Succeeding in the new mobile data services ecosystem

The challenges facing operators today are some of the most difficult in years.  The worldwide economic downturn is affecting nearly every industry and the telecoms market has not been immune to its impact. Unfortunately for operators, the current market conditions mean some of the most utilised mobile services are today experiencing revenue decline. For example, once one the biggest profit generators for operators, mobile messaging services are now showing a decline in revenues per message in an increasing number of regions.   Having competed on price as the key differentiator for years, today’s ‘all you can eat’ messaging bundles don’t allow the operator to earn more by stimulating higher traffic volumes.

Operators now seek to build sustainable business models, even in challenging economic circumstances, and pursue new revenue streams offered by IP/broadband services. Entering into the broadband arena brings into play a new level of competition. With the proliferation of broadband networks, smart phones and mass mobile communication services, the mobile playing field no longer belongs to the network operator alone. New competitors in this arena include the likes of Google, Apple and alternative messaging providers like MSN Messenger and Blackberry Ping.

However, within this changing mobile data ecosystem, there is still much untapped revenue potential in the messaging network and ample opportunity for operators to remain well positioned in the mobile services ecosystem. This is enforced by the nature of mobile users, that are not prone to replace one service with another but, continue using all, with each of them adding a specific value: e-mail for messages that can wait, SMS for urgent messages to anyone and a quick ‘Ping’ to friends they know are online and use the ‘Ping’ application.

The answer for operators wanting to exploit this untapped revenue potential lies in them embracing the new messaging ecosystem to preserve the profitability of messaging, while capitalising on the unique strengths of their network, as well as their brand.  This way operators can extend their offerings to relatively untapped market segments and build compelling service offerings for their subscribers incorporating internet services or applications available in the cloud.

Acision believes in three key areas where operators can monetise on their network assets and embrace the evolving mobile ecosystem now and in the future.  Operators should:

• Enhance offerings to practically untapped market segments, like enterprises and machine-to-machine communications. These segments are showing high potential for growth beyond the traditional (commoditised) peer-to-peer consumer market. For example, these services focus on application to person communication like automated appointment or payment reminders, workflow management notifications or calls for action.  All this leads to extensive interactions between applications and the customer or employee using mobile messaging. Already today, machine to machine communications are experiencing wide adoption of the messaging channel for communication, through alerts and action triggering. E.g. an application sends an SMS to a smart meter triggering to respond with the latest meter reading.
• Raise the value of messaging services, by opening up the network to enable the integration of messaging as part of new, richer services or service enhancement, like so-called ‘mashups’ that go beyond offering an SMS ‘breakout’ from social media sites, but actually enrich an existing (internet) service or application with capabilities from the network of an operator. E.g. Insert latest LinkedIn Status Updates in the subscriber’s mobile ‘Out of Office’ replies, or have personal subscriber preferences for mobile also applied on mobile applications, browsing, messaging and calling – e.g. in case of parental control.
• Monetise assets by providing more than network access. E.g. intelligence from the network, like usage information, device awareness as a ‘cloud’ service to parties outside the network, like application developers, ISP’s, ASP’s and content providers to use and integrate with.

More details on these three areas are outlined below:

Enhance offerings to practically untapped market segments
Over the last few years there has been a great emphasis for operators to extend services for the consumer segment by enhancing peer-to-peer communications through the personalisation of the user experience of messaging and enterprise messaging services.

Today, Acision’s personalised messaging solutions are deployed at over 15 operators including SingTel and Maxis who were the first to deploy in 2008, Telkomsel in Indonesia, MTS in Russia, Tata Teleservices and Videocon in India. This number is growing, as subscribers become accustomed to more personalised and intelligent communication. These new types of services not only contribute to customer acquisition but also increase ARPU and loyalty, through services such as parental controls – protecting children against mobile bullying and mobile usage (e.g. during school hours) and message delivery controls (e.g. ‘not available’-services (out of office), copy-forward; message duplication of all messages with storage online, or diverts to email if the user does not want SMS to be delivered on their mobile).  

Yet there is imminent growth opportunity by tapping into new market segments that represent a high value to the operator. It’s a classic truism of the mobile market that an operator generates 80% of their revenues from only 20% of their customers, but less widely broadcast is that enterprise customers, while representing only up to 12% of the operator subscriber base, generally generate 80% more revenue than typical consumer users. It is, therefore, an obvious strategy to target this higher value segment with specific, relevant propositions.

There is a substantial market here, as also analyst firms like Informa and Portio maintain this with their forecasts that application-to-person (A2P) and person-to-application (P2A) messaging traffic is set to double in the next three years. In contrast, person-to-person (P2P) SMS traffic, application-to-person and person-to-application traffic together is set to develop at a compound annual growth rate of 22% from 2009-2014, with person-to-person traffic already expected to exceed the forecast growth rate of 15.3%. .

A2P refers to the messages that are sent from an application to a person, and is useful for many purposes, including offering text alerts or notifications to a mobile phone user - for example, for sending messages to consumers about due appointments or payments. An automated message can be sent to a user reminding them of a dental appointment or a service schedule for a car can be sent to its owner before its check up. If you consider that patients who fail to keep hospital appointments cost UK hospitals more than £600 million a year, enough to run two medium sized hospitals, the benefit of an automated SMS reminder service is apparent. This simple service has proven to reduce ‘failure to attend’ rates by up to 75%.

Also, mobile marketing and advertising campaigns can be triggered from an application, like loyalty campaigns, when a customer is at the end of a subscription or almost out of credit. P2A refers to the messages sent from a mobile user to an application; this includes, for example, submitting information or uploading content files that can contain text, audio, video or anything in digital format to an application. It also includes information services, like ‘text LOCATION to business X’ for the store nearest to you, and this can then generate a response back to the person.

These services have real business value since they cut down on missed appointments, generate new business and are perceived to be examples of good customer service from the enterprise to its customer.

Another fertile area for messaging will be the machine-to-machine (M2M) communications market. This has a raft of applications from telemetry to smart metering and enables mobile communications between applications. M2M messaging is projected by analyst firm, Strategy Analytics, to grow by 75% from 2008 to 2014 and, even though the technology to support this has been around for a long time, it is only now M2M messaging is set to take off.   This is because messaging is now widely accepted as a reliable, cost effective channel with the potential to offer advanced and intelligent network services.

Acision's Enterprise Messaging solutions addresses these services for enterprises and arms the operator with the functionality it needs to differentiate itself. By introducing new and revenue-enhancing services for enterprises, operators can attach real value to their services and enable enterprises to improve efficiency and business collaboration with employees, customers and partners. Solutions are currently in deployment at operators in Europe, North America and the Middle East.

Raise the value of messaging services
There is no use denying that SMS has commoditised as a pure communication bearer. Prices per SMS have gone down and profitability is under pressure. This leaves operators struggling to understand how and if this tide can be turned. 

However, should SMS be devalued because it is low tech, simple, reliable and widely adopted? Acision does not think so. It is exactly because of the unique adoption and characteristics of SMS, its device agnostic nature and reach that makes it a highly valuable communication channel that should be taken advantage of, not only by broadening its reach but also by enhancing its value.

The operator has more than the network and access to offer and there is no other party in the mobile value chain that can pinpoint, for example, a user's location, who they are, what mobile device they use, their user habits and personal preferences, or how much they spend on mobile, and what they spend it on. This is intelligence the mobile operator has within its network, yet is not optimally leveraging today.

Key here is that this is done in a holistic and controlled way, and not to damage the relationship and responsibility operators have to their user base. Acision provides operators the ability to use and benefit from their unique messaging network assets, making it possible to integrate them as intrinsic parts of a new service or a service enhancement. To illustrate: An operator can offer subscribers the SMS ‘out of office’ service1. If the operator also partnered and integrated its messaging service with LinkedIN, the latest status update of the subscriber from LinkedIN can be inserted in the subscriber’s mobile ‘out of office’ replies.

Today the operator acts as the ‘gatekeeper’ in the mobile space for its subscribers’ personal preferences and security, for example in case of parental control services2. Here the parent can set timeslots when their child can or cannot receive messages. By partnering with application developers, these preferences and settings can be applied to, not only messaging, but also the mobile (‘online’) applications. So, if your son of 14 is not allowed to send and receive text messages during school hours, he can also not use the mobile apps on his phone. This creates a new and richer service that is valuable to the customer.

Opening up the unique messaging network assets, also makes it attractive to operators. Instead of being mere providers, operators can go beyond providing messaging ‘breakouts’ (web sms) from an internet site, but be a partner for internet parties, application developers and service providers, jointly creating an enhanced and more valuable user experience.

Closely related to this is the next opportunity.

Operators offer more than network and access
By disclosing and sharing selected information about mobile usage, preferences and trends, operators can create additional revenues. For example, by offering that information, capability or communication bearer via the web, external parties can access, or develop against them. 

In addition to that, it should not be neglected that the operator is in control of his network, it can ‘sell’ the network itself as a service as well. For example by differentiating service quality levels (e.g. priority delivery services, security levels), coverage (like home and office zones, or automated roaming to wifi), and message flows that can vary in complexity, across bearers and networks

The operator owns the mobile channel, so it’s up to them to decide how much they want to disclose for external parties, like internet service providers and application developers to use. People are willing to pay for mobile services, much more so than they are on the internet, as they are used to paying for these services. That willingness is also closely linked to the quality of service that they expect a mobile service provider to give them. In this sense, operators have opportunities for service differentiation wholly in their hands.

Racing for the Future – embracing the mobile services ecosystem
Acision sees the mobile network operator becoming a mobile services provider. That shift will take time, and will require changes in organisation as well as business models. The operators that can provide added-value and services on top of and around ‘basic’ messaging will turn around stagnating revenues and derive more revenue from high value customers. These services can cut across the boundary perceived by users between traditional messaging (SMS/MMS/e-mail) and mobile versus fixed user experience and services.

Opening up the rich capabilities of the network and disclosing that to partners is a core opportunity for operators and Acision is positioned to help. Acision provides the architecture to support monetisation of communities, enterprise applications and machines and to do that in a controlled way. Acision offers operators the ability to rapidly deploy new services that incorporate cloud based capabilities using its open standards-based messaging services platform. This “network driven service differentiation” efficiently leverages the operator’s brand and available network assets.

In addition, using “mash-up technology” the operator can launch enriched communication services. This same service scenario would also allow Internet players to incorporate mobile network capabilities into their communication services. Internet players are keenly interested in mobile operator capabilities such as location, payments, dialogue management, identity, presence, storage and security.

Acision is positioned to take messaging to the next level which is well beyond the standard peer-to-peer, applications and social network connections provided in the market today. Working closely together with a number of the largest “over-the-top” players, Acision is building profitable services with optimized end-to-end user experiences for the new messaging ecosystem.

To learn more about how Acision can empower your organisation to play a central role in the changing communications context, please visit http://www.acision.com/Products-and-Solutions/Mobile-Data-Services.aspx

1. SMS Out of the Office is a service in the Acision’s Personalised Messaging Suite and live at over 15 or Acision customers worldwide today.
2. Acision Parental Control Solution