Telefonica Wants To Turn Its Mobile Data Into A Big Data Business, Launches Dynamic Insights Unit

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Big data is one of the more fascinating developments in today’s tech world: harnessing the huge wave of information that comes out of our many Internet-based networks and then trying to make sense of it. And while some of the companies in the space have come in the form of startups, the newest player is not a small VC-backed effort but one much bigger: the multinational carrier Telefónica. Today, the company’s new business unit, Telefónica Digital, is announcing Dynamic Insights, its formal entry into the business of big data.

Telefónica’s move is not too out of left field. Mobile operators have huge repositories of data in their businesses — not just from people’s activity on cellular networks, but from WiFi networks, too. Telefónica will also be drawing on data collected from other areas such as its machine-to-machine networks. The company has a big base of users and enterprise M2M customers upon which to draw: it has operations in 25 countries, covering 312 million customers, including 243 million mobile phone subscribers, 40 million fixed-line customers, 19.34 million Internet and data subscribers, and 3.3 million pay TV subscribers.

So while carriers are already crunching data for internal purposes to, say, help figure out how to shape traffic on its networks or decide what to charge users for services, it was only a matter of time before we started to see carriers making more of an effort to figure out how to turn all that information into a business in its own right.

And in the case of Telefónica specifically, it’s actually been in the business of commercial big data for a while already.

When Telefónica’s UK carrier O2 launched a free WiFi network in the UK back in January 2011, the carrier noted that it would be using the data amassed from that network in its O2 Media advertising and marketing services.

Offering the network for free meant more people would use it, and as I wrote at the time, “the more people use the network, the more information O2 will be able to build up about their mobile activities, which they will then be able to offer to advertisers to better target their campaigns.” In that sense, you can think of Dynamic Insights as Telefónica’s idea of how to turn this concept into a bigger business.

It also makes sense for Telefonica to look for new revenue streams based on data in its bid to offset declines in areas like voice and data tariffs — both of which are increasingly commoditized for big carriers.

Telefónica says that Dynamic Insights’ first product will be called “Smart Steps” and will be aimed at companies and public-sector organizations to “measure, compare, and understand what factors influence the number of people visiting a location at any time.”

Presumably, it will combine not just user numbers over given periods but also track movements at particular locations. Telefónica notes that potential customers could include retailers looking to optimize store design, or a local council to measure the impact of, say, a free parking service for a shopping precinct.

It notes that future data sets will focus on areas like fraud protection and what it calls “Smart City” technology, such as traffic management. (And although it doesn’t mention it in the release, marketing and advertising are likely to be other key areas for Dynamic Insights, as they have already been for Telefónica.)

While Telefónica has data in spades in its network, it doesn’t necessarily have the analytics in-house yet to process it. To that end, the carrier says it has entered into a partnership with the market research group GfK to look at ways of analysing and packaging that data so that it is more usable by enterprises. Telefónica says the GfK agreement will initially cover Germany, the UK and Brazil. Financial terms of that deal are not disclosed.

Telefónica is betting that its access to raw data could prove to be a viable business in its own right, as long as it’s used in a way that doesn’t violate consumer privacy. “Big data is one of the key building blocks of the digital economy. Approached in a smart and responsible way it has the potential to transform every part of business and society,” said Stephen Shurrock, Chief Commercial Officer at Telefónica Digital, in a statement.