The role of mobile phones today has evolved beyond a general-purpose communications tool to become an extension of a user’s persona and everyday routine. New revenue opportunities for mobile operators will only increase as customers want and expect more services from their phones – to help manage finances, schedule meetings, shop and share experiences online through chat, watch sports and listen to music, and keep up to date with information on the go, for example.
This new world beyond voice, and even text messaging and data access, is referred to as the “4th wave” of digital services. Unlike the first three waves where communications was the service, in the 4th wave, communication – voice, messaging – is the enabler for a host of value-added services across a range of verticals.
As with previous waves, mobile phone subscribers will choose their operators based on the value-added services to meet these new demands. Therefore, it is critical for the mobile operator to ride the 4th wave on the way up through new digital value-added services, which I like to call VAS 2.0. This new model of value-added services enables operators to capitalize on advanced technologies and capabilities, such as cloud, network functions virtualization and APIs, and establish a foundation to harvest new emerging digital services beyond previous communications offerings – extending services to new digital application areas such as the “Internet of Things,” analytics, e-commerce, mobile payments and e-health.
Let’s look at some examples. As the digital services lead, the mobile operator has an opportunity to drive new revenue by charging both the subscriber and third-party service providers such as WhatsApp, Facebook Messenger and Tinder, for API usage. In another scenario, the mobile operator provides VAS 2.0 to the subscriber through advanced messaging apps, while also monetizing the 4th wave of services by providing the network services (messaging, voice, video, text messaging, etc.) needed for the mobile app developers’ services to be utilized.
The challenge with this new monetization model, however, is achieving the requisite speed. Mobile operators must move quickly to adopt and integrate this next level of digital services offerings before losing more ground to competitors or over-the-top providers in either revenue and/or customer relevance. More importantly, mobile users are savvier than ever, taking advantage of Wi-Fi data to avoid the need for larger data plans. By opening the door to new opportunities in both the consumer and enterprise markets, the 4th wave presents mobile service providers with a new business model through the monetization of digital services.
Three strategies for monetizing digital services
The Chetan Sharma Consulting report, “Operator’s Dilemma (and Opportunity): The 4th Wave,” defines the 4th wave as something qualitatively different from previous mobile communications waves. It’s not a single curve, but a combination of smaller curves to be managed as a portfolio of services. The competitive landscape for each of these small curves varies and requires strong domain expertise and an agile organization to quickly adapt to the changes and demands of what’s already become a $1.6 trillion mobile industry.
Below are three key strategies to help service providers efficiently and cost-effectively evolve their services for the digital era. If implemented successfully, these tips will enable operators to become digital lifestyle players and seize growth opportunities for increased revenue in the new IP-based world.
Simplify: As a first step in the journey toward providing digital services, mobile operators must first simplify their legacy VAS systems and extract operating leverage. This can be done by creating a single subscriber profile and operation administration and management system shared across a unified multi-VAS solution that handles more than one application such as text messaging, multimedia messaging, e-mail, voicemail or visual voicemail. Converging to a common database function and centralized cloud system will create opportunities to mine and analyze data, and support multiple customers on a shared infrastructure, opening up future monetization possibilities.
Modernize: Mobile services that purely address SIM-based devices are likely to fade into oblivion as individuals and families embrace a multidevice lifestyle. It’s important for the digital services provider to serve its customers across all their IP-connected endpoints including tablets, IPTVs and gaming devices. By addressing IP-connected endpoints, a service provider can increase the addressable market for their VAS portfolio twofold. Also, a multidevice service experience that is agnostic across Android, iOS and other ecosystems is a differentiator and ensures consumer stickiness.
Differentiate: The third step, after making the current services more economical to operate and more relevant to today’s subscribers, is to evolve these services to enable an experience today’s subscribers have come to know and expect, but also allow for the continued evolution of competitive services and compelling new-user experiences. A full digital experience minimally needs to be cross-device, with auto-synchronization among devices; group-centric with fast switching among multiple group conversations; linked to social networks of the subscriber’s choice, with a searchable history; and not limited to a single media type, such as voice or text. Operators are wise to choose the right solution strategies that will ensure these capabilities, but also allow for future offerings as the IP market evolves further.
By following these three steps, mobile operators will be well positioned to compete with nontraditional, OTT players and on their way to monetizing the 4th wave. As true digital services players, operators will benefit from additional communications and revenue opportunities, from the analysis and monetization of mined data and/or personalized service experiences, to API connectivity and enabling machine-to-machine and IoT. It’s critical that mobile operators begin making these adjustments to their services offerings to remain competitive and relevant as true digital lifestyle players, today and in the future. The sooner mobile operators act, the better able they’ll be to successfully catch this 4th wave to capitalize on and monetize the digital services market before OTTs have a chance to lock in their market dominance.
Aashu Virmani is VP of products and go to market, digital services at Comverse. www.comverse.com.
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