In Cisco’s Mobile Internet group, we have had a busy & informative past few months engaging directly with many of our mobile operator customers, and I wanted to share some perspectives. First of all, the tally of activities included:
Cisco released its annual Visual Networking Index (VNI) Global Mobile Data Traffic Forecast showing 2010 global mobile data traffic nearly tripling for the third year in a row. By 2015, the average mobile device will generate 17x more traffic than 2010
Cisco launched a comprehensive, integrated framework for mobile networks called M.O.VE (Monetization, Optimization, and Video Experience), which got a very good reception from customers as an architectural foundation to meet operator challenges
Mobile World Congress and CTIA gave us the opportunity to meet with over one hundred operators, and discuss how they can meet the challenges of increasing revenues, reducing mobile data costs, and satisfying ever-increasing customer expectations.
We released a custom Cisco-commissioned Heavy Reading study, based on a global survey of 50 operators, which uncovered very interesting perspectives, expectations, and experiences in the areas of Monetization, Optimization, and Video services.
So with all that going on, I will provide some summary observations in a 10-part series of blog entries over the next several weeks. I’ll especially focus on the challenges of and opportunities for Monetization of mobile networks.
- Monetization is moving from ideas to tangible initiatives
As they continue to build out 3G and now LTE data networks, operators are now very focused on gaining a greater return and sustained revenue growth from these investments. Monetization is moving from the possible to the tangible and concrete in terms of deployable enabling solutions, offerings of a variety of “Use Cases”, some initial operator experiential data to learn from, and the evolution of operator business and revenue models.
- Operators are identifying revenue-generating priorities and evolving business models.
Operators are evolving their business models to meet the dual goals of 1.) increasing the number of mobile data subscribers (e.g., while smartphone sales were up over 70% in 2010, they are still only one-half of all handsets sold in Western Europe and U.S., according to Gartner); and 2.) generating better yield from existing and higher-end users. In most regions of the world, operators have moved away from all-you-can-eat mobile data plans towards a revenue model based on intelligent traffic management and by promoting market segmented offers linked to usage. Operators have a view towards which of the many possible Use Cases are expected to achieve success over the near and medium timeframe. I’ll examine several of these Use Cases in detail in subsequent blogs in this series.
Operators are moving to customer-centric service offers.
IP network intelligence and increasing network performance are enabling operators to offer users many ways to personalize their service subscriptions and usage, e.g., letting users pay for what they need with multiple speed/quota tiers and flexible usage models (day pass, off-peak rates, family or group data quotas, etc.). You want examples of operator services?! Come back as we expand upon this in detail in this blog series.
Operators are pursuing 2-sided business model (B2B2C) and revenue partnerships with a diverse range of media and content providers.
Operators report they are already trying to strike deals with movie/video services, music services, and other content providers. Key operator network enablers for such partnerships include tiered services and zero-rating, where consumption of a content partner’s service would benefit from a guaranteed high bandwidth rate while at the same time the subscriber’s data usage for these services wouldn’t be deducted from monthly quotas. Many operators believe that their business models going forward will more and more be based on offering content as part of mobile data packages. We'll discuss some early operator examples of these types of B2B2C services in the coming blogs.
- Operators are investing in network capabilities necessary to evolve business models.
Operators are actively trialing and deploying enabling solutions for Monetization. Mobile operators show high interest in the following network capabilities as key to their Monetization strategies and service offers:
- Policy and charging control (PCC) solutions - most operators are actively evaluating, trialing or deploying PCC
- Traffic Optimization and Bandwidth Management – scored highest in the HR survey cited above;
- Priority Handling – in spite of challenges implementing QoS in 3G/HSPA networks;
- Zero-rating – especially for content provider partnerships, as well as to incent users to mobile data (e.g., zero-rate Facebook for 6 months).
Policy and charging control (PCC) solutions are viewed as critically important to offer tiered services and flexible packages such as group data plans, premium video services, off-peak usage models, quota management, etc. Many operators view PCC implementation as a pre-condition for many of the targeted Monetization use cases and for the enablement of content provider partnerships. It’s essential that any enablers can work across 3G and LTE networks so that end-users receive a unified experience.
In the remaining blogs in this series, we will take a closer look at several of the targeted Monetization Use Cases, examine what it takes to deploy, and assess expectations for adoption rates and revenues – as perceived by operators in our customer engagements.
How about you? Do you see these or other trends in Monetization?
See the Mobile Internet Monetization Showcase for case studies, data sheets, and other information on a wide range of revenue-generating "Use Cases" that operators can offer.
Continue reading: Monetization #2: Need for Speed