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Mobile Service Provider Growth Priorities

February 13, 2011 - 0 Comments

As the Mobility industry converges upon Mobile World Congress in Barcelona this week, I wanted to talk to you about subjects we will all be talking about at MWC – monetization, optimization, and the video experience.

There’s been considerable speculation about the demands that are placed on today’s mobile infrastructure and how rocketing traffic volumes will impact the network operator’s business model.

We decided to explore service provider’s expectations for the ongoing development of the mobile Internet. More specifically, their thoughts on monetization and network optimization, especially around bandwidth-intensive applications, like mobile video.

So we commissioned a market research study that was recently performed by Heavy Reading.  Based on interviews with over 50  mobile operators from around the world (the interview subjects did not know that this was a Cisco-sponsored survey), here is a summary of what they told us (full report embedded at the end of this post):

Charting a Profitable Growth Strategy

  • Growing an active, paying, mass market mobile broadband subscriber base is seen as a pre-condition for more sophisticated monetization strategies.
  • Operators view “Tiered Services” as the most attractive monetization use case. This is especially the case in HSPA+ and LTE networks which now have enough capacity that operators can start segmenting their service offerings.
  • Other use cases that operators can use to drive data penetration and usage were also favorable viewed, e.g., group data plans and session/day pass or other time-based charging services.
  • Models that can help meet the dual goals of subscriber growth and generate better yield from existing and higher-end subscribers are most attractive. Maintaining a balance between those two objectives is, of course, preferred.

Maximizing the Returns on Network Investment

  • Mobile operators acknowledge the issue of traffic growth, and 40 percent of respondents described their environment as extremely challenging. But no single user application is causing deep concern – at least, not at the time of this study.  (Maybe it’s simply hard to pinpoint one – it’s all part of the same challenge.)
  • Policy and Charging Control (PCC) is quickly becoming fundamental and is a tremendously important enabler of advanced monetization use cases. There’s already strong operator intent to deploy policy management technology over the next one or two years. Some consider it a precondition for advanced use cases.
  • Basic mobile broadband infrastructure capability and associated economics very much impacts thinking on monetization. Ongoing RAN build-out is how most operators solve capacity constraints. Responding to their backhaul congestion problem is likewise a continued work-in-progress.

Preparing for Mobile Video Mainstream User Adoption

  • Monetization of mobile video is perceived to be difficult – given the current market dynamics. Over-the-top content is expected to dominate viewing. Most operators seem undecided about whether to market content services directly, or via experienced distribution partners.
  • Over 40 percent expect to deploy video optimization technology within three years.  The level of attention paid to his challenge varied greatly by region.
  • Anticipated bandwidth saving from video optimization is between 10 and 25 percent. Heavy Reading believes that in practice operators can achieve bandwidth savings of around 15 percent — if optimization is well implemented.

One additional finding of the survey was especially gratifying to me. Apparently, many perceive Cisco as the market leader, in terms of the capability to support end-to-end mobile video strategies. Moreover, even in the more advanced mobile services markets, Cisco is rated a leader by 53 percent of respondents.

I think one of the reasons Cisco is perceived as a leader is frankly because we take the time, as evidenced by this survey, to ask questions and listen to what our customers tell us.  We design and build products and solutions to meet the real-world needs of our customers, and we partner with our customers over the long-term to ensure those solutions deliver the value they seek.

Stop by our booth if you’re in Barcelona this week and I’ll show you what I mean.  But don’t be surprised if I ask you as many questions as you ask me.  That’s the Cisco way.


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