New Business Models and Revenue Streams – How 4G is Changing the Market
By Ken Lee
When Apple released the iPhone 4 in the summer of 2010, there were immediate reports from reporters, bloggers and faithful consumers that the new phone could do everything except make a phone call. In the first 80 days following the Apple iPad launch in April 2010, Apple sold three million units, and finished 2010 with 14.8 million units sold. In 2011, Apple is projected to sell more than 39 million iPads, and consumers are expected to scoop up another 19 million non-Apple tablets, including Android tablets. These numbers illustrate how consumers and business users are rapidly using their mobile devices not only for voice calls, but increasingly to text; surf the Web; produce, consume, and share multimedia content and applications; and traverse social media.
The proliferation of consumer-friendly IP-enabled multimedia devices – such as smartphones, tablets, gaming consoles, set-top boxes, and televisions – coupled with relatively cheap and easy access to broadband Internet, has altered the telecommunications and Web landscapes. Five years ago, voice was the primary driver behind mobile service plans. Now, messaging and multimedia-driven data plans are one of the primary revenue drivers. And considering mobile data traffic is increasing at an explosive rate – by 160 percent over the past year – it is imperative that communications service providers (CSPs) continue to deliver new and innovative data-driven value-added services, in addition to traditional calling and messaging-based services.
This evolving paradigm shift in mobile revenue models should not incite concern among operators, however. If anything, it creates exciting new opportunities for CSPs to retain subscribers, grow revenue and venture into new business initiatives like platform-as-a-service, M2M (machine-to-machine) communications and network-enabled application stores.
Changing Consumption Models
Oracle Communications surveyed more than 1,000 mobile phone users in the United States and discovered that consumers across all age groups are looking to leverage their phones to enhance their shopping experience. The “Mobile Trends: Consumer Views of Mobile Shopping and Mobile Service Providers" report – released at the CTIA Wireless show – found that 48 percent of respondents noted they use their mobile device for commerce-related activities, while the number of consumers aged 34 to 55 who have made a mobile purchase increased by 145 percent in 13 months – jumping from 11 percent of respondents in a November 2009 ATG study to 27 percent in December 2010.
Best of all, CSPs have inherent advantages when attempting to garner market share in other industries. Wireless operators are automatically endowed with detailed subscriber data, including customer service preferences. In addition, network operators can incorporate other rich telecommunications features – such as short message service (SMS), location, charging, or presence capabilities – into their service and application offerings. These advantages enable service providers to maximize application functionality and customize apps to each unique user.
But competition in the communications market is fierce. As next-generation network technologies – such as Long Term Evolution (LTE), Evolved Packet Core (EPC), and IP Multimedia Subsystem (IMS) – garner greater industry adoption, the ability to rapidly launch and monetize new services – leveraging existing network assets as well as new next-generation network capabilities – will be essential to maximizing revenue and winning greater market share. In order to effectively compete in an increasingly diverse service provider ecosystem, which includes providers of device-centric application stores, as well as mega Internet and search service providers, network operators must be willing to expand the sourcing of new applications and content beyond their traditional ecosystem of telco-specific developers, and reach out to developers of innovative Web and social networking applications.
