Mobile broadband has quickly moved from a relatively niche service targeted at business users into a mass market consumer offering. With mobile broadband networks leading to faster, richer data consumption through laptops and a surge in Web 2.0 use on mobile devices, mobile broadband providers are increasingly experiencing congestion and Quality of Service (QoS) issues.
To solve these issues, operators either have to invest heavily in backhaul and network expansion or focus on ways to use network capacity more effectively. With mobile broadband prices dropping as a result of the land grab game, the business case for mobile broadband will be hard to justify. Without a shift in the way operators manage and assess mobile broadband, they risk serious challenges to their competitiveness and profitability.
With cost and revenues now being dictated by the megabyte, average revenue per user (ARPU) cannot remain the primary operator key performance indicator (KPI). The KPI dictating the operator business case from now on will be profit per Megabyte. To convert a high volume of subscribers and growing bandwidth consumption into a profitable business model, the following three business imperatives should move to the top of the operator agenda:
• Control cost: By applying compression techniques, bandwidth usage can be reduced up to 40 percent, depending on the services. Unfortunately, as mobile broadband bandwidth growth is driven by video and peer-to-peer downloading, this benefit is difficult to maintain. This means operators also need to control traffic flow, forcing certain high data users and over-the-top applications to off-peak hours. This can be achieved through service offerings, combining elements like time of day, application, usage, speed and location.
• Manage Quality of Experience (QoE): The uptake of 3G access and Web 2.0 content will raise the bar for mobile broadband operators in terms of providing a quality experience. Offering differentiated services against tiered pricing enables the operator to prioritize users and applications against contract conditions and manage QoE. Another aspect of QoE is offering customers real time insight in what they have used and what they are being charged for. This includes putting customers in control of their costs through Web portals and pro-active spend updates. This allows for peace of mind for the user who is more likely to be satisfied with the service and spend more.
• Raise ARPU: By creating dynamic offers around applications, bundles, bolt-on services, time of use and location, mobile operators can create added value. Access to high bandwidth applications will be available for a premium during peak hours. What is important is to move beyond the current "one size fits all" flat-rate pricing. Secondly, value added services give mobile operators the chance to take full advantage of mobile capabilities such as location-based applications, parental/virus controls, hosted applications/services and micro payments. All of these elements add to the mobile broadband proposition, further strengthening the mobile operator's position in the market.
It is clear that operators need to find a way of turning mobile broadband into a viable, long-term mass market service. Solutions that enable operators to maximize the profit per Megabyte by decreasing the need for network capacity investments and drill into new access revenue models and value added services (VAS) revenues will be at the core of this new approach. Today, service provider solutions are most effective when employing four building blocks that tackle these challenges:
• Differentiation: Increase revenues through distinctive offerings and compelling VAS. This requires capabilities to create and charge innovative post, prepaid and bundled offers, as well as quickly bring to market third-party services
• Enforcement: Minimize peak traffic by controlling any type of Internet service, for any individual, based on dynamic parameters. This requires both subscription management and capabilities to analyze and allocate bandwidth on individual and application level
• Optimization: Control cost by compressing data and improving the user experience through content adaption. This requires intelligent capabilities to optimize traffic flows only when and where needed
• Intelligence: Provide real-time, actionable intelligence for marketing, customer service and operations
By transitioning to an approach that supports these performance measures, coupled with profit per Megabyte as a key business indicator, mobile operators will find themselves better equipped to deliver high quality mobile broadband services and enable viable and effective businesses.
Oswin Eleonora is senior vice president at Acision.