Artificial Intelligence Will Boost Virtualized Network and Business Processes

As it would have been unwise to ignore the impact of computing and the Internet on the legacy telecommunications business, so too should artificial intelligence likewise be taken seriously, both as an enabler of productivity gains, but also as a development that has serious social, economic, social and political implications.

In one sense, virtualizing networks is a trend that AI could reinforce. So too, “big data” analytics will be enhanced by use of AI, allowing virtualized networks and processes to work better, and faster.

And it is hard to imagine that AI will not also lead to changes in sales and marketing practices. If AI can be used to predict usage and therefore demand, AI also can help organizations adjust demand “on the fly.”

But AI also will reduce the number of jobs required to run any telecom business, as AI is expected to reduce demand in other industries.

Graduate recruitment at auditors and accountants could fall by as much as 50 percent by 2020 due to the impact of artificial intelligence, according to Steve Varley, EY chairman and managing partner for the UK and Ireland. “Over time our graduate needs are coming down."

source: World Economic Forum

The World Economic Forum estimates that AI, robotics, and automation could replace five million jobs around the world by 2020.

Citi estimated that 35 percent of jobs in the UK are at risk of being replaced by automation,

Likewise, the Organization for Economic Cooperation and Development has estimated that 47 percent of U.S. jobs are at risk, and across the OECD as a whole an average of 57 percent of jobs are at risk. In China, the risk of automation is as high as 77 percent.

AI will help. It also will “harm,” in the area of employment. The issue is whether, on a net basis, more jobs are gained than are lost.

Customer Satisfaction Might be Important, It Just Is Not Predictive of Behavior

Most firms consider “customer satisfaction” an important business outcome, the belief being that satisfied customers are repeat buyers; “loyal” customers less likely to desert a firm for a rival. In other words, happy customers are supposed to be loyal customers.

source: B2B International

But even repeat buyers are not necessarily “loyal” in the sense that they are relatively immune from churn.

However logical that thought might be, the evidence suggests that even satisfied customers are not loyal customers.

source: Fiserv

For example, Juniper Research has found that 98 percent of surveyed U.K. mobile banking users are “very happy” or “quite happy” with their service.

But the survey also found that 31 percent of mobile banking users would consider changing banks if they had a bad experience with their service.

In the U.S. market, where respondents have similar levels of satisfaction with mobile banking, about 16 percent of those surveyed would consider leaving their current bank if the experience was unsettling.

In other words, customer churn, in the consumer services realm, is a problem even when customers say they are highly-satisfied with a service.

That is not to argue that customer satisfaction scores are unimportant: they might be generally significant. Virtually non-existent is the company executive that believes customer perceived satisfaction is unimportant.

The issue is simply that consumers who say they are satisfied are not necessarily loyal, in the sense that they are relatively immune to offers from rival firms.

"Featuring" Apps Drives Downloads, Especially for Games, Especially in South Korea

The impact of featuring on downloads was substantially greater for games than for apps outside of games, though being featured help both types of apps, according to an analysis by App Annie.

Featuring had a clear positive impact on app downloads (both game and non-game), with a median effect around four times larger for games.

Featured game downloads improved about 140 percent, for featured apps on iPhones (Apple App Store) between 2013 and 2016, App Annie says. Apps other than games gained perhaps 40 percent during the same time period.

source: App Annie  

The impact of featuring on iPhone downloads appears to be decreasing across the board, though at a much quicker pace for apps outside of games.

The higher rate of decline for apps is likely due to differences in the typical lifecycles of games and apps. Users tend to cycle through apps at a lower rate than games, which translates over time to less instances of users actively browsing for apps, App Annie argues.

Featuring boosted downloads as much as 480 percent in South Korea and as low as 90 percent in the United States.

source: App Annie

The impact of featuring has been declining overall, but at a particularly high rate for apps outside of games, going from a roughly 80 percent expected download boost in the second half of 2013 to less than 25 percent in the second half of 2015.

Does Zero Rating Harm Consumers?

Virtually nobody seems to argue that zero rating of mobile Internet access--for one, a few or a bundle of apps--actually harms consumer welfare in the near term. Instead, opponents cite other concerns related generally to preserving competition in the ecosystem.

Whatever the other concerns might be, it seems clear that zero rating actually provides benefits for low-income Internet access customers, or people who do not routinely use mobile Internet apps and services.

“Zero-rating is also poised to play a key role in helping to close the digital divide by addressing cost concerns and strengthening the value proposition offered to skeptical non-users, two key considerations for the millions of Americans who remain offline,” argues the Multicultural Media, Telecom and Internet Council (MMTC).

source:Disruptive Analysis

One survey found 84 percent of adults would be “extremely/somewhat likely to try a new online service if it is a part of a free data offering,” while 85 percent reported they were “extremely/somewhat likely to use more data if it didn’t count against their monthly data usage.”

That should come as absolutely no surprise.

T-Mobile US, which offers such features as part of its “Binge On” program, found customers watched twice as much content from free streaming sites on plans with limited data. Again, that should not come as a surprise.

But some argue zero rating will have only negligible impact on carrier revenues, one way or the other.

In Asia, Income Inequality Gap Widens, Poverty Declines, Middle Class Grows

source: IMF

Income inequality is rising in China and India, the International Monetary Fund says. 

On the other hand, poverty has dropped since 1990, virtually across the board. 

Also the size of the Asian middle class has grown as well, since 1990, especially in urban areas.

Some might note the tension here, as well as the pattern observed in other economies over time. 

Inequality increases as poverty declines and the middle class grows.

Economists will debate whether, in fact, growth in inequality is an almost necessary evil for an economy that rapidly reduces poverty levels and grows the middle class.

That typically happens when an economy enters a growth phase based on new technology, some would note.

That is a positive underpinning for suppliers of Internet access, but rural gaps illustrate why it is so important to work hard on increasing Internet access in rural areas, where the middle class has not grown nearly as fast as in the urban areas.

As you might guess, there is a correlation between educational attainment levels and income.

The percentage of people with less than four years of schooling is much higher for the poorest quintile than for the richest quintile. This is particularly true in Bhutan, Cambodia, India, and Nepal, among other countries.

source: IMF

Likewise, access to financial services varies with income.  The share of adults with a bank account is much higher in the top 60 percent of the income distribution than in the bottom 40 percent. This is true in a number of Asian economies, including India, Indonesia, Vietnam, and the Philippines.

Much the same pattern exists in access to health care.

Don't Let Any "Good" Be the Enemy of the "Greatest Good"

source: Rype

The Pareto distribution can be seen in one’s personal or business life, in business strategy or business performance. The fundamental principle is that effort and outcomes are non-linear. A small number of inputs or instances drive most of the outputs or results.

The practical implication for communications or app providers is that a relatively small number of decisions and priorities actually matter, where it comes to making a transition from legacy to next generation business models.

The corollary is that there are a many “good” or “useful” or “helpful” things any service or app provider can do, but which should not be done, to concentrate on the few areas where breakthroughs are possible.

In other words, the temptation to “do” any number of helpful things actually can be detrimental to strategic success, which requires intense concentration on a relative handful of decisions, investments and effort.

There are always lots of useful or helpful things a company might do, to support its business. Many of those things actually will deliver a measurable result. But most will fail to help a company make a strategic breakthrough.

So saying “no” to most of those helpful things can be a prerequisite for focusing effort on a few matters that can decisively change a company’s future.

The areas in which Pareto applies are rather large. The Pareto theorem is the underlying principle of the “long tail” approach to freemium pricing, for example, where basic versions of a product are free, and users then pay incrementally more for additional features.

The Pareto rule can guide resource allocation, the principle being that there is some allocation or resources that makes a person or an organization better off, while not harming existing persons or the organization itself.

The principle is popularly understand as the 80/20 rule, which stipulates that about 20 percent of effort produces 80 percent of results.

The Gini coefficient essentially follows Pareto distribution patterns as well, and describes national income inequality patterns as well.

In the United States, the number of homes without a broadband connection follows a Pareto distribution.

It illustrates the law of diminishing returns. The cost of building access loops generally follow Pareto rules, for example. The inverse of the Pareto distribution is that a small number of instances produce most of the “per-line” access cost.

In other words, a small number of remote locations represent a disproportionate share of network cost, based on cost per mile.

source: National Broadband Plan

source: National Broadband Plan

17% of Accounts Drive 60% of India Mobile Operator Revenues

Customers spending more than Rs 300 per month will account for 60 percent of India mobile industry revenues, said CLSA.

In other words, 165 million customers drive 60 percent of total industry revenues. 

If there are now about a billion total Indian mobile accounts active, then 17 percent of accounts drive 60 percent of revenue, a classic demonstration of the Pareto distribution, often called the “80/20 rule,” where a disproportionate amount of results is driven by a relatively small number of instances.

source: Trak

source: CLSA