Mobile operators must switch strategies to stay competitive; voice revenue declining, OTT on the rise
Focus should be on new business revenues, spectrum and network intelligence, and new business models
THE priorities for Asian mobile service providers (MSPs) in 2014 should include a comprehensive review of their service portfolios, the re-evaluation of what works and what doesn’t, and the introduction of new innovative services that will shore up their top- and bottom-lines, according to Frost & Sullivan.
Ajay Sunder (pic) of Frost & Sullivan Asia Pacific said there are a number of reasons why MSPs in the region should pay close attention to maximising revenue from the following year onwards.
Speaking at a briefing recently, the senior director for the consulting firm’s telecom division, noted that MSPs continue to face challenges that include the decline in traditional voice average revenue per user (ARPU), network congestion and outages, and the disruption caused by the rise of over-the-top (OTT) players.
“Service providers are losing traditional voice revenues,” he pointed out. “The increase in data demand and spikes in geographies are leading to network congestion and outages, thereby forcing MSPs to relook their long-term network strategy.”
Ajay pointed out that while these trends were forcing MSPs to relook their strategies, not all is lost yet as there are several other notable trends that are taking place that can work to their advantage if they act soon to capitalise on them.
These include the rise of the ‘second device’ owned by subscribers, the continual uptake of smartphones and tablets, and the increased usage of social media savvy consumers, all of which are potential takings for MSPs who are prepared to capitalise on them.
“For instance, Malaysia’s mobile penetration rate stands at 157.6% with a 37.6% smartphone penetration; Indonesia at 129.5% with smartphones at 14.5%; Singapore 154.3% with smartphones at 74.2%; Philippines 118.2% with smartphones at 20.8%; and Thailand 137.4% with smartphones at 22%.
“There is a multi-screen trend with the addition of one or more tablets as consumers take advantage of the different form factors and declining prices of these devices.
“The types of content suited for different devices would enable operators to target subscribers better with value-added services such as video streaming and reading for 10-inch tablets, and 7-inch tablets for gaming,” Ajay said.
As for social media, he said Asia Pacific users have shown a high involvement in most of the social media platforms such as Facebook. Operators are looking at the social media platform as an important tool in their overall promotion and marketing campaigns, he added.
“Increasingly, we are seeing subscribers utilising social media on their mobiles rather than on laptops and [desktop] PCs. The future trend of social networking will be on mobile rather than on PC browsers, especially with the rise of the second device.
“Mobile subscribers across emerging markets, especially Indonesia, are active Facebook users even if they are light users of the mobile Internet,” he said. “Tie-ups with social media partners would provide mobile operators with accessibility to an increased target base for value added services.”
New strategies needed
Ajay also suggested that MSPs in the region take a three-pronged approach in order to prepare for the aforementioned challenges for 2014 and beyond.
The three strategies are: Focus on new business revenues; harness spectrum and network intelligence; and create new business models for their operations.
In focusing on new business revenues, he said MSPs need to re-evaluate their portfolio and introduce new services by zooming in on both consumers and enterprises.
In the consumer realm, the analyst said that MSPs should focus on new emerging services from where they can get third-party revenues, if not direct consumer revenues, such as mobile advertising, payment and commerce.
For the enterprise, there must be a focus on being an enabler and identifying key services targeted at those verticals that will drive growth, he added.
“SingTel Group’s Digital L!fe, which has a gross revenue of S$111 million (US$87.7 million) in FY2013 (fiscal year 2013), focuses on innovative and cutting-edge digital content, services and adjacent markets such as mobile advertising and mobile payment.
“Korea Telecom is targeting to generate €12.7 billion (US$17.4 million) in new services by 2015 through its focus on machine-to-machine services, e-health, cloud services, e-payments and commerce, advertising, and security services,” Ajay said.
He said as far as harnessing spectrum and intelligence is concerned, MSPs would need to move beyond physical infrastructure sharing such as RAN (radio access network) sharing, which is already being done, to higher sharing philosophies such as network function virtualisation (NFV), and eventually software-defined networking (SDN).
“An example of NFV can be found in the sharing of network functions such as billing systems as these are just functions that can be virtualised, and savings can be derived when MSPs share such functions instead of having to invest in individual billing systems,” he said.
As for new business models, Ajay said MSPs would need to evaluate new partnerships with non-traditional value chain players, as the impact of these new services may be huge depending on the nature of the partnership.
“In the payment space, NTT DoCoMo and Visa Worldwide (Japan) will begin offering DoCoMo Kouza Visa, Japan's first mobile-based virtual prepaid card service, where the new service will combine the spending control of prepaid services with the convenience of credit cards.
“In advertising play, inMobi, the world’s largest independent mobile ad network, has teamed up with LINE to promote LINE Free Coins to app developers globally.
“And in the United States, Verizon Wireless is using big data and analytics to offer consumer data to a variety of B2C businesses,” he said.
At the end of the day, MSPs must be prepared to participate in business transformation, and move their offerings away from merely bandwidth and raw data, he added.
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