The mobile industry sees continued disruption and transformation in 2013

(Dec 14 2012) 4G , LTE , Wi-Fi

1. 

   As we close out 2012, it is clear that the mobile industry is slowly starting to respond to the changing market dynamics that are being heralded by an astonishing growth in data service demand. Many of these efforts will continue in 2013. In particular operators are:

   Refining their strategies for digital services. While significant experimentation is involved, many operators are establishing platform strategies and targeting vertical market solutions such as in home security and automation, connected vehicles, and mobile payments etc. There are now over 600 active mobile payment initiatives across the globe and virtually every tier 1 operator is being vocal about their platform and vertical market strategies for digital services.

   Commercializing LTE services. The value proposition for many operators is to enable better network economics and benefit from the superior performance and market perception that LTE enjoys. To date, the pricing and bundling strategies have essentially paralleled those for 3G. However some operators are starting to innovate their service packaging, particularly in Asia Pacific. This activity is set to accelerate with the proliferation of smartphone plans.

   Optimizing operational costs. As the economics for mobile services come under pressure and service demands change, operators continue to refine their operations. In particular:

   • While in many cases progress is slow, traditional operational silos are being superseded with horizontal approaches. In many cases silos and horizontal approaches are being adopted in parallel, to enable the graceful migration off legacy approaches.
   • Automation is becoming more commonplace but still proves challenging to implement in technical operations. However as networks become more complicated and technologies like small-cells are adopted, increased technical automation is inevitable.
   • Some operators have increased their attention towards proactively managing customer experience, by integrating operational and business intelligence data. The commercial efficiencies created with customer experience management solutions have a positive impact on operational costs. The major challenge for implementing these solutions are traditional organizational structures that encourage information silos. However successful initiatives are emerging in cases where they are driven by operators’ senior management.

   Outsourcing and network sharing. There are diverse opinions in the industry as to the assets that are strategic for operators in the future. In 2012 there were numerous cases where operators sold their tower assets, and a variety of cases where operators outsourced network operations and opted for network sharing arrangements for the rollout of their 4G networks. We can expect modest growth in outsourcing and network sharing activity in 2013, with the value proposition varying greatly depending on local market conditions.

   Network and service optimization. With the proliferation of data services, operators have been not only faced with the challenge of delivering adequate capacity, but also in implementing offload solutions, optimizing signalling traffic and more recently, managing traffic flows according to the service being delivered. Several challenges still remain. For example:

   • Without standards like ANDSF and Hotspot 2.0, connections that are offloaded to Wi-Fi cannot be easily handed back to the WWAN network.
   • Signalling traffic models have yet to be fully understood, particularly with new standards such as Diameter and the variety of services and applications that are being launched.
   • The advancement of customer experience and service orchestration solutions result in the blurring of business and operational support (B-OSS) functions, which complicates traditional implementations. This is further complicated by digital service and M2M initiatives that operators are pursuing.

   With market demand outstripping the rate at which the mobile industry can respond, we expect disruption and experimentation to accelerate in 2013. Mobile operators will come under increased pressure to transform; many will see eroding margins and the industry will continue to consolidate. We believe that industry consolidation will fuel at least one major merger in each region in 2013. 
   

   By: Phil Marshall PhD, Tolaga Research 
   

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