Mobile Operator revenues diminishing, what to do?

March 9, 2012 at 6:09 pm | Posted in Uncategorized | Leave a comment
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Unfortunately for many mobile Operators, their revenues are shrinking: Classic voice is commoditized, and Text has become a diminished, all-you-can eat charge. Analysis forecasts that mobile revenues in Western Europe will not increase until 2014, Analysis forecasts (see figure, illustrating negative growth rates forecast). The US market is similarly seeing mobile revenues decrease (see figure, illustrating reducing Voice and Test ARPU, with growing Data ARPU). The challenge is to increase data revenues, quickly.

Retail revenues shrinking in EU

Retail revenues declining in U.S.

Q: What to do to boost revenues?
A: Make mobile data services mainstream (“Crossing the Chasm”). Also, enhance the value of existing services, to bring in new customers.

Taking data services mainstream

Mobile broadband data is being used by a fraction of the subscriber base, with a lot of growth available. Subscribers are overwhelmingly buying smartphones, but many do not subscribe to a mobile data plan. AT&T notes that “56 percent of all smartphone subscribers are on tiered data plans” [4Q2011 Earnings summary]. Adoption of mobile broadband is less than 50% of the subscriber base in developed countries. Growth rates for adoption of mobile data are moderate (20% more data subscribers in Europe, YoY growth), undoubtedly owing to the poor economy. Mobile data is on the verge of becoming a mainstream service, and Operators urgently need to make it easy for new users to get on board.

As an example of making data a mainstream service, T-Mobile (US) is doing a great job of making data services affordable. To encourage new users to “Try it, you’ll like it,” they build a little data into every plan. Also, they allow subscribers to use it at affordable rates without committing to a contract–removing hurdles to the use of mobile data, and making it easy for new users to add this service without breaking the piggy bank. Further, you are not penalized if you use more than you planned: “T-Mobile is the only nation-wide network with overage-free mobile broadband plans.” And you can use all of your services FREE over Wi-Fi (“Wi-Fi Calling”), so that if you have Wi-Fi, you have service, anywhere on the planet. Voice, text, video, e-mail … all free over Wi-Fi.

Enhancing the value of existing services

Orange is enhancing their existing voice service with an offering that should bring in new subs: HD Voice. Since Orange is leading the pack with HD Voice, and the service delivers enhanced voice when both parties have an HD-compatible phone, then once someone experiences this service, they will want all of their friends and family to have the service, too … causing them to flock to Orange. If HD Voice were to be made available on the iPhone 5, say, it could create a surge of influential customers that (a) quickly enjoy the service with a large percentage of others, and then (b) evangelize the benefits of the service to others.

Similarly, other Operators are working to add Presence info to your Address Book and communications apps. Imagine how much more efficient you would be in communicating on your mobile device if you knew whether your friend was Available or Busy, or whether they preferred that you contact them via IM/Text/Voice/Video. Several, leading Operators are delivering RCS (Rich Communication Suite) services to the market, and plan to succeed in making your communications easier and more fun. The benefits could be similar to the example of HD Voice, above: bringing in more subscribers to your enhanced offerings of classic, mobile services.

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