including music (Deezer, Pandora, Spotify), video (Hulu, Netflix) and data (Dropbox, iCloud, Evernote). These services are only practical when they have a reasonable amount of bandwidth available. Unlimited plans that throttle users mean that midway through a month, a subscriber’s access to streaming music, video and photo uploads is severely impaired to the point of being unusable.
It’s ironic that telcos chanting the mantra of customer centricity and service quality are at the same time offering unlimited data packages that are not customer nor service focused. The end result of unlimited is in fact a poor user experience, mostly based on a misunderstanding of what unlimited really means.
Operators looking to offer real customer centric service models need to find a better mechanism than throttling to manage infrastructure resources. Perhaps verticalizing services to allow unlimited social networking, unlimited voice and messaging, unlimited audio and video, makes more sense. In reality it is only one small segment of data usage that is creating the problem for everyone else. Operators cannot rightly offer unlimited and then throttle only a choice set of abusive applications, but if the packages are verticalized and service-aligned, they certainly can.
In the long run, it will be impossible for telcos to align around customer centricity when the packages offered impede the very services that determine customer satisfaction. Further, telcos need to ditch the data speak and use subscriber language to help minimize dissatisfaction. When someone picks up a phone to make a call, they don’t know how much bandwidth they are using. When someone buys a DVD, they don’t think about how much storage is required for the movie. When someone gets a photo framed, they aren’t charged based on the resolution of the photo.
Converting every service to data and bandwidth, when not even the best engineers can predict the outcome given the everchanging landscape of codecs, applications and usage behaviors; and then trying to market that to users is a ludicrous prospect at best. Customer Centricity is a great direction, but it isn’t going to happen without some serious reassessment of the world subscribers understand.