Telcos find themselves standing on the brink of dominating a highly lucrative new vertical: digital identity. And the timing could not be better, for everyone.
Right across the world, telcos have found that their heritage business – voice and data – is no longer delivering the required returns. Take data as an example. Despite hundredfold growth in data volumes, revenues have stagnated – largely due to an overabundance of supply. It was the telcos’ investment in technology and growth that created the digital infrastructure, but telcos have largely had to look on as Over The Top (OTT) service providers leverage their networks to deliver lucrative digital services.
COVID-19 has exacerbated the challenges facing telcos. Thanks to the pandemic, the industry experienced a US $43 billion fall in 2020 compared to 2019. For many telcos, gains in network demand to support home working and entertainment were offset by losses in roaming, pre-paid, and voice. It’s been forecast that it will take up to 2023 for the industry to return to pre-COVID levels. The digital identity vertical will help realise faster growth.
Opportunities in identity
Even before the pandemic, telcos were making strides into digital identity. The potential market for telco verified IDs is significant. One analyst house has forecast that the mobile ID market will grow over 800% 2019-2024 and will generate over $7 billion for mobile operators in 2024. Already, innovative telcos have brought several identity services to market for brands. Identifiers including Mobile ID, Mobile Connect and Verimi have been launched to help brands authenticate the identity of online shoppers to help reduce fraud.
Today, the identity market is heating up. Through 2019 to today a fire has starting to take hold of the digital marketing industry, with the loss of the identifiers, cookies and Mobile Advertising IDs that underpinned the programmatic revolution of personalised marketing. All attempts at finding a scalable alternative have fallen short.
Emerging from the pandemic, telcos are now set to take back their position at the heart of the digital economy. Telcos bring to bear three fundamentals for effective identity:
- Scale often offering 40%+ reach into a single geography from a single telco.
- Security, as one of the most highly regulated and privacy-compliant industries.
- Connectivity, through an entire network across mobile, fixed line and broadband that sit above the OTT players.
Telcos have built their reach meeting subscriber needs in connectivity and security, but digital identity is their new battleground.
Telco IDs in action
The telco verified ID is a privacy first approach that rules out the ability for middle players to take advantage of exported identifiers. The process flows like this:
- Consent. Every time a person visits a website or app they are asked to consent for their network provider to verify their identity, in much the same way we are asked to consent to cookie use today. That puts frequent and transparent control in the hands of the web user.
- Verification. For the sole purpose that the consent was given, the brand’s website or app requests an ID from the telco. The telco does not export any Personally Identifiable Information (PII). Instead, it sends an obfuscated ID assigned to this one user on this single visit. Each time the subscriber returns – even cross device – if they consent, the same request to the telco is made and the telco returns confirmation it is the same ID.
Throughout this process there are three important principles. First, the identity is owned by the telco, representing their subscriber. Second, the ID cannot be exported to third parties or sold on. Third, if the subscriber opts out, it is instant as no PII data was ever in the ecosystem.
From the brand’s perspective the benefits are clear: they can use the ID to build measurement and analytics and deliver services to retuning customers without log-ins. What’s more, telcos can enable brands to personalise content. Brand can request a specific audience segment, which the telco can provide through a transient, obfuscated ID that they alone match against returning consented subscribers to third party websites and apps. In short, telco ID services allow brands to continue to enjoy the bounties of programmatic marketing without putting PII at risk.
Secure first mover advantage
We are experiencing a timely coming together of a pressing need with an ideal solution. It is the convergence of brands’ need for accuracy and scale, subscribers’ need for control and transparency and the telcos’ need to expand into fertile verticals. For this reason alone, telco-verified IDs should be right at the top of telcos plans to branch out to new business models. At last, the industry has a clear path towards what they have so long desired: an unambiguous and unique role in the digital world. Telcos that get their verification services to market soonest stand to gain the most.