Information for the October 2008 research, conducted by Parks Associates on behalf of Camiant, was gathered from in-depth interviews with executives at 16 major mobile broadband providers in Canada, Eastern and Western Europe, Turkey, Scandinavia, and the United States.
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
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.