A mismatch between revenue growth and network costs might result in operating costs exceeding revenues within four years, according to researchers at Juniper Research (News - Alert). That stunning prediction likely will fail to materialize, but only because mobile operators and regulators, in some cases, will have moved to remedy the problem before it becomes dangerous. The biggest problem is simply that data revenues do not increase fast enough to cover investments in data capacity. If one assumes mobile operators will continue to invest heavily in new facilities, the only other variable that could change is revenue per megabit, essentially.

Despite the notion that mobile service providers are powerful and wealthy entities, the exhaustion of business models remains a key problem. “Mobile network operators  face the prospect of a ‘nightmare’ scenario’ under which operator costs will exceed revenues within four years unless remedial action is taken,” Juniper predicts. 

A new report from Juniper Research warns that spiraling mobile backhaul costs could contribute to a catastrophic scenario in which mobile service revenues are less than mobile network costs. Mobile network data traffic more than doubled in 2010 and is expected to increase by more than 13 times to 25,000 petabytes a year  by 2015, Juniper Research estimated. 

Many estimate that backhaul costs are between a third and half of all operating costs. 

Despite the general bullishness about all things mobile, the mobile operator problem is that legacy voice revenues are falling faster than new revenues are being created. And most of the new revenues being created within the mobile application ecosystem are accruing to third party app providers, not mobile network access providers. 

None of those facts are unknown, and no mobile operator is unaware of what must be done. For a period of time, growing data revenues will continue to be the primary new revenue source of note, both because most consumers will start buying data plans, and because many more data devices will use mobile broadband. 

Other initiatives are under way, but few can promise the widespread revenue lift of most strategies related to mobile data revenues, in the near term or in the future. 

“Clearly, there is no one-size-fits-all solution for MNOs (mobile network operators), simply because the circumstances of individual operators differ widely, even within the same market,” said report author Dr. Windsor Holden. 

Juniper Research also found that while global operator-billed revenues will exceed $1 trillion annually by 2016, other researchers think the $1 trillion mark will be hit in 2012.

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