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The journey to profitable mobile services

by Juniper Employee ‎04-16-2012 01:39 PM - edited ‎04-25-2012 01:00 AM

In this blog post, I would like to recommend the paper Mobile Internet 3.0, produced by Chetan Sharma, describing how operators can become service innovators and drive profitability. The paper looks at the global trends in mobile data and the need for new approaches to operator services that can help increase the mobile data margins and help operators play a more decisive and enabling role in the mobile ecosystem. It provides an operator blueprint for succeeding in the Mobile Internet 3.0 era by discussing the operating principles and the long tail of VAS. Several strategies and application areas are analyzed that can help operators in building a viable VAS strategy and sustainable profit streams.

 

                                                                                     Chetan Sharma paper.jpg

Mobile operators around the world are experiencing tremendous mobile data growth. While the mobile data revenues are increasing, the margins are decreasing for many operators. As the percentage of the Smartphones on the network increases, the data business is primarily becoming an access business which is difficult to sustain over the long-haul. Operators must look at ways to move beyond just providing access services and position themselves from being service providers to becoming service innovators.

 

As illustrated in the following figure, the operators deciding to focus just on Voice, Internet Access and Messaging will remain in a declining ARPU model and will miss opportunities to grow. Operators exploiting the long tail of mobile data services will capture the ARPU growth opportunities. However, the investments required to enable this new model, have to move away from the traditional network silo approach and focus on a truly scalable, open and innovative network able to evolve overtime incorporating new services and models. 

 

 LongTail.jpg

It is becoming clear that the long-term value will be in the portfolio of value-added services (VAS) and not by selling bytes. The world slowly evolves into the Mobile Internet 3.0 where mobile data becomes the primary source of service revenues. Operators now have a fundamental choice to make: either learn to live with the utility business that pushes the margins downwards by 30-50% or selectively compete and/or collaborate with the OTT (over the top) players where they can offer compelling solutions and packages to their customer base and beyond.

 

The mobile ecosystem is going through significant shifts in consumer behavior, the value-chain alignment, and the strategies required in managing the profitability of the service business. Operators who are fully able to grasp the changes occurring in the ecosystem and are willing to refocus will position themselves for higher profitability in the coming years. A fundamental rethink of the network and the business models is required. Rather than leaving all the VAS business to others, operators should look at ways to launch new services, to micro-segmented consumer base, to enable APIs and services that the developer ecosystem can build on, and to look at the core network to enable incremental revenue streams. The following table created by Chetan Sharma, lists the Mobile Growth Areas.

 

GrowthAreas.jpg

 

The pace at which the new services are launched needs to accelerate and the marginal cost of the introduction needs to go down significantly. By architecting the “network as a platform,” operators will have more flexibility in deploying an open and programmable network that not only provides operational efficiencies and insights but also paves the way for new generation of services such as mobile cloud, mobile security, health care, and identity management.

 

Juniper Networks MobileNext delivers industry-leading scalability of mobile sessions, set up rates and forwarding capacity for 2G, 3G and LTE networks. The solution enables high-definition voice and video delivery with seamless handoff between 3G and LTE for non-interrupted user experience. Based on an open platform for ecosystem innovation, MobileNext is the world’s first open, secure and scalable mobile packet core; it provides industry-leading scalability and performance for mobile operators with unmatched integration of inline services; it takes the industry to a new level!

 

To learn more, attend the sponsored Light Reading webinar EPC: The Engine for Innovation in Mobile Networks

Comments
by Juniper Employee on ‎04-18-2012 11:59 PM
by Juniper Employee ‎04-25-2012 02:45 AM - edited ‎04-25-2012 02:45 AM
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