Mobile Operators Must Rethink Network and Business Models: Tellabs Study

By Rajani Baburajan, TMCnet Contributor

Profitability could be challenging for some mobile operators within three years, according to a Tellabs (News - Alert) study, which is based on independent analyst data. The mobile Internet is forcing operators to transform their networks and business models. If they stick to their present network strategy, costs will surpass revenues for many operators in North America by 4Q 2013, in developed Asia Pacific by 3Q 2014 and in Western Europe by 1Q 2015.

At this week’s ITEXPO East 2011, the leading IP communications conference, mobile vendors presented at the 4GWE conference, which discussed the critical issues of how best to enable and exploit the mobile Internet. 4GWE explored the trends driving a shift toward an anywhere, anytime, broadband mobile network. The conference served as a gathering place for Mobile Network Operators, fixed carriers, handset manufacturers, mobile Internet device manufacturers, application providers, and venture capitalists.

Executives from mobile vendors including Skype, Google, Verizon, Motorola, AT&T (News - Alert), and more, expanded upon the operator's role in meeting the ever increasing demand for wireless services; how carriers will prioritize traffic in an age of mobility and never ending applications; the role of the device in delivering 4G applications; how the smartphone will improve productivity in the enterprise and at home; and the role of 4G technologies including WiMAX 2.0, WiFi (News - Alert), and LTE.

The Tellabs study says traditional ways of handling dramatic traffic growth are expensive. Intense competition increased pressure on revenues. “Mobile operators can spend themselves into a hole well before users run out of hunger for capacity,” said Rob Pullen, chief executive officer and president of Tellabs, in a statement. “Our study shows that simply adding capacity or 'dumb pipes' is an unsustainable business. To avoid the 'end of profit,' operators must bring intelligence to their networks -- it's critical to carrier survival.”

It will be challenging for telecom operators to sustain a business model based on bandwidth alone. Adding intelligence to the network adds revenue, improves business fundamentals and enables a more profitable business, according to Tellabs study.

To provide critical intelligence for operators, Tellabs will introduce a new smart mobile backhaul solution and an improved smart mobile packet core platform, company officials said.

Analytics enables smart networks to deliver the right bandwidth to the right users. Intelligence brings new traffic management efficiencies, new business models and new revenue streams. Intelligence will reverse the trend of declining carrier profits.

According to the study, higher network access costs make North American operators most susceptible to the changes wrought by the mobile Internet. This is despite earlier adoption and roll-out of more cost-effective network technologies.Rapid revenue decline is the challenge faced by operators in developed Asia Pacific markets. Analysys (News - Alert) Mason predicts revenue per gigabyte decline of 88.2 percent between 2010 and 2015. Lower network access costs and a more gradual revenue decline lessen the impact on Western European operators, the study says.

Recently, Tellabs announced that its new Long Term Evolution (LTE (News - Alert)) Evolved Packet Core (EPC), based on the Tellabs SmartCore 9100 platform, advances the transformation to mobile Internet.

As an LTE serving gateway (SGW) and PDN gateway (PGW), the Tellabs SmartCore 9100 platform offers high performance at a lower cost per bit, reducing the total cost of ownership, the report said.

(source: http://testing-wireless-networks.tmcnet.com/topics/testing-wireless-networks/articles/141566-mobile-operators-must-rethink-network-business-models-tellabs.htm)