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Mobile operators will abandon network cost-based pricing to focus on premium services, as they look to reduce churn and maintain revenues according to a new paper released by global telecoms, media and technology (TMT) adviser Analysys Mason. This transformation, enabled by new end-to-end approaches to network management, arrives in the face of growing competition from over-the-top (OTT) services and rapidly rising data costs. The report estimates that the volume of wireless data traffic worldwide will grow at an annual rate of 67% between 2010 and 2015. During the same period, data revenue per gigabyte is projected to fall from USD23.21 to USD4.27. The report reveals that, in order to handle this growth whilst assuring revenues, operators are increasingly looking to offer new services such as temporary network speed boost and tiered bandwidth allocation to create a premium service for high value customers. Patrick Kelly, Research Director at Analysys Mason, believes that average revenue per user (ARPU) will increasingly be related to additional services: “Operators are facing increasing pressure to deliver a high quality service despite growing data demands. The only realistic way to do that is to decouple ARPU from network costs and instead align it to the delivery of premium services. “Previously, there was a lack of availability of tools to support complex segmentation of mobile data services. As the focus shifts towards maintaining revenue for data services, more operators are adopting the increasingly sophisticated tools to manage tiered services,” said Kelly. Interviews with operators have shown that the main obstacle to the delivery of these services is their ‘silo’ approach to network delivery, which hinders a full view of the customer experience. Operators are increasingly employing end-to-end network monitoring solutions to eliminate these silos and create real-time, end-to-end monitoring. “The rise of data has created a clear and urgent need for operators to introduce new ways of dealing with network traffic such as prioritisation of higher tier subscribers. End-to-end monitoring and analytics make that possible, but operators need to educate customers about the requirement for tiered traffic to ensure continued quality of service,” commented Lars Pederson, CEO, CommProve. Operators implementing this new, unified approach to network monitoring - including Vodacom, part of Vodafone - reported reduced churn, increased levels of customer care and a renewed ability to differentiate and remodel their services around premium offerings. The paper, sponsored by CommProve, a leading provider of network monitoring and business solutions for mobile networks, surveyed a number of mobile network operators. The research investigates operator strategies to tackle growing data needs and loss of revenue to OTT services.
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Transforming network intelligence into a positive customer experience and revenue-generating opportunities
Patrick Kelly, Research Director Analysys Mason
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Business models that worked in the voice era are not sustainable in the data era
Traffic will grow at a 48% CAGR from 2010 to 2015, from 225PB per month to 1603PB per month
In developed regions, revenue per gigabyte will fall from USD23.21 in 2010 to USD4.27 in 2015
The implications of not changing the current business model (flat rate tariff) puts in jeopardy the sustainability of the business
Comparison of the network economics of mobile networks [Source: Analysys Mason, 2012]
Impact to network monitoring market
Business models will change
Flat > Price tiers > Application based
Monitoring services over multi-domain fixed and wireless networks
Indoor wireless coverage and outdoor macro solutions will be used to offload cell sites
Femto, Wi-Fi, WiMAX
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Growth in mobile data traffic is driving technology upgrades which require more advance network monitoring
In developed markets, early deployments of LTE are under way
Wi-Fi offloading will combine with cellular technology to balance demand
CSPs will require more robust assurance capabilities to manage more complex technology and services that span multiple domains.
Traffic is increasing but revenue per MB is falling
Some cell sites become congested much faster but CSPs want to maintain superior service for high ARPU customers
Video will require higher QoS metrics
Wi-Fi offloading will combine with cellular technology to meet demand
Mobile technologies Mobile services demand
Drivers in the mobile market [Source: Analysys Mason, 2012]
Assure QoS
Customer experience
Mean time to resolution
Monitor BTS and CPE
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Network intelligence enables better business decisions
Focus on the customer
Move from historical network monitoring to real time
Manage across all network domains
Understand the experience both on network and off network
Generate new services such as speed boost
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Improve customer experience in real time
Rapid fault detection and root cause analysis
Multi-domain performance management
Integrated service management
Real time network monitoring
Business analytics
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Integrated service management must map to business objectives…. We see four key tenets…
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Patrick Kelly
Research Director
Analysys Mason Limited818 Connecticut Avenue NWSuite 300Washington DC 20006, USATel: (202) 331 3080Fax (202) 331 3083www.analysysmason.com
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