Mobile operators will abandon network cost-based pricing to focus on premium services, as they look to reduce churn and maintain revenues according to a new white paper released by Analysys (News - Alert) Mason.
The change, enabled by new end-to-end approaches to network management, will be needed if mobile service providers are to compete effectively with over the top app providers and match revenue to the costs of continual bandwidth growth.
The report estimates that the volume of wireless data traffic worldwide will grow at an annual rate of 67 percent between 2010 and 2015.
During the same period, data revenue per gigabyte is projected to fall from $23.21 to $4.27. Clearly, among the problems mobile service providers confront is that consumer demand for data is growing at a faster rate than revenues consumers pay for that usage.
The report reveals that, in order to handle this growth while assuring revenues, operators are increasingly looking to offer new services such as temporary network speed boost and tiered bandwidth allocation to create a premium service for high value customers.
“Operators are facing increasing pressure to deliver a high quality service despite growing data demands,” said Patrick Kelly, Analysys Mason research director. Kelly thinks the only way for mobile service providers to avoid the severe revenue compression is to sell additional services to end users.
It probably would be hard to find any service provider executive who would disagree with that analysis. But though premium and new services are an obvious way to combat the declining ARPU, precisely “what” the new services will be is open to more questions.
Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.Edited by Jennifer Russell