Mobile Business Setups for Revival & Profitability 2014 & Beyond

Published: February 2014
No. of Pages: 145
  

An ultimate guide to mobile operator wizardry involved in building profitable businesses beyond 2014; portfolio planning ahead NGN up-grades, and trends of monetization; best practices in mobile-fixed partnerships, resource allocation & re-utilization; with referential case studies– straight from the horse’s mouth.

E1. Introspection

Mobile Business Setups – for Revival & Profitability: The reasons which led us to choose this particular project springs from the telecoms happenings globally in the past couple of years. After a decade of extraordinary growth, when telecom players had been generating huge revenues and had great profit margins, the industry is today at a point where even many established players are struggling for their survival. And it’s high time even for the players that are in safe position today to review and restructure their mobile business setups to remain profitable in the future.

We sought to analyse the various new opportunities that all the players in the telecom market can grab to grow and become more profitable in the years to come. But what are the current challenges that are holding them back to Invest, Innovate or Monetise? And how the players can reinvent themselves to counter those challenges and quickly enhance their competitiveness - that’s exactly what the Report endeavours to answer.

In particular we analysed:

  • Majority of operators’ business bottom lines are at the stage of no profit/ no loss. How can they return to strong growth?
  • Towards which side be investments inclined in the future and what would be their probable gestation period, and ways to win investor confidence?
  • Progression towards NGNs like LTE/ LTE Advanced, with selective case studies.
  • Different ways operators are managing their networks and where they are making mistakes.
  • Effective PCRF modules.
  • The lesser known paths to optimise CAPEX and OPEX.
  • Newer ways to collaborate with mobile device makers, app developers, ISPs, MVNOs and OTT players.
  • How to explore pricing keeping consumers at the core?
  • SMS/ MMS business models that can help operators to fully extract revenues from these services which many consider passé.

Such and many other matters we examined led us to come up with a unique research – A research which isn’t bent on any particular technology, country or fraternity – But rather, is specifically targeted at – Boosting up revenues for ALL connected to the Mobile Phone – be it mobile network operators at any stage of technology, device makers, app developers, ISPs, MVNOs, OTT players et al. Truly, a one for all, and all for one project – Towards Revival & Profitability!

E2. Towards Boosting Revenues and Profits!

The Report begins by fully analysing the various challenges that the mobile industry is facing today. In Chapter 2, we have regionally covered the 6 continents and observed each one from its unique perspective. Following are the most prominent risks that are holding back telecom players or going to be a spoilsport in the coming years and the players in the value chain must strategise accordingly.

1. Investors’ Confidence at an all time low, Regulations adding more woes

The global telecom market has gone through a flurry of events that has largely been in the favour of consumers, telecom network and infrastructure providers, device manufacturers and the new breed of players like OTT providers and app developers. Ironically, the network operators that once used to be the face of the telco market have now become mere spectators. This is not going to be the ideal condition for the telco industry to grow, generate wealth and add value to the end users for a longer period of time. And that’s the reason, investors that once looked at the telco market as very lucrative are now doubtful on the returns.

Operators have managed their capital expenditure and balanced it well with free cash flow and dividends but strict capital expenditure control can restrict them to formulate new services at a fast pace. They must remain committed to invest in new growth avenues and at the same time monitor technology and consumer developments accurately to make sure their financial investments remain on the right track. Moreover, regulatory uncertainties are impacting operators’ desire to invest in new markets. It is crucial for regulatory bodies to formulate pro-investment policies so that operators form workable stances on a range of issues and also to facilitate the relationship between fixed and mobile policies. All these parties must work in cohesion to achieve transparency over regulatory approaches.

2. Business Models not in line with Digital Services Opportunities

MNOs need to approach customers from a fresh perspective by letting go of their legacy strategies as values move from minutes of usage to volumes of data. Rather than battling churn, MNOs should target revenues from new services and think up a broader array of pricing models for monetising such services.
Other players like device manufacturers, network equipment vendors and independent software vendors will have equal opportunity by enabling and cooperating with each other in building platforms to offer digital services portfolio.

3. Innovation taking over Loyalty

Take a look at the few disruptive innovations that shifted the loyalty and changed the course of telco market with their fascination – LTE vs. WiMAX; Android vs. iOS, Symbian, BlackBerry and others; Internet calling and messaging vs. traditional communication services and last but not the least mobile apps vs. websites. Each of them has simply shaken the dominance of the other and in some cases even derailed the other from the track. With ever-growing innovations players in the telecom market need to spot the next big thing as early as possible and align themselves accordingly. Failing to do so, even the established players can lose their hold on the market and can even disappear to be present in the book of legends.

4. Underuse of Customer Analytics and Failure to target the RIGHT AUDIENCE

The successful MVNOs like Virgin Mobile have been able to build great brand equity in highly competitive markets just by focusing on users and their lifestyles. This calls for a big shift in the approach from operators that used to focus more on network and less on the users. MNOs need to have detailed business intelligence about their customers so that they can identify the segments that will remain profitable for longer period of time. These factors will help them understand customer mindset and in reusing network data in collaboration with other parties to offer services with unparalleled QoS. Improved information can also assist operators in cutting OPEX while meeting regulations from governing bodies. How this can be done has been aptly covered inside the Report.

5. Improper M&A and Partnership Strategy

The nature and associated risks of mergers and acquisitions have changed despite a surge in such activities. But mergers, acquisitions and collaborations are crucial in the converging mobile market. However, operators need to clearly differentiate between when they should acquire and when they should collaborate.

A detailed analysis with solutions have been presented on the geographical-based problems faced by MNOs, ISPs, Fixed-line operators, MVNOs, Device manufacturers, Network infrastructure providers, App developers, and Independent software vendors. The issues that are broadly analysed include declining ARPUs, network failures, churning subscribers, unfavourable regulatory policies, grey market for mobile devices, devices’ incompatibility and failure to recover RoIs - so that you get a better grasp of the real hurdles out there and can devise appropriate roadmaps to come back on the track – from which many are slipping fast. Besides, the report also explores various ways by which you can implement lean strategies to drive growth and innovation.

Chapter 3 is about preparation for revival and profitability - to counter the market challenges, to make winning strategies, and to achieve the competence required to boost up the profit margins.

The first section of the Chapter talks exclusively about disruptively overhauling your business strategies. It has been widely observed in the telecom market, especially in the case of MNOs, that although everything is fine: customer base is increasing, users are subscribing to the services, the operators’ portfolio is in place, but that’s not reflecting into ARPUs. The reason is your customers are idle, either partially or fully. But, the question is: Why? One of the reasons is that somehow you are ignoring their needs or competition is offering better solutions or your users are looking for better solutions. Here comes the role of disruption – no matter what you offer - devices/ services/ software, you need to revamp them time and again to make them more useful and appealing to your users. Acclimatise and transform your offerings, otherwise you will be outdated.

We next took into perspective the VoIP challenge and how operators can turn ‘threats’ into ‘opportunities’, especially in regards to the sudden upswing of OTT players. It’s becoming progressively tough to charge for communications services, so most OTT providers are forced to give their core messaging, voice and video chat features free of cost. OTT providers are exlporing many revenue streams like Ad-based or free-to-use functionality and paid premium functionality. How can MNOs adapt to these business models to offer cheaper/ free basic communication services?

With the advent of VoLTE HD Voice, and other innovative VAS (based on LTE/ LTE Advanced) what are the challenges that will put pressure on OTT players and how long they are going to be a challenge for MNOs? The Chapter critically analyses OTT battleground and new technologies that are going to help telcos to challenge OTT players.

A section has been provided on MVNOs. Starting an MVNO is quite simpler compared to an MNO; however, tasting the success is a different ball game altogether. Even in a market that is crowded with MVNOs, there must be room for some innovative propositions. Success will be achieved by focusing on a segment and its specific need – and offering something you are really good at. The future is about connecting machines to machines and identifying niches in different verticals and leveraging the data growth. PosteMobile is a classic example that evolved its business model from traditional mobile services to a range of financial services on mobile. No doubt the operator has been adjudged as the most innovative MVNO in 2013.

Roaming is undoubtedly going to remain a hot topic this year and beyond. Roaming on 4G/ network collaboration on profit-sharing basis/ hotspotting/ 4G in business use/ portfolio planning in local and overseas markets have been studied in this Chapter that could be lucrative for operators in the coming years. Currently mobile roaming is a US$50 billion market and will reach around US$91 billion by 2018. The share of LTE roaming revenue will be approximately 45% in 2018 from just 6% in 2013.

Entering a new market is always accompanied by a lot of risks and requires a foolproof strategy to counter the challenges that might come in the way of reaping out the investments. Taking this into perspective we have provided a section on viral go-to-market strategies inside the Chapter, with a case study on Bharti Airtel – Which would help the operators that are looking at newer business opportunities in emerging markets such as Africa and Asia Pacific.

Consumer segment currently accounts for the major source of revenue for operators. This segment is going to remain the focus area of operators in the foreseeable time due to its size; however, the enterprise segment holds really immense potential for MNOs. The worldwide mobile service revenue (voice, messaging, handset data plans, mobile broadband and enterprise apps, and management services revenues) from business users will reach US$360 billion by 2018. On the other hand, the enterprise cloud-based services would double by 2018 from the current size of US$18.3 billion in 2012. MNOs must strive to engage with enterprise segment and align themselves to offer innovative business solutions. The Report tells how and where the opportunity is.

Chapter 4 has been devoted entirely to consumer engagement and relationships – With the focus on continually, and disruptively evolving your VAS strategies and enhancing QoS to keep your subscriber base not only intact, but on an upward swing. Special focus has been put on consumer segmentation, pricing and service bundling – so that operators don't make the mistake of 'putting all their eggs in one basket.' Business models on prepaid and postpaid offerings with illustrative cases have been provided to maximise your revenue.

Chapter 5 provides ideal roadmaps for network development and ways to minimise the total cost of network management.

An ‘excellent’ network doesn’t necessarily imply huge investments. Based on our study of various operators’ network models across different geographies, we have endeavoured to outline simple steps whereby an operator can draw in considerable revenue with minimum network investment. And, by the way, not every operator out there is on the verge of 4G. We haven’t left that out of realm and a section of this Chapter analyses optimum service delivery mediums/ pricing packages for such mobile operators, with appropriate business models wherever possible, with a case study on the network upgradation and modernisation strategies of Maxis Malaysia.

We have included certain ‘progression’ guidelines for operators as to how they might move from 2G to 3G and beyond, while keeping CAPEX and OPEX tamed. For example, in Canada, Bell and Telus formed a network sharing agreement stating that they will overlay their EVDO network with HSPA+ to launch their LTE services - Bell did so in September 2011, while Telus launched its LTE services in February 2012. Similarly, Net4Mobility is a joint venture in Sweden between Tele2 and Telenor, whereby both developed their LTE network together. A case has been presented on Bharti Airtel to further explore the concept.

Side by side we have studied PCRF module in-depth, with effective business models as well as an interesting case study on Verizon Wireless’s approach towards PCRF. Besides, there’s an exclusive case study on LTE – pitting the pioneer TeliaSonera with three big telcos – Verizon Wireless, SK Telecom and NTT DoCoMo, which could help those on the verge of planning LTE launches soon/ or those who have already deployed commercial LTE, to monetise it effectively.

And yes – We haven’t left out the exciting possibilities for fixed-line operators. They would be here to stay, albeit, how they reform their business strategies in the advent of NGN mobile and wireless arena would be the focal point on how they perform in the coming years. Can fixed-line and mobile operators team up somewhere whereby both jointly reap increasing revenues? The Report includes certain roadmaps and suggestions for such fixed-line and mobile operators.

In Chapter 6 we have explored the most profitable mobile services and evolving business models to remain competitive in the future.

Operators have been investing heavily in the network and infrastructure development, however, old business models would not be sufficient for them to survive and therefore they must identify new revenue streams and build business models to further drive profitability and growth.

The chapter starts with the mobile business model of the future that would leverage advertising to offer free mobile services to the users while generating revenues from third parties such as media companies and retailers. We have profiled three case studies to learn from the pioneers as to how they are leveraging customer data and mobile network intelligence to offer intelligent advertising solution. The chapter covers cases on mobile marketing and wallet platform WEVE, AT&T AdWorks, and global advertising alliance by Telefónica Digital and Pinsight Media+.

The next section explores the future of value added services and how the latest technologies would entice even the most stubborn user. Many such technologies and their applications have been thoroughly covered – like the marketing application of geolocation services, concept of context awareness, and the commercial application of mobile QR codes.
Let’s check Layar, a company working on augmented reality. It has developed an application that maps a live camera image of the user’s surroundings with relevant information. An image of a storefront on the street could contain overlaid information about existing sales and promotions. One could point a camera at an image in a magazine and the app could suggest an online boutique to purchase the dress advertised. Another example is the world's largest taxi app “myTaxi”. It connects customers with taxi cabs in different cities on the basis of the relative location of the customer to the taxi, time, desired destination, cost and other factors. Apart from basic features like online booking and fare calculator, the app has some really interesting features like making cashless and cardless payment, option to rate/ save as favourite a driver (he will be on preference list on next request) and live tracking of your taxi's arrival with details such as the driver's picture, name, remaining distance and arrival time. We have covered these and few other concepts of the future of mobility within the Chapter.

M2M or Internet of Things is going to create billions of fresh revenue streams in saturated markets such as the US and South Korea. However, these opportunities are not limited to particular geography and will emerge across the globe in different forms. In particular, smart grid is going to emerge as the most important M2M sector for operators by 2018, followed by smart homes. So, have you visualised your M2M portfolio? How are you going to grab the M2M opportunity? Check out the M2M opportunities in detail inside the Report.

After covering so much how could we overlook the rising popularity of cloud computing? The new wave of cloud systems and technologies is creating a buzz and mobile cloud data will make up for 80% of the total data on 4G networks by 2018. Enterprise services will hold immense value, representing a larger and more profitable revenue stream for mobile operators.

Mobile contents have come up as one of the most talked-about industry segments and it’s likely to remain in prominence in future as well. But operators have not been able to leverage this segment as much as content developers and OTT players. Ironically, operators are better positioned to take advantage of this new trend owing to their existing relationship with customers and their reliance on operator billing. The case of NTT DoCoMo vis-à-vis mobile contents, which we have presented, is really encouraging for other MNOs that want to generate revenues from content offerings.

The Chapter contains a detailed analysis of mobile apps and business models/ strategies on MNOs/ Vendors/ App stores and developers. With the emergence and growing importance of apps, mobile network operators have also shown interest in launching their own app stores and/ or collaborating with app developers. But most of the initiatives were not so successful and eventually MNOs decided to dispose their ideas. Now, the question is at a time when apps are in great demand and few players like Apple App Store and Google Play have tasted huge success in their respective app stores then what went wrong with other initiatives? We have analysed the app store launched by Verizon to understand the app economics and take lessons to visualise the other ways in which operators can take advantage of the app–economics.

Talking of mobile platforms, Android and iOS have performed really well for a long time now. However, both of them have certain limitations that are creating need as well as opportunity for new OS. Tizen is one of such OS to join the family of mobile platforms. We have covered and analysed the entry of this new operating system – Which might give Android/ iOS a run for their money in the long run. Besides, other new OS such as Sailfish, Firefox and Ubuntu are also mentioned. Another case is on Apple App Store and Google Play – analysing which might beat the other, and if so, how?

Besides apps, the Chapter covers M-Commerce services in depth, inculcating the various intricacies with all parties concerned, with suggestive business models to serve as roadmaps to all players concerned. The Chapter entails a case study on the M-Payment service M-PESA by Kenya’s Safaricom – as to how the service came into existence and what factors/ marketing strategies made it such a huge success that it became the second-largest source of revenue for the telco for FY 2012. One of the other verticals analysed is M-Health, with modules to break barriers and reap profits from this service which is bound to create ripples in times ahead.

We next discuss mobile multimedia services. The growth in mobile multimedia services directly uplifts the data usage. In 2012 the data plans accounted for around 65% of the total mobile multimedia revenue. This also shows that MNOs are the prime beneficiary of mobile video services. The growth of mobile multimedia services is also attracting advertisers to leverage this medium for marketing their products and services. The impact can be seen as the advertiser’s spend almost doubled in 2012 reaching US$11.26 million from US$6.3 million in 2011. Business models and strategies for profitable launches in new markets have been presented, with a case study on SK Telecom.

Another section speaks about mobile devices and related forecasts: Smartphones, Tablets and Phablets. What influence different mobile device manufacturers will have on each other’s businesses in the coming years and how the market dynamics will shape up with the strong growth of Chinese and Indian device manufacturers? Whether high-end or low-end devices there is room for all, but what would be the USPs for device manufacturers over the next five years. The section presents an interesting case study on Huawei that has registered extraordinary growth in smartphone market by addressing the market with innovative offerings to meet the user's expectations within their budget.

Chapter 7 offers strategic guidelines for securing future profitability. What should be your approach and how can you retain and prolong your success in the telecom market? As now it is evident that “Old tricks” will not be sufficient to win the new games, the Report rounds off with thought provoking guidelines for all the players in the value chain. These guidelines will help you efficiently transform your mobile business setups and emerge as a game changer.

E3. Methodology

We took into our ambit the past few years and for this particular study we regionally explored some of the prominent mobile operators, device makers, infrastructure providers and interviewed several telecoms experts, C-level and mid-level executives.

Information Sources: Major sources include both face to face and telephonic interviews with telecom industry experts and consumers. It also includes various surveys that were conducted in different regions of the world. Other sources comprise of organisations’ websites and financial reports, books, trade journals, magazines, white papers, industry portals and numerous government sources.

Forecasting Methodology: We used extensive database of macroeconomic and sector specific data to generate industry forecasts. We used Judgment based methods like the Delphi method and Extrapolation; Time series methods like Exponential smoothing, Cyclical and seasonal trends and Statistical modeling, as well as the Survey method. The initial baseline projection is computed with the most recent market data. After an initial baseline forecast, all probable future macroeconomic and industry specific occurrences and assumptions are taken into consideration to generate the final forecast.

Key Questions Answered

  • How MNOs can maintain market stickiness and longevity, while securing investors’ confidence?
  • How services should be offered in different phases for smooth transition to fixed-mobile convergence (FMC) and what are the new avenues where fixed-line operators can team up with mobile operators?
  • What are the revenue opportunities in mobile cloud beyond online storage and media offerings?
  • What influence different mobile device manufacturers will have on each other’s businesses in the coming years and how the market dynamics will shape up with the   strong growth of Chinese and Indian device manufacturers?
  • How to develop strong value proposition by addressing the digital lifestyle opportunities and maximise Customer Lifetime Value?
  • How can MNOs leverage maximum gains from low consumer spend markets?
  • Where is the real profit in tidbits such as QR codes and NFC, and how MNOs can leverage them to drive customer engagement and uplift new mobile services?
  • What are the new verticals (m-commerce, m-health and m-entertainment etc.) MNOs can explore to generate more revenues?
  • What are the new ways SMS and MMS can further be exploited by MNOs?
  • Why conservative approach of investment (CAPEX) can be a better option in many markets?
  • What are the new ways OTT players and MNOs can have a successful collaboration over a longer period?
  • What Samsung should not overlook with Tizen?
  • Network infrastructure providers need to provide customised solutions to MNOs – The Whys and Hows.
  • How to collaborate with other players in the ecosystem for shortening your time to market?
  • How the scenario would shape up between content aggregators/ developers and MNOs in the Mobile VAS arena?
  • How uncertainties (regulatory hurdles, unstable economic climate, and political issues) can be assessed to turn them into strategic advantages?

Key Findings

  • Mobile device manufacturers and OTT players have hijacked almost entire attention of customers and MNOs are currently reeling under that pressure. However, they should not panic but need to safeguard their position and avoid unnecessary risks. Identifying the segments with high profit margin and holding their position in the market will offer great opportunities to monetise their investment in the long run.
  • Our survey revealed that majority of OTT players are in pressure to collaborate with MNOs/ ISPs to ensure QoS and believe that QoS can only be guaranteed by partnering with data providers.
  • VoLTE has all the capabilities to beat the OTT VoIP services; however, the device ecosystem is currently not in its favour. The penetration of LTE devices is low and limited to developed markets such as the US and South Korea. Price of LTE devices are declining, but it is still not affordable for the masses and we expect that low-priced (below US$100) LTE devices will spread only after 2014.
  • Smart mobile devices are slowly entering into the workplace and the trend has started impacting the industry in two ways. On the one hand, demand for data and mobility services is growing exponentially, and on the other hand it is also driving enterprises to replace computing devices or promote BYOD.
  • The demand for smartphones is growing rapidly and it is going to make more than 50% of the total mobile phones shipped globally in 2013. The worldwide shipment for smartphones will reach 1.7 billion by 2018.
  • Strong demand for Android tablets and the introduction of new iPad mini from Apple have greatly boosted the worldwide tablet market. In fact, tablet market is going to heat up further with the introduction of more affordable devices from Chinese vendors and the introduction of Apple’s iPad mini 2 (by the end of 2013 and most probably at significantly reduced price). We predict the total worldwide shipment for tablets to cross 300 million mark in 2017 and reach close to 345 million in 2018.
  • The worldwide mobile service revenue from business users will reach US$360 billion by 2018. On the other hand, the enterprise cloud-based services would double by 2018 from the current size of US$18.3 billion in 2012.
  • Most of the activities in the telco industry are currently revolving around mobile broadband. However, it must be noted that fixed line will not only carry at least ten times more traffic than the mobile network during the next 5-8 years, but it will also be crucial for the widespread growth of mobile broadband. In fact, fixed mobile convergence (FMC) will be the business model that will work best in the coming years through optimal use of fixed and mobile technologies.

Mobile Business Setups for Revival & Profitability 2014 & Beyond

Table of Contents

Chapter 1: Executive Briefing

Chapter 2: Key Sustainability Issues, Regional Variability and Trends 2013-2018
2.1 Asia Pacific
2.1.1 Competition Driving Down the Prices, Profit Margins and RoIs
Figure 2-1 Operators’ RoIs in Selected Markets in Asia Pacific (In %), 2008 and 2010
2.1.2 Skyrocketing Data Traffic affecting QoS
2.1.3 Overcrowded Device Market with Flourishing Grey Market
Figure 2-2 Chinese Smartphone Market Share (In %), Q4 2012
2.1.4 Unpredictable Regulatory Policies
2.1.5 Early Launches of NGNs: A Case of Too Much, Too Soon
2.1.6 Cultural Constraints
2.2 Africa
2.2.1 ARPUs Nose-diving across the Region
Figure 2-3 Africa Unique Subscribers by Region (In %), 2012
2.2.2 Burden of Overheads
Figure 2-4 Average Corporation Tax by Region, 2011
Table 2-1  Examples of Taxes and Fees Applying to Mobile Operators in SSA, 2011
2.2.3 Regulatory Risks and Issues Adding to Woes
2.2.4 Limited Spectrum to offer MBB
Figure 2-5 Available Mobile Spectrum in Selected Countries (In MHz), 2012
2.2.5 Returns Disappointing
2.3 Middle East
2.3.1 Political Instability
2.3.2 Competition Resulting in Price Wars, Declining ARPUs and Voice Revenues
2.3.3 Cultural Barriers
2.3.4 Scarcity of Local Mobile Contents
2.3.5 Unexpected Government Interventions
2.4 Europe
2.4.1 Economic Instability Putting European Telecoms Market on the Back foot
2.4.2 MVNOs Rivaling MNOs for Customer Share
2.4.3 OTT Players affecting MNOs’ Voice/ Messaging Revenue
2.4.4 Competition Bringing Down RoIs
Figure 2-6 European Mobile Service Revenue (In EUR Billion), 2008 - 2012
Figure 2-7 Mobile Penetration by Region (In %), Q1 2013
2.4.5 Insufficient Data Revenue
2.4.6 Unfavourable Regulations
Table 2-2  EU Roaming Regulation, 2012 - 2014
2.5 North America
2.5.1 Cut-throat Competition and Lack of Cooperation
2.5.2 Low Density Rural Markets
2.5.3 Smartphone Market Reaching Saturation
Figure 2-8 Smartphone Shipments by Region (In Million), 2013 and 2018
2.5.4 Burden of Device Subsidies
2.5.5 Unstable Economy
Figure 2-9 Real GDP of US, Canada, Japan, Euro Zone, Non-Japan Asia and Latin America (Y-o-Y % Change),  2012 - 2014
2.6  Latin America
2.6.1  High Taxation Impacting Mobile Users and Operators
Figure 2-10  Total Cost of Mobile Ownership as a Percentage of GDP per capita, 2012
Figure 2-11  Tax as a Percentage of Handset Cost, 2011
Figure 2-12  Additional Mobile Services Taxation for Users (In %), 2011
Figure 2-13  Taxes as a Percentage of profits for Latin American ICT Operators, 2012
2.6.2  Voice Services Reaching Saturation
2.6.3  Declining ARPUs, Low Consumer Spend and Limited Customer Base
Figure 2-14  Latin America Mobile Penetration by Country (In %), 2011
2.6.4  OTT Players Started Intensifying Market Competition
2.6.5  Wi-Fi Abundance Affecting ISPs and MNOs

Chapter 3:  Preparation for Revival & Profitability with Best Operator Practices, and Forecasts
3.1  How to put the accelerator on the ARPU meter?
3.1.1 No Matter What You Offer – Devices/ Services/ Software - Today’s Telco Market Needs DISRUPTIVE INNOVATION!
3.1.2 Why winning existing customers again and again is so much important?
3.2 Strategies to Boost up Profit Margin
3.2.1 Which will drive the maximum revenue in medium term – voice, SMS/ MMS or broadband?
Figure 3-1 Worldwide Revenue Share of Voice, SMS/ MMS and Broadband (In %), 2013, 2016 and 2018
Figure 3-2 Vodafone Group Service Revenue Breakdown, 2012
Figure 3-3 MTN Group SMS Revenue (In R Million) 2010 - 2012
Table 3-1  MNOs’ Data vs. Voice Revenue Breakdown in Selected Markets (In US$ Billion)
3.2.2 What should be your data strategy for maximising RoI?
Figure 3-4 Types of Data Plans among Smartphone Users in Key Markets (In %), 2012
3.2.3 Data Package – How to obtain a profitable mix which is appealing also?
3.2.4 The Evolution of Data Pricing and ARPU Trend
Figure 3-5 The Evolution of Data Pricing and ARPU Trend
3.2.4.1 Case Study: Verizon’s Share Everything Plan
Table 3-2  Verizon's Unlimited Talk and Text + Shared Data Plans, May 2013
Figure 3-6  Verizon Wireless’ EBITDA Service Margin (In %), Q3 2011, Q2 2012, Q3 2012 and Q1 2013
Figure 3-7  Verizon Wireless’ Uptake of Shared Data Plan (in %), October 2012 and April 2013
3.3  The OTT Challenge (Communication and Media)
3.3.1 How serious is it a threat for telecom operators and how secure is the future of OTT players?
3.3.2 Case Study: Tango- Leading OTT Mobile Video Calling Service
Figure 3-8  Tango Subscribers (In Million), October 2010, June 2011, September 2012 and November 2012
3.3.3 Case Study: KDDI Skype Partnership – if you can't beat 'em, join 'em
Figure 3-9  KDDI ARPU Growth (In JPY), Q3 2009 – Q2 2011
3.3.4 Case Study: Hike – Be brave to beat yourself!
3.3.4.1 What propelled the Indian upstart to the top?
3.3.4.2 Hike’s route to revenue
Figure 3-10  Hike App Downloads (In Million), February 2013 and April 2013
3.3.5 Who wins the VoIP - VoLTE Tug of War?
3.4 The MVNO Route
3.4.1 Why is it currently the best strategy to enter into telecoms market?
Figure 3-11 The MVNO Business Model
Figure 3-12 MVNOs’ Activities along the Value Chain
Figure 3-13 Typical cost structures for MNOs and MVNOs
Figure 3-14  Worldwide MVNO launches by region, 1991-2010
Figure 3-15  Worldwide MVNO Subscriptions (In Million), 2012 - 2018
3.4.2 How MNOs can leverage MVNO opportunity to generate incremental revenue while keeping user base and brand value intact?
3.4.3 How MVNOs can create a compelling value proposition?
3.4.3.1 Case Study: Virgin Mobile, UK
Table 3-3  Virgin Media Value Proposition
Figure 3-16  Virgin Mobile, UK Subscriber Growth 2000 - 2007
3.4.3.2 Case Study: Ortel Mobile, Europe
Table 3-4  Ortel Mobile Value Proposition
Table 3-5  Free calls from Ortel Mobile to Ortel Mobile
3.5  High Speed Network Markets – Network Lease-out, Data Exchange Revenue
3.5.1 Opportunities in 4G Roaming
Figure 3-17  Worldwide Roaming Revenue and Share of LTE Roaming Revenue (In US$ Billion and In %), 2013 –2018
3.5.2 IPX: Drive Profitability and Innovation in 4G/ LTE
Figure 3-18  Worldwide IPX Market (In Billion US$), 2013 – 2018
3.6  Emerging Markets: Operators/ Vendors Need to Bet on for Future Growth
3.6.1 What should be your go-to-market strategy?
3.6.2 Case Study: Bharti Airtel
3.7  How lucrative are the Greenfield markets?
3.8  Exploring the Opportunities in Enterprise Segment
Figure 3-19  Worldwide Revenue Share for MNOs – Consumer vs. Enterprise vs. Wholesale (In %), 2012
3.8.1 Enterprise Mobility Services
3.8.2 Unified Communications Services
3.8.3 Enterprise Social Media
3.8.4 Cloud Offerings

Chapter 4:  Mobile Marketing in Retail - A Participatory Approach towards Consumer Engagement & Monetisation; 2013 & Beyond
4.1 Social Media: Newer Tactics to win Spendthrifts – The Youths
4.1.1  Brand Presence – How social you are?
Figure 4-1  Levels of Brand Social Engagement
4.2 Customer Segmentation, Pricing and Service Bundling: Time for Overhauling
4.3 What should be your VAS Strategy in different markets?
4.3.1  VAS Business Models for Emerging Markets: What to offer and how to monetise?
4.3.2  Matured Markets: What the market demands and how to meet the customers’ expectations?
4.4  Your Darling Dollar Strategy: Prepaid vs. Postpaid
Figure 4-2  Prepaid Mobile Users: Smartphone vs. Feature Phone in key Markets (In %), 2012
4.4.1 Comparison of Go-to-Market Strategy – Unefon Mexico vs. Virgin Mobile UK
4.5  Churn Management - Preparing for the Worst
Figure 4-3  Churn Behavior in Key Markets, 2012
4.6 The Next Level – QoE, Success Mantra of the Future

Chapter 5: Next Generation Networks (NGNs)-Ideal Initiatives towards Network Development, and Road Mapping for 2013-2018
5.1 Evolved Packet Core (EPC) Model: Key to Excellent Traffic Management and a Great QoS
Figure 5-1 The Open Evolved Packet Core
5.1.1 Which is the best model? What should be your approach to EPC deployment?
5.2  Policy Management
5.2.1 How PCRF can be implemented to take maximum benefit from 3G and 4G/ LTE investments?
Figure 5-2  Policy and Charging Control Architecture
Figure 5-3  Key PCRF Interfaces
5.2.2 Selecting the right vendor
Table 5-1  Major PCRF Vendors, Solutions and their Clients
5.2.3 How MNOs can minimise their PCRF/ Policy Server deployment costs?
5.2.4 Case Study: Analysis of Verizon Wireless’ approach to PCRF
5.3  Strategic Importance of Wi-Fi beyond Traffic Offloading
Table 5-2  Strategic Value of Wi-Fi beyond Traffic Offloading
5.4  How to tame the Capex and Opex?
5.4.1 Case Study: Bharti Airtel – Pioneered the Innovative Business Model of Outsourcing and Sharing
Figure 5-4  The Rise of Bharti Airtel’s Empire
5.5  Have you reaped your 2G/ 3G investment? Decide Yourself!
5.5.1 Decide timing of Network Upgradation
5.5.2 Worldwide Network Upgradation and Shifting Customers to More Advanced Networks
5.5.3 Case Study: LTE approach - Top Three vs. the Pioneer (Verizon Wireless, SK Telecom and NTT   DoCoMo vs. TeliaSonera)
Table 5-3  LTE Subscriptions of Top Three Operators (In Million), March 2013
5.5.3.1 Verizon Wireless
Figure 5-5  Verizon's LTE Subscribers (In Million), Q1 2011, Q1 2012 and Q1 2013
Figure 5-6  Verizon's 4G LTE POP (In Million), Q1 2011 - Q1 2012 and Q2 2013
Figure 5-7  Verizon's 4G LTE Devices’ Sales (In Million), Q1 2012 - Q1 2013
5.5.3.2 SK Telecom
Figure 5-8  LTE Subscribers in South Korea (In Million), 2011 – 2013
Figure 5-9  SK Telecom's LTE Subscribers (In Million), 2011 – 2013
5.5.3.3  NTT DoCoMo
Figure 5-10 NTT DoCoMo's LTE Subscribers (In Million), December 2010 – August 2012
5.5.3.4  TeliaSonera
5.5.3.5  The Sluggish Sweden
5.5.4  Case Study: Analysing the Network Upgradation & Modernisation Strategy of Maxis Malaysia (2G, 3G and 4G/ LTE)
5.5.4.1  Country Profile - Malaysia
5.5.4.2  What made Maxis to plan network upgradation and modernisation?
5.5.4.3  Evaluating Maxis’ Network Modernisation Investments and its Impact on the Maxis’ Top and Bottom  Line
5.5.4.4  Benchmarking Maxis’ EV/EBITDA with its Peers’ and Others’
Table 5-4 Country Profile – Malaysia
Figure 5-11 Maxis Non-Voice Revenue (In RM Million), FY 2011 - FY 2012
Table 5-5 Maxis Non-Voice Revenue Break-up, Q4 2012
Figure 5-12 Maxis Network Modernisation Expenditure (In RM Billion), FY 2009 – FY 2012
Table 5-6 Maxis Performance (Growth in Subscriptions, Revenue and EBITDA), 2009 - 2012
Figure 5-13 Maxis Mobile Subscriptions (In Million), 2009 - 2012
Figure 5-14 Maxis Revenue (In RM Million), 2009 - 2012
Figure 5-15 Maxis EBITDA (In RM Million), 2009 - 2012
Figure 5-16 Maxis Stock Performance (In MYR), 2011 - April 2013
Table 5-7 EV/ EBITDA of Maxis and its Peers, 30th April 2013
Table 5-8 Maxis’ Valuation based on EV/ EBITDA, 30th April 2013
5.6  Ideal LTE Strategy for Late Entrants
5.7  Fixed Line has its Role to Play
5.7.1 Fixed Mobile Convergence (FMC)
5.7.1.1 Verizon’s Global Fixed Mobile Convergence
5.7.1.2 Com Hem’s Fixed Mobile Convergence (FMC) Application
5.7.2 Traffic Offload from Mobile Networks to Fixed Networks
Figure 5-17  Worldwide Mobile Devices (Offloaded) Traffic on Fixed Line (In Exabytes per Month), 2012 – 2018
Figure 5-18  Worldwide Cellular Traffic vs. Mobile Devices (Offloaded) Traffic on Fixed Line (In %), 2012 – 2018
5.7.3 Enterprise Segment Still Holds Billion Dollar Potential
5.7.4 Revival Strategy for Fixed Line Operators
Figure 5-19  The BML Loop

Chapter 6:  Profitable Mobile Services & Business Models for 2013 and beyond
6.1  Mobile Advertising Revenue Opportunity for MNOs
6.1.1 Case Study: Mobile Marketing and Wallet Platform WEVE
Figure 6-1  WEVE Value Chain
Table 6-1  Fast Forward - Mobile Marketing and Wallet Platform WEVE
6.1.2 Case Study: AT&T AdWorks
6.1.3 Case Study: Global Advertising Alliance by Telefónica Digital and Pinsight Media+
6.2  Smart Lifestyle Services: MNOs must claim their Forte
6.2.1 Geolocation Services
6.2.2 The Fusion of Interactive Transparent Display and Augmented Reality
Figure 6-2  The Future of Automated Transportation and Augmented Reality System
6.2.3  Encashing Mobile QR Codes
Figure 6-3  QR Code Scans per Minute, Q2 2011 and Q2 2012
Figure 6-4  QR Code Scans by Age Group, 2012
Figure 6-5  QR Code Scans by Gender, 2012
Table 6-2  Top five QR Code Campaigns by Content Type, Q2 2012
Table 6-3  Top five QR Code Campaigns by Industry, Q2 2012
6.2.4 Broadcast Gaming
6.3  M2M: have you visualised your M2M portfolio?
6.3.1.1 Case Study: Telenor Connexion
6.3.2 Telematics, Fleet Management, and Connected Cars
Figure 6-6  Worldwide Connected Cars Market by Shipments (In Million), 2013 – 2018
Figure 6-7  Worldwide Connected Cars Market by Revenue (In US$ Billion), 2013 – 2018
6.3.2.1 Verizon's 4G Venture Forum for Connected Cars
6.3.2.2 BMW’s LTE Adapter – Offers LTE Wi-Fi with NFC facility
6.3.3 Smart Home & Home Appliances
6.3.4 Utility Management, Smart Grid, and Smart Metering
Figure 6-8  Smart Grid
Figure 6-9  Worldwide Smart Meter Connections (In Billion), 2013 - 2018
6.3.5 Financial Services
6.3.5.1 Case Study: Tesco Bank Box Insurance
6.3.6 Industrial Application
Figure 6-10  Worldwide M2M Industrial Manufacturing Market (In US$ Billion), 2010 - 2018
6.3.7 Retail Industry
Figure 6-11  Worldwide Cellular M2M Connections in Retail Industry (In Million), 2013 - 2018
6.3.8 Agriculture
6.4  Highly Unexplored Technologies to Woo Users & Boost Revenue
6.4.1 Where lays the real profit in mobile cloud? Thinking beyond online storage
Figure 6-12  Worldwide Public Cloud Services Market (In US$ Billion), 2012 – 2018
Table 6-4  Worldwide Public Cloud Services Market by type (In US$ Billion), 2012 - 2018
Table 6-5  4G Mobile Cloud Offerings
6.4.2 Public Safety LTE
Figure 6-13  Worldwide Public Safety LTE Revenue (In US$ Billion), 2013 - 2018
6.4.3 LTE Broadcasting
6.5 Digital Contents Market Opportunity
6.5.1 Case Study: NTT DoCoMo d-market
Figure 6-14 NTT DoCoMo Smartphone Sales FOMA vs. Xi (In Million Units), FY2010 – FY2012
Figure 6-15 NTT DoCoMo d-market Revenue (in Yen Billion), FY2012 and FY2015
Figure 6-16 NTT DoCoMo VIDEO Store Subscribers (In Million), 2012
6.6 Mobile Apps – What’s your App Strategy (MNOs, Vendors, App Stores, Developers)?
6.6.1 Monetising Your Business Models
Figure 6-17 Average Number of Apps Installed on a Smartphone in the US, 2011 and 2012
Figure 6-18 US Web vs. Mobile App vs. TV Consumption per day (In Minute), 2010 – 2012
6.6.2 Strategy for New App Launches
6.6.2.1 Fabrication Dilemma – Big Question “What to offer?”
6.6.2.2 App Categories
Figure 6-19 Worldwide Smartphone App Consumption per day by Category (In Minutes), Q1 2011 and Q1 2012
Figure 6-20 Fastest Growing App Categories, October 2011 - March 2012
6.6.2.3 App Platforms: Where is the Money – Android, iOS or Figure 6-21 Evernote’s Average Revenue per User per App by Operating System (In US$), 2012
6.6.3 Case Study: Tizen – All set to disrupt Android supremacy?
6.6.4 Case Study: Apple App Store vs. Google Play vs. BlackBerry World and Windows Phone Store
Figure 6-22 Mobile App Store Size (In Numbers), May 2013
Figure 6-23 Number of Applications on iTunes App Store vs. Google Play, July 2008 – July 2012
Figure 6-24 Apple App Store Paid vs. Free Applications (In %), 2012
Figure 6-25 iOS Application Downloads in Key Markets (In %), October 2012
Figure 6-26 Google Play Application Downloads in Key Markets (In %), October 2012
Figure 6 27:  Apple App Store Revenue (In US$ Billion), 2011 and 2012
Figure 6-28 Average Prices of Most Popular Apps – iPad vs. iPhone vs. Android (In US$), January 2012
Figure 6-29 Average Revenue per App per Month (in US$), 2012
6.6.5 Revenue Opportunities via Apps for Small-to-Midsized Vendors
6.6.5.1 Mobile App Revenue
Figure 6-30 Worldwide Mobile App Revenue Forecast (In US$ Billion), 2011 – 2018
Figure 6-31 iOS Revenue in Key Markets (In %), October 2012
Figure 6-32 Google Play Revenue in Key Markets (In %), October 2012
Figure 6-33 Revenue Generated by Applications Available in the Local Languages and Applications Available in
Local Languages (In %), May 2012
6.6.6 Should every operator launch their own app store?
6.6.6.1 Case worth Analysing: Verizon Apps
6.6.7 MNOs, Vendors and App Developers’ Collaboration Opportunities
6.7  Opportunities in the M-Commerce Arena
Figure 6-34  Revenue Share of M-Commerce as a percentage of E-Commerce, 2012 and 2016
Table 6-6  Fastest Growing M-Commerce Android Apps by usage in the UK, May 2012 - October 2012
6.7.1  M-Payment Market is Heating Up
6.7.1.1  MasterPass: A New M-Payment System from MasterCard
Figure 6-35  Worldwide M-Payment Users (In Million), 2011 – 2018
Figure 6-36  Worldwide M-Payment Revenue (In US$ Billion), 2011 – 2018
6.7.2 Measuring RoI for MNOs from M-Payment Services
6.7.2.1 Case Study from Kenya: Safaricom’s mobile money transfer service M-Pesa
Figure 6-37  Safaricom’s Revenue (In Sh Billion), H1 2012
Figure 6-38  Safaricom’s Revenue Break up (In %), H1 2012
Figure 6-39  Financial Services Outlets in Kenya, 2009
6.7.3 Lean Principals for Consistent Growth
6.7.3.1 How to come up with Minimum Viable Products for maximum gains?
6.7.3.1.1  How did T-Mobile drive smooth m-payment adoption?
6.7.3.2 How to attract new customers?
6.7.3.3 Ways to Drive Customer Loyalty via Early Adopters
Figure 6-40  Customer Life Cycle
6.7.3.4 Retention and Brand Building using Disruptive Tactics
6.7.4 M-Payment Types
6.7.4.1 Premium SMS-based Transactional Payments
6.7.4.2 Direct Operator Billing
6.7.4.3 Mobile Web Payments (WAP)
6.7.4.4 NFC (Near Field Communication) Based Payments
6.7.5 Let’s Analyse the NFC Mobile Payment Market
Figure 6-41  Worldwide NFC M-Payment Forecast (In US$ Billion), 2012 – 2018
6.7.5.1 NFC Device Ecosystem
Table 6-7  List of Available NFC Devices, April 2013
6.7.6 KYC Opportunity: Unexplored Avenue in Banking
6.8  M-Health: Unveiling the Hidden Potential
6.8.1 M-Health Services Categories
Table 6-8  M-Health Applications
6.8.2 How to drive M-Health adoption?
6.8.2.1 Barriers to M-Health Technology Adoption for Healthcare Providers
6.8.2.2 Barriers to M-Health Technology Adoption for Patients/ End Users
6.8.2.3 Ways to Overcome Challenges and Drive M-Health Adoption
6.8.3 M-Health Avenues
6.8.4 Case Study: Vodafone mHealth
Table 6-9  Vodafone mHealth Solutions
6.8.5 Healthcare Telematics
6.8.6 Current Market Landscape and Future Revenue Potential
Figure 6-42  Worldwide M-Health Revenue (In US$ Billion), 2013 – 2018
Figure 6-43  M-Health Revenue by Region (In %), 2018
Table 6-10 M-Health Revenue by Region (In US$ Billion), 2018
Figure 6-44  M-Health Revenue by Stakeholders (MNOs, Device Vendors, Healthcare Providers, Content Providers/
Application Developers) (In %), 2018
Table 6-11 M-Health Revenue by Stakeholders (MNOs, Device Vendors, Healthcare Providers, Content Providers/
Application Developers) (In US$ Billion), 2018
Figure 6-45  M-Health Revenue by Various Categories (In US$ Billion), 2018
Figure 6-46  M-Health Revenue by Various Categories (In %), 2018
6.9 Monetising the Mobile Multimedia Services
6.9.1 Key Advantages
6.9.1.1  Growth in Data Revenue
Figure 6-47 Worldwide Mobile Multimedia Revenue (In US$ Million), 2012
Figure 6-48 Worldwide Mobile Multimedia Market Y-o-Y Growth (In %), 2011 and 2012
6.9.1.2 Key Differentiator to Churn Control
6.9.2 Case Study: SK Telecom, South Korea
6.9.3 Strategies to Revive Mobile Multimedia Services
6.9.3.1  Which type of segmentation is best suited for multimedia services?
6.9.3.2  What to offer?
6.9.3.3  Business/ Revenue Model to make Mobile Multimedia Services Attractive and Profitable
6.9.4 Which are the most profitable markets for launching multimedia services?
6.9.5 Revenue Opportunities for Vendors
6.10 Evolution of Mobile Devices 2013 - 2018
6.10.1 Device Portfolio for MNOs: Key Considerations from Revenues to User Experience
6.10.2 Device Manufacturers: What should be your future roadmap?
6.10.3 Case Study: Huawei ….. How to beat market leaders?
6.10.3.1 What makes Huawei worth mentioning in the smartphone market?
6.10.3.2 The Makeover in 2012
6.10.3.3 The Competitive Edge
6.10.3.4 The Whim to Win
6.10.3.5 The Challenges Ahead
6.10.3.6 The Future Strategies
Table 6-12 Top Five Smartphone Vendors, Shipments (In Million) and Market Share, Q1 2013
Table 6-13 Huawei’s Revenue by Business Segment (In CNY Million), 2012
Table 6-14 Huawei’s Revenue Break-up by Business Segment (In %), 2012
6.10.4  Growth Opportunities for Smartphones, Tablets and Phablets
Figure 6-49  Worldwide Smartphone Shipment (In Million), 2013 and 2018
Figure 6-50  Smartphone Market Volume by Price Band (In %), Q4 2011 – Q3 2012
Figure 6-51  Major Smartphone Markets by Shipment (In Million), 2013 and 2018
Table 6-15 Major Smartphone Markets by Shipment (In %), 2013 and 2018
Figure 6-52  Worldwide Tablet Shipment (In Million), 2013 - 2018
Figure 6-53  Worldwide Tablet Shipment by Operating Systems (In %), 2013 and 2018
Figure 6-54  Worldwide Phablet Shipment (In Million), 2012, 2013, 2016 and 2018

Chapter 7. Strategic Guidelines for Securing Future Profitability
7.1  Don’t take away focus from your “Cash Cows”
7.2  Don’t push too much too soon – Restrain Please!
7.3  Strive for Identity
7.4  Unlearn Your Success Quickly
7.5  Recognise the Unrelated Competition
7.6  Keep Your Trump Card Ready

Published By: Teleresearch Labs.
Product Code: Teleresearch Labs.6


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