Making Use of Big Data

A lady pregnant with twins gets a call from the local supermarket for a 50% offer on baby items on Thursday between 10 o’clock in the morning to midday. On arriving at the supermarket, she is lead to a section where all the baby items suited for twins were arranged carefully. She has an easy time piking the necessary items and heads to the till. As she walked out, she asks “How did you know I was going to give birth to twins?” The manager informs her there they had noticed her shopping trends; she would buy baby items in twos in all the supermarkets of the chain. May be your favourite supermarket might do this for you soon. This in essence is known as customer profiling from Big Data analysis. 

Citing an example closer home, M-Shwari uses a credit score algorithm based on your credit history as well as usage of M-PESA and other Safaricom products, to determine your loan eligibility and maximum loan amount. In Tanzania, Vodacom Tanzania has partnered with a New York based company, First Access, to enhance financial inclusion. First Access is a data analytics company that can predict risk for consumers who have never had a bank account or a credit score, using their prepaid mobile data. First Access offers the first instant risk-scoring tool for financial institutions serving low-income customers. Scores are authorized by subscribers in real time via text message through an approval system that First Access has pioneered The scores are based on demographic, geographic, financial and social network data from subscriber mobile records. Delivered in real time to any participating financial institution, they include a recommended loan size in the local currency and eligibility for instant disbursal.

In some cases, these analytics can be used to prevent calamities. During the recent Ebola outbreak in West Africa, Orange Telecom in Senegal handed over anonymised voice and text data from 150,000 mobile phones to Flowminder, a Swedish non-profit organisation, which was then able to draw up detailed maps of typical population movements in the region. Authorities could then see where the best places were to set up treatment centres, and more controversially, the most effective ways to restrict travel in an attempt to contain the disease. In developed countries, Port, train and flight data, and number plate recognition, can all help track potentially infected people and identify who they may have come into contact with an infected person.

To most of us, Big data is an all-encompassing term for any collection of data sets so large and complex that it becomes difficult to process using traditional data processing applications. Every day, we leave traces of data on social media, telephone calls, bank transactions, mobile money transactions, hospital visits, credit card transactions, supermarket tills, fast food restaurants, online trading and many more. The sheer size of data generated on a daily basis is amazing. Both Google and Ebay generate approximately 100 petabyte, each to 100,000 Terabytes, of data per day. This is in comparison to Facebook at 600 Terabytes and Twitter at 100 Terabytes per day. The presents challenges such as analysis, capture, curation, search, sharing, storage, transfer, visualization, and privacy violations. 

In today's environment of data abundance and frequent data overload, the ability to discover unique insight enables organizations to improve decision making, resulting in the ability to take advantage of opportunities, minimize risks, and control costs using Big Data analytics. Big data analytics is about asking new questions, formulating new hypotheses, improve customer experience, exploration and discovery, and making data-driven decisions. Big data analytics is about bringing together many different data sources and mining them to find patterns. The first task is to break down data silos to access all data an organization stores in different places and often in different systems. A second task is to create platforms that can pull in unstructured data as easily as structured data. Specialized software tools and applications are then used for predictive analytics, data mining, text mining, forecasting, and data optimization.

International Airtime Remittance

During the East Africa Com Conference at Safari Park on 9^th and 10^th September, one thing caught my eye- International Airtime Remittance. The statistics involved are just mind boggling. For instance, in general, there are over 200 million foreigners in diaspora sending approximately 400 billion dollars to their home countries in cash. According to the Central Bank of Kenya, Kenyans remitted around 1.29 billion dollars in 2013 alone, which translates to 114 billion Kenya Shillings in cash. However, sending cash has hitherto been expensive. An alternative to remitting cash is to remit mobile air time instead. Mobile airtime is considered an electronic product, rather than cash, by most regulatory authorities, and is therefore easy to manage. Many people in diaspora now choose to use air time remittance as a gift for friends and family in their home country; a little bonus on top of a weekly cash remittances, or something to encourage the family member to phone. It is cheaper and allows them to send money is small denominations.  

A study by Juniper Research indicated that international transfers made via mobile phone top up exceeded $10 billion in 2013. In the developing world, there are 2.7 billion people who do not have a bank account. At this same time, there are 1 billion people who have cell phones in these areas. The overlap of these numbers is substantial. In Kenya, mobile penetration is at 78% while the banking is at 40% of the population. Many people without bank accounts have cell service. For those in developing countries, buying airtime for them could really make a difference. By having someone complete an airtime purchase on their behalf, individuals with a cell phone and no bank account can continue to stay in touch. This has propelled the growth of International airtime remittance.

How does it work? International Airtime Remittance can be implemented using a number of channels available to users, including web portals, SMS, USSD, Mobile Web Apps and Android Apps that can be fully customized. The solution requires a trans-global entity, providing a platform to integrate with mobile operator top up systems in different countries. The International Top-up Operator purchases airtime from international mobile operators at a wholesale or discounted rate. By offering international top up, retail channels can enable their customers to conveniently purchase airtime and send. Retail distribution channels purchase airtime from the international top-up operator, and sell airtime to customers for a service fee added to the top-up amount at the time of sale. 

The future of International remittances is bright, with operators looking to offer consumers ability to seamlessly send value across virtually any border to any recipient without traditional intermediaries. For instance, paying electricity bills, dental bills, or school tuition with the same ease as sending of airtime from a prepaid mobile phone. Over the last few years, Kenya Power and Lighting Company has been rolling out prepaid meters for urban households and has installed approximately 400,000 meters. Instead of the postpaid meter, you’ve got a prepaid meter and as soon as there is no money left in the meter, the light goes out. Once this happens, the consumer buys prepaid tokens to resume the service. What if a relative living in the diaspora to top up your prepaid electricity meter to ensure that your lights never go off?

Another example of a prepaid utility service is the M-Kopa Solar. The solar lighting system offers clean lighting solutions to millions of homes that are not on the electricity grid. M-Kopa provides pay as-you-go solar home solution and comes with two LED solar lights and one solar rechargeable LED torch, and a larger 8W panel that gives 60 percent more charging capacity. Following the removal of VAT on solar-powered devices, M-KOPA Solar charges an initial deposit of KES 2,999 followed by 365 daily payments of KES 40. The growth of this service has been tremendous. M-Kopa is currently connecting 2,000 homes to solar every week, with a customer base of around 90,000 and targeting 1 Million customers in the next four years. Most of the M-Kopa customers are in the rural areas, some have relatives in the diaspora. Considering it only costs $0.40 per month to use the solar solution, most people in the diaspora would be more than happy to support their families back at home. There are many existing and upcoming pre-paid utilities that may use International remittances in the near future.

Advent of MVNO

During my short stay in Germany in 2006, I used a mobile service provider that did not own any infrastructure. By then, I only understood the company as a reseller of O2, later I came to understand that it was a mobile virtual network operator (MVNO). The first MVNO was created by Tele2 in Denmark, and subsequently rolled out in several European markets. This model formed the basis between the cooperation between Tele2 and Telia in Sweden. However, the first commercially successful MVNO was Virgin Mobile UK, which was launched in 1999. The success of Virgin Mobile UK was replicated by the United States licensee of the Virgin Mobile brand. Initially an independent company, Virgin Mobile USA was eventually acquired by its host mobile network operator, Sprint Nextel.

As of October 2012 there were 634 active MVNO operations worldwide, which in turn are operated by 503 companies. In April this year, the Communications Authority of Kenya (CAK) recently issued MVNO licenses to Finserve Africa Limited, a subsidiary of Equity Bank, Zioncell Kenya Limited and Tangaza’s Mobile Pay Limited, with the three companies entering into an agreement to use Airtel’s infrastructure. In hot pursuit of the same is Kenya Airways, having signed a Memorandum of Understanding (MoU) with Airtel to deliver an MVNO service for the airline, subject to regulatory approvals.

An MVNO is a cell phone carrier that typically does not have its own network infrastructure and licensed radio spectrum. An MVNO pays wholesale fees for minutes and SMSs and then sells them at retail prices under its own brand. The advent of MVNO in most countries is as a result of the regulation authority’s intent to compel mobile service providers to offer wholesale access to their network to encourage competition whose aim is to benefit the consumers. As the number of MVNOs increase, the consumer will have a variety of pricing models and value propositions to choose from. The main advantage of MVNOs is that they do not incur capital expenditure on spectrum and infrastructure and does not have the time-consuming task of building out extensive radio infrastructure. These factors make them fiercely competitive and innovative leading to new products and services in the market.

There are some disadvantages to MVNOs. Since they do not control the network infrastructure, the response time to technical challenges is hampered and may lead to instances of customer dissatisfaction. Some MVNOs do not allow roaming, due to lack of commercial agreements with providers in other countries. From the perspective of the mobile network operators, MVNOs cause a cannibalizing effect by targeting the same retail market as them. In some cases, it may lead to a shift of same consumers from the mobile network operator to the MVNO considering it’s essentially the same service rendered.  It is essential for the regulatory authority to consider the merits and demerits of MVNOs as the authority issues licenses. In developed markets MVNOs can avoid cannibalizing a host operator’s subscriber base by targeting low-end segments the MNO might find too costly to tap.

MVNO market in Africa is in its infancy with only a few countries having taken up the concept. South Africa is the leading with several operating and upcoming MVNOs; Virgin Mobile, Redbull Mobile, Econet, Hello Mobile, 8.da and Appchat. In Cameroon there is SET Mobile and SMS Mobility, in Senegal there is Sonatel and Toubatel, Morocco has Poste Maroc, Madagascar has Blueline and Tanzania has Zantel. Virgin’s subscription numbers are closing in on half a million, which probably makes it the biggest MVNO on the continent, although such figures only put it fifth in South Africa and barely noticeable behind the 60 million total of the big three. One of the biggest challenges is how to position an MVNO in a low-income market. Stability of retail pricing will be a key driver as to whether MVNOs can be sustainable in low ARPU markets.

MVNOs have to be innovative. Working with one host network operator across multiple countries sounds ideal; it could mean the same technology platform, contractual agreements and volume discounts on wholesale rates. This is the model Kenya Airways has adopted with Airtel leveraging on the provider Pan African coverage in 17 African countries. In some countries, MVNOs use a mobile virtual network aggregator (MVNA). MVNAs would normally establish scale of their own by working with a number of MVNOs. So far there hasn’t been sufficient activity in Africa to attract aggregators–MVNAs–which enable MVNOs to launch at a lower cost of entry and often greatly facilitate the set-up process. The single enabler–MVNE–model through which operators can cost-effectively host specific strategic MVNOs is more likely in the near term. Some MVNOs have taken advantage of popular established brands during market entry; Cell C’s sub-brand Red Bull has the obvious youth appeal of a ‘cool’ drinks brand. Set’Mobile, on the other hand, which came to market in Cameroon, borrowed the name of the country’s world-famous footballer Samuel Eto’o.