Telecom firms risk losing a key revenue stream to rivals like Google by leaving valuable customer client data largely untapped and hesitating to invest extra cash to leverage customer information.

Tapping into the mountain of information generated by people's data usage is a potential gold mine as operators can delve into the intimacies of customers' lives -- which websites they view, where they shop, their social and political views.

That kind of data, which is exploding following the launch of advanced phones from the likes of Apple and Google, could be monetized and used for anything from personalized advertising and credit and health checks to background screening for job applications or health monitoring.

But operators hesitate to use the data, fearful that they will be accused of violating sacrosanct client privacy.

Operators are sitting on a whole lot of info about age, gender, spending ... and operators have the most data but they are afraid to let it out and that leaves the space for others, said Julien Theys, analyst a research firm Screendigest.

The potential for monetizing customer data usage is hard to pin down, but analysts estimate a market valued in the double-digit billions.

Companies such as Oracle, Canada's Angoss, Tibco, IBM or AsiaInfo Holdings stand to benefit thanks to data mining and analyzing services they provide if operators overcome their concerns and realize they can use the information to their advantage.

While telecom operators have plenty of experience with data mining, monitoring calling behavior to adjust offers, predict and reduce churn as well as detect fraud and network faults, privacy concerns are not unfounded.

While online retailer Amazon has been successful with its customers who bought this also bought recommendations, Facebook has repeatedly come under fire for its privacy settings on misgivings over data mining and access to members' personal information by third parties.

What users are afraid of is that on the most personal of all devices, the mobile phone, they will be flooded by spam ... what they want is control, said Thorsten Dirks, head of KPN's German unit E-Plus.

In addition to the privacy concerns, there is also the issue of underinvestment in analyzing the data.

How do customers use data, when and what for? Telcos have the information in their database but have not analyzed it, this requires investments in platforms, software to analyze it, said Chetan Sharma of Chetan Sharma Consulting.


Swisscom is one operator working on monetizing mobile data usage beyond offering flat rates. Swisscom Chief Executive Carsten Schloter said his firm is focusing on ensuring information access from any device.

So you're on vacation and your movie library is at home on your server. If all your data is stored on the web with us, you can access your movies, pictures anywhere, Schloter said.

Is that being a bit pipe? No. Is that being an entertainment company? No, but it offers more value, he said.

But having provided customers with unlimited usage when mobile data traffic was just kicking off, operators are finding it difficult to raise prices or start usage-based charging.

The trick is to charge for services that offer more than just basic connectivity, such as Internet calling or video streaming, or charging different fees for high traffic times.

They need to get the right tariffs for special needs, i.e. how and when do they (people) use data, but (operators) are not going deep enough in customer analysis, said Michael Fritsch of Oliver Wyman Consultants.

Many analysts like to point to airlines such as Ryanair for managing and creating user demand -- the price for seat bookings depends on time of booking, leading to higher prices as the plane gets fuller or lower prices during times with low demand.

Others recommend teaming up with mobile advertisers or e-sellers, pointing to successful services of Turkcell and Japan's NTT Docomo.

Telco operators have infrastructure, platforms for example that can be used for commercial services such as e-commerce ... they should be the shopping mall but not the individual retailer, said Fritsch.

Bengt Nordstrom, chief executive of Swedish consultancy Northstream, said it will only be a matter of time before telecom operators tap into their data goldmine, but they may not get enough of the pie with rivals surging ahead.

Most of the telecom operators we talk to already are in the planning phase, he said. Apple really changed the industry. Google's launch of its own smart phone will only speed up developments.

(Editing by Tarmo Virki and Sitaraman Shankar)