Early Indications Suggest LTE Broadens Network Monetization Strategies

Today's network service provider is charged with finding ways to reduce overall network costs, while also fully monetizing their network assets for more revenue and better margins. A new report from Mobidia Technology and Informa suggests that 4G LTE may present one of the best opportunities to execute such a strategy.

Findings from their research suggest LTE subscribers on average are taking advantage of greater 4G bandwidth and using more mobile data, such as video services, than their 3G counterparts. As a result, 4G LTE business models appear to provide better monetization opportunities than previous wireless generations.

Examining the leading LTE markets of Japan, Korea and the U.S., Mobidia's data also indicates the makings of a trend toward reduced Wi-Fi usage both in relative and absolute terms. The data included in their "Understanding Today's Smartphone Users" report also shows an increase in adoption of new pricing plans and a shift away from unlimited plans.

Taken together these "suggest a positive opportunity for the more than 100 mobile operators that have already deployed LTE," according to Mobidia's press release. "The generational change to LTE is driving increased demand for mobile data and presenting operators with the ability to monetize that data in more sustainable ways," they write.

In their analysis of LTE usage in September 2012, Mobidia and Informa found, among other things, the following:

  • In all markets, LTE subscribers used significantly more mobile data than 3G subscribers. Specifically, in Korea and Japan, markets often used as leading indicators of mobile trends, Mobidia recorded increases of 132 percent and 67percent, respectively.
  • At the same time, decreases in relative Wi-Fi usage in all markets were also noted and Korea registered an absolute decrease. While Wi-Fi usage is still very significant, the data points to a possible trend towards a decrease in reliance, suggesting an opportunity for LTE operators.
  • LTE operators' strategy to reset pricing plans during the transition to 4G appears to be working. Mobidia's data shows significant decreases in unlimited plans and increases in larger-sized, volume-limited plans. As an example, only seven percent of SKT LTE subscribers are using unlimited plans compared to 24 percent of SKT 3G subscribers. Additionally, the percentage of SKT subscribers on 2G or higher plans increased from only 10 percent of 3G subscribers to 62 percent of LTE subscribers.

Commented Derek Sprat, Mobidia's president and CEO, "Based on our analysis of early LTE usage, it looks like operators have a strong opportunity to increase demand for mobile data while implementing stronger and more sustainable ways to monetize that data during the transition to 4G."

Wireless carriers should study these trends within their own markets closely and adjust their business models accordingly. These trends also favor Wireline only carriers, at least to the extent that they continue to build robust fiber backhaul facilities for wireless backhaul and small cell opportunities. Continued growth in wireless data means continuing needs for more robust backhaul, which only comes from rich fiber and Ethernet connectivity.

CHR Solutions has vast experience in helping both wireless and wireline carriers identify these market opportunities and develop and execute business strategies to capitalize on them.

Written by Kevin Kutcher at 10:00
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