Data Analytics & AI

Is VEON’s social app just 2009 all over again?

It’s been some time since we saw a large mobile operator group launch a new ‘social’ app. Competing with the likes of Google, Facebook and the companies they own is incredibly tough given their brand strength, global scale and software capabilities.

Consequently, after a few false starts, mobile operators have tended to shy away from service innovation in their consumer business in recent years. This is precisely what VEON (formerly Vimpelcom) is setting out to do with the launch of its new personal internet platform. The app, which is available with immediate effect in Russia, Ukraine, Georgia and Pakistan, offers a full suite of social messaging and sharing capabilities.

The launch has huge significance on a number of levels. If successful it will give operators renewed confidence in their ability to remain relevant – and top of mind – in their consumers’ digital worlds. If it fails, it will reinforce the growing body of opinion that CSPs’ should satisfy themselves with being enablers of digital lifestyles rather than digital service providers in their own rights.

From VAS to analytics and customer experience

“Customers can stay in touch and share experiences through social networks, instant messaging, email, apps, maps, music and buying digital content on their mobile bill, with the personalized address book at its heart.”

This isn’t a quote from VEON. It’s taken from a September 2009 press release to launch Vodafone 360, a service that sounds similar to the VEON app. Readers who were in the mobile business back in 2009 don’t need reminding about the fate of Vodafone 360. It never had the full support of senior management, was available on a limited number of devices and failed to capture the imagination of customers.

Eight years later and VEON seems to be embarking on a similar project.

“VEON gives customers access not only to chat, calls, and a fresh, innovative account management platform, but also the best features on the mobile Internet”, CEO Jean-Yves Charlier said at the app’s launch last week. “With the use of data analytics and artificial intelligence VEON offers its customers the chance to “discover new content daily: personalized top stories, music and video.”

What’s different this time?

So, what are its chances of success and what might VEON learn from the failed efforts of other mobile operators five, ten or even 15 years ago?

For one thing, the motivation – and drivers – behind the launch of a social app are very different from those that gave rise to Vodafone 360 (and to be fair, Vodafone was not the only operator to try and fail with such an initiative). Back in 2009 such apps were both a defensive play – an attempt to slow, and reverse, the migration of messaging services to the internet and apps – and an offensive one designed to open new revenue streams.

Mobile operators’ thinking in 2017 is very different. Introducing value-added services is not to gain new revenue from mobile customers, but to generate data analytics to enable better, closer relationships with customers. Social apps can also create efficiencies. The more users conduct their relationships with VEON through an app, the less they need costly help from call centers.

More than helping yourself

Of course, VEON is not positioning its new service as a self-care app; it is much more than this. But encouraging customers’ to discover the self-service and self-care capabilities while using the app could be clever way of getting customers to use those functions. So far operators have found this very hard to achieve, as they are competing against the likes of Instagram, Facebook and Whatsapp for customers’ attention.

[Editor’s note: I can only say from my own experience that part of the problem operators have with getting customers to use their apps is terrible design.]

In the last two or three years, VEON has started the transition from a loose confederation of operating companies – with 250 million customers in 13 countries, mostly Russia and central Asia – into a global organization. VEON has a publicly-stated ambition to reinvent itself from a telecom company into a global tech leader.

The group’s technology strategy is now based in Amsterdam, and network and IT functions are gradually being integrated into this central organization. In 2016 VEON announced a $1 billion deal with Ericsson to overhaul the company’s IT infrastructure. In the same year, it set up a London-based subsidiary to develop new digital services and propositions in segments such as digital financial services.

VEON needs incentives to make it work

But will VEON’s new digital platform be attractive to its customers?

The adoption of over-the-top apps around the world suggests that once users start to use these services – in preference to operators’ services – there is no going back. Over time, the benefits that operators offer in interconnectivity diminish as smartphone and data adoption becomes pervasive. Furthermore, initiatives to aggregate third-party content and services have rarely succeeded so far.

To generate interest, and usage, VEON must offer its customers incentives such as:

  • Access to exclusive content – VEON has already forged partnerships with digital media companies such as Deezer, Vivendi and MasterCard. They may be prepared to offer free or exclusive content to VEON customers in return, for example, for the opportunity to upsell them premium services.
  • Membership to a ‘priority’ club – for example, UK operator O2 has a service called O2 Priority which offers its customers discounts on a range of physical and digital goods, and priority access to some sporting and music events.
  • Free data –  VEON could offer free data for customers who use its online app. Another alternative would be to work with third parties to develop sponsored data models.
  • Zero-rated content – VEON has already said that it will keep its app open even for customers that have run out of data.

While the data platform has been developed as a group initiative, its partner initiatives will need a local focus. This is particularly important given different national rules around privacy, the storage of customers’ data and interpretations of net neutrality which will likely impact strategies around zero rating.

 



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About The Author

Chief Analyst

Mark Newman is an analyst with 25 years of experience delivering insights on the future of the telecoms sector to senior level executives and audiences. Mark’s recent research has focussed on telecoms operator business models, digital transformation, service provider diversification, and the intersection between Internet and telecoms. He delivers analysis, presentations, strategy sessions and workshops to global audiences, helping them to plan for the changes that technology and disruptive new business models that will fundamentally transform their businesses. Mark was Chief Research Officer at Informa Telecoms & Media and Ovum before leaving to set up his own research firm, ConnectivityX, in 2016. He joined the TM Forum as Chief Analyst in February 2017.

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