Elitecore Technologies director and COO Nikhil Jain explains how telcos can start to bridge the widening gap between falling revenue and rising data demand
Telecomasia.net: Why do telcos need do to things differently to create viable new revenue streams?
Nikhil Jain: Telcos need to do things differently to create new revenue streams because they are experiencing a revenue crunch across traditional solutions like voice, SMS and VAS, which are not sufficient in generating incremental ARPU.
On the other hand, demand for mobile data is increasing due to rising penetration of smart devices and high-speed networks. This creates new opportunities for revenue growth, but even here telcos are not seeing sufficient ARPU pick-up on their huge investments.
Even as global mobile data traffic in FY11-12 went up by 2.6 times, operators actually saw their revenues per MB fall by 46%. What this means is that even as data usage is increasing exponentially, most users continue to pay around what they did a year ago for these services.
The smart monetization approach is to move away from unlimited, flat-rate data plans and rather focus on:
- Create new revenue models, capture new customers, increase subscriber stickiness through innovative loyalty programs.
- Minimizing costs by using solutions like PCRF to control traffic according to business demands, service type and real-time customer requirements. Additionally, operators may go for solutions like Wi-Fi offload to shift high data traffic from expensive 3G networks to cost-effective Wi-Fi networks
- Keeping your customers happy by giving them a compelling experience and service quality through greater personalization, simple pricing, greater transparency and visibility.
How can operators open up their distribution networks to third parties?
As discussed, operators are confronted with a gap between the revenue generated and the increasing cost of the traffic. This challenge must be resolved to capitalize on the mobile data opportunity and make it more profitable.
One way to do it is by seizing partnership opportunities that can be done by opening up your network to third parties – content and application providers that depend on telco networks to drive their own revenue growth. It’s a mutual win-win for both parties. Operators may give connectivity to partners via their cloud infrastructure.
With these capabilities in place, operators can enter promising new markets, including M2M, cloud services and targeted advertising. For example, mobile content and service owners get to utilize the operator’s content delivery networks (CDNs) for delivery of locally cached premium content to multiple consumers. These consumers in turn will pay the mobile operator for premium, personal multimedia services on multiple screens.