How does a conventional telco make money? It is based on two fundamental aspects – time and distance. For a domestic call, the further the distance, the more expensive it is. For international calls, apart from distance, charges differ according to the duration of your call, plus during peak or non-peak hours. That is how conventional telcos profit from the voice business.
Ovum indicated that consumers’ increasing use of IP-based social messaging services on their smartphones cost operators $8.7 billion in lost SMS revenue in 2010 and $13.9 billion in 2011. Applications like Whatsapp, Viber, Skype, Google Talk and many more offer us cheap or even free instant messaging and voice calls. These free applications are threatening operators’ bread and butter.
US research firm Senzafili Consulting pointed out that Softbank, the third-largest operator in Japan by number of subscribers, became the first worldwide to have a data ARPU higher than its voice ARPU in 2010. Conventional telcos are well aware of the necessary changes that must take place. However, decision-makers are sceptical about which strategy to follow to reinvent the business model.
P1, a greenfield operator that started with all-IP technology, presented a business case that differs from its 3G incumbents, which used circuit-based technology. P1’s Wimax network is designed to provide high-speed and high-capacity broadband from the start.
On average, every P1 user consumes 17GB of data monthly. This would crash a 3G network at any point in time because it is not designed to withstand massive loads of data transmission, unlike a 4G network architecture.
P1’s existing business model is being tested and has been modified since its inception to cope with the explosive data consumption by customers. In a media showcase in April 2011, P1 successfully demonstrated the ability to transition a Wimax network to a TD-LTE network in just 30 minutes via a software upgrade.
On the devices front, P1’s parent company Green Packet is developing TD-LTE devices. Globally, the momentum toward TD-LTE devices is quickly increasing. GTI, the Global TD-LTE Initiative, has over 30 devices developed and tested. They range from USB dongles, mobile routers, tablets, Mi-Fis and even smart robots.