Today operators face challenges on multiple fronts, which include decreasing revenue per user; the gradual erosion of SMS revenues as phones have become ‘smarter’; apps and OTT services devaluing lots of operator innovation investments; the cost of infrastructure upgrades and spectrum as well as the complexity of managing sector regulation and beyond.
By Sherry Zameer, senior vice-president Africa at Gemalto
However, looking forward, the Internet of Things (IoT) opens up great opportunities for mobile network operators to develop new fruitful business models. In 2015, almost 5bn ‘things’ were already connected, as per Gartner latest report. For 2025, figures are even predicted to climb to 50bn connected things, from which a majority will rely on Mobile Network Operators’ (MNOs) connectivity services. In order to establish new revenue streams and be able to fully embrace those new business opportunities, operators will first have to overcome some exciting challenges.
Moving towards dynamic management of the infrastructure
Ubiquitous, high speed connectivity is high on the wish list of consumers everywhere, be that in their homes, public places or beyond. There are boundless opportunities for mobile operators to explore partnerships with local communities, with transport networks, brands etc. To monetize the increasing demand for connectivity within the rise of IoT, network infrastructures will have to flex between different needs.
Dynamic management of the network infrastructure would be a potential new business model for MNOs. They’ll have the opportunity to provide a new aggregation service with a notion of handing over to a different connectivity framework, depending on the connectivity available and the broadband needs of each device.
The emergence of 5G is the chance for MNOs to regain control of the network, with the possibility to provide fragmented and virtual connectivity services. MNOs will also have the opportunity to adapt their services according to the data consumptions needed – creating a sort of ‘network on demand’. For some emerging IoT use cases, low bandwidth broadband at low cost could be provided. For example, connecting an automatic inventory alert service for a fridge will require less data consumption than a connected car.
Positioning as IoT connectivity aggregator
IoT is opening up the development of thousands of new services using broadband connectivity. To enable IoT and meet the ‘always-on’ generation needs, mobile connectivity needs to become a standard feature for M2M and consumer electronics devices. Here, mobile operators can play the service transitional role. As connectivity providers, and having full control of their network infrastructures, they are in a powerful position to manage the rights for entering the connected world to new IoT players.
It also falls to the mobile operators to play a “hub” role for the connected world. They are the link between the consumer and their connected activities, and could become the main interface. In this position, operators will have to make the connected world accessible to every service provider. To always provide a seamless connected service to their customers, every service will have to be easy to access from any device through any network, without any friction for the end-user. Standardization will be the key here. For example, as smartphones will probably be the main means for payment, any financial institution will need its service available on any device, without any constraint.
As a consequence of the extraordinary rise of new connected devices, operators will have to be able to provide flexible connectivity services remotely, everywhere and anytime, for any device to embed an instant connection feature. Customers will expect instant and seamless connectivity, on any device, straight from the box throughout its lifecycle and for this, mobile operators will have to work closely with device manufacturers.
Taking some risks to enable the IoT
The IoT market is set to grow in excess of 15bn connected devices in 2020, generating a vast opportunity across consumer devices, industry, smart cities, cars and connected homes. Making the IoT effective in this context requires significant work on the technology, standards, security and beyond. A wide range of new connected devices or use cases will develop very fast.
Operators will need to follow the pace of new trends, and will have to try, and in some cases, fail. It will be necessary to set up 20, 50 or 100 pilots or beta test programmes in line with new disruptive connected technologies that could potentially arrive on the market, and task the business with assessing the ones that could be successful – then develop and market those more aggressively.
This requires a bit of (controlled) risk, but the predicted value demonstrates that this could very much be worth it.
Providing next level of customer experience
The market is converging to more simplified user Interface models, to reduce the number of actions we make on devices. In the future, our connected devices will be so smart that they will anticipate our actions, based on previous behaviour, for a simpler and more convenient experience. For example, approaching a cashier would automatically activate our mWallet, or our car heater would automatically start when the car detects we’re a few minutes away.
This critical mission will involve providing the most reliable connectivity experience to make consumers feel they can easily embrace the new world of mobility. It is the responsibility of the operators to ensure this quality of experience. Given that 40% of dissatisfied customers are likely to switch service provider, customer services will have to adapt accordingly, with real time problem solving, to avoid the connected dream becoming a nightmare.
Anticipation could be a way for mobile operators to provide the best service, by listening to customers through an engagement strategy and data analysis, using Quality of Experience and Quality of Services solutions. Such solutions enables mobile network operators and OEMs to proactively identify and solve subscribers’ issues in terms of network quality and device performance, based on real user experience.
Developing a marketing service offering
Intelligent mobile marketing is also a great opportunity for mobile operators. The continual evolution of smartphone (and mobile smart device) technology will provide many more marketing opportunities down this path in the decade ahead, and if done well, respecting some golden rules such opt-in based campaigns based on relevant and valuable contents, the wealth of insight operators have clearly puts them in pole position to capitalize on this with advertisers and marketers to run efficient targeted campaigns that would bring value to mobile subscribers.
Mobile operators hold a wealth of data about their customers, which will enable them to become authorized data brokers. This puts them in a good position to facilitate exchanges of information of mutual benefit to their customers and themselves; for example, putting together people who travel a lot with the best travel insurance policies that meet their needs, or directing their customers to download apps that might help them with tasks they are carrying out laboriously on their phones otherwise.
Mobile operators will have to handle it with care as mobile consumers will accept to receive relational or promotional messages but on their own terms: opt-in first, easy opt-out and preferences management. It is increasingly important for mobile operators to work more closely with customers to get their buy-in on marketing campaigns. This way, not only will the campaigns have higher success rates, but by fully engaging with customers means they will be truly targeted. Campaigns must be continuously monitored to ensure they are up to date to ensure the best ROI.
Defending the data and enabling the security of end-users
It’s clearly going to be an even more digital world by the time we welcome 2025 and consumer expectation is that their providers – including their mobile operators – will take a bigger role in securing them and protecting their data.
Operators today could start to carve this out as a point of differentiation as we prepare for the connected future. They need to make sure their services are always secure, and build a trusted foundation for IoT by securing data everywhere.
Most new connected devices and services will not use a regular SIM card where data and credentials are kept securely. Instead, new types of secure elements, embedded within the device for the most case, are likely to emerge. And for data in motion, MNO’s will consider setting up secure authentication and encryption solutions to secure communications between devices and the cloud.
It’s important to remember that mobile operators will not be the only players making the connected world of 2025 a reality. Governments, urban planners, city-states, technology firms, automotive manufacturers and beyond will all be playing a big role in delivering some of the elements that make up the vision the world’s youth share.
Regardless of how many of these predictions emerge as truth, the reality of the situation is that as more devices become connected, and our dependence on technology and communication increases, the telecommunications infrastructure in the region will need to adapt and be prepared to support this so the region does not get left behind.