Mobile Internet: The Business Case for Service Providers (ET Telecom Blog Series)
Sanjay Kaul, Managing Director, Service provider, Sales, Cisco India & SAARC
The article was published in ET Telecom
Today, more things are connecting to the Internet than people. As the IP Traffic increases at a rapid scale, the increase is expected to come from consumers - prominently Gen Y. Video is another big contributor to this growth. The ever increasing demand for smartphones and other devices is generating staggering amounts of mobile data.
Meanwhile 3G, 4G and Wi-Fi deployments are rising and the world is clearly shifting from coverage and capacity to service. The importance of customer experience is becoming critical for service providers (SPs) worldwide.
The use of Wi-Fi for Internet access is exploding as more mobile devices are Wi-Fi enabled, the number of public hotspots expands, and user acceptance grows. Slowly the distinctions between consumer and business services on mobile devices are becoming blurred. Wireless usage is shifting indoors. Network analytics show that the majority of mobile data usage - close to 80 percent - is indoor and nomadic, rather than truly mobile.
As digital communication channels are exploding and mobile devices get smarter, consumer expectations are changing drastically. Consumers expect consistent, proactive, personalized service across all of these channels. Customer experience is overtaking price and product as the key service provider brand differentiator. An increased emphasis is being laid on serving the needs of the mobile user in diverse contexts and environments, as opposed to focusing on devices alone.
Opportunities and challenges
As mobility and BYOX trends increase, there is a greater need for solutions that enable mobility while ensuring adequate security. Security needs to be flexible, robust and application aware to provide the proper security at the proper time. Multi-cloud environments are increasingly sought by companies as looking to improve business with new online services that foster growth while reducing costs, minimizing risks, and increasing agility. Data monetization through analytics and enterprise architectures designed to be CAPEX and OPEX efficient seem to be the route out for increased profitability.
The magnitude of data traversing across so many channels can be intimidating to keep up with, sort, analyze, and extract value from. However service providers, who can view far and wide across the network, can collect this data, analyze it and convert it to meaningful useful information. When such âcrudeâ? data is extracted, refined, and piped to where it can impact decisions in real time, its value will soar. Referred to as Big Data Analytics, this is a new monetization opportunity that Service Providers can bank on.
Like analytics, service providers can also benefit from Wi-Fi solutions, which help reduce the data load on the network. Growth in mobile network traffic is staggering. Driven by the onslaught of devices that are now connected to the Internet, mobile data traffic is expected to grow three times faster than fixed IP traffic. As the use of Wi-Fi for Internet access explodes, more mobile devices become Wi-Fi enabled, number of public hotspots expands, and user acceptance grows, service providers are presented with a tremendous opportunity to invest in Wi-Fi services to create carrier-class Wi-Fi experience and increase revenues. As the growth in data increases, service providers will need to offer personalized, differentiated services in order to attract customers, build loyalty, and increase revenue from existing customers.
From a voice and data perspective, Spectrum is one of the key CAPEX items for operators. The cost of spectrum is prohibitive for service providers to run profitable data businesses and to offer the customer experience that Indian consumers deserve. For success to come by the current business models must be reassessed. User behavior is changing fast and changing for good. The penetration of smartphones is steadily rising. Price levels are dropping rapidly, mainly driven by local brands. To generate positive EBITDA levels with existing data tariffs service providers need to use evolved data architectures which have embedded key technology advances like NFV, SDN, orchestration, cloud enablement and SON which will lower overall service cost of production.
Operators need to transform their network architectures, evolve their legacy networks– which are basically voice networks – into data networks. Architectures that help provide a complete view of the network along with embedded intelligence will help to get a better perspective and therefore improve data revenue and margins on that revenue for service providers. This in the long run can create a win-win situation where in service providers can create scale and make money while also enabling enriched user experience.