Mobile internet usage has experienced significant growth recently. Key factors to this growth include easier to understand flat-rate and pay-as-you-go billing models, faster and higher bandwidth networks, and continuous improvements in mobile device capabilities, particularly in the area of usability (larger, touch-sensitive screens).

Kathleen Brush
Kathleen Brush

Although the increase in online traffic is good news for mobile operators, it also brings its challenges, particularly with regards to how operators prepare their networks for more transactions. If operators can’t accurately predict future growth in data volumes, they will miss out on the inevitable increase in ARPU for mobile data usage.

New Rules for a New Game

Mobile operators traditionally offered their Internet services primarily through their portal. For example, Vodafone Live! users had only one choice - go to the Internet via the Vodafone Live! portal or don’t go at all. In the last two years, there has been a significant trend away from this walled garden approach. Operators quickly realized that they could not sustain their revenue growth, let alone increase it, if they were to maintain this closed approach to off-net services. To succeed in offering a true mobile Internet experience to their subscribers, operators had to move to an environment that blurred the lines between traditional wireline Internet and mobile Internet.

Enter the Smartphone

A challenge facing operators that embrace a more open approach to off-net content is the risk of losing control of their subscribers. This is crucial when it comes to smartphone devices.  Here’s why:

Traditional WAP1 or WAP2 feature phones still go through an intermediary proxy gateway owned by the operator for authentication, access control, transcoding (if applicable) and potentially other value-added services. This model allows the operator to totally control the user experience, and by suitable manipulation of proxy server logs, access a wealth of knowledge about users’ online behavior (trends, most popular sites, device types and average browsing duration). 

Smartphones, which are increasing their market volume following the success of Apple’s iPhone, typically do not have proxy settings pointing to the intermediary gateway. They are similar to laptops in that their data traffic goes directly to the Internet unaided. More importantly, smartphones are responsible for the bulk of recent growth in mobile Internet traffic. (The iPhone has increased mobile Internet consumption by 13 times when it comes to social networking sites, according to comScore.)

The result: Mobile operators have less and less visibility into what their smartphone subscribers are doing even though they account for a large number of mobile Internet transactions. Although operators are seeing a short term gain in data ARPU as a result of increased mobile Internet usage, they need to look at ways to monetize the increasing off-net mobile Internet. The key lies in regaining that bird’s-eye view of their subscribers’ online behavior so that they can offer them revenue-generating services that are deemed relevant and useful to each individual user.

The Role of Analytics

Analytics provide aggregate data, allowing operators to know exactly what subscribers are doing in their networks. By seeing both on-portal and off-portal activity, operators can get a true 360-degree view of their mobile subscriber base. Whether operators are promoting their own services or looking to collaborate with advertisers willing to pay a premium to reach an audience, mobile analytics are a tool that every operator must have in 2009.

By combining the trends in data traffic with subscriber demographics and location data, operators have a wealth of data to build user profiles and consumer segments. Analytics solutions that can only see a portion of the subscriber’s interests, such as their click stream patterns on one or two Web sites, cannot create as clear a picture of the subscriber base.

The mobile operator continues to occupy the ideal position in relation to the consumer that is also a mobile Internet user. From its vantage point, the operator uniquely collects the knowledge that is key to monetizing the mobile Internet. The more an operator can understand about its subscribers, the more it will be able to determine and then provide services that are not only relevant, but ones that subscribers would be willing to pay for.

Brush is vice president of marketing at Openwave Systems.