Across the world, the use of smartphones and tablets has grown dramatically over the past few years. Simultaneously, high bandwidth applications such as video streaming, social networking and interactive gaming are booming. The result is that we have more connected devices than ever before, consuming an unprecedented amount of data.
However, the much slower rate of growth in carrier revenue has resulted in a phenomenon that we at Wipro term as the 'data monetization gap.' Over-the-top (OTT) players have created an ecosystem of innovative services and applications that thrive on the availability of high speed data connectivity. Companies such as Google, Amazon, Facebook and Apple have succeeded in gaining consumer acceptance and monetizing their services, whereas Communications Service Providers (CSPs) bear the cost of network expansion without getting a similar proportion of revenue for the privilege, leading to the 'gap.' The key challenges faced by CSPs in monetizing their services include the popularity of unlimited data plans, rapid deterioration of quality of experience, lack of differentiation and a 2-sided business model, where OTT players such as Apple, Netflix and Hulu directly deliver to consumers, reducing the role of CSPs to mere connectivity providers.
To address these challenges, CSPs must create smart, gated networks that will enable them to prioritize, control and customize services based on service type or customer preferences. Intelligent policy and charging capabilities along with subscriber intelligence, network intelligence and partnerships with content players will allow CSPs to create innovative new pricing plans and product bundles.
These capabilities will make CSPs more relevant in the value chain and create better opportunities for network monetization. In a whitepaper, I recently co-authored, we examine these industry challenges and propose a 3-sided business model for CSPs. In this model, customers will pay directly to content providers, while content players will have revenue sharing agreements with service providers to offer differentiated service based on the type of services, or consumer preferences. Consumers may also separately pay CSPs for superior QoS. The '3-sided business model' will improve CSP network monetization by:
- Providing an un-matched customer experience. Customers will be empowered with options to select the desired service levels and control network speed by service type or other preferences
- Offering innovative new products and billing models. Differentiated charging and service personalization based on consumer preferences
- Creating a network of content partnerships. CSPs will build innovative business models by collaborating with 3rd party OTT providers and offer premium services by exposing network application programming interfaces (API) to the content specialists.
- Optimizing network resource management. In co-ordination with networkintelligence based on real time utilization data, policy controllers will help optimize network resources.
To move up the value chain and become a highly profitable digital services provider, CSPs need to develop a business model that will not only help them retain and attract new customers, but also deliver a next-generation of network monetization opportunities we can only dream of today.