Many years ago in the pre-smartphone boom world, I attended several conferences and symposiums held to discuss the elusive "killer app" that would eventually justify heavy spending on 3G networks and licenses.
After endless discussions of several options including LBS, gaming, mobile payments etc. the consensus was that the silver bullet was - ironically - voice services, which would fund investments in data services that would increase ARPUs by upwards of 50%. Sure enough, in time, when smartphone navigation became user-friendly and content became accessible (largely thanks to Apple) and data pricing became affordable, ARPUs have indeed taken off and 3G and 4G are now widely used and understood consumer concepts.
However this boom in mobile data usage will inevitably lead to the death of voice services, and we are already seeing examples of this going into 2014.
For example, in the quarter ending September 2011 NTT DoCoMo reported a voice ARPU of 2,280 yen and a packet ARPU of 2,690 yen. Fast forward to two years later, and voice ARPU has fallen to 1,430 yen, a staggering decrease of 37% in two years while even the data ARPU declined slightly to 2,670 yen. This decrease was caused by the rise of LINE, which has substantially diminished MOUs.
With the massive uptake of LINE, KakaoTalk, WeChat, Viber and Skype, similar situations are almost certain to play out across the region in the coming year. Half of the mobile industry's revenue going to OTT platforms is a scary prospect indeed.
So how can this issue be tackled? It certainly won't be easy, but we are seeing signs of operators preparing for the challenge. NTT DoCoMo itself is now reporting a "smart" ARPU in addition to voice and data to show the growth of new services while SK Telecom is highlighting the growing contribution of "new business" to its revenue.