GR: On your website, you talk about enhanced services. Are enhanced services for prepaid making a comeback?

JN: A lot of the focus has been on not necessarily adding value added services to the end customer in terms of prepaid, but being very creative in the personalization of the prepaid product to the customer.

GR: Can you give me an example of what you mean?

JN: One of the areas that we’ve seen a lot of focus is a movement from fixed line prepaid to wireless, as many of our customers are moving into the mobile area, moving their products onto a mobile platform. I think the trend in Europe is actually sort of slightly ahead of the U.S. just because of the market deregulation. And the value added services are actually proving to be of lesser interest to those customers; so what they’re actually doing is saying, “Well, okay.  Let’s monitor our customers on an individual basis in real time and monitor behavior and then target them with promotion.  Target them with personalized plans that actually drive change in behavior of that customer.”

GR: So, the enhancement is for the service provider, not the customer. What are the most important features service providers are asking for?

JN: With the recent projects we’ve been doing in the U.S., the big focus for our customers in prepaid has been on efficiency.  Just simply making their networks more efficient so they can give a better value product to their customer. I think they’ve identified that actually what’s driving the customer is value for money, and they want quality. So there’s been a lot more focus on not what we would refer to as sort of least cost routing, but on quality-based routing and getting that balance very finely tuned to make sure the sort of value and the quality proposition to the customer is optimum.  So these are things that obviously are within control of the network operator.

GR: Is the focus on efficiency for service providers?

JN: A lot of the focus has been on three things.  One is the network operators making their networks more efficient.  Big, big push towards IP, and it fully happened in Europe.  Ninety-five percent of our customers are running pure IP-based networks to maximize their efficiency.  We’re seeing slightly less of that in the U.S., curiously.  We’re seeing that that’s a process of change, which is – many of the operators are in the middle of, some further down that line than the others, just to make their networks smarter and more efficient.

They’re recognizing the customer just wants value for money, and is largely driven by the quality and cost of the phone call they’re making.  So in that context, what could you do to make your customer feel more engaged with the service you’re offering and maybe personalize your service towards what that customer specifically needs and their behavior and their usage of your product?

GR: This means giving them management tools, right?

JN: Yes.  A lot of management tools, real time dashboards so they can say, “Okay.  Let’s look at that demographic.  Let’s look at that user base that’s dialing into the Asia region or dialing into Pakistan.  India, for example, we’ll target them with a particular campaign next week.  We’re going to look at all those users that perhaps would have spent with us maybe $10.00 last month, but maybe their spend with us has dropped to under $5.00 We want to see if we can get a change of behavior from them, run the campaign within that segment of customer base, monitor the results, and then monitor the profitability of that change at that promotion and then start running it across different demographics within their customer base.

It’s interesting. There’s a lot of analysis and a lot of science being brought to the process in terms of analyzing the customer base in real time.  And if you’ve got a real time platform then you can do that, and then if that’s in mobile, it may be sending them a text message that invites them maybe if they top up they get a bonus.

GR: You said something at the beginning.  You were talking about prepaid calling services, you said that the European market was slightly ahead of the US market.

JN: I think in some sense, in two areas.  One is, somewhat surprisingly, the adoption of IP.  It is surprising to us that as we look at the U.S. markets, we’re finding that there’s an awful lot of TDM, what we regard as sort of legacy infrastructure, around that needs to be migrated to make those networks more efficient. That’s pretty much already happened for our customers and the service providers in Europe.  The second thing is the MVNO (Mobile Virtual Network Operator), primarily due to market deregulation, we’re seeing the majority of our customers or the significant majority of our customers in Europe have already got a dual mobile/fixed line service; so they’re offering both mobile solutions to their customers with a similar focus, almost identical focus, to those of their fixed line products.

We don’t see that happening quite so much in the U.S. markets. The general consensus, as we see it, is that it is going to happen.  Maybe this is the year we start to see that change occur because we are providing both mobile platforms and fixed line platforms and have been now for a couple of years.  That’s really taken off in Europe, and certainly you’re looking at the MVNOs.  Their wholesale divisions have got a huge focus on the calling card operators and the prepaid fixed line operators.

GR: In Europe?

JN: Absolutely huge. Every large MNO (Mobile Network Operator) in Europe has got a lot of focus on those prepaid fixed line operators and are offering them a wholesale proposition to bring their traffic onto their mobile platforms.

GR: Isn’t that interesting.  And in the U.S. they fight it.

JN: Absolutely, they do. And we’ve seen some regional MVNO activity in the US as we’re in that market, but we’re not seeing anything quite of the scale that we’re seeing in Europe, and in fact I think part of the reason is fear.  For a long time the MNO sat on the fence and said, “Well, am I gonna cannibalize my revenues here?”

GR: Yep.

JN: “What’s gonna happen?  Is it complementary?”  I think what they’ve recognized though is they’re tapping into a whole new distribution market, a whole new customer base that they previously did not address because their products and services were not focused on that market segment, and so it is all incremental growth.  It’s all additional revenue; so once they’re over that, and they’ve seen it, now the proof is obviously there.  They’ve adopted these products.  They’ve taken on board these new partners.  They’ve developed their MVNO offerings with them, and they can see the additional revenues and profits they’re generating, there’s a real clamor.

So now you’ve got the MNOs, who haven’t got a wholesale offering for the MVNOs in this ethnic or international focus, who are clamoring and are desperate to bring this market on board.  So there’s a real change of behavior we’ve seen in Europe in the last 12 months.  We haven’t seen that happen in America and in North America, and there are reasons for that.

GR: Do you think it will happen?

JN: I think it’s inevitable that it will.  It will be the timeframe over which it occurs, whether it’s this year or next year.  We know there are discussions going on with MNOs that are clearly looking towards the U.S. as well as the European markets, and they will be seeing what’s going on.  And so some of that will be observed, and they’ll look at that and say, “Well, actually this is really an opportunity, not a threat.  We need to embrace it and get the first move advantage.”

GR: Yes.

JN: And it’s not very sexy, but it is the reality for the product that these guys are putting out to their customers, and it’s about making sure that it’s as compelling as possible.



Justin Norris  is Co-Founder and CEO, DIGITALK.  Visit DIGITALK online at www.digitalk.com.