Communications and Technology Industry Research

When referring to Mobile Network Operators (MNOs), the concept of ‘dumb pipes’ may leave some scratching their heads in confusion. However, according to a new study from Juniper Research, many of these MNOs will have to fundamentally change their mobile content business models to avoid becoming ‘dumb pipes’ in the future.

 

Juniper suggests that these business models be changed to emphasize the ‘shared value creation’ to become ‘smart pipe’ service providers. In doing so, these companies will be able to significantly increase their income from mobile content, which Juniper estimates at $23 billion in 2008, rising to $52 billion in 2013. 

 

The global mobile content market is expected to be worth $167 billion by 2013, creating significant opportunity for those MNOs who are able to capitalize on their strengths. This market share will be shared among players such as MNOs, Content Providers and third parties including content aggregators and billing companies.

MNOs currently take a significant percentage of the revenues generated by Content Providers when they use their networks. As a result, end-users have been handed high prices and consumers are being deterred from access mobile content on a wider scale.

As this has created an unattractive situation, it has become a disincentive for MNOs and Content Provides alike. In fact, some Content Providers have attempted to bypass the MNOs or exit the sector altogether. The report highlights that the situation needs to change, but that MNOs must make the first moves.

The Juniper report examines the three main scenarios that Operators and the sector as a whole are facing – the ‘Dumb Pipe’, ‘Smart Pipe’, and ‘On-Portal’ routes. In modeling the market in this way, Juniper is able to create a detailed forecasting and modeling tool to examine how a future market may develop under different conditions.

Report author Andrew Kitson shared in a Tuesday statement, "One single scenario will not win out since different business and revenue models have to co-exist in the mobile content market. Players will adopt multiple approaches that best fit their markets.”

“Crucially, if MNOs are to benefit financially, they need to move away from their Dumb Pipe roots to the Smart Pipe model, though they will clash with the content providers which already dominate the Smart Pipe. A compromise needs to be found," added Kitson.

If MNOs can change their ARPU-driven mindsets to focus on value creation and support for their partners, they can swiftly make the change.

This latest report provides coverage and forecasts from a global perspective as well as from a regional viewpoint by examining how the market will grow or wane under the On-Portal, Dumb Pipe, and Smart Pipe scenarios around the world.

This market is expected to continue to change and new dynamics must be taken into consideration. As a result, MNOs will have to change their strategies – just as any other business facing market challenges. When implementing smart strategies, MNOs will be able to leverage their existing share and capitalize on emerging opportunities.