Though on the outside the boxes may look different, inside all washing powders are the same. It makes customers think they have a lot more choice than they really do. Increasingly it is the same with telecommunications. A few special additives may lead some customers to pay a premium, but the average customer just wants the basic no-frills product, at the best price. So it comes as no surprise that Vodafone UK, has turned to two of the most straightforward marketing methods long used to sell washing powders and the like. Sales flagging? Cut the price to encourage some new customers. The brand fails to attract a certain share of the market? Put the same product in someone else’s box, with someone else’s brand on it. Neither tactic is new, but it is fascinating that even Vodafone UK is now being forced to use them, and is eroding margins in the process. Read the story here. So the only way to boost those margins will be to squeeze costs and to grab every penny available. Which should make for interesting times for Vodafone UK’s revenue assurance team.
Archive for March, 2007
The results of opinion polls should always be treated with caution. They usually tell you more about the bias of the people paying for the poll than anything else. So it is no surprise that the new UK government quango responsible for promoting online security, “Get Safe Online” has produced some pretty terrifying stats on the level of internet crime in their first survey. See the press release for the GSO Internet Security survey here. The figure that most worried me is the high proportion of internet users who did not hold themselves responsible for keeping their information secure. Whilst 48% agreed that they were primarily responsible for the safety of their online information, a staggering 13% thought the ISPs should be responsible. A further 16% thought it was the responsibility of their bank (do they also blame their banks if they spend their money foolishly or loose it down the back of the sofa?) Given that the poll also claimed that the average internet fraud cost the victim £875, that is a lot of people willing to risk a lot of their money in the hope that somebody else will cover their losses. See the BBC’s write-up of the GSO survey for these and more stats.
So ISPs should beware. Whatever the legal rights and wrongs, ISPs need to have cast iron contract terms and conditions, and support that with clear communications to customers that explain internet fraud is not the fault of the ISP. At £875 a time, they want to take a lot less risks than their customers….
Imagine a future where everybody drives electric cars. Or a future where people both buy electricity from national suppliers and produce their own for domestic use, perhaps using solar panels. One of the biggest problems for energy conservation will be loading, trying to balance the use of electricity with its production, in an effort to minimise the difference between the peak load and the average load. This is crucial for energy conservation because of two reasons. First, power stations are most efficient if their output is continuously being delivered at the designed optimal level of output. This is better than increasing and decreasing output to reflect changes in demand. Second, transmission over distance involves wastage. The better the match between local demand and local supply, the less energy is used just to move electricity around the grid. Of course, the problem of loading is already with us, but increased demand through using electricity for cars, or increasing the variability of demand through erratic home micropower generation, might accentuate that problem further.
One partial solution would involve a change in mindset. Solutions historically have focused on supply-side management techniques, like building lots of small local Combined Heat and Power stations to service local communities, building international connections to transmit between different national grids, or by storing energy through techniques like pumped storage of hydro electricity. In contrast, there is less effort placed on demand-side management, and techniques used to manage demand are relatively crude. These focus on the promotion of energy conservation and applying different charges for consumption depending on the time of day. This in turn promotes relatively crude mechanisms for storing energy locally. For example, heat energy can be stored in order to utilize off-peak electricity supply. Put simply, electricity is used to heat up a large pile of bricks during the middle of night, and the bricks radiate this heat during the day. A timer in each house will click on the supply of electricity at the start of the off-peak time, and click off at the end. This may help balance the load overall, but it is pretty unsophisticated, and arguably not very efficient. Imagine if, instead, a remote computer could chose when each house’s pile of bricks is heated up, with the goal of trying to keep a constant demand by switching on and off the use in each house in order to match demand with supply. Think then of the battery in the electric car, or of a battery connected to the micropower generator in the person’s home. These would simply be more sophisticated stores of energy than the piles of bricks. They could also be used to help balance the load, storing electrical energy during off-peak times, but also contributing electricity during peak times. The car’s battery would be fully charged during the night, ready for the commute to work in the morning. Any excess left in the car battery after the return home at the end of the working day could be run down during the evening to help meet household needs, especially if there is a sudden surge of demand in the house. Balancing the load in such situations would require a lot more co-ordination, meaning a lot more communication between the electricity company’s computers and the ones in the car and in the home.
There is already an elegant solution for communications for demand-side energy management: transmit data between the relevant devices using power line communications. Despite having lots of promise, power line communications have so far failed to evolve into an effective competitor for delivering broadband, and even less so for voice. Problems with power line communications include poor quality because of the inherent noise in using power lines, and interference with radio. But for electricity demand management, power line communications provide a straightforward solution once the infrastructure is installed. All the relevant devices will already be connected by electric power lines – the battery in the car, the home meter, and a computer to manage the regional electricity load – so this mechanism avoids the need to connect a separate communications line to each device. Also, the bandwidth needed for such communication will be small, decreasing the issues with quality and interference. In future, power line communications could enable far more intelligent load management, balancing demand and supply by controlling exactly which household devices receive electricity and when. Better still, it can be used to deliver cost savings in the here and now. Power line communications could be used to eliminate the need for a person to visit the home in order to read the electricity meter. It would also improve billing accuracy by doing away with the need for estimated bills.
Like everything else in life, there is some bad news and some good news for demand-side management. The bad news is that the many politicians who have jumped on the green bandwagon mostly think in terms of old-fashioned solutions to problems. Prefering solutions that focus on the state and central control, most politicians talk in terms of punitive taxes for the perceived “undeserving” use of energy, such as personal travel, especially when this supposedly has to do with carbon emissions. Note that according to the International Energy Agency’s 2006 report, more energy is used globally for electricity than for transport, and that coal, a fuel with only a negligible level of use in modern transport, is a greater source of carbon dioxide emissions than oil. Other favourite solutions for our unimaginative leaders include the building of more nuclear energy power plants and increasing storage capacity to manage load. At the same time, we also see some tinkering with daylight savings time and increasing promotion of the benefits of pumping up tyres on cars, but these initiatives are better at getting cheap publicity for politicians than they are at reducing emissions. So what is the good news? You may have thought what I wrote about demand-side management of electricity using integrated communication is science fiction. Thankfully, it is not. Not only is it science fact, but it is becoming commercial fact too. Forward-looking businesses are already planning for demand-side management of electricity. Take this press release from Manitoba Hydro, explaining their plans for a pilot installation of new automated meters. They will be using Cannon Technologies solutions that incorporate power line communications. Though Manitoba Hydro is starting small, they identify that the benefits will be long-term. At first, the power line communication will enable Manitoba Hydro to remotely read meters and identify outages, but it is also an enabler for management of demand. Intelligent real-time balancing of electricity supply and demand will likely be a key technology for increasing energy efficiency and reducing carbon emissions. The sooner it is implemented in practice, the better.
Here is a brief catch-up on recent revenue assurance sales announcements:
Communications is getting better and better of course. But sloppiness abounds. What kind of signal is given by the failure to deliver messages on time? Vodafone UK’s failure to deliver 11,500 SMS texts in time for a TV show vote is revealing on two levels. First it says that Vodafone UK is happy to lose nearly £6,000 in revenues. Of course, over 80% of that revenue was going to go to other businesses. So will Vodafone be compensating their business partners as well as refunding their customers? It is only because of the unusually high levels of scrutiny currently being given to TV-related premium services that this is a news story. We have little public data on how often this kind of thing happens; annual losses may run high. Second, it says the service provider does not care about whether a text message arrives in 2 minutes or 2 days. Saying the 11,500 texts delayed is a “small proportion” of all the texts sent that night is not very reassuring. These service levels may be good enough for quick, cheap and trivial text messages sent between friends. But standards will have to be a lot better to justify the hype – and cost – of the advanced data-driven services that Vodafone and others sell as the future of mobile. After all, if you look at the financial reports you will see revenues from those advanced services get added to the same total as revenues from SMS.