MNOs need to future proof their businesses. Today, they are constantly have to adapt to handle evolving content, services and delivery channels, as well as strong competition in the market. And Juniper Research believes it has come up with three clear ways MNOs can overcome these problems.
In a new White Paper, the research company shows just what MNOs are up against and looks at how RCS, Grey Routing and even carrier billing offer a way to level the playing field.
According to Juniper, traditional business models relying on core revenues, such as messaging or voice, are being increasingly challenged by OTT (Over the Top) players providing popular, and often free, alternatives to texting and circuit-switched voice calls, on improving 4G, and soon 5G, networks. MNOs’ traffic costs have risen due to the explosion in consumer data with little to no solution to monetise this huge traffic. Regulations, such as pricing costs and net neutrality obligations and spectrum shortages further contribute to the revenue erosion.
Thus, unless MNOs successfully monetise alternative revenues, such as 5G rollouts, mobile identity, A2P [Application-to-Person] messaging, M2M, among others, the sustainability of many operations is questionable.
According to Juniper there are several things, however, that MNOs can do to fight back.
Future proof with RCS
One way to future proof things is through A2P services and new ways of messaging.
Juniper Research estimates that revenue growth will be driven by MNOs tackling fraudulent messaging over grey routes and the opportunity offered by RCS (Rich Communications Services).
Juniper Research forecasts that operators’ A2P SMS revenues will continue to grow over the next five years with rich media functionality drawing new levels of traffic away from traditional SMS.
While still in its infancy, Juniper Research anticipates that RCS will become the most disruptive messaging technology to emerge since SMS. However, RCS’ potential as an A2P medium can only be reached if manufacturers increasingly produce handsets supporting the technology.
Mitigating Grey Routing
Grey route SMS includes A2P messages disguised as P2P traffic to exploit the lower costs compared to directly connected A2P SMS. Juniper Research anticipates that efforts from operators to close grey routes on their networks will come to fruition in the next five years and can help future proof things.
While MNOs aim at mitigating grey routes, their ambition is not to eliminate them altogether; investment costs to completely eliminate these routes are likely to exceed the savings that can be gained from doing so. Juniper Research anticipates that MNOs will reach an optimal amount of grey route traffic on their network to minimise investment in SMS firewalls and retain revenues from grey route traffic.
Privacy & Digital Identity Solutions
In February 2014, the GSMA announced the launch of Mobile Connect. Created under the auspices of its Personal Data Inititiative, Mobile Connect is a secure universal log-in solution, which permits log-in via a single PIN or password; the solution works on both smartphones and mass market devices.
At launch the initiative was supported by a number of leading MNOs, including Axiata Group Berhad, China Mobile, China Telecom, Etisalat, KDDI, Ooredoo, Orange, Tata Teleservices, Telefonica, Telenor, Telstra and VimpelCom. It was also backed by key players from across the mobile value chain, including Dailymotion, Deezer, Gemalto, Giesecke+Devrient, Morpho, Oberthur and VALID.
At the same time, MNO’s have an opportunity to enable, not just transactional authentication through the provision of a verifier, but a full digital identity.
Mobile Connect offers the potential to be coupled with the identity security offered by eID (electronic ID) schemes to further enhance online trust and, crucially, to reduce governance operating costs (eg through the use of digital signatures). Hence, there is a clear opportunity for MNOs to engage with national and international regulatory bodies to demonstrate the efficacy of mobile authentication solutions.
We believe that digital identity can benefit MNOs in several ways including simplified operations, solid databases, fraud reduction, compliance with regulations, trusted and secure access to services.
Furthermore, the adoption of digital identities also depends on factors specific to each country, such as regulations as well as business and consumer cultures.
The future proof Carrier Billing Opportunity
Carrier billing is being driven by a wide range of factors:
- It can monetise the unbanked and underbanked;
- It can capitalise on younger demographics with high levels of smartphone adoption and more inclined to use digital technologies;
- It goes beyond smartphones and can be used through connected game consoles, connected cars or connected TVs;
- It supports impulse purchases, as well as subscription models.
In large part, this was due to the fact that the majority of Apple’s high-end handsets sell in more affluent markets with high-banked populations, but as refurbished iPhones gradually penetrate the low-banked markets then monetisation will become more pressing. This also means that in several key regions, smartphone owners cannot use carrier billing in major storefronts.