Rising Costs Threaten Profitability of Mobile Network Operators

A new report from Juniper Research has found that while global operator-billed revenues will exceed US$1 trillion annually by 2016, mobile network operators (MNOs) face the prospect of a “nightmare” scenario under which operator costs will exceed revenues within four years unless remedial action is taken.

 

The report found that MNO core revenues were flatlining and even declining in some markets, the result of market saturation allied to falling ARPU. Furthermore, operators were faced with the prospect of spiralling backhaul costs due to the dramatic increase in cellular network data traffic, which more than doubled in 2010 and is expected to increase by more than 13x to 25,000 Petabytes per annum by 2015.

 

Identifying New Revenue Opportunities

 

However, the report argues that MNOs have the opportunity to redress the balance through a series of adaptive strategies designed to optimise core revenue streams, develop new revenues and significantly reduce operating costs.

 

The Mobile Operator Business Models report highlights the need for MNOs to offer integrated rate plans, while also providing a wide range of segmented postpaid and postpaid tariffs. It also emphasises the potential for double-sided revenue streams in areas such as cloud, M2M and mobile financial services where MNOs can leverage their existing assets.

 

No “One-Size-Fits-All” Solution

 

According to report author Dr Windsor Holden, “Clearly, there is no one-size-fits-all solution for MNOs, simply because the circumstances of individual operators differ widely, even within the same market.  Instead, we have outlined a series of measures which MNOs can select according to their particular needs.

 

The report says that Tier 2 MNOs with lower traffic volumes may gain competitive advantage by retaining flat rate data bundles.

 

Another finding of the study is that integrated mobile broadcast represents a potentially cost-effective means of offloading video traffic from the network.

 

As cost of fossil fuels increases, transition to “green” networks and base stations represents both an environmental and economic imperative, notes the study.

 


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