Communications and Technology Industry Research

In a recent report, Juniper Research predicted that non-messaging mobile content revenues (including that from advertising) will reach $188 billion by 2012. The firm said what’s still uncertain is what player in the market will capture the largest chunk of these revenue.

 

“Mobile network operators have nothing to lose by looking at alternative business and revenue models that enable them to blend a retail strategy with a well-articulated business-to-business and wholesale approach that capitalizes on the network- and subscriber management requirements of an increasing array of downstream service providers,” said Sue Uglow, author of the report, in a statement.

 

Uglow continued: “This requires a step-change in the mindsets of most MNOs, but we are beginning to see movement in this direction.”

 

Presently, the focus is on identifying ways to create revenues from non-messaging mobile content. However, understanding about how revenue sharing and primary expenditure works is still vague.

 

Juniper looked into new business models that offer to achieve revenue sharing among mobile content providers. One of these is the “dumb pipe” model. In this scenario, mobile network operators (MNOs) are diminished to ‘dumb pipe’ due to revenue-seeking activity from content owners, search engines and other branded service providers.

 

The ‘dumb pipe’ scenario does not bode well for MNOs, Juniper said; it’s a potential route to bankruptcy since most will only be able to retain 24 percent of the non-messaging mobile content market.

 

Another model is one Juniper labels “on-portal.” In this scenario, MNOs extend their efforts to implement vertically-integrated services. While “on-portal” is better for MNOs than “dumb pipe,” it’s still not perfect. Juniper predicts “on-portal” can boost MNO non-mobile messaging revenue to 30 percent of the market. The major share of revenues would still go to content providers.

 

The third and final scenario is the “smart pipe” business model. Here, MNOs will adapt to support delivery of flexible, applications-centric value configurations—such as search, imaging and information services. The success of this scenario will depend on the core competence of MNOs that pursue it. If successful, MNOs could retain 31 percent of the market.

 

Uglow said service providers will be most successful if they avoid the trap of focusing too heavily on retail revenues.

 

“Some providers may need to relinquish the end-user relationship as the costs associated with reaching consumers of non-messaging mobile content will exceed the revenues available,” Uglow said. “Profitability will become a more important long-term indicator of success than revenue.”