Mobile network operators need new approaches to make data profitable

MELBOURNE, AUSTRALIA: Mobile network operators (MNOs) need to develop a smarter approach to managing their network and charging for data usage to allow them to drive profits, manage costs and secure customer loyalty, according to Ovum.

In a new report, the independent telecoms analyst finds that MNOs need to use customer data held in the business support system with network policy management and control, if they are to manage soaring traffic loads, drive profits, personalise the customer experience and increase their agility and response times.

Clare McCarthy, Ovum principal analyst and author of the report, said: “The phenomenal growth in 3G-enabled devices and smartphones has seen mobile broadband data volumes soar, and penetration is only set to increase. This is putting intense pressure on limited network capacity and spectrum, and profits are not keeping pace with traffic volumes.”

“By expanding policy management and controls, operators can develop smarter charging plans that will provide them with a sustainable revenue stream, improved customer service and the ability to shape traffic on their mobile broadband networks.”

According to forecasts by Ovum, mobile broadband users are set to grow at a CAGR of 28 percent over five years to 2015, globally. While growth will continue to be robust in the developed markets of Western Europe and North America, the strongest growth is forecast to occur in the emerging markets of Asia-Pacific and the Middle East & Africa, with CAGRs in these regions exceeding 35 percent. In Asia-Pacific alone, Ovum forecasts that mobile broadband connections will rise from 332.9 million in 2010 to 1.5 billion by end-2015.

3G dongles and smartphones will drive demand for broadband data applications, while smartphone and tablet users will increasingly use their devices for video services.

McCarthy continued: “Some MNOs have already adopted plans with options such as discounted evening and weekend use or monthly data caps. However, this approach doesn’t go far enough and only addresses one part of the equation. It doesn’t maximise revenue potential with high-value customers.”

“Segmented data plans are one way of increasing revenues, and they can also help deliver a better customer experience. For example, an enterprise is more likely than a family to pay for guaranteed bandwidth, priority service availability and predefined access controls,” added McCarthy.

MNOs can also encourage spend in the consumer sector by promoting ‘bite size’ access to specific applications, which can work well in emerging markets. If an MNO offers access to social networking services during a defined period at a lower cost, it can make its service more affordable and attractive to users, move traffic to off-peak periods and increase quality of service and customer experience across its operation.

In Asia-Pacific’s emerging markets, new innovative mobile broadband billing schemes are emerging where operators charge for social networking services, including Facebook. For example, Philippines operator Globe Telecom charges a daily rate for unlimited Facebook access for big-screen mobile broadband users.

"This is a simple, but effective way, to extract additional ARPU from a customer," said Nicole McCormick, Brisbane-based senior analyst for Ovum, said. "The problem however for MNOs with mobile social networking services is the extent to which they may cannibalize texting revenue."