The future of carriers' revenue

Jouko Ahvenainen/Grow VC Group
29 Oct 2013

Voice has been the main revenue source for carriers. Now data takes the most capacity of networks and grows rapidly. Users expect to have data rates that make it easy to predict the bill. Roaming is still very expensive. Some carriers still hope they could offer something else than bit pipe services. Data, media packages and fair revenue sharing are the most obvious answers to make money.

Most voice and text packages nowadays have more than enough minutes and messages. It basically means that users have a fixed price for calls and text messages. It makes sense if we consider competition against Skype, Google Voice and all other VoIP services. But does it make sense that each phone user must take a voice and text package to use data?

Carriers have failed with most Value-Added Services (VAS). They have used a lot of money to develop their own social networks, location-based advertising, content services and games. But they still earn money from voice, messages and data. Fortunately, most operators have learned that this in-house VAS innovating is not the way to handle future challenges.

A small percentage of users require a lot of roaming capability. But many of those users are heavy users of mobile and they can also be important early-adopters and influencers. Mobile is often more important when you travel, than when you are at home. Many users feel that roaming prices are a way to make money for carriers, not in line with the telco's costs, when traffic is nowadays mainly IP traffic anyway. It can be a way to make money in the short term, but a pricing model that influencers feel is unfair can cause damage in the longer term. These people find other ways to use services.

So, people today can have a feeling that carriers force them to pay for voice and texts, although they mainly need data, and roaming prices are a way to make money in fierce home market competition. At the same time carriers must also be able to make money when they invest in networks, and LTE for example requires more base stations and a lot of network capacity.

It is typically better to accept facts and prepare for the future, than try to stick to the status quo. Voice and messages won’t be a relevant way to make money. People want to use data and data will occupy networks. Pricing must be based on data. People want data pricing to be transparent and easy to control. It means packages that have a fixed price with an easy option to buy more if you need more. No fancy tricks to force people to buy more than they need or buy something they cannot really understand.

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