Data-based business models for transport, retail and the Internet of Things

First anniversary of Telefónica NEXT

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A year ago, Telefónica Deutschland founded its subsidiary for data-based business models: Telefónica NEXT. Plenty has happened since then: The corporate start-up has now conducted data analyses for transport planning in five German cities, it is strengthening bricks-and-mortar retail and thus German city centres with its analytical expertise, and it has made the alpha version of its “Geeny” IoT platform for end-user applications available to developers and companies. We take a look back. The Berlin-based company works on advancing innovations beyond Telefónica Deutschland’s core business. With “Advanced Data Analytics”, Telefónica NEXT is eyeing the social and economic advantage that can be obtained from analysing large volumes of data. The company is also developing the IoT software platform “Geeny”, which helps other companies launch smart products for end users quickly. In doing so, Telefónica NEXT combines the strengths of Telefónica Deutschland with the agility of a start-up and operates independently on the market. “Many people have now realised that data are valuable. Telefónica NEXT makes this value tangible. Based on analyses of anonymised data, we gain valuable insights for different areas of society that ultimately benefit everyone,” says Nicolaus Gollwitzer, CEO of Telefónica NEXT, and goes on to explain: “With our expertise in the fields of data analytics and the Internet of Things, we create new solutions for transport planning, retail, advertisers and consumer goods manufacturers that want to make their products smart.”

Big data provides new insights for transport planning

Whether by bus or by bicycle, Telefónica NEXT calculates movements in mobile network cell sites using anonymised mobile network data from Telefónica Germany’s network
Around five billion data points are generated each day in the Telefónica Deutschland network when mobile phones communicate with mobile cell sites. These can be used to calculate anonymised movement flows for the German population. Analysing mobile network data can contribute to transport planning and better air quality – this has been demonstrated by Telefónica NEXT with renowned cooperation partners in a total of five German cities. The data represent a valuable addition to existing measurement methods, which are often less accurate, more time-consuming or more expensive. In November 2016, Telefónica NEXT worked with the lift-sharing app flinc to examine the potential of flexible shuttle systems based on anonymised mobile network data in Hamburg. In February 2017, a study conducted with the Fraunhofer Institute for Industrial Engineering (IAO) in Stuttgart demonstrated for the first time that mobile network data can be used to draw conclusions about transport. In Nuremberg, Telefónica NEXT and its cooperative partners tested a new method in April 2017 that enables pollutants in the air to be analysed on the basis of anonymised mobile network data. Together with the transport consultancy Intraplan, Telefónica NEXT has since August 2017 been offering one of the most detailed data platforms and analyses for transport planning in Munich. In the same month, the three-year project “ProTrain” was launched in Berlin. Together with seven other partners, Telefónica NEXT is optimising local public transport in Berlin and Brandenburg. Based on the findings of the projects in the first year, Telefónica NEXT will further refine its analysis methods. “We will find partners with whom we can jointly tackle extensive and complex challenges, for example for cities, transport associations, transport companies and the automotive industry,” says Jens Lappoehn, Managing Director of Advanced Data Analytics at Telefónica NEXT.

Strengthening city centres with data analyses

Thanks to digitalisation, customers are ordering more and more goods easily and conveniently online. Bricks-and-mortar retail is currently losing out and struggling with declining revenues. “With our services, we provide bricks-and-mortar retailers and brands with a data-based decision-making tool for understanding their target groups more accurately and addressing them with more relevant messages. This particularly strengthens city centres if local businesses are better able to contend with online competitors,” explains Jens Lappoehn. For example, Telefónica NEXT calculates anonymised visitor flows in the catchment area of businesses. In May 2017, Telefónica NEXT purchased the start-up MiNODES and thereby expanded its analysis options for bricks-and-mortar retail with in-store analyses. This technology has also been used in selected O2 shops since October 2017. Based on the analysis, advertisers and retailers can use data to target their customers in places where corresponding offers are relevant to them – for example, close to businesses. With the free service O2 More Local, clients give O2 their permission to use their data, such as location, age and sex, to send them local offers by SMS or MMS. The number of subscribers to O2 More Local has risen to around four million in 2017, underscoring the popularity of this form of mobile advertising. For the second year, Telefónica NEXT plans to further develop in-store and out-of-store analyses and to address other customer groups such as airports and museums. “Everywhere where people are moving, they have different needs depending on their situation. Our solution help understand these needs and respond to them better,” says Jens Lappoehn.

Innovations in data protection, too

The basis for the data analyses is the specially developed “Data Anonymisation Platform” (DAP), which is what makes data-protection-compliant analysis of the data possible in the first place. The development of the procedure was monitored by the federal Data Protection Commissioner and certified by TÜV. In the context of the EU data protection directive, the effective anonymisation of large quantities of data is now increasingly of interest to other companies, too. Telefónica NEXT will therefore also offer the anonymisation process as a service for other companies in the future to enable them to anonymise their own data effectively.

Unleashing the Internet of Things for end consumers

In its first year, Telefónica NEXT also moved forward with the topic of the Internet of Things. In contrast to other platforms, the IoT software platform “Geeny” focuses on applications for end users. “With Geeny, we enable companies to launch their own IoT products for end customers quickly and cost-efficiently,” sums up the Managing Director of the unit, Moritz Diekmann. In doing so, Geeny distinguishes devices from applications and data. At the moment, these aspects are usually inextricably combined. For example, users cannot use fitness tracker data for apps from other manufacturers. Geeny aims to break down this connection between manufacturers, data and devices so that end users can use new applications and companies have broad market access with smart products. “Many developers and interested companies are already working with the alpha version of Geeny now, such as manufacturers of smart home products,” says Moritz Diekmann. In the next step, end consumers will also be able to use the platform.

Debate about effects of digitalisation

Telefónica NEXT not only develops data-based business models, but also engages in the public debate about the risks and opportunities of digitalisation and data analytics. The managing directors regularly appear as guests and speakers at the Telefónica BASECAMP and at events such as the DLD Conference.