Mobile network operators will have to be nimble in 2016
Editor’s Note: With 2016 now upon us, RCR Wireless News has gathered predictions from leading industry analysts and executives on what they expect to see in the new year.
It’s no secret mobile network operators are in a state of transformation. New market entrants and old allies continue to chink away at MNO influence with more agile communication offerings for enterprises and consumers as well as pushing for industry standardization initiatives, like e-SIM. Emerging markets that once seemed to provide a glimmer of opportunity like the “Internet of Things” are also proving to be a dead end for MNOs until sufficient security standards can patch its vulnerabilities.
What’s clear looking ahead in 2016 is MNOs aren’t willing to raise the white flag just yet. They’re already reassessing their value proposition and focusing on what core assets will move the needle from a revenue standpoint: data. In the midst of innovation and change, MNOs will find temporary reprieve in their rich user profile data, which harbors powerful insights that are highly valuable to brands.
As MNOs work to achieve market stability, I expect the following events to unfold in 2016:
MNO’s data revenue will rise, as user location data becomes table stakes for brands
Privacy concerns on big data practices will remain high on policymaker agendas in 2016 as consumers weigh in on reverse engineering possibilities, such as being able to pinpoint the exact location of a mobile subscriber at a given time. But even with regulatory attention and newly passed European Union data protection rules, brand appetite for MNO subscriber data will continue to accelerate given the convenience it delivers for digital user experiences, compelling MNOs to get serious about monetizing their data assets.
A practical business scenario is for MNOs to provide real-time information on the subscriber’s location and availability so brands can make cloud purchasing and mobile payments simpler and more efficient for their customers. MNO location data is expected to be a $79 billion dollar business by 2020, according to 451 Research.
In the coming months, we’ll continue to see an increased number of use cases where MNO data is used in the background to facilitate and improve user experiences for shopping and financial transactions, among others.
Enterprises will welcome OTT hubs for cheaper, richer engagement with customers
Communication and collaboration tools are essential in today’s enterprises, not only for internal corporate communication, but also to engage with costumers. Ovum estimates that application-to-person messaging accounted for 24% of total messaging traffic in 2014. It’s estimated that A2P traffic will grow to 2.21 trillion in 2017, which will make up 31.3% of total messaging traffic.
The rising familiarity of over-the-top messaging apps and the strong demand for mobile customer engagement is making an OTT hub, or a single place that houses multiple OTT apps to reach end users, an attractive and cost-effective alternative to traditional channels of customer communications. Using OTT hubs, a brand can send messages to a customer’s most preferred messaging app, whichever that happens to be, via one entry point.
As OTT apps gear up to monetize, brands will invest in OTT hubs making them integral part of their omni-channel customer engagement strategy. The larger-scale messaging functionality afforded by OTT hubs will further erode MNO influence in consumer communication. Additionally, brands’ heavy use of OTTs will increase OTT traffic in the form of A2P messaging, resulting in unprecedented growth in non-monetized A2P traffic for MNOs, particularly for those without sufficient text messaging firewalls in place to monitor and control the traffic.
Mobile operators will accept e-SIM as inevitable, and explore ways to add software locks
Electronic SIM cards is a new standard proposed by GSMA, which embeds SIM cards into devices, eliminating the need for consumers to physically switch out their SIM when they need to change devices, service providers or plans. Already in advanced stages of technical development, e-SIM will be compliant and rewriteable by all operators, which will result in cost savings for manufacturers and significantly simplify the process of making changes to a subscriber mobile service offering.
Therein lies the problem for MNOs. The ease of switching service providers with e-SIM intensifies the battle to maintain its customer base.
Industry talks of standardized e-SIM will kick into high gear in 2016, especially with GSMA getting close to delivering the technical architecture. Recent speculation also puts major manufacturing influencers – Apple and Samsung – at the forefront of the e-SIM conversation, as an embedded standardized SIM reduces costs in making different devices for each wireless carrier and operator.
With more pros than cons for key mobile ecosystem players, MNOs will accept e-SIM as the inevitable and adapt its service offerings with built-in software locks to increase the bond between the device and the connectivity service.
Headline-grabbing security breaches will stall IoT innovation until new industry standards are introduced and proven
While the innovation promise of IoT seems boundless, recent survey data shows great hesitation with IoT security by consumers and security experts alike, with 50% and 90% showing skepticism, respectively. At last count, ABI Research estimates that by 2020, the number of active Internet-connected devices will exceed 40 billion. To the security conscious, this means there will be 40 billion more access points for hackers to breach by that time.
We’ve already seen several examples where security vulnerabilities with connected devices creates serious security concerns, including hacking into connected cars to gain control or shut down a car in motion, unlocking doors or alarm systems in homes, compromising medical devices, altering camera settings in baby monitors or stealing health data from wearables. The list goes on.
As IoT continues to expand, there will be major security breaches that will expose the fundamental weaknesses of existing IoT standards on radio technologies and Internet connectivity. The resulting business risks will dampen the hype around the recent promises of connected living until new standards are introduced to provide the sufficient level of IoT security. In that time, MNOs will make no meaningful gains in achieving connection efficiency necessary for the IoT economy.
While it may seem like the walls are closing in on MNOs, they will catch a break with data and a leaner infrastructure that focuses on revenue generating ventures. If the regulatory environment remains steady, MNOs will play a key role in enhancing brand-customer engagement with data and helping to define IoT standards. OTTs will continue to displace MNOs in the communication ecosystem, but so will other forces, which will move them to reevaluate what assets they need to protect. 2016 will no doubt turn into another year of juggling for MNOs as they explore and exploit new monetization tactics linked to their core assets.
Thorsten Trapp is a 20-plus year mobile expert and cofounder and CTO of Tyntec, a telecom Web convergence company.
