The trouble with data is that it simply does not go very far. There are other problems too, of course, such as no-one understands and it fills customers with fear, but as one IT Director at a major US carrier said, “2GB of data is not a lot of video.”
No wonder then that operators are moving to remove the fear of data. And the fear is very real. This according to research quoted in the new white paper from real time (and now virtualized) real time charging specialist Openet. ‘In April 2014 Wakefield Research carried out a survey of 1,000 U.S. smartphone users on behalf of Citrix, and found that 82% say they are “aware of and fear that their app usage impacts the monthly data limit and have avoided using an app because of this”.’ Add to this the fact that LTE video volume is already five times the volume as on 3G, and you have a problem.
The paper is timely, as it digs deep into some examples of what operators are doing to stop ‘dataphobia,’ the fear of data. Obviously the approach varies from application to application – and depends mainly on the amount of data an application uses.
One constant, though, is what operators can offer OTT players – and, again according to Openet, the OTT players know it. These include long standing customer relationships; regular billing and subscription habits; flexible charging models to enable offers; flexibility in delivery to ensure the best quality and customer analytics and insights.
Looking at low bandwidth applications, some operators have become truly innovative. WhatsApp messaging is obviously very popular – and, let’s face it customers use WhatsApp, they don’t use ‘data’ to talk to each other – and, for instance, ePlus in Germany offers their prepaid customers free (or apparently free) WhatsApp whether or not they run out of credit during the month. Others offer WhatsApp at a discount. This creates a win-win-win situation – customers are happy, operators get revenues (and brand awareness) and the OTT player gets reach and a new, proactive channel.
Moving up the bandwidth scale, the paper focuses on music as an interesting partnership model. If music was the food of love, let’s stream it. The music industry has gone through more pain and change than almost any other in the last decade or two. From vinyl, to tape, to minidisc, CD and now iTunes and streaming. For a while the future was very unclear.
But streaming music and making it part of a subscription is having a positive impact, both on music providers and operators. Spotify’s paying customers have increased from six million in March 2013, to 10 million in May this year. Deezer has also done well, and Napster, having done some innovative deals with operators, believes that now 80 percent of the music it serves is listened to on mobile devices. 90 percent in some countries, where the deal is particularly good.
As well as the ‘ordinary’ benefits of partnerships, with music operators can also offer marketing reach and resources, the ability to convert – or help convert – free activity into premium activity and that subscription/charging expertise.
Video, the bandwidth choker, is the application most discussed, and we are now seeing a positive move away from a ‘them and us’ situation. Netflix used to be in the news for putting messages on customers’ screens when the quality broke up, now they are working with operators to make sure it doesn’t happen. By launching a subscription fee and working with Verizon and AT&T, the quality is better, more consistent and customers are happier. In the UK, Vodafone is enhancing the launch of its LTE service by offering free Netflix, Sky Sports or Spotify Premium. Bell Mobility is offering 10 hours of on-demand viewing for $5 a month, with no impact on data plans.
Knowing that data is a hungry beast is driving innovation. If you did fairly basic jobs on your smartphone, surfing and emailing gently and then watched video for just six minutes a day, they would completely use up a 4GB data package. Apart from the need to get ‘beyond data’ because of the lack of clarity, people do not buy data anyway, they buy the applications in the simplest and easiest form they can. This Openet paper comes at the right time to discuss and roll out sensible, innovative products that will place operators in the forefront of the application revolution, not at the back as we once thought.
Hi Alex, it’s an interesting article. But with further evolution in technologies, data isn’t really a issue or concern. For service providers and for end users, the revenue model is more driven through value add services. As you have rightly mentioned, service providers need to start looking at useful applications, play stores, online videos to really encash the benefit of underlying data connectivity. Even in developing contries like India, data usage is doubling / trippling almost month on month, were we are still having 3 G.
Mahesh
Alex,
In my opinion, one of the key features of data business model is fact that data is not anymore end product for Telco, but rather channel for other products. This is giving to data similar flavor as hardware had when mobile revolution started, it can open door for new type of subsidies, where instead of subsidised handset, You will get subsidised data package.
Ivan
Alex,
I think that a big question is who will end paying for the data (or data quality) is it the end customer directly, is it the customer via the bundle he buys for the Telco (e.g., that includes free Music), or will it be the application provider (e.g. Facebook) or will it be customer via the content that it buys (e.g. the customer will buy a Netflix/ESPN subscription and Netflix/ESPN will pay for the data/quality). I think that the last two options have the potential to completely change our industry.
Gadi