Finding sustained operator value

Phil Marshall, Tolaga Research
21 Nov 2011

The mobile industry is going through massive change fueled by the proliferation of smartphones and tablets and innovative solutions that are being delivered by players like Apple, Google and Facebook. As this change occurs, market value is being distributed among a wider range of industry participants, whether application providers, device manufacturers, aggregators or mobile operators. This is playing havoc with the traditional vertically integrated product centric business models that have been the bastion of the mobile operators.

Mobile operators are faced with the challenge of ensuring they maintain sustained value as the industry evolves. We believe that this sustained value essentially comes in three key areas, namely service orchestration and distribution, transaction management and the customer experience.

In this context, service distribution essentially refers to the network and device ecosystems, and the span and packaging of services that operators make available to their subscribers. Tolaga recently conducted a global survey of mobile broadband packages and found that virtually all packages are tiered based on bandwidth usage, mirroring a "dumb pipe" philosophy that is feared by the operator community.

To avoid the perils of the "dumb pipe", we believe that service packages must be tiered based on the bundles of services and content offered. As an example, a bundle might include social networking, cloud-based media storage and orchestration, messaging and telephony in addition to basic broadband access.

A differentiated social networking experience might be created with identity management capabilities to orchestrate multiple personas such as "at work", "at home" or "night-clubbing". Media management and storage solutions could incorporate scheduling for optimum network utilization, cataloging and distribution of services across devices and potentially be integrated with entertainment solutions such as augmented reality and gaming. To achieve these capabilities and to create compelling customer experiences, we believe that operators must ultimately become masters in integrating and augmenting third-party service innovations.

Transaction gateway

We anticipate growing demand for transaction management capabilities as mobile media usage and mobile social networking expands. Mobile operators have trusted billing relationships, whether postpaid or prepaid, with their subscriber base that can be leveraged for broader transaction management demands. For example, mobile operators could:

  • Capitalize on emerging mobile payment solutions and replicate established business models of companies like Visa, Mastercard and Paypal.
  • Develop transaction management capabilities to complement emerging solutions, such as Facebook Marketplace, Foursquare and Groupon - preferably in the absence of its excessive marketing and business development costs.
  • Provide automated transaction management capabilities to support the variety of emerging machine-to-machine applications in markets such as energy, healthcare, transportation and retail.

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