The Impact of Social Communications on Communication Service Providers

September 7, 2010 | By Tal Givoly | In: Innovation, Social Media, Strategy

This blog post is going to be a little bit different than the past few posts. This time, I really need your ideas about a topic that’s been on my mind for a while. I’m just going to tee up the discussion and ask you all to help with ideas.

I’ve been giving a lot of thought to the tsunami of social media, and in particular, that of social communications, and its impact on communication service providers – in particular, on fixed line and mobile operators. Social communications are the communications facilitated by social media, especially in the form of Facebook and Twitter, but also LinkedIn, YouTube, blogs and talkbacks. While social media impacts all businesses – which I’ll touch on briefly – the sector which is most affected by social media is the communication service providers whose core business is providing means of communications and connectivity, mostly paid services. Social communications are obviously competing with and are possibly disruptive to the business of communication service providers. With this in mind, I pose the following question:

What should communication service providers do in order to mitigate the impact or even benefit from the evolution of social communications?

Impact of Social Media

Social Media has an impact on any business, brand or enterprise. For one, the voice of the customer has now been amplified dramatically. A great example is the case of United Breaks Guitars. Dave Carroll took a United flight and filed a complaint after his Taylor guitar was damaged by the airline due to mishandling.  After failing to be compensated by United, he wrote a song and published a YouTube video (if you haven’t seen it, it’s a must-see video) about his experience. It had an immediate impact that spanned far beyond the online world and reached millions within days. It’s a fascinating story that was even the subject of a Harvard Business Review case study that clearly demonstrates that the voice of the individual has been greatly amplified by social media. This is not a lone case, there are many others. People talk publicly / in social media, about brands, their experience with products and services, and all these experiences receive a much greater attention than they would otherwise. If, in the past, one would share one’s experiences with friends, today one can easily share one’s experiences with the world, and if the message is “viral”, it can have far reaching implications.

Additionally, Social Media, and in particular, Facebook and Twitter, have also become a “means of communication with companies”. Companies set up a fan page or create applications on Facebook. They also have Twitter identities. Individuals now post messages on the walls of companies or tweet these companies. Most of these discussions are, effectively, in the public domain – so anybody can listen, chime in and share. This means that companies need to appropriately handle these new channels of communication – both for inbound communications received from customers and outbound communications in terms of brand and marketing messages. This is an entire domain in and of itself, which I’ll discuss in a future blog post.

Social Media and the Nature of Social Communications

Many of the implications of Social Media can be said to be common to businesses in general – but the impact for communication service providers is likely to be much more significant. A few weeks ago I was a speaker at #140conf event in San Francisco. My topic was “Telecom and the Evolution of Social Communications”. #140conf is an amazing series of events created by my friend, the unstoppable Jeff Pulver. The first was organized in the summer of 2009 in New York. Since then, there have been at least a dozen such events and meetups around the world – in London, Los Angeles, Barcelona, Tel Aviv and other cities. I had the great pleasure to present at a few of these events. Each is different from the other – in particular, in the amazing “characters” one meets – which keeps things interesting and always inspiring. This was a follow up to a talk I gave titled “Twitter vs. Telecom: Friend or Foe?” back at #140conf in New York in April. In that New York talk, there were about 300 people in the audience, but I realized very quickly, nobody was looking at me. They were hearing me, and they were “present”, but they were busy typing away at their iPad, iPhone, Blackberry, netbook or laptop. They weren’t just “taking notes”. They were all in communication. They were engaged in a lively communication with about 50,000 people around the world on the same discussion topic “#140conf”. In the ten minutes I was on stage, tens, if not hundreds of tweets were communicated between them.

What I observed was not the sort of communication that is facilitated by the traditional telcos and mobile operators – the communication service providers. It’s very different. How is it different?

  1. It was mostly not one-to-one – most of our traditional forms of communication are between a calling party who calls a called party. Yeah, we have telephone multi-party meetings or teleconferences. But these are not the most common types of calls.
  2. It was mostly all text and some pictures – instead of voice. In a conference like this, it’s still rude to just pick up the phone and have a voice conversation.
  3. There was a very high volume of communication very rapidly – everybody could read many more perspectives and chime in more rapidly. During the event there were many thousands of messages going by, sometimes exceeding 100 messages per minute in this one “discussion”.
  4. It was an open discussion – anybody could join in and it was a discussion in a public forum. People got pulled in because someone they followed had engaged in the discussion or shared parts of it.
  5. Perhaps, most importantly, no money was being exchanged – it was all free. Twitter and Facebook are free services. The broadband internet access was free WiFi provided by the venue. No traditional communication service provider saw a dime from all these communications!

But, this was certainly “communication” – though different than before. Obviously, we had and still have many free means of communications – Instant Messaging such as ICQ, “email”, VoIP such as Skype. But, but in these cases, you usually know who you are communicating with and you direct the communication to those people. We also have group communication such as IRC, mailing lists, and talkbacks on blogs – but there, it is mostly topic-specific – you join / participate in a particular discussion and you have to go to where that discussion is taking place. With social communications, there is a combination of these forms of communication whereby people create real-time interactions that are both topic-specific, and more open ended – it’s both peer-to-peer, and multi-party. It’s all in real-time and without moderation.

Until the prevalent use of social communications, participants physically at a conference could only communicate with each other during the conference breaks. Now they communicate any time, and also with many people who are not physically at the event itself.

Another community that is clearly affected is teenagers. Many teenagers practically “live online” and communicate with each other using various instant messaging platforms or even Facebook almost exclusively.

So, what’s the problem with this?

No problem, it’s terrific. It is liberating and provides people with a lot of freedom to communicate ideas with each other. Except if you are a communication service provider and you make a great portion of your income by selling the means of communication and connectivity – mostly telephone calls and messages. Social communication does not merely supplement traditional voice and SMS communications, it also replaces some of it. How much of it, is not yet clear.

It’s true that all communication service providers are now also generating income by providing many other things – ranging from the devices themselves to broadband access to value added services. All these will indeed be critical enablers for the ubiquitous connectivity of the relatively near future – so there are many other avenues to make money other than telephone calls and messages. But they are still very important to the service providers.

Some service providers are taking action

A few weeks ago, Richard Martin asked in his blog post whether service providers can do social media. I believe that this will vary between service providers and by geography – in some places, there are such opportunities, but in others, they’ve already missed the opportunity – the means of social communications have already been established. In that case, the only option sometimes available would be to “buy in”. Telefonica made just such a move to own a controlling interest in the “Spanish Facebook”, Tuenti. They now own a leading means of social communication in the country. An excellent IBM study Richard cites claims that “Social networking Web sites and services have become primary communication media for a new generation of digitally aware consumers, competing with traditional telecommunications (Telcos) for “share of voice.””. Now it is no longer this “new generation”.

Some service providers have tried a few things, such as integrating social communications in some manner or another with the traditional forms of communications. One of the most notable examples is Vodafone 360, announced a year ago, that attempts to integrate social media into the personal phone experience. However, most of these attempts have not been particularly successful. From talking to many service providers, I can say that the disruptive impact of social communications is not yet clear to most.

Now it’s your turn

So, here’s where I am looking for your help. I have a few ideas, but am looking for more:

  • What can communication service providers do to mitigate the impact of social communications on their business?
  • What can they do to benefit from the evolution of social communications?

Please add your thoughts and let’s discuss! Also, if you are aware of a “best practice” about how to mitigate, benefit from, or leverage social communications by service providers, write about it here.

18 Responses to The Impact of Social Communications on Communication Service Providers

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Kunal Bhandari

September 7th, 2010 at 6:38 am

I think communication service providers must use the platform of social communications to spread their better service/quality/Rates etc to get an exponential growth in their business. No commercial Ad can reach so many homes as social communications.

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Mugdha V

September 7th, 2010 at 9:30 am

IMO, CSPs need not *mitigate* the impact of social media. They should instead concentrate on encouraging their user/subscriber-base to access social media via their networks. They need to facilitate this by:
1. providing/supporting faster and *portable* apps for accessing social media
2. offering affordable data plans for cell phone and other mobile devices
3. maintaining fault-free networks based on latest technologies, to handle the huge social media-generated traffic

The user experience of accessing social media through cell phone and other mobile devices should becomes as rich as that through thick-clients. Once this happens, the CSP revenue from data services will go up, and will mitigate any losses on the voice-services front.
And of course, social media is great as a channel for CRM & promos.

Lastly, most CSPs around the world are already taken the steps mentioned above. Let’s hope others follow suit.

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Manish Sukhwani

September 7th, 2010 at 9:43 am

Intresting discussion Tal. Thanks.

Stories or examples like United Breaks Guitars. Dave Carroll tell us one thing that these days social communicatons travel faster than anything else in this world. Only time will tell how much loss United Airlines beared because of Dave Carroll’s social communication on YouTube. But one thing for sure, it surely hurt the brand United Airlines. If UA would have handled the situation carefully and kept Dave Carroll happy, i am sure Dave’s communication would have been entirely different. Social communication sites like twitter in simple sense is just plain text but the emotions a text can spark cannot be measured.

The dilemma which poses every business entity including service provider today is “Should we take Social communications seriously”. Social communication being free does not suit any businesses except online advertisers. But the reach and penetration Social communication has, is immense. So businesses needs to be careful in this case.

Service Providers see everything interms of revenue and no-revenue commodity. Social communications when looked from revenue perspective it looks dull and un-intresting. But when looked from brand building and brand promotion point of view it has a lot of potential. Service providers can use the social communication to improve their service based on feedback and also get lot of innovative ideas which can open new business lines for them. Using social communication as your critic and advisor is definitely one way for creating new age business.

About mitigation, i am not sure how can they mitigate impact of social communication? News broadcasting companies earlier neglected social communication but now News broadcasting companies have started realizing the importance of social communication and have started using them in their business plans example: CNN – YouTube, Twitter etc. If the service providers do not change now, they would have to change in the future with urgency but may be at that time they won’t have the time to think before acting.

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Josh Salomon

September 7th, 2010 at 11:38 am

As was exposed in Israeli news a while ago, in some cases SPs give more attention to social media than to their customers. The story was that a customer of one of the Israeli SPs (Hot if I remeber correctly) was not satisfied with their service (the time you need to wait for CSRs and their responsiveness) and tweeted about this. Next thing he knows is that SP representatives are calling him and asking how they can help him (and this SP is known to have less than perfect customer service). SP spokesperson admitted that they monitor social media constantly.
So it seems social media can become a fast channel for better service.

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Shoba Shanker

September 7th, 2010 at 12:18 pm

CSPs need to leverage the power of the social media… no word spreads as fast as, the “characters”. 24/7 customer service is a thing of the past. Today, it is the here and now, that motivates the users. So all CSPs need to get on the bandwagon.

Also, on the economic impact for CSPs the ROI is inversely proportional to the cost incurred (zero) in using social media.

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Michael Killian

September 7th, 2010 at 1:37 pm

It’s not just about the “service” angle. CSPs need to facilitate, integrate, and offer a great experience for their users to use the social network communication modes with equal ease as voice rather than fight or mitigate it. Voice, although important and never going away, is declining. Perhaps it’s due to lack of the one to many mode. I see it declining in one on one communication as well. CSPs need to compete for subscribers and bandwidth (revenue) via the experience and total communication service integration. The ad potential also needs to be leveraged, especially for the mobile providers. Get ads to their subscribers based on their set preferences, location, or on demand requests for nearby services etc.

Of course the providers also need to utilize and pay attention to the networks for service reasons and brand monitoring. No need to get into that as it’s been well covered.

Hopefully we’ll get to discuss further at the October #140conf in LA if I manage to get out there.

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Jessica Zimet

September 7th, 2010 at 1:59 pm

It’s an important question, and one that we should be looking to answer. Clearly service providers are not going to be looking to stop “social communications” – they need to be able to support them, and they need to able to do so at a profit. A key issue here that many consumers aren’t aware of is that service providers need to make huge investments in their networks to be able to carry the new services, providing you with a great connection that carries VoIP for your iPhone, for example – yet the carrier doesn’t see any real revenues from these network investments. The question then is one that goes to profits – what can carriers provide (that no one else can), that consumers and/or businesses will be willing to pay for? It’s like the service providers have built superhighways over what used to be dirt paths, and people are happily switching from horses and buggies to shiny new cars – and it’s not costing them a penny more.

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Vishal Chougule

September 7th, 2010 at 2:12 pm

Social sites are most popular for posting comments to each other from Orkut / Facebook. For this its necessary that user are connected to Internet via pc or mobile. For broadband access they need pay or in emerging markets lots people dont have internet enabled mobiles or connectivity issues.
Here service providers can work with companies providing social communications like Google for Orkut where when user type post , he can mention mobile # and the post will be smsed to end user . Vice versa every social n/w site will have a number where user can sms and site will redirect to user based on some protocol / contents of sms. This will service provider opprtunity to have revenue stream.

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Gautam

September 7th, 2010 at 4:32 pm

Social Networking sites like- Facebook have deeper as well as broader reach of its audience. Alas, that Telco companies lost this chance by focusing more on selling ringtones and wall papers during the technology time.

Social Networking sites are on their way to rule the web and our daily lives. For Telco companies to hop on this band wagon is by opposing Net Neutrality and sign strategic tie-ups with Social Networking sites to gain on the traffic that goes to and from these sites. Something similar to what AT&T gained from exclusive deal with Apple on iPhone.

Another area for Telcos is to gain insight from Call data of its users and use it to launch innovative Social Networking solutions. In this way they would utilize their strength to define a new game. Its a pity that the physical location of a person is so easily available to a Cell Phone provider and it is still not able to use it to the best of its interest.

A cell phone provider knows where are you when. This is the moment of now that coupled with technology and give an altogether different perspective to our social networking.

Eg. A theme park can know how many people are on its way. A restaurant can know the people that are searching for it. A toll way can know the people approaching to it. A city can know the visitors it is expecting now. And did I say repeat business?

Yes, with the data that Telco’s hold its easy to find the trends of repeat business. People going to Starbucks more often than others. People going to a specific shopping mall.

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Vlad

September 7th, 2010 at 8:35 pm

The example of United just shows how social networking can be an excellent marketing channel and nothing else. Opposed to a comment above – surely it DID NOT hurt the brand United. As every sensible marketing person would tell, there is no such thing as bad publicity. It’s just achieving the same effect by only providing a good service is hard to impossible.
As already mentioned above, I too don’t think the effect of social media should be mitigated, but instead, leveraged.
One (not really innovative) way is the so-called f-commerce. More specifically – branded applications for facebook/twitter. There are very few companies that succeed in that market, but the potential is huge. Especially for telco providers that can (as also mentioned above) leverage additional data they have on the subscribers (geolocation, personal preferences, statistical data, etc.). But that of course is not a zero investment. Quite the opposite, developing a successful social media application is not area where any of the telco’s has experience or knowledge. Even more – integrating such an application to work with data from telco’s system is a huge task with many concerns (security). But in the end it might be worth it. And it may be the place for Amdocs to come in (with at least the experience of integration of its systems).

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Tal Givoly

September 7th, 2010 at 11:18 pm

So here’s what I’ve heard so far:

Kunal suggests CSPs (communication service providers) use social media to market their traditional services – leveraging the media for viral marketing, effectively.

Mugda suggests CSPs compete by providing the best “access” to the social media, including perhaps apps. The revenue would be from “increased usage” of broadband access (data services). Mugda also supports Kunal’s idea.

Michael is getting there – starting to suggest new experiences/services that are suited for CSPs – that’s what I’m looking for. More of these please! (btw, I will not be in #140conf LA)

Gautam suggests mostly a regulatory approach and then strategic agreements with FB/Twitter. Interesting, though certainly a challenge, and likely one that will not work across the globe. The rest of the ideas are mostly location-based-services, not specific to social media.

Vlad suggests that CSPs offer the branded app to interface with FB/Twitter and also tap into all the rest of their “unutilized” proprietary knowledge to create ever more compelling user experiences.

Some responses:

Manish, many businesses are noticing social media, including CSPs – almost all have some presence in Twitter/Facebook/etc. But dealing with “social media” is not the same as “social communications” in its disruptive – alternative-to-paid-communication sense.

Josh & Shoba, most CSPs are monitoring their Twitter mentions and their Facebook fan pages and trying to handle some cases from there. But then again, that’s not different from other businesses – I’m most interested about the particular nature of CSPs – their prime business is “communication” – that is being disrupted. What should they do about that issue?

Jessica, right on. Nothing is stopping this. Now the question is, what can CSPs do about it?

Vishal, indeed FB/Twitter/Orkut updates SMS is the first service service providers often offer. But there are more countries where this is becoming free. Also, the trend (though not reality in many places) is that mobile Internet-connectd smartphones are gradually, yet in an accelerated pace, replacing simple or feature phones. Then why even pay for the SMS? pay for mobile internet access and use the service over the top? anything else?

Vlad, the saying “there’s no such thing as bad publicity” isn’t always true. It’s just comforting to think that way. The analysis I’ve linked to by HBR suggests otherwise in the United case, for example. JetBlue, on the other hand, has been getting a significant boost due to their approach on using Social Media rather effectively.

Thanks for all the comments/feedback thus far! keep it up!

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Mats Carlsson

September 8th, 2010 at 8:42 am

Hi Tal
I went to an interesting seminar yesterday in which TeliaSonera positioned themselves to be more of an access provider than anything else, but a good and a reliable one. They expect that there will be a growing market to provide opportunity for services like temporary bandwidth om demand, storage and back-up services, home network services etc. They do not think they will be a profitable content provider.

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Yoav Dobrin

September 9th, 2010 at 4:40 pm

one concern i have with relating social media to the crm world, is the simple fact anyone can create as many social media accounts as one wish for. this can result in diversity of issues to the service provider, starting with a denial of service attack, through miss scoring of the particular customer, and going as large as competitors impacting service provider revenue.
How would SMG or CRM be able to identify the true vs. the make believe customer?

About the big brother concept that in my view would create media fuss over corporate looking into consumer FB (specifically in the us), trying to figure out trends and such. (it is legal I know, but still)

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Ben Gardner

September 14th, 2010 at 11:51 am

The moment that CSPs gave customers access to a network that wasn’t their own (the internet), it was inevitable that eventually all of their services would be duplicated (and in most instances replaced) by third party providers. We are now simply waiting for technology and the market to evolve to a point where all communication types (including phone calls and text messages) are easy to make via ‘free’ data services rather than via the CSP’s network. Social networking is just the first stage of this.

The long term growth of CSPs will be dependent on devloping services that remain superior to third party providers and when this isn’t possible, providing a profitable data service.

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Ali

September 21st, 2010 at 10:06 pm

Sorry for being the late comer to the discussion. I liked few of the responses above and here’s my take on the question.

Mitigate effects on CSP’s services – I don’t think CSP can do anything to mitigate the effect of social communications. There is no way people are going to pay for communication when they have alternate (and better in some instances) options.

Leveraging Social Media – Absolutely they need to leverage. The way to do so is (as mentioned by many posts here) improving customer service by listening to customers more attentively, building brand names, following customers (being able to listen to what they are saying about SP), improving customer experience (which is very relative).

Increase Revenue – There is not much CSPs can do to increase revenue by just providing communication platform, this is just making them dumb pipes. These are few things (some of them already mentioned in the posts above):
1. Providing value added services
2. Changing the business model, instead of giving all you can eat free for bandwidth, have the usage buckets which customers are going to hate but that’s how it is in other countries.
3. I liked where Gautam was going with utilizing the location of the customer. So CSPs can partner with local businesses to provide best deals to the customer. For eg: I’m in SF and it’s lunch time, based on my location the CSP can send me deals for lunch based on my preferences and location. They can then get the commision from these local businesses. It won’t cost anything to the end customer and local businesses would get more business from new customers, CSPs would get some revenue share and end customers would also be happy because they are saving money while getting a free personal concierge services.

My 2cents.

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Spencer Lawson

September 29th, 2010 at 11:22 am

Nice commentary. Yesterday I was tipped off about this site and wanted to let you know that I have been gratified, going through your posts. I shall be signing up to your blog’s feed and will wait for your next post.

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Amdocs | Blogs: Tal's Blog » The Age of Consent

October 5th, 2010 at 5:57 am

[...] I said in a previous post, the topic of social media is one I’ll be returning to [...]

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roltanet

December 21st, 2010 at 11:30 am

one cannot swim against the tide, in longer run he will loose.
companies which make cell phones have taken advantage of social networking(facebook,twitter,orkut…).They have specially made phones and marketed them exclusively for social networking and they have cashed on it.
so if customer service provider feel that the social media is eating on their margins of paid services they need to take advantage of these social media to increase their margins .

people on networking site post photos and upload videos ,video chat in short “the more time they spend on networking sites the more are they going to use data”, so obviosly customer service provider’s can take advantage of these exponential increase in data usage and cater to this segment by innovative offerings to its customers.One such innovative step taken by a leading telco of singapore Singtel which has offered a personalized portal .The exPress Portal provides subscribers with access to their email accounts and social networks, enabling them to update multiple social networks at once.
Thus it can be a win-win preposition for both,no one has to loose and that’s the fact.But the problem will come when one will start felling that”for him to win other has to loose”.

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Tal PortraitTal Givoly has over 20 years of telecommunications technologies and software development experience, and has held management positions in technology, innovation, intellectual property, research, development, standards, and product management at Amdocs, XACCT, MIS, and other companies. Until March 2011 and for the 7-years prior, Tal was Chief Scientist at Amdocs and led innovation activities across the company.

Tal is a prolific inventor with over 25 granted patents. Tal is recognized for his passion for, and expertise in, innovation, being invited to speak at major industry events such as TeleManagement World, Mobile World Congress, CTIA and Billing & OSS World. He was also actively involved in industry forums and standard bodies including TM Forum, IETF, ATIS, and IPDR.org. Tal was a director on the board of IPDR.org and TM Forum. Tal has been named one of the top 10 people to follow in OSS/BSS.

Tal is now a full-time entrepreneur and inventor – focused on trying to build some world-changing companies. The most important startup Tal is now involved in is Medivizor, as Co-Founder and CEO. Occasionally, he shares his thoughts on this blog.