US Operators Relying on Mobile Data Services and Innovative Pricing
Published on: 14th Jul 2009
Note -- this news article is more than a year old.
The North American mobile market, with over 80 percent penetration, is saturated. Mobile operators are optimizing revenues from existing subscribers by introducing innovative premium data services that utilize next generation wireless networks and devices. They are also augmenting revenues by offering additional connectivity to existing subscribers, particularly wireless broadband Internet. The current economic climate has ratcheted up the attractiveness of the prepaid segment, and pricing such as Boost Mobile's unlimited service for $50 and others, have become useful tools to counter the slowdown.
New analysis from Frost & Sullivan finds that the market earned revenues of over $171.3 billion in 2008 and estimates this to reach $188.3 billion in 2014.
"The mobile phone is today the most important communications device and subscribers continue to rely on wireless services for their communication, entertainment, and information requirements on-the-go," says Frost & Sullivan Industry Analyst Vikrant Gandhi. "Besides voice, text-messaging has evolved as an important medium for communication, primarily because it can be used in a wide range of scenarios, is ubiquitous, and is extremely cost-effective, especially when used as part of a data plan."
Other important and popular data services include mobile Internet, premium mobile content, and others. More than 50 percent of North American mobile subscribers are regular users of text messaging. A major part of the messages are sent as part of a dedicated or bundled data plan. Mobile internet penetration in North America is in the 12-15 percent range, and the usage of both consumer and enterprise mobile applications is expected to continue on an upward trajectory.
Although North American mobile operators have established a reputation for zealously protecting the consumer experience, achieving that end is not always possible, as a large portion of traffic is going off deck. This rapid explosion of content throws up several operational challenges as well.
"Mobile operators are forced to expand their content catalogs and yet are not able to increase the data plan rates to justify this expansion," explains Gandhi. "At a certain 'tipping point', it may not be feasible to continue doing this without exploring other sources of revenues - such as mobile advertising and other connected devices."
Bringing new devices to market at a rapid pace is by no means an easy task, and long product development cycles further complicate the matter. Participants must seek ways to increase average revenue per user (ARPU) without being caught up in the race by blindly adding new services, devices, or network technologies.
Seeking new technologies is crucial; however, the question whether network technologies drive content or the promise of delivering next generation content drives investments in a network will always remain. Mobile operators must explore multiple strategic factors encompassing cost and service pricing, network technologies and devices, content lineup, quality of service and customer-care, the enterprise segment, geographical coverage, and others to derive the cutting edge in the highly competitive North American mobile communication markets.
For example, mobile operators could organize mobile content into various tiers and synchronize these with customer demographics to determine the potent mix they must have on their decks. Apple's iPhone and Blackberry Storm showcase the intensity of the impact compelling devices can have on subscriber uptake and service usage.