With growing data usage on mobiles, network operators must manage the trade-off between quality of service and competitive pricing on the one hand and building profitable, always-on networks on the other, writes Timothy Sherwood
With consumers demanding access to more content than ever before, anywhere and anytime, the mobile broadband market has a potential for unprecedented growth.
According to Gartner, mobile device sales in India are forecast to reach 251 million units in 2013, an increase of 13.5% over sales of 221 million units in 2012. This makes for interesting analysis when coupled with the fact that 79% of India’s population uses mobile phones and that 59% of them have accessed the web only via their mobile handsets. India has around 900 million 2G subscribers and 20,000 TD-LTE users; about 2.5 quintillion bytes of data is being added every day.
In 2013, Deloitte predicts that global smartphone shipments will exceed by one billion units for the first time and a large proportion of it will come from India. As the user base grows, broadband services usage will stratify further, exerting pressure on the already strained networks. The absolute number of those exploiting the full breadth of a smartphone’s capability will increase with the continued reduction in device pricing; as more personalized data plans become available, we expect consumers to purchase more bandwidth-hungry applications like video and gaming. Reports suggest that video will be over 70% of mobile data traffic by 2016.
Furthermore, in the enterprise mobility space, mobile access to business applications is increasingly becoming a critical requirement, driving data consumption growth and associated revenue opportunities for mobile broadband. According to the IAMAI and IMRB, India will have 130.6 million mobile broadband users accessing critical business applications and services by March 2014.
With such a massive amount of mobile data consumption predicted, mobile network operators (MNOs) will need to respond with a variety of approaches in order to provide competent mobile broadband solutions. They need to build faster, scalable networks to keep pace with the increasing data demands and introduce unique pricing models that maintain a balance between affordability versus data usage of Indian populace. However, these approaches present challenges in regard to execution risk, particularly managing the trade-off between subscriber demands for service availability, quality and competitive prices and the ability to build profitable always-on, always-available ascendable networks.
Rethinking strategy
The need of the hour is to rethink business and service delivery strategies in order to address the challenges of data demand and fierce market competition. With the changing dynamics of the mobile ecosystem it is imperative that MNOs, handset and equipment manufacturers and managed service providers work closer than ever before. Operators increasingly need to make offerings independent of technology, device and network to create new opportunities to reduce churn, monetize and personalize offers and ultimately earn a larger share of each subscriber’s wallet.
Primarily, there are three crucial business areas for MNOs that require quintessential attention: monetizing on innovation, delivering the right customer experience, and ultimately driving profitability. And the one thing all of them have in common, is the need for innovative operator infrastructure implementations, within and across operator networks. MNOs are bound by RoI performance metrics and may not have the bandwidth to increase their capex to build infrastructure providing competent service to these consumers. Therefore, it is imperative for managed service providers to provide world-class services to the operators with minimal capital investment and a lower operational cost over the long-term. Utilizing managed service providers simplifies the interconnection of mobile operator communities, ensuring smoother end-to-end service delivery and management across networks, resulting in quality and efficiency gains. They help to reduce total cost of ownership, time to market and implementation risks; at the same time providing for a viable migration path for the next generation technologies that ensure backward compatibility. These solutions eliminate the need for negotiation and on-going management of complex bilateral interconnects to quickly expand services across multiple operator networks.
Once a scalable infrastructure and interconnect approach is in place, MNOs will need to focus on how to adeptly optimize and monetize their broadband network investments in order to ‘sweat their assets’ as well as satisfy their customers on priority. With advanced policy management, operators can create innovative data offers to allow subscribers to personalize their mobile data experience and usage. Increased personalization will drive revenue growth as different customer segments will discover standard plans, promotional campaigns and loyalty programs designed to meet their specific needs and interests as well as to encourage increased usage and wallet-share capture.
With improved segmentation, leveraging a managed services infrastructure, MNOs will be able to service their customers better. They will be able to offer creative service bundles and manage customer expectations for always-on, always-available connectivity and service obtainability, regardless of application and location. This will be especially useful for subscribers who use critical applications for multi-party, multi-operator communication services such as voice, text and video calling and others who expect the same service availability and performance while they are roaming.
Demand for big data
The increase in smart devices on-the-go will also give rise to increase in data usage from multiple applications, which will ultimately accelerate the demand for Big Data. In addition to help better understand the customer and the context in which they utilize their smart device, Big Data will further manage data faster and speed up the processes, thus discarding the traditional concept of single enterprise data warehouses. This means that detailed usage reporting, which is required to better target customer segments with innovative services, will be critical to an MNO’s business growth strategy to manage the wave of mobile data growth ahead.
Lastly, MNOs not only need to focus on individual subscribers within their mobile data strategy, but also Machine to Machine (M2M) communications, which is rapidly developing as the ‘Internet of Things’ takes form. Different industry verticals are seeking new methods to innovate, taking advantage of mobile broadband connectivity. M2M applications encompass location tracking and logistics, remote control and management of equipment, remote sensing, security, agricultural telematics, automotive telematics, telemedicine, etc. Though their adoption in India is nascent, globally it has seen healthy implementations and continues to evolve from sporadic, one-way “update” communications (like smart meters) to real-time, conversational interactions (like automotive telematics). In fact it is predicted that global connectivity revenues from M2M services will reach $17 billion in 2016.
So while the predicted mobile data growth is astounding, the opportunity for continued innovation makes for an exciting future.
Timothy Sherwood is Vice President, Mobile Market Development & Strategy, Tata Communications.