Elitecore Technologies chief operating officer, Nikhil Jain, explains how telcos can bridge the gap between falling revenue and rising data demand.
TelecomsEMEA.net: Why do telcos need do to things differently to create viable new revenue streams?
Nikhil Jain: Because they are experiencing a revenue crunch across traditional solutions like voice, SMS and VAS, which are not sufficient in generating incremental ARPU.
On the other hand, demand for mobile data is increasing due to rising penetration of smart devices and high-speed networks. This creates new opportunities for revenue growth, but even here telcos are not seeing sufficient ARPU pick-up on their huge investments.
Even as global mobile data traffic in FY11-12 went up by 2.6 times, operators actually saw their revenues per MB fall by 46%. What this means is that even as data usage is increasing exponentially, most users continue to pay around what they did a year ago for these services.
The smart monetization approach is to move away from unlimited, flat-rate data plans and focus on:
- Creating new revenue models, capturing new customers, and increasing subscriber stickiness through innovative loyalty programs.
- Minimizing costs by using solutions like PCRF to control traffic according to business demands, service type and real-time customer requirements. Additionally, operators may go for solutions like Wi-Fi offload to shift high data traffic from expensive 3G networks to cost-effective Wi-Fi networks.
- Keeping your customers happy by giving them a compelling experience and service quality through greater personalization, simple pricing, greater transparency and visibility.
How can operators open up their distribution networks to third parties?
As discussed, operators are confronted with a gap between the revenue generated and the increasing cost of the traffic. This challenge must be resolved to capitalize on the mobile data opportunity and make it more profitable.
One way to do it is by seizing partnership opportunities. That can be done by opening up your network to third parties – content and application providers - which depend on telco networks to drive their own revenue growth. It’s a win-win for both parties. Operators may give connectivity to partners via their cloud infrastructure.
With these capabilities in place, operators can enter promising new markets, including M2M, cloud services and targeted advertising. For example, mobile content and service owners get to utilize the operator’s content delivery networks (CDNs) for delivery of locally cached premium content to multiple consumers. These consumers, in turn, will pay the mobile operator for premium, personal multimedia services on multiple screens.
How important is it for them to be able to support a two-sided business model?
With the recent boom in mobile broadband, supporting a business similar to the Telco 2.0 model has become a driving force for operators to survive the fierce market competition. This two sided model essentially supports upstream capabilities as well as enhancing downstream relationships, thus, providing a single platform for operators to generate revenues, offer service differentiation and reduce subscriber churn.
The real benefit of using the two-sided model as a differentiation approach is that it enables operators to move away from the reactive approach of limiting heavy users, instead taking a more proactive, marketing-led approach to service differentiation in which high usage is turned into a revenue opportunity.
The new paradigm we propose here is what is known as the Telco 2.0 monetization strategy in which operators focus on building B2B capabilities to support third parties that wish to interact with the telco user base
There's a lot of talk about 3G/Wi-Fi offload, why is this important for customers and mobile operators?
Due to rising smartphone usage, mobile data services are growing at 150% per annum despite spectrum growth of only 6% in the best locations, making it expensive to realize the full potential of 3G and 4G services.
Since 60% of mobile data is being consumed indoors, most operators are adding Wi-Fi to their packet core strategy – it’s free spectrum and operators greatly reduce their capex on 3G/4G services. The Wi-Fi roadmap offers a win-win situation for operators and subscribers, with the former benefiting from low investment due to free spectrum and the latter enjoying a better quality of service (QoS). Users also prefer Wi-Fi networks because these help in offloading some data from their data plan or in providing better user experience.
How can services such as smart roaming plans, parental controls and quote sharing family plans enable telcos to improve the customer experience and boost loyalty?
Along with the increase in the demand for innovative and reliable data offerings, the demand for a versatile solution package is rising. This has led operators to come up with policy-based plans like parental control, roaming based plans and quota sharing family plans.
A secure parental control solution offers parents/guardians a real-time control mechanism to enforce responsible internet usage for children across multiple devices. Many parents may not be technically competent to deal with the available solutions, which can be expensive. This technical burden can be shifted to operators that can manage parental controls for their subscribers at a cost-effective rate due to economies of scale.
Likewise, quota sharing family plans can enable family members to share a common data plan and get a single bill for all the services/members. A shared wallet account is maintained, with the transfer of minutes allowed between group members.
Other offerings like smart roaming plans enable users to avoid bill shock via real-time notification of usage.