Gemini Waghmare is the founder and chief executive of UXP Systems. Here he tells George Malim that for communications service providers (CSPs) to survive and thrive in the digital services market, they need to position themselves as the broker of users’ digital identities. Doing so puts them at the heart of the digital services value chain and enables them to tap into indirect sources of revenue such as advertising and direct revenues from supplying data insights and added value to partners and customers. Their trusted relationships with customers, their physical infrastructure and their ability to handle complexity at great scale positions them well to achieve the transformation from CSPs to digital service providers (DSPs)
VanillaPlus: CSPs used to focus on serving traditional customers that they knew only by billing account details or a specific device. How, as they enable digital users in multiple locations and using different devices, are they bringing users’ digital identities together with their traditional processes?
Gemini Waghmare: From our point of view every service is digital. In television, for example, CSPs, for years and years, simply shipped set top boxes that users would plug into their rooms and watch TV at a specific time. Now you can watch anything, at any time, on all sorts of devices – a fixed service has become digital; accessed by a digital ID. When you think about the lifecycle of digital user, you have to think about digital identity (ID). If you want to offer digital services, you have to offer a digital ID – you can’t even have a relationship with Apple, for example without one.
The challenge for CSPs is that they have vectored all their existing systems around the notion of a customer rather than a user. A customer is a billing address, a bill payer and a SIM card but, to be a digital services provider, a CSP has to deconstruct that paradigm. A user might be my children or my wife or a guest using services at my home. CSPs need to support all the users associated with an account and without moving on from the traditional concept of a customer, they can’t become a digital service provider. I’m not only talking about next generation services here, this affects all services.
VP: Is this transformation as simple as CSPs asking customers to establish digital IDs?
GW: It’s certainly not simple. CSPs have a lot more to worry about than just a name and password and they have much more than just a digital identity of their customers. That could turn out to be valuable but it is complicated by customers having multiple IDs within their CSP such as phone number, set top box, SIM card and billing ID.
For example, on a CSP website I might use a username and password but on a mobile device I shouldn’t need to because I can be identified by the unique SIM card in my device.
Further complexity is added because of the existing sources of truth and identifiers by which CSPs already know you. They need to federate these while maintaining the individual identities associated with each existing system. There are only two approaches to achieving that. One is to make it really difficult and customise and redefine all their existing systems. The other is to overlay their existing systems with the notion of a digital ID and begin to federate all their existing users and create a new user lifecycle.
VP: You’ve mentioned the need to manage the user lifecycle. What is the importance of that?
GW: The need to manage the user lifecycle and what the user lifecycle has meant has been rudimentary so far. CSPs have required user ID for something as simple as viewing their bill and that’s it. Recently, ID usage has become a little more robust and CSPs are using digital IDs to enable users to log into services such as TV anywhere. Beyond that sort of service there hasn’t been much need to go beyond having one ID per household.
Now CSPs are starting to offer more digital services such as cloud, fitness or health services and need a digital ID for every member of a household. The provider now has to identify who you are, whether you exist, what mobile device you have, whether you have an entertainment service and then they can onboard you to the service you want to use.
Most CSPs can’t onboard you to a service without having a billing relationship with you but digital service providers will do that. Netflix or Box will let you come on board without you having a billing relationship with them. They allow the notion of groups and profiles and those ultimately enable monetisation of each user.
VP: This will be complex and costly for CSPs to achieve. What’s the business case and how will they achieve a return on investment?
GW: There are three facets to the business case. The first is addressing the original argument that CSPs will become only dumb pipes. All the digital service providers at the moment are non-CSPs so all the CSP is needed for is providing the pipe. If CSPs want to play in the value-added services market they must manage the digital relationship and have a digital services platform to bring all of these services together. If they don’t they will not have a role to play in digital services beyond selling capacity on their pipes.
The second business case is the monetisation of new services. If you look at how CSPs have invested in fibre, the connected home and the digital life there is an amazing opportunity for them. You currently need about ten digital IDs to access all your services but if you brought all those together there’s a value-added opportunity for CSPs to become the digital ID provider. The great thing about that approach is that CSPs would place themselves at the heart of the value chain.
Finally, being at the heart of the digital value chain would mean that digital interactions all happen within a CSP’s environment and they would gather valuable user data from that. Google makes no secret that by having a relationship with a digital user it is collecting all sorts of data about them. If CSPs were to do the same it would open up a huge amount of user data insight and enable indirect monetisation models such as advertising as well as direct monetisation opportunities for the CSPs of the future.
CSPs understand this opportunity and at the moment are gathering themselves and regrouping to take advantage of it.
VP: Do you see CSPs becoming a hub that federates data from all the different digital services providers and other organisations in traditional sectors? Could they turn this into a significant revenue stream?
GW: I hope so – we’ve bet our business on it. and we think that there’s good reasons why:
The CSP owns the network so they will always play a role and, unlike a company such as Apple, they can’t be cut out of the mix. They will always play a role. There are typically one, two or three providers bringing fibre or LTE to users so why wouldn’t a consumer want to use their broadband provider as a hub for all their activities?
Another advantage is the trusted relationship that CSPs have with their customers. We trust our CSPs because they have the billing relationship with us and they are local. In addition, there is more inherent trust in them about the data we give them. That trust presents a lot of value for the end user and the CSP.
A final observation is that CSPs are regulated and legislated in the market a user resides in. Companies such as Google are far less regulated and, as privacy concerns increase, users are looking to the attributes that CSPs already have to secure their data.
VP: CSPs’ huge volumes of data, their trusted relationships with users and their status as infrastructure owners seem to be coming together to give them good prospects of becoming successful digital service providers. What will UXP Systems’ role in that be and how do you see the company developing?
GW: User lifecycle management, which is our business, is what customer relationship management (CRM) was 20 years ago. At some point CSPs will look back and say to themselves can you really believe all we had was the relationship with the bill payer and the device, not everyone in the house?
Internet players have forced the user lifecycle to be very robust so you interact completely digitally with them but that will help CSPs to initiate digital relationships across all users. It’s one thing to enable a single digital user relationship but it’s quite another to say here’s a platform to make it easy to plug into an ecosystem of connected cars, smart homes, entertainment, IT services and many other digital offerings.
CSPs can do that and will serve as a hub for data with monetisation models attached. We’re already supporting customers such as Cable & Wireless, Rogers, Telus and CenturyLink to enable digital IDs. The CSP of the future will integrate and interact with apps like Nest to control their home or Fitbit and many, many others. CSPs can monetise a lot of this and act as the broker. We believe this is what the value chain of the future looks like but without digital ID it isn’t going to happen.
