|By David O’Byrne, Project Director, GSMA|
The strategic importance of IP technology to enable advanced communications services for mobile operators
Mobile communications have become essential to modern life. Around the world, there are 6.7 billion mobile phones, connected to the mobile network, on which individuals make calls and send almost seven trillion SMS messages per year, up from 5.3 billion connections just 5 years ago. 2.5 billion, or 48% of these are using smartphones, and 3.5 billion can access the internet via mobile devices or mobile networks, compared to just 0.9 billion fixed broadband connections.
These numbers highlight how consumers still rely heavily on mobile network operators for communications services. However mobile communications services have not changed dramatically in the past decade, while increasing smartphone penetration and mobile broadband connectivity have led to the widespread adoption of web-type communications services. To maintain a strong presence in the communications market and retain their role as innovative service providers, mobile operators urgently need to roll out advanced services using IP technologies. These services combine the multimedia capabilities of the internet with the reliability, reach and security associated with SMS and circuit-switched voice calls.
New world services
Mobile customers’ perceptions of cost and value are also shifting. In response, mobile operators are pivoting from directly charging for communications services towards relying on metered data tariffs, supplemented with large or unlimited messaging and voice call allowances bundled into a monthly post-paid plan or a prepaid bundle.
In this new model, operators are going to generate an increasing share of their communications revenues from the provision of their messaging service as a platform for third party service providers and payment services. Advanced communications can enable consumers to easily communicate with businesses, receive advertising and promotions, and pay for and (in some cases) receive goods and services. This concept is known as conversational commerce.
GSMA Intelligence estimates that a mobile operator deploying advanced communications services could see a revenue increase of between 2% and 14% between 2015 and 2020. All kinds of businesses, from landlords and taxi cabs, recruiters and utility providers to gaming and financial service providers, regard conversational commerce as the next horizon for the digital economy. Mobile networks’ inherent reliability, reach and security, coupled with strong identity protection, precisely meet the needs of both companies and consumers in this new environment.
Calling up cost savings
There should also be opportunities to lower costs. The use of an IP multimedia subsystem (IMS) to support advanced communications services could reduce operating costs by 10% by 2020 through savings in interconnection, network savings and site support costs. Operators’ capital spending could also fall by 15% through a combination of spectrum refarming and reduced switching and transcoding.
In fact, the financial benefits accruing from the deployment of advanced communications services could generate US$5 billion of benefits for a typical operator in a developed market over the five years to 2020, according to a study by GSMA Intelligence.
Conversely, without a compelling communications proposition, a mobile operator will become less relevant both in the consumer market and the business market. Should operators be relegated to the role of connectivity providers, GSMA Intelligence has estimated total mobile services revenue would be 29% lower by 2020 compared to operators providing communications plus data services.
In summary, there is a strong business case, as well as compelling strategic reasons, for mobile operators to roll out of advanced communications sooner rather than later.
Find out more about how the Universal Profile can support the transition to Advanced Messaging.