A new whitepaper developed by DOCOMO Digital, a global leader in direct carrier billing and alternative payments, reveals how mobile carriers are pivoting to digital services to fight commoditization of connectivity business and the pressure on profits amidst heavy capital expenditure on the rollout of 5G services.
Some key areas of revenue diversification include a focus on next generation content and gaming bundles, payments as a tool to power up digital services revenue, enterprise IoT and a focus on productivity. Other areas driving revenue for telcos include gaming, creating original video content, distributing external content in home markets, and various new areas such as smart insurance and everything related to security and cloud services in association with 5G offerings, among others.
The whitepaper, ‘Mobile Carriers Accelerate Digital Services Play’, is based on the latest industry analyses by leading bodies such as the GSMA, Global Data, Oliver Wyman and Ericsson among others. The whitepaper also features interviews with leading industry experts from leading companies such as Telefonica and CK Hutchison group.
OTT media consumption has spiked for instance and bundling with OTT providers has been a key strategy for many telcos around the world. The global OTT market size was valued at $121.61 billion in 2019, and is projected to reach $1,039 billion by 2027, growing at a CAGR of 29.4% from 2020 to 2027.
These forecasts are likely conservative given the face of a 134% spike in OTT consumption in the wake of COVID-19 alone.Mobile carriers look well-positioned to transcend into a more digital avatar with subscription bundling and payments. The increasingly sophisticated digital ecosystem with the mobile phone at its centre, coupled with the power of the impending 5G revolution, means telcos have much to work with in the service stack as they prepare for the industry’s future.
Jonathan Kriegel, Chief Executive Officer at DOCOMO Digital states: “We are witnessing a host of telecom convergence use cases emerging – large operators are partnering with digital service providers and re-positioning themselves as all-in-one connectivity partners. This is increasingly being seen in the form of telco-OTT bundling. The deployment of 5G will further accelerate telcos’ revenue diversification strategy by opening up myriad possibilities.”
He adds: “In this research-based whitepaper, we delve into the evolution of the telco and this sort of convergence 2.0. We see how telcos have sought to diversify revenue streams through service stacks in categories as diverse as mobile bunding, TV and content partnerships, smart mobility, health and wellness, digital commerce, enterprise or home IoT, 5G and others. Some have seen success already, while others are on their way.”
Kriegel concludes: “Progressive telcos are leading the way in convergence and investing in the creation of digital ecosystems – that can include digital and physical goods, loyalty programmes, various payment options and the like. Their examples will serve well in transforming the industry.”