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Monetization: Day Tripper

Posted by brwalsh May 25, 2011

In this recent Monetization series, we’ve looked at different approaches in which operators are offering mobile broadband services. Tiered Pricing and Family Data Plans are a couple of examples of how operators are expanding their user bases with more granular service offers that give subscribers better value and opportunities for personalization. But there is another segment of users who only want to purchase occasional mobile broadband services for their laptops, tablets or smartphones, without signing up for a long-term contract of any kind. Time-based data plans let users access mobile data networks for a specific period, e.g., an hour, day, week, etc. The session ends when the user reaches the expiration of the time period purchased (or reaches a defined quota of data usage). These Day/Session Pass services are becoming increasingly popular and are evolving into a kind of new model for pre-paid data services.

 

By offering Day/Session Pass services, operators can monetize price-sensitive and “casual” mobile data users with temporary access to the operator’s mobile data network. At the same time, it gives the operator an up-sell opportunity to offer specific promotions targeting these casual users.

 

There’ll Be Days Like This

 

In a custom Cisco-commissioned Heavy Reading study, based on a global survey of 50 operators, Day/SessionPass was ranked on par with the Family/Group Data plan use case in terms of importance, with 24% ranking it “5—Very Important”. It was also one of the more attractive use cases to operators in terms of expectations for subscriber adoption and revenue generation. One benefit cited by operators is that consumers understand what they are buying with time-based billing models – notwithstanding the current operator trend toward usage-based revenue models. A number of operators interviewed said that they are already offering or planning to introduce Day/Session Pass services. However some operators were concerned that Day/Session Pass services would conflict with existing prepaid mobile Internet offerings, which tend to be usage-based (e.g., TT$4/MB prepaid data from TSTT). Some operators thought the Day/Session Pass use case was well suited to the “kiosk” prepay market.

 

Eight Days a Week is Not Enough


Day/Session Pass services are already offered by many operators globally, with many different flavors based on whether the service is for a feature phone, smartphone, tablet or notebook/netbook – as well as whether the time period is continuous or not. And many are actually hybrid time/usage-based offers, where the “time” period can prematurely expire if the user reaches a defined quota of data usage. For example, AT&T’s DataConnect Pass for netbooks and notebooks provides multiple time period options, each with a data quota maximum: Day Pass – $15 (with 100 MB quota); Week Pass – $30 (with 300 MB quota); Month Pass – $50 (with 1GB quota). Interestingly, AT&T suggests that DataConnect customers consider using Ethernet or Wi-Fi for very large downloads and software updates to avoid consuming the allowed data quota too quickly.

 

Orange France announced Internet Everywhere range of prepaid services that includes: 1 hour Pass for €8, a 2 hour Pass for €14, a 6 hour Pass for €25, and a 20 minute Pass for €3 (with 24 hour validity). Sprints offers users with 4G capable netbooks/notebooks the option of Day ($14.99), Week($29.99), and Month ($49.99) Mobile Broadband connections.

 

Rogers in Canada offers different Day/Session Pass plans for feature phones and smartphones. C$1 gives Feature Phone users a Data Day Pass with unlimited mobile internet for any 24-hour period. Feature phone users can also get a Week Pass for C$7 for up to 125 MB of data usage. And C$2.99 provides a Smartphone user a Data Day Pass with 20MB of data to use for mobile browsing, email, instant messaging, and application use for any 24-hour period. Inexpensive phone-based Day Passes are also offered by T-Mobile USA (Web DayPass is $1.49 per continuous 24 hours) and Vodafone UK (£1 for a day, running from midnight to midnight, with a 25MB per day data limit).

 

Some operators also include Wi-Fi hotspots in the Day/Session Pass offers, such as PCCW in Hong Kong which offers a HK$98 (~US$12.50) DataRoaming Day Pass that provides unlimited mobile data and Wi-Fi roaming in mainland China.

 

Many operators are investing in the intelligent mobile/evolved packet core and Policy and Charging Control (PCC) solutions necessary to deploy new mobile broadband services like Day/Session Pass. These intelligent IP solutions give operators the flexibility, performance and scalability to sell mobile data plans for defined time periods and which also have data volume-based controls. A robust subscriber notification functionality keeps subscribers aware when quota reaches a data usage threshold or time period expires, and provides capabilities for user top-up.

 

For more information, 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 #6: Boost Me

A few fun facts:

  • Mobile networks are getting more complex (AnyG support)
  • Mobile traffic is getting more complex (video, visual communications, collaboration-on-the-go, etc.)
  • Consumer expectations are driving this “traffic complexity” as they want rich media content on the go, and they want to stay connected all the time.  (As do I)
  • Mobile Operators have made (and continue to make) enormous investments in their infrastructure to bring Mobile Broadband services to their subscribers
  • Mobile Operators need to find ways to derive more profit from these investments
    • Monetization and Optimization enable profit.

 

MOVE artwork.JPG

 

Most often the mobile operator infrastructure is viewed as a bunch of parts, or sub-systems; for example, the RAN Backhaul, the Packet Core, and so on.  Much of what the public sees in the way of vendor performance are staged demonstrations and tests that are unfortunately simple snapshots of these sub-systems or even just a single platform.  Current Analysis have observed several times that vendor tests without detailed test case and traffic profile data are of little practical use to network operators.  Indeed, in their article titled “2011: What Lies Ahead in Mobile Infrastructure”, Peter Jarich and Daryl Schoolar of Current Analysis stated:

 

“Infrastructure vendors need to find ways to provide real-world metrics behind their packet core claims. Credit goes to Cisco for making its solution available to EANTC for testing. While its competitors may not have all the assets needed to submit for a similar test, they do need to find ways to back up performance claims, ideally by leveraging deployments that reach beyond the lab to “one up” Cisco while still maintaining some control over the messaging.”

(http://www.currentanalysis.com/COMPETE/FrontEnd/Search.aspx?pAND=2011%3A%20What%20Lies%20Ahead%20in%20Mobile%20Infrastructure).

They are quite correct in their statement.   In short, the network operates as a whole and the network needs to be assessed as a whole.  Not just how one piece works, but how the entire network operates in concert.  The next level in mobile performance and profitability requires a solid, proven, and yet flexible foundation.  Not smoke and mirrors.  Not slideware and promises.  Blue-sky is nice, but you cannot run a network and you cannot make a call on a promise.

 

This past February at the Mobile World Congress in Barcelona, Cisco announced M.O.VE.; Monetization, Optimization, and Videoscape Experience (/www.cisco.com/go/movewww./www.cisco.com/go/move).  The  M.O.VE. framework is built on a proven, solid and flexible foundation.   And better yet, this foundation is the only comprehensive mobile infrastructure to have successfully completed independent testing and validation.   This “Megatest” was not just one or two boxes, nor was it a series of isolated demonstrations (hence the “Mega” designation).   The well regarded industry research and news organization, Light Reading, sponsored an open invitation to all network vendors to have their mobile network architecture tested by an independent third party.  Cisco accepted this challenge and built a large scale mobile operator network from cell site through the core and cloud to meet the requirements set down by EANTC and the test plan that they created.

 

One of the most respected independent testing and engineering firms, EANTCcreated a test plan and traffic profile that placed the entire mobile network under real-world conditions.  In fact, while measuring one function, EANTC would stress other areas of the network (i.e. let’s break this and see what happens to all these other things).  Various systems that may have otherwise been tested in isolation were shown to work together and help each other around the circumstances that “happen” in real-world network operations. Indeed, one can take away from this test that while Cisco’s various sub-systems are industry leading, that when used together they provide even greater value to the mobile operator (and their subscribers).

 

The results of this “Megatest” were reported by Light Reading and further commented on by several industry analysts and journalists.  (http://www.cisco.com/en/US/solutions/ns341/ns973/mobile_testing_light_reading.html)

 

So what does this mean to you and why should you care?  I mean aside from the truly nerdy delight of reading such a detailed test (yes, I proudly count myself in that group).  This “Megatest” provides the Mobile Operator, with the comfort of third party documented proof, that the very important capabilities of Cisco’s M.O.VE. framework is built upon a validated, solid foundationProfitability for the real world is available today.

brwalsh

Monetization: Freedom Rider

Posted by brwalsh May 11, 2011

Continuing the series on Monetization opportunities for mobile operators, let’s take up the concept of Freemium. The Freemium business model involves offering a basic service for free (indefinitely, or for a trial period), while charging a premium for advanced features (or continued use after the trial). Freemium is a well-established business model on the Internet, with many popular free services also offering premium features to paying users (e.g., YouSendIt, Pandora, Flickr, LinkedIn, Spotify, Skype). The success of the Freemium model has varied. While many of these services have converted only a small percentage of users to paid premium services, there are some exceptions such as Spotify, a DRM-based music streaming service, which said in March 2011 that it had 1 million paying customers on Spotify Premium, amounting to about 9.5% of its registered user base. Spotify’s paid-for premium service is advertising-free, and provides extra features such as: higher bit-rate streams, offline access to music, access to exclusive content, and usage on mobile devices.

 

Freer Than Free


Mobile Operators
are also experimenting with the Freemium model, but with a twist. For an already free mobile internet-based service, an operator’s Freemium offer allows the subscriber to access the service free of data charges, i.e., by not counting (“zero-rating”) usage of an application against the subscriber's mobile data quota. This makes free mobile Internet applications even freer! What’s the point of that? Well, these operator Freemium offers are primarily intended to gain new mobile data subscribers. How? For example, operators have offered free access to Facebook (i.e., not counting data bandwidth used by Facebook) for a limited time to help promote a new device launch – with a goal to gain new service revenues from up-selling a mobile data plan subscription after the user is “hooked” by the free trial.

 

Another operator Freemium approach involves offering free trials for access to particular premium video content at a higher quality of service (QoS) level, in effect, with a free enhanced user experience. After the trial is over, the operator offers the subscriber the opportunity to subscribe to the premium video service for an incremental monthly charge.

 

 

Money for Nothing


In a custom Cisco-commissioned Heavy Reading study, based on a global survey of 50 operators, Freemium rated as more of a “middling” opportunity – lower rated than some of the other services we’ve discussed previously in this Monetization series, such as Tiered Pricing or Family Data Plans. The response for the “importance to revenue generation” question shows it rating about a “3” on a 1-5 scale. In the qualitative part of the study, there was some sense that Freemium was not the most well understood services model, which may account for the low scoring in the online survey. It had the most appeal in under-penetrated, emerging markets where operators felt that it could help drive mobile data adoption and usage until critical mass is reached.

 

The 0.facebook.com mobile site launched in 2010 was mentioned by many operators as a Freemium offer they were promoting to bring users onto the network with a low opportunity cost if it doesn’t work. 0.facebook.com includes all of the key features of Facebook but is optimized for speed especially in lower bandwidth networks. Users can access 0.facebook.com without incurring any data charges, paying for data charges only when they view photos or when they link from 0.facebook.com to other mobile sites – at which time a notification page appears to confirm that they will be charged.

 

Operator Freemium Initiatives

Many operators are beginning to invest in the intelligent Evolved Packet Core (EPC), application detection, In-Line Services, and Policy and Charging Control (PCC) solutions necessary to deploy new mobile broadband services like Freemium. The network and application awareness gained by intelligent IP networking gives operators an understanding of what services could be good candidates for Freemium offers within their subscriber bases. Several operators have launched Freemium mobile Internet services based on both the free of data charges (i.e., zero-rate) and free enhanced user experience (i.e., higher QoS) approaches. For the former, an example is Vodafone Australia offers promotions to gain new subscribers by tying free access to Facebook with certain device launches. Vodafone zero-rates all Facebook traffic for these subscribers, and is now applying the same concept to Twitter. For the latter, Vodafone has also offered free 1-week trials for access to particular video programming from content partners (e.g., SKY News) at a higher quality of service. After the trial is over the subscriber is redirected to a website to sign up for the premium SKYMobile TV over 3G service.

More examples: Ukrainian mobile operator life:) with 9m subscribers, offers free access to Facebook directly from mobile phones. The Facebook mobile application for Java-powered feature phones can be downloaded and used by life:) subscribers with Free Access service without incurring any data charges. Another example is Vodafone New Zealand, which has an ongoing campaign for “non-stop” Facebook and Twitter for its Mobile Internet Add-On subscribers, which zero-rates data usage for a limited time for these 2 popular social media applications. Some operators are applying the Freemium concept to events that are of high significance to subscribers. For example, Mobily in Saudi Arabia in August launched a "Connect Laptop" plan that gives new subscribers free mobile internet access from 4 a.m. to 7 p.m. during Ramadan. Other operators are looking to offer free (i.e., zero-rated) mobile internet access to major national sporting events.

 

 

Freemium for the Feature Phone

 

...which expands the concept dramatically, especially in developing country markets. The  announced Facebook for Every Phone application for Feature Phones is optimized to use less data than other Java applications but still lets users have a smartphone-like experience. This initiative extends Operator’s Freemium opportunity in a couple of new ways: (1) it’s targeted to feature phone users — 2,500 phone models are currently supported — which is of particular interest to operators in less developed markets not yet seeing a boom in smartphone adoption, and (2) Facebook is partnering with a number of mobile operators globally to offer free data access to the application for 90 days. Included in the initial group of operators signing on are: Aircel, Airtel and Idea in India, Banglalink in Bangladesh, Celcom in Malaysia, Smart and Globe in the Philippines, Smartfren and Telkomsel in Indonesia, Ufone in Pakistan, and Vodafone in Turkey.


The Freemium business model has some real potential for operators to gain new mobile data subscribers and drive revenues. Freemium services can also be offered with or without partnerships with Over-the-Top (OTT) or content providers, as we’ve seen in the examples above. Some operators are exploring offering "Freemium Events" – giving subscribers access to certain web events, e.g., an important cricket or football match, or a musical concert free of mobile data charges, as a retention tool to reward loyal customers and generate more interest in mobile data plans. Watch Ash Dahod, Cisco’s VP/GM of Mobile Internet Technology Group, speak about Freemium among other monetization topics at 4G World.

 

What do you think? Please feel free to free-ly share your Freemium thoughts below!

 

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 #5: Day Tripper


I'll bet that many of you mis-read that title as "Virility".  This blog has nothing to do with the blue ****, or any of the spam messages that probably bog down your email, even if your name is undeniably female.

 

This is about Virality - which if Webster or Britannica were still around, they would have defined as "The attribute or quality of an idea (or video) to replicate itself through manipulation of a human beings' brain.  Modern examples "Viral video", conspiracy theories, extreme ideology".

 

Virality is all around us. The medium that you are reading right now, a "blog" didn't exist until just a few years ago, and now they are everywhere - a viral idea (evolutionary biologist Richard Dawkins calls them "memes", self replicating ideas subject to evolutionary pressures).  Other examples of virality fill the peta-bytes of storage we know as "YouTube" (TM).

 

Those are the ones that concern us in the mobile community the most.  Video is a rich medium. a euphamism for "fat and expensive" - fat because it take a lot of bandwidth to transmit, expensive because it consumes an unfair amount of spectrum, processing and transport (especially backhaul).  It's also a moocher, mostly looking for a free ride.  Subscribers, especially those with HD screens such as smartphones and tablets consume an ever growing amount of video, for which they pay little or nothing.  Mobile service providers, who benefitted in the last two decades from the viral concept of "Mobility", are now suffering from a different Virality - "mobile video".

 

Today, about 50% of all mobile data traffic is video.  Of that, the vast majority are viral videos from sources such as YouTube and Google, with paid-for sites rapidly growing.  The trouble is that the payments for subscriptions of advertising go the content providers, who get a free ride over the mobile carriers network.  Mobile operators sell data plans, but they are not scalable for the new world of all-you-can-eat-viral-video.

 

There are multiple technologies available offering features such as operator storage (caching), re-encoding (trancoding), adapatation to available bandwidth (transrating), and improved delivery (TCP Optimization).  Cisco is of course one of them (download "at-a-glance" PDF here).  We ran several business models of typical mobile service providers, and we found that if a moderately large operator with 17 million subscribers were to apply all of the technologies above, their cost savings (assuming that they used the Cisco Mobile Videoscape solution) just from optimization and managing over-the-top video virality could exceed $800m over 5 years, with another $250m in potential revenue.

 

$1 Billion (and change).  Now that's a Virality I can get behind.......

With many Operators offering Tiered Pricing mobile data plans, some operators are also mandating that users subscribe to a mobile data plan for any new smartphone purchases. In some cases, families are resisting the costs of “per subscriber” data plans, and are deferring smartphone upgrades. This trend could slow operators’ mobile data revenue momentum. Operators are considering a new type of "family plan," a mobile data-service plan that covers multiple users’ devices, allowing the subscriber to purchase a single bucket of bytes for sharing among family members. Similarly, these plans are of interest to other value-conscious groups such as Small-to-Medium Businesses (SMB). Let’s call this the Family/Group Data Plan.

 

A variant of that plan involves grouping devices rather than grouping users, i.e., a user with multiple devices (e.g., smartphone + tablet) could have a single contract with a shared data quota across devices. While similar in some sense to the Family/Group Data Plan, let’s refer to this variant as a Multi-Device Plan. These 2 types of plans are likely to be offered in mixed combinations as they become more prominent in the market.

 

 

Operators Like Family Values

 

In a custom Cisco-commissioned Heavy Reading study, based on a global survey of 50 operators, there were interesting operator perspectives on Monetization, Optimization, and Video services. In this research, Operators viewed Family/Group Data plans as the second most favored monetization use case, in part because it will help operators drive incremental data penetration and usage. A Family/Group Data Plan is viewed as a lower cost way for new subscribers to come onto the network, and a good value service that will encourage loyalty and differentiation. This is the use-case that respondents thought the most likely to achieve greater than 30% penetration, and that operators think has the best revenue potential, with 36% saying it could generate $5 ARPU per month. The plan was also viewed as easily understandable – important for pushing mobile broadband into the mass market. A group of 19 respondents from North America and Western Europe with revenue greater than $200 million were more enthusiastic than average about this use-case, with 45% of them selecting a “more than 30%” penetration rate for this service. In emerging markets, there was also strong interest in this offer because it had the ability to attract multiple customers in one contract. Some mobile operators also believe that Family/Group Plans would add interest in new LTE offerings and even help capture customers from the residential DSL market.

 

Some operator Family/Group Plan examples: 3 Austria launched its 3PartnerCard which, for €3 per month, gives mobile data subscribers a second USB data modem that can share the data quota of their primary data stick. 3 Austria also offers 3 Data Pool which enables a corporate customer to subscribe to a common pool of mobile data quota, from 3GB to 50GB/month, that can be used individually by company employees. Rogers in Canada offers voice & data Family plans with either 1GB or 2GB shared data quotas, including unlimited Social Networking usage. AT&T recently hinted that it's working on Family Plan offers, and Verizon Wireless disclosed that it too will introduce family data plans after it launches tiered data pricing, likely sometime in the summer. [March 2013 update: in addition to Family Data plans now offered by AT&T, Verizon Wireless and others, TeliaSonera launched shared mobile data plan in Sweden, allowing up to seven devices via a single subscription]

 

Tough Love

 

Family Data Plans can also have a parental control feature if the operator gives parents the ability to dynamically manage and allocate a shared data quota across family members. For example, a parent might block mobile gaming services for a period of time for a child who isn’t doing well in school, so that there is less distraction. The same capabilities can enhance “group” plans sold to businesses, where there may be different categories of employees who could be permitted different mobile data service privileges.

 

Multi-Device Plans

 

These plans enable the operator’s customers to share their data quota across more than 1 device. While the predominant approach is for operators to offer subscribers separate mobile data plans for each device, there is growing recognition for the need of multi-device mobile data plans, especially as tablets, e-book readers, etc. are often considered as secondary devices by users. And as these secondary devices typically support Wi-Fi connections, many users will forgo the cost of subscribing to a separate 3G or LTE data contract. Some analysts project that Apple is producing the iPad2 in a ratio of 3:4:3 (Wi-Fi, UMTS, and CDMA/EV-DO, respectively), suggesting that the majority of iPad2 shipments are 3G models. [Update: analyst firm ABI Research reported that only 25% of the Apple iPad tablets shipped in Q1 2011 featured support for 3G networks.] That number is significantly lower from previous quarters and just below the industry average of around 35 percent. It may be that once the early adopter segment is exhausted, operators will have to more seriously consider Multi-Device Plans to continue a high 3G or LTE service attachment rate for tablet sales. And as tablets generate 5 times more traffic than the average smartphone (see Cisco’s Visual Networking Index (VNI) Global Mobile Data Traffic Forecast), operators will want to monetize their data usage. Operators also view the enterprise market as a segment where there will be demand for Multi-Device Plans, e.g., 3G iPad and Android tablet users wanting to add the device to their corporate smartphone accounts.

 

Multi-Device Plans are now appearing from some operators, e.g., for an additional €3 per month, Movistar Spain’s iPhone Plus or Premium subscribers can get a 2nd SIM for an iPad sharing the same mobile data quota. Mobistar in Belgium launched Internet Everywhere Multi, a contract which allows sharing the same data bundle across several mobile devices. Such Multi-Device offers are also logically consistent with the direction that multimedia content providers are heading in offering “any screen” access to users’ preferred services, especially premium video content. Many operators are investing in the intelligent mobile/evolved packet core and Policy and Charging Control (PCC) solutions necessary to deploy new mobile broadband services like Family/Group Plan and Multi-Device Plans.

 

This “Any Screen” trend leads to an interesting question: will the ability of the operator’s intelligent network to manage a user’s data quota across multiple devices – possibly along with the capability to optimize formatting and display of such content – provide additional opportunities for operators to forge partnerships with content providers?

 

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 #4: Freedom Rider

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