The ubiquity of the smart device has been a driving force behind countless new innovations, services and new business models in recent years. The AppStore gold-rush and stories of phenomenal Silicon Valley startups that have come out of nowhere to gain multi-billion dollar valuations have been widely celebrated. Consumers around the world are now accustomed to having the power of a fully-fledged personal computer in their pocket and at their disposal at any time. It might be at work, at a football stadium, at the beach or even from the comfort of their bedroom. The average person checks their smartphone over 100 times per day, some as frequently as every six seconds. The implications for telecommunications service providers are vast. Most notably, these trends have driven the rising demand for data services to power the use of these devices. In a few short years data has taken over from voice related services to become the most critical revenue generating service of the modern Telco provider.
Data Services and OTT
Data services now provide wireless operators with 50% of their average revenue per user (ARPU). SMS and Voice, which not so long ago made up the lion’s share of profits are now typically provided for free or buried deep in cost structures. The demand for data continues to double every 18 months and will continue to do so for the foreseeable future. Over The Top (OTT) applications such as Skype for calling and WhatsApp for instant messaging, among others, have dramatically reduced the importance of traditional services. In some markets 37% of providers are leveraging OTT app partnerships themselves to align themselves with these trends.
When users are not connected to an open Wi-Fi network (which some now joke should be added to Maslow’s hierarchy of needs) they require a fast and plentiful data connection. A recent report found that only 15% of providers offer unlimited data plans. Nonetheless, customers expect cheap, flexible and highly tailored data packages and add-ons from their service provider. They expect to stack and pool data among families, friends and across all of their phones, tablets and other smart devices in their own country or abroad. Converged contracts that cover all users, services and prepaid/postpaid payment options are common. Flexibility and cost effectiveness are key. One size does not fit all.
New offers and rate plans
Progressive Telcos have heard their customer’s cries and now offer affordable family and device sharing plans. In many markets, particularly North America which is the grip of a pricing war, such plans continue to drive growth in the face of customer churn and low switching costs. Europe and other parts of the world are still somewhat behind but are gaining pace quickly. These needs have driven dramatic changes in Charging and Billing requirements, with many Telcos realizing that their existing systems are not flexible enough to manage such complexity and that they are not designed for the modern real-time reality.
Customer engagement is key
Where does it end? Certainly, some providers and their partners are already starting to innovate further by offering sponsored plans – requiring the users to consume advertising content to access the services. Some Silicon Valley giants also continue to tease about entering the mobile data space, something that could make a serious impact in affected regions. But for now, innovative Telcos need to offer dynamic plan options, OTT partnerships to provide zero rated data, complimentary cloud services, data sharing and other packaged add-ons all tailored to an individual customer’s needs. They need to act on the insights they are drawing from their integrated operational/business support systems (OSS/BSS) showing what/when/how users are consuming services and capitalize on customer engagement systems that are tapping into social and big data. Importantly, they must realize their services by leveraging flexible Charging and Billing solutions to offer it all before their competition does.