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‘There’s no catch’

By August 4, 2016 No Comments

This writer was recently checking into a hotel in south-east Asia and advised about a service provided by the hotel for “free”. Various customers checking in at the same time were being told the same thing: “there’s no catch”.  The service being offered was a smartphone with free local calls and free calls to 14 other countries in the region. Data, including maps, was also free. It seemed too good. It turned out there really was no catch. No roaming, no bill-shock, immediate access to a local mobile service, zero contact with whatever local service provider was supporting in the background, time saved fiddling around with WiFi passwords. No cost whatsoever.

How could such a great a service be provided for “free” and what are the implications for Operators? Clearly there is something going on that gives incentives for the enabler and hotel to provide this service. There are a number of possible revenue drivers. It would be easy to comment, as many already have, on the commoditisation of voice and data. Better perhaps to focus on the evolved revenue streams that must be driving this service:

1.       Hotel bill subsidy: building the cost of running the service into the price of the hotel booking while the hotel provides it as a “free” service and differentiator.

2.       Advertising: the service home screen and additional pages were pushing advertising of the hotel itself, local restaurants, shops and other services in the area.

3.       Out-of-bundle services: (e.g. calling countries outside the free zone) could provide additional revenue, added to the hotel bill.

4.       City subsidies: in certain cities the city management could subsidise such a service if it involved promotion of public venues.

For Operators everywhere there must be implications from this type of multi-national wholesale service. (It’s available from hotels in a number of countries). At very least, with airline traffic expected to grow by up to 100% over the next 20 years (at least according to IATA, an international association of airlines) there is no doubt that a market exists for specialist, multi-national MVNOs.

No surprises then that Transparency Market Research expects the MVNO market to grow at 7.4% CAGR and to US$75.2bn up to 2023.

More generally, clearly there continues to be scope for evolved business models that are more experience-oriented and move beyond traditional and locally-driven voice, SMS and data bundling. Users will pay for advanced Operator services that they badly need (e.g. business-grade video conferencing) but indirect payment channels could hold additional value (as in this example where the billing relationship was with the hotel). A lot of future mobile value is likely to be driven indirectly through existing or alternative billing relationships with retailers, utilities or even car brands, especially as the number and variety of connected devices increases.

Broadly negative user experiences around mobile advertising and increased use of ad-blocking implies that Operators require more subtlety in their use of advertising-driven business models as they re-boot their wholesale business in a more data-driven mobile environment. Social media-driven advertising has already been shown as much more acceptable, especially to younger mobile users and especially if it results in a monetary bonus or discount for those users. Although advertising has limitations it can be ever more nuanced and relevant. Partnering with trusted brands (as in this case with a hotel chain) is key to Operators, in winning back advertising revenue streams and providing sponsored data to end-users who turn off or turn down their ad-blockers.

But as this case shows, Operators still hold keys to often under-used resources: user-location awareness, other detailed user information (in this case possibly combined with hotel information about user demographics) and details of actual, real-time, user activity. Enriched, real-time data remains a much under-valued asset in most mobile networks.

Together with the right partners and tools, Operators can reframe the market they are in and reconsider their business models. More flexibility than ever is already possible for the management of an ever-wider range of traffic that will be driven by 3rd parties in 5G and IoT environments. This approach doesn’t have to cannibalise existing revenue.

Perhaps “no catch” has a bright future.

 

For more information on evolved charging, wholesale models, network transformation and big data, head to:

http://178.128.46.162/learning-centre/whitepapers

 

For information on wholesale solutions for Operators and enterprises head to:

http://enterprise.openet.com/