Telcos plagued with privacy double standard on customer data

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Privacy is becoming one of the most important issues of our time. So far, companies like Facebook and Google have got away with using customer data – or rather, user data – to make money from their real customers, the advertisers.

Soon, though, this tide will turn. If these companies believe for a second that the next generation of customer will be comfortable with them sharing their data – let alone be happy with the advertising avalanche – they need to think again.

Millennials will go to great lengths to remain anonymous online, and use it for free. Stories about how they avoid advertising, and paying for a service are repeated at every major telecoms conference. The teenager who will have multiple Skype accounts, the teenager who will always give a false phone number, the teenager who, wait for it, will pay $10 a month for Spotify Premium to avoid the adverts.

So far, telcos have been far more restricted in how they use customer data, and in the longer term this might play into their hands.

Right now, telcos are not happy that their hands are tied. At a recent conference, Telefonica Germany CEO Thorsten Dirks said that he saw a double standard, because “customers are handing over data voluntarily to companies such as Google and Facebook.”

Dirks, and many others, want to be able to use customer data – for the customers’ benefit. For example, event organizers would be able to manage catering, parking and crowd control more effectively if they could see the dynamics of the crowd. The data could also be used to send customers alerts about road traffic conditions, as a simple example. If they team up with a city, then parking capacity, traffic congestion and a host of other information could be transmitted.

Proximus, in Belgium, has just started selling location data. At the moment, it is anonymized and not down to an individual’s level (groups of 30 customers are being sold as a report).

Other telcos are using it without making any noise about it. A visitor to Edinburgh received a text from his telco while waiting for his plane from London. “Are you going abroad today?” read the text. The gentleman in question works for the Direct Marketing Association, and was extremely interested in how, and why, he would receive this text.

The fundamental irritation with the privacy issue is that Facebook, Google and the internet players want to utilize user data for their own benefit. Telcos want to use customer data for the customers’ benefit.

There is a trend emerging, small and quiet at the moment, that could turn this on its head. It is called Vendor Relationship Management (VRM).

Essentially, a customer gives his preferences to a data broker, who then gets the best deals from a range of preferred suppliers. There are a number of people around the world working on this, including Harvard University. Inevitably there are very few large companies on board, since – if it takes off – it will damage their business. But a few are acknowledging that this is where we are heading.

There is, without doubt, an opportunity for telcos here. An offering based on privacy and terms and conditions that only use customer data for the customers’ benefits would go over well – with some good marketing behind it.

If somehow telcos could become the VRM platforms of the future, then … well, that would be something to think about.

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