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The last decade has been a tale of rampant growth in mobile services revenues. But who’s benefited in the $2.5T app economy? Carriers have only marginally participated. Is there a way for them to regain some of the value – and deliver products that customers love? An expert panel, supported by Syntonic, debated this topic as part of MEF’s programme of events at MWC18.

If there was a theme to this year’s Mobile World Congress, it was 5G.

Hype around the next-gen network technology loomed large on the show floor, with plentiful demos, use cases and launch announcements.

But over in Hall 8.1, the tone was a little more sceptical.

“People think 5G is going to save the day for the carriers. But 5G is ‘out there’ a little bit. It’s not going to happen here and now. 4G will be around a while longer.”

Watch the Keynote

The cautionary words came from Gary Greenbaum, CEO of Syntonic, as he introduced the MEF session: “Beyond voice, text, and data – disruptive services to grow carrier ARPU”.

The session comprised a keynote by Greenbaum and a panel discussion moderated by Susan Welsh de Grimaldo from Strategy Analytics with panelists:

Supported by

  • Frederic Dingemans Head of Digital Commerce Tata Communications
  • Nicholas Wodtke Executive Vice President of Digital Content Veon
  • Danielle Levitas Senior Vice President, Research & Professional Services App Annie
  • Gary Greenbaum, Co-Founder and CEO, Syntonic

Greenbaum began with a candid reality check.

He noted that many carriers believe 5G will rescue them from a declining or flattening telco revenues. But he argued that they would be better advised to focus on recapturing some of the value in OTT services.

“Voice text and data are commodities,” he said. ”And the only way of differentiating a commodity is price. As a result, carriers are in a death spiral – unless they change what they are, and try to participate in the $2.5 trillion app economy that their investments partially created.”

Greenbaum backed up his analysis with numbers. He revealed a graph that showed the global revenue from core telco services (voice text and data) being matched and overtaken for the first time by that of mobile services (content, commerce, advertising) in 2016.

Then he added that mobile services would generate five times more revenue than voice text and data by 2021.

The conclusion? Carriers have a choice. He said: “They can continue to invest their $170 billion a year in CAPEX infrastructure and try to monetise that with voice text and data. Or they can try to claw back some of their value that has accrued to the mobile services space.”

Happily, there are signs that many are doing just this. Greenbaum named a number of services such as VEON Be Free, Vodafone Pass, T-Mobile Binge On and others that bundle high value content for one tariff with no data charges.

And he noted that Syntonic is working with a growing number of carriers to deliver new data models and content bundles and unlimited access to specific apps.

On the panel, Tata’s Frederic Dingemans reflected that such services are merely answering the vast hunger for mobile content from subscribers.

“The appetite for mobile connectivity greatly exceeds the size of the subscribers’ wallets. There are millions of dollars of pent up demand,” he said.

Watch the Panel

Clearly, creating bundles works for customers. But sponsoring data is also great for brands because it’s so flexible.

“The value of a MB of data can be shaped. You can apply policy to it,” he said. “Is it for one app? For a night? For a morning? For roaming? We’re always discovering new models for that marketplace.”

Dingemans also described the high perceived value of data in consumers’ eyes. “Brands find data to be powerful currency because you can really target users with something that matters to them. So we position data as a reward currency.

“This is very powerful for brands for two reasons. One, you can really target data. Two, there’s the cost. You give someone a dollar of data and it looks like a dollar but it might actually cost 20 cents.”

In markets where incomes are relatively low, this approach has obvious potential.

App Annie’s Danielle Levitas gave the example of India as a region where demand for content is huge even if direct spending is not. “India is now the largest market for Google Play downloads,” she said. “but it’s only a $100m market. What is driving that monetisation and value for customers has been advertising.”

That said, while consumers in mature markets may have more disposable income, they too often prefer ad models.

This means that there’s potential for a subsidised approach just about everywhere. VEON’s Nicholas Wodtke said: “Today’s teenagers are cord cutting. They  watch everything on a laptop. They don’t pay a single bill but they’re very rich content consumers. So if you want to get a transaction, you do not start with a commercial proposition. You have to win them over first. It’s a long dance.”

Tim Green

Features Editor, MEF Minute


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