Differentiate instead of engaging in price wars: Ericsson to operators

  • Three broad strategies they can take to differentiate themselves
  • Users still worry that shared data plans lead to higher cost, slower speed
Differentiate instead of engaging in price wars: Ericsson to operators

MALAYSIAN mobile operators have a golden opportunity to differentiate themselves from the competition – but only if they can create new business strategies and avoid price wars, according to Ericsson.
 
Forward-thinking operators – ‘frontrunners’ in Ericsson terminology – are “opportunity focused” instead of “problem focused” organisations, said Sebastian Barros, vice president of solutions for Ericsson Malaysia and Sri Lanka, citing his company’s studies with a number of operators worldwide.

Operators around the world are facing the data crunch – the exponential consumption of mobile data by consumers – and as such, do not have any choice but to innovate and create new connectivity strategy and service differentiators, he said.

“Malaysian operators have a big opportunity for differentiation,” Barros said at a recent media briefing in Kuala Lumpur to unveil the findings of Ericsson’s latest Mobility Report recently.
 
“But in order to do so, they must leverage on consumer insights for new packages and avoid price wars, because the latter move will be a ‘lose-lose’ game,” he added.
 
Operators must make sure that their data experience can fulfil their subscribers’ app expectations.
 
Based on work done by the Ericsson, Barros said there are three broad strategies operators could take without resorting to price wars to gain subscribers:

  • Quality-led operators which differentiate themselves by providing high-performing networks and ensure the quality of their networks;
  • Market-led operators that adapt quickly to market conditions; and
  • To differentiate based on unique design offerings so new customer value can be generated.

Differentiate instead of engaging in price wars: Ericsson to operators“An example of the first scenario is to use small cells – an all-in-one base station/ antennae system with a small footprint such as the Ericsson Radio Dot System – to provide high quality indoor coverage as 85% of the time, subscribers stay indoors,” said Barros (pic).
 
“The second example is seen in operators which provide unlimited data streaming options for subscribers based on app usage, such as music or video streaming, both of which are market-led initiatives.
 
“The third case is where an operator provides a service such as WiFi calling whenever there is a reliable connection, so that subscribers can save costs by switching over from cellular to WiFi calls, which is a unique proposition,” he added.
 
Barros said all these strategies have been used by various operators of various sizes and market demographics, which include both advanced and developing markets.
 
One Asian operator that embraced a combination of these strategies was able to improve brand sentiment and NPS (Net Promoter Score) and network performance, according  to Barros.
 
“It had attractive plans targeting prepaid users, and increased its year-on-year total revenue growth by 13%,” he said, declining to name the operator.
 
NPS is a management tool that can be used to gauge the loyalty of a firm's customer relationships. Malaysian mobile operator Maxis Communications is one company that uses it.
 
Shared data offerings

Differentiate instead of engaging in price wars: Ericsson to operatorsThe Ericsson Mobility Report is a yearly study undertaken by the Stockholm, Sweden-based telco vendor.
 
The report analyses data traffic from the world’s largest selection of live operator networks in order to gain insights on current traffic and market trends in today’s networked society.
 
One key finding this year – that admittedly has not changed from last year’s study – is that end-users in some markets have not been very receptive to the concept of shared data offerings, according to Afrizal Abdul Rahim (pic), regional head for Ericsson ConsumerLab South-East Asia and Oceania.
 
Shared data offerings is when operators structure data packages to track the number of devices attached to a principal account, rather than to the persons attached to an account.
 
For example, a family may have 12 devices farmed out to various people, but data is shared among the 12 devices and tracked through one master account rather than individually.
 
Should there be a need to increase data usage, the principal account holder can either scale out by ordering more data volume, or extend the number of devices he has in his account.
 
Afrizal said that despite an increase of multi-device ownership across the region, including Malaysia, subscribers are still not adopting such concepts.
 
“Consumers feel shared data offerings can help,” he said. “In fact, our survey showed that the top three reasons for acquiring a shared data plan is to save money by bundling; one data plan for all devices; and a single bill for the family.
 
“But there still seem to be barriers to adoption – these include the perceived higher cost of doing so and that the belief that sharing of data plans will lead to slower connection speeds,” he said, adding that the latter belief is promulgated by consumers’ experience with a shared WiFi connection at public hotspots.
 
Asked what can be done to address such challenges, Afrizal said operators would have to slowly educate their customers and the public that these packages actually benefit them, instead of being a burden.
 
“It’ll take time to get there but I believe eventually, the market will adjust,” he said.
 
Other findings
 
Afrizal said the latest Mobility Report indicated that worldwide mobile subscriptions continue to rise and that as of the first quarter of 2015, there were 7.2 billion subscriptions, up from 6.9 billion in the third quarter of 2014.
 
Going by this growth rate, 90% of the world’s population over six-years-old will have a mobile phone by 2020.
 
“There will be 9.2 billion mobile subscriptions by the end of 2020 and 85% of mobile subscriptions will comprise mobile broadband by the end of 2020,” Afrizal said.

Differentiate instead of engaging in price wars: Ericsson to operators

As for smartphone growth, he said the total number of smartphones in the South-East Asia region stands at 230 million as of the end of 2014. This figure is expected to rise to about three times to 790 million by 2020.
 
Correspondingly, mobile data will grow by nine times from 2014 to 2020. Much of this traffic will be in the form of video transmission, Afrizal said.
 
“In 2014, video accounted for around 45% of mobile data traffic,” he said. “By 2020, 60% of all mobile data traffic will be in the form of video, growing at an annual rate of about 55%.”

Differentiate instead of engaging in price wars: Ericsson to operators

Afrizal said that the top three smartphone apps in the South-East Asian region based on the total monthly active users varies between Facebook, WhatsApp, and YouTube.

“In Malaysia for example, WhatsApp, Facebook, and YouTube are the top three apps actively used by smartphone users, as is the case with Singapore – but in Thailand, the top three apps are Line, Facebook and YouTube.
 
“In Indonesia BlackBerry Messenger (BBM) is the top app, followed by YouTube and WhatsApp. But the BBM app usage in Indonesia is that of those used by Android and iOS users and not by BlackBerry handsets users.
 
“Meanwhile, in the Philippines, the top three apps are Facebook, Facebook Messenger and Viber,” he said.

Differentiate instead of engaging in price wars: Ericsson to operators

 
To get a copy of the Ericsson Mobility report, go here.
 
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