In spite of this phenomenal growth and insatiable consumer demand, many MNOs are struggling to profit from this mobile gold rush. Mobile operators are watching as their average revenue per customer (ARPU) flattens or declines. This mobile paradox - huge growth and customer demand, yet significant business and market challenges - seems to be unique to the mobile industry. Mobile operators need to build out more network capacity to keep up with the voracious customer demand, but they are struggling to convert these investments into higher revenues and profitability. Much of this business is being lost to substitute over-the-top (OTT) services and to major shifts in usage behaviors.
Cisco believes that there are four key strategic thrusts, or monetization areas, for operators to create new value from their mobile business.
Pricing has always been an important tool for mobile operators. While pricing is, in fact, the most powerful of a firm’s profit levers, it is often overlooked by managers. Key considerations in enhancing profitability through pricing include: tiered pricing and usage caps; value-based pricing; shared plans for Internet of Everything (IoE) readiness; plan rationalization and simplification; and, bundling.
4. New Solutions and Services
As the world becomes truly mobile, service providers have a unique opportunity to use their core technology and business assets to create new solutions and services to enhance their users’ experience and utility, reshape businesses and business models, and create new sources of value beyond their core access business. Potential new solutions and services that mobile operators could successfully deliver include: mobile cloud; Internet of Everything and machine-to-machine (M2M); connected vehicles; enterprise and small and medium business (SMB) solutions; OTT collaboration; and, location and data analytics solutions.