With capex in danger of overtaking mobile service revenues, operators are, not surprisingly, worried, says research house Infonetics. According to analyst Stephane Teral, service revenues are moving away from the operators to OTT players. Mobile broadband will overtake voice contracts by 2015, now just two years and a few days away.
While this might plunge us into gloomy silence or worse, no-one is sitting still and the operator fight back is under way – on several fronts.
Operators are launching their own OTT offerings, fighting back against the free messaging apps that have been pulling SMS revenues away. RCS based Joyn will be one to watch in 2013, to see how effective a competitor it will be against other OTT offerings.
Whilst SMS revenues are falling, SMS will remain the backbone of many services and will therefore remain valuable even if the consumer revenues are declining. Gartner believes that mobile payments will be used by 448 million people and be worth $617 billion by 2016 – on the back of SMS. Big brands, the majority of Fortune 500 companies, are exploring the precision marketing opportunities that operators can offer them with good old fashioned SMS technology – and they like what they see.
They are fighting back on the billing front too. The largest OTT players in the business – Facebook, Google and the like – understand that they need operators to do their billing for them. Direct Operator Billing (DOB) is the most intuitive, fastest and simplest billing method – and it is the way that operators will fight back, not only through partnerships with the likes of Facebook, but DOB gives them a way of taking Apple – and others’ – transaction processing revenue. A duel is developing that will be fascinating to watch in the coming months.
Quality of Service (QoS) is becoming a differentiator and a major focus for the industry as we fixate on customer experience. OTT players that need quality in their service will likely be willing to pay operators for it. Video providers need to know that their products are being delivered at a quality that guarantees a quality experience. The GSMA, with its IPX initiative, will be a key enabler of guaranteed quality. Soon, we will see the concept of toll free sites and services become a reality.
Leaving aside the as yet not fully explored consumer opportunities presented by the Cloud and M2M, operators are far from finished. Very far. Remember that we tend to focus on the consumer, big picture issues, where capex may indeed be overtaking service revenues. But historically the most profitable part of an operator’s business is in the enterprise space and if you consider the opportunities that are out there where operators can leverage their hard earned experience in flattening silos in the Cloud and enabling M2M businesses, then the future looks a lot rosier than the bare facts suggest.
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