Camiant advises operators: Charge for the traffic Mobile networks to run out of affordable bandwidth
According to the findings of the newly published study, "Mobile Broadband in North America and Europe: Change is Key to Maintaining Profitability," mobile broadband affords tremendous growth opportunities for operators; however, given the popularity of data cards and smart phones and the substantial capital expenses involved in building additional network capacity, operators can expect to hit network limitations fairly quickly, says study a commissioned by Camiant, provider of policy control and application assurance technology.
With operators seeing anywhere from 100% to 800% bandwidth growth, there is a clear need to design new business models for the mobile broadband market. Existing business models, especially the "unlimited" models popular in Western Europe and the U.S., have dangerous drawbacks that will become apparent in the next three to five years. As mobile broadband adoption continues to grow and traffic volume skyrockets, the revenue that these models deliver will fail to offset the costs of delivering the traffic.
"Mobile carriers around the world, especially those offering 'unlimited' data plans, must rethink their approach to wireless broadband network management," said Anton Denissov, research analyst with Parks Associates.
"Failure to implement refined network controls and business policies would condition abusive consumer use patterns and accelerate service commoditization."
"The time is right for mobile operators to embrace new business models and to train users to behave in a long-term economic fashion, and not expect 'all you can eat' models," said Randy Fuller, vice president of business development for Camiant.
"Operators who implement more refined policies and models that monetize traffic early on, before consumer expectations and behaviors are conditioned, won't be the ones leaving money on the table."
Key findings from the custom study:
Mobile broadband offers carriers opportunity to improve their market position by:
- Raising customer average revenue per user (ARPU)
- Avoiding commoditization by becoming providers of enhanced services, not just connectivity
Carriers will need to develop new business models to more effectively monetize rapidly growing mobile data traffic:
- Western Europe - 400% - 800% per year traffic growth
- Eastern Europe - 300% - 800% per year traffic growth
- U.S. - 200% - 300% per year traffic growth
- Canada - 100% per year traffic growth
Current business models are rudimentary and do not maximize a carrier's revenue.
Their fundamental elements include:
- Channeling consumers to use lower-capability devices (i.e., mobile phone vs. air card)
- Controlling traffic based on raw traffic volume (i.e., pre-defined usage caps)
- Disconnecting consumers or charging a-la-carte (on per MB or per GB basis) if they exceed the traffic cap
- Banning heavy (most active) users from the network
Carriers need more refined control and business policies to condition reasonable consumption patterns:
- Need to implement early on, before consumer expectations solidify
- Would help avoid commoditization challenges similar to ones in the fixed broadband market (U.S.)
The research proposes key elements for new business models to succeed. These include the need for operators to be service-centric instead of connectivity-centric, monetize traffic as well as users, and avoid blanket punitive pricing.
New business models need to resolve usage inequities by charging a user for usage that actually taxes the network rather than for using a device that may tax the network. These changes will encourage adoption of connected devices other than mobile phones or PC cards; that adoption, in turn, will offer additional revenue opportunities for carriers.
4 comments
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10:05
pfcnpfcn said:
PFCN is the nom-de-plume of Brian Keedwell (Integrated Marketing). PFCN is an achronym for Profitable Fulfillment of Customer Needs.
DUMPING IN TRADE
Definition:
The practice of selling goods abroad below the price charged for the same goods in the domestic market or at a price below the cost of production, usually with the aim of driving competitors out of the market.
Dumping is considered to be an unfair trade practice and, as such, is prohibited under many national trade laws.
The author of the foregoing article states:
Change is Key to Maintaining Profitability
Surely that is an understatement! What about:
A 180-DEGREE CHANGE OF DIRECTION IS THE KEY TO BECOMING PROFITABLE
[http://www.magicit.com/pfcn.aspx?a=ChangingDirection.pdf](URL]
Markup doesn't seem to work - please paste foregoing link into web-browser.
To bill at least at average cost is obvious (and necessary to stay inside the Dumping law). What the Telecom industry just doesn't get (it seems) is that high value-creating SERVICES is the answer. This ENTIRELY depends on enabling high QUALITY, high PRODUCTIVITY mobile processes - AND BILLING BASED ON VALUE NOT ON COST. If the Telecom industry already understand THEN WHY NOT JUST DO IT BY INVOKING SYSTEMIC INNOVATION?
Please see the following two COMMENTS by PFCN.
21:47
pfcnpfcn said:
THE DANGER OF ALL YOU CAN EAT PRICING is at last recognized in this month’s article by MobileMonday, that coordinates some seventy meetings on the first Monday of every month around the world.
MOBILE NETWORKS TO RUN OUT OF AFFORDABLE BAND WIDTH. At last the practice of “offering all (the Network Service) you can eat” at a fixed price has been correctly recognized as a dangerous practice accelerating the commoditization of offerings by Network Operators.
Meanwhile, Telelogic, newly acquired by IBM for its flag-ship business requirements analysis product FOCAL POINT product, emphasizes the CREATION OF VALUE.
But what is the sense of creating value for the customer if one then gives it away on an ‘all you can eat’ basis?
In a reader comment by INTEGRATED MARKETING submitted to the MobileMonday website http://www.mobilemonday.net/news/mobile-networks-to-run-out-of-affordable-bandwidth it has been pointed out that MPS (Mobile Process Service) has two winning philosophies:
MPS has the sole purpose of creating value for the end-user by increasing PROCESS EFFECTIVENESS (a combination of Quality and Productivity), and
MPS has an extremely low appetite for band-width because MPS is based on delta bi-directional updates of distributed data bases.
Since MPS has the inherent capability of billing on an entirely FUNCTIONAL basis, the customer can be billed for VALUE RECEIVED which is a clear win-win for both End-user and Network Operator – apart from which it places the onus on MPS Developers to focus on PROCESS EFFECTIVENESS (i.e. creation of value) for the End-user which IBM claims is the capability of FOCAL POINT.
Brian
13:01
pfcnpfcn said:
PFCN is the nom-de-plume of Brian Keedwell (Integrated Marketing).
PFCN is an achronym for Profitable Fulfillment of Customer Needs. PFCNPFCN implies two cascading, synergisitic PFCN innovations.
According to Gunnar Sohlenius (Emeritus KTH) Wealth and Welfare in the world (collectively Quality of Life) depends on three parameters:
FIRSTLY - EFFECTIVENESS OF BUSINESS PROCESSES (a complex, usually S-curve, function of QUALITY and PRODUCTIVITY) - of which I suggest that, increasingly, more and more are associated with mobile SERVICES offered to their customers by the end-users of Telecom SERVICES (note: 'services' such as what I have called 'Mobile PROCESS Service', NOT a bit-pipe which is little more than a product for rent!). I suggest that the telecom industry moves up the value chain by offering SERVICES based on ICT, NOT mere data transport! Thus ICT=DS+NS.
SECONDLY - CREATIVITY/INNOVATION of which the cornerstone is VISION, is required. Execution needs to be scientifically based (by using such as TRIZ or axiomatic design).
The final pre-requisite for Wealth and Welfare is
THIRDLY - PEACE IN THE WORLD otherwise value created will be repeatedly destroyed.
Pricing should be based not on COST of providing the service, but on VALUE of the service. Shifting from cost to value requires innovation (in processes, organization and IT). Cost-to-value shift is thus just one of many 'Changes of Direction' that will be required if the Telecom industry is not to hit the mountain:
http://www.magicit.com/pfcn.aspx?a=ChangingDirection.pdf
Is it possible to deliver a high value service at low cost?
YES! There is an exception to Michael Porter's warning about being 'caught in the middle'. I spotted it on sixth-time reading of his book - the exception is 'If you are alone with an innovation!'.
It is all about shifting, and dramatically changing the shape of, the Quality/Productivity (or Productivity/Quality) S-curve by Creativity/Innovation. Please see my paper delivered at PRO-VE 2008 in Poland 10 September, 2008 (25 Euros - or was it Dollars?) - copyrighted by Springer entitled MAKING THE ‘MOBILE PROCESS SERVICE’ MARKET BY A SMART BUSINESS NETWORK.
Here are cascading innovations that include Creation of Value for end-users and Capture of a fair share of that value by the vendors based on Risk/Reward negotiation. Maybe we should call it the ‘Mobile Process to ServiVe’ market!
The concept and technology were presented at Ericsson in 1994 and published in 1995.
http://www.magicit.com/pfcn.aspx?a=1995EricssonConference.pdf
The vision and path to commercialization were suggested three years ago (2005) in MobileMonday: http://www.mobilemonday.net/mm/story.php?id=4024
and presented in Helsinki at Conference on Agility. http://www.magicit.com/pfcn.aspx?a=mpsi_icam.pdf
It's time to drain the swamp!
http://www.magicit.com/pfcn.aspx?a=DrainingSwamp.pdf
as suggested in when this document was authored at the beginning of the decade!
If bi-directional data distribution is conducted by delta updates to relational distributed databases with embedded trigger capability, then broad-band for Enterise Mobility will not be required at all - but that is a story for another day!
Maybe Obama could apply this simple three item formula to promote World-Wide Wealth and Welfare
Effectiveness of Business Processes
Creativity/Innovation, and
World Peace.
20:41
pfcnpfcn said:
PFCN is the nom-de-plume of Brian Keedwell (Integrated Marketing).
PFCN is an achronym for Profitable Fulfillment of Customer Needs. PFCNPFCN implies two cascading, synergisitic PFCN innovations.
According to Gunnar Sohlenius (Emeritus KTH) Wealth and Welfare in the world (collectively Quality of Life) depends on three parameters:
FIRSTLY - EFFECTIVENESS OF BUSINESS PROCESSES (a complex, usually S-curve, function of QUALITY and PRODUCTIVITY) - of which I suggest that, increasingly, more and more are associated with mobile SERVICES offered to their customers by the end-users of Telecom SERVICES (note: 'services' such as what I have called 'Mobile PROCESS Service', NOT a bit-pipe which is little more than a product for rent!). I suggest that the telecom industry moves up the value chain by offering SERVICES based on ICT, NOT mere data transport! Thus ICT=DS+NS.
SECONDLY - CREATIVITY/INNOVATION of which the cornerstone is VISION, is required. Execution needs to be scientifically based (by using such as TRIZ or axiomatic design).
The final pre-requisite for Wealth and Welfare is
THIRDLY - PEACE IN THE WORLD otherwise value created will be repeatedly destroyed.
Pricing should be based not on COST of providing the service, but on VALUE of the service. Shifting from cost to value requires innovation (in processes, organization and IT). Cost-to-value shift is thus just one of many 'Changes of Direction' that will be required if the Telecom industry is not to hit the mountain: http://www.magicit.com/pfcn.aspx?a=ChangingDirection.pdf
Is it possible to deliver a high value service at low cost?
YES! There is an exception to Michael Porter's warning about being 'caught in the middle'. I spotted it on sixth-time reading of his book - the exception is 'If you are alone with an innovation!).
It is all about of shifting, and dramatically changing the shape of, the Quality/Productivity (or Productivity/Quality) S-curve by Creativity/Innovation. Please see my paper delivered at PRO-VE 2008 in Poland 10 September, 2008 (25 Euros - or was it Dollars?) - copyrighted by Springer entitled MAKING THE ‘MOBILE PROCESS SERVICE’ MARKET BY A SMART BUSINESS NETWORK.
Here are cascading innovations that include Creation of Value for end-users and Capture of a fair share of that value by the vendors based on Risk/Reward negotiation. Maybe we should call it the ‘Mobile Process to ServiVe’ market!
The concept and technology were presented at Ericsson in 1994 and published in 1995. http://www.magicit.com/pfcn.aspx?a=1995EricssonConference.pdf
The vision and path to commercialization were suggested three years ago (2005) in MobileMonday: http://www.mobilemonday.net/mm/story.php?id=4024 and presented in Helsinki at Conference on Agility. http://www.magicit.com/pfcn.aspx?a=mpsi_icam.pdf
It's time to drain the swamp! http://www.magicit.com/pfcn.aspx?a=DrainingSwamp.pdf - as first suggested at the beginning of this decade!
If bi-directional data distribution is conducted by delta updates to relational distributed databases with embedded trigger capability, then broad-band for Enterise Mobility will not be required at all - but that is a story for another day!
Maybe there is food-for-thought by Obama to promote World-Wide Wealth & Welfare:
Effectiveness of Business Processes
Creativity/Innvovation, and
World Peace.
WWWW - win-win-win-win.
Web-site coming soon: www.w-w-w-w.org
MPS (Mobile Process Service) is the elusive 'sweet-spot'.