North American mobile operators need to transform their networks and business models in the next three years or they may risk becoming unprofitable, according to a study conducted by Tellabs using data from Tellabs and Analysys Mason.
Specifically, the report found that the dramatic growth in mobile data traffic is putting increased pressure on mobile networks. Currently, operators are meeting that demand by adding capacity, which the Tellabs study said is not sustainable for the long term. All operators face this dilemma, but North American operators are at more risk because of higher network access costs.
The report predicts that North American operators have a high likelihood of reaching the end of their profitability by 2013. Asia Pacific carriers in developed countries likely will follow North American operators and reach the end of profitability by late 2013 or 2014; Western European operators will reach that point by late 2014 or 2015. "Operators need to do things differently to stay ahead of the revenue cost curve," said Stuart Benington, director of global portfolio planning at Tellabs.
To maintain their profitability, the report said operators need to control their costs and build more intelligence into the network. While new network technologies do help reduce the cost-per-gigabyte operating expense, the report said they aren't enough to turn the trend around.
Benington said that reducing the revenue per bit for North American operators is particularly challenging because they spend so much on backhaul costs. However, he said operators can solve this dilemma by getting a better view of their network through analytics and using those analytics to figure out the best way to engineer their network traffic. Once they figure that out they can then monetize that traffic.
For example, he said that, through modeling, operators can learn whether users are surfing the Web, viewing video or using peer-to-peer communications. Depending on what they learn, they can then determine what to charge for those services.
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