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Monetizing the Mobile Internet

Thu, 07/29/2010 - 9:33pm
Jonathan Morgan, Cisco

Monetization is the hot discussion in the mobile industry. One of the biggest service provider challenges is to enhance profitability as the mobile Internet data tidal wave crashes to mobile operator shores.

Mobile operators worldwide are seeing tremendous growth in mobile data subscriptions and as a result, bandwidth usage. The widespread popularity of IP-enabled smartphones, netbooks, e-readers, tablets and other devices is fueling this growth. The 2010 Cisco Visual Networking Index Mobile Data Forecast found that global mobile data traffic increased 160 percent between 2008 and 2009. The forecast predicts that in 2014, more than 5 billion existing and newer consumer mobile data devices will be in use, plus billions more machine-to-machine (M2M) devices to support a myriad of evolving applications.

Jonathan MorganWhile mobile operators can reap the benefits of a growing market, they are also faced with maintaining and enhancing their access and backhaul capabilities on 2G, 3G and 4G networks. The radio network - from radio towers and base stations and backhaul - constitutes 80 percent to 90 percent of capital expenditures for mobile operators. Yet beyond sustaining or enhancing the user experience with dependable network performance, this part of mobile operators' infrastructure expenditures does little to help them add new revenue.

Another challenge that is impacting the return on investment of mobile operators is the emergence of free, over-the-top (OTT) and off-net applications and services. Consumers can utilize these applications and services, which use the operator's network, without providing even an incremental usage fee to the mobile operator while adding cost to the mobile operator network the more they use these OTT services.

To take advantage of the mobile Internet explosion and avoid functioning as merely a bandwidth "bit pipe," mobile operators must invest strategically in network assets that create increasing value for subscribers and content providers. This will allow them to launch new business models that go beyond current flat-rate business-to-consumer data plans. Monetizing the mobile Internet to cash in on new, intelligent technologies and applications is a way to do so.

There are three general areas of opportunity for increased revenue generation within the evolving mobile Internet marketplace. With an intelligent mobile Internet architecture in place, operators should consider focusing strategic efforts on:

1. Protecting, controlling and growing the existing services base
2. Developing revenue-sharing business models with third-party providers
3. Increasing revenues by launching new services

Today's subscribers represent a wide variety of users with diverse needs. Operators are looking for ways to protect, control and grow this subscriber base. An intelligent policy infrastructure is the baseline to monetization of the network, efficiently enabling all three general areas of monetization. Using intelligent features of these types of platforms, mobile operators can integrate subscriber information with network and application intelligence, in real time, to deliver personalized experiences. Such real-time session- and subscriber state intelligence is not available through the cookies in a web browser interaction but only through the intelligent capabilities of the operator's mobile Internet core. This intelligence includes correlation of subscriber subscription plans and preferences with awareness of time of day, location, usage pattern, type of application running, available bandwidth, roaming status and other factors to enable features such as:

• Service-aware charging
• Access control
• Policy control
• Content filtering
• Quality of service (QoS)
• Application detection and control
• Filtering, caching, and ad-insertion
• Security

The intelligence provided by the network can be used to create new next-generation business architectures and new business models. With an intelligent mobile Internet architecture, operators can collaborate instead of compete with third party content, device, and service providers. Operators can benefit from a two-sided business-to-business-to-consumer market, creating value for both the producers and consumers while benefitting from both. With these capabilities in place, mobile operators can enter promising new markets, including M2M, cloud services and targeted advertising.

A comprehensive, end-to-end, intelligent mobile Internet architecture can provide mobile operators with an array of features that will allow them to enhance the existing customer experience, assure premium multimedia services, forge new business-to-business-to-consumer service models with partners and develop innovative new services themselves. These capabilities are the building blocks of innovative services, business models and partnerships that will help mobile operators better monetize the mobile Internet, raise ARPU and maintain customer loyalty in this explosive market that continues to gather momentum.

Jonathan Morgan is senior marketing manager of Service Provider Mobility Solutions at Cisco.

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