Source: Wireless Intelligence
Mobile Network Operators face up to regulatory and OTT challenges
Many of the operator CEOs speaking at the 2013 MWC in Barcelona commented on the phenomenal pace the industry is currently moving. But what was also apparent was how those same network operators have been much slower than over-the-top (OTT) players, OS developers and in some cases device manufacturers in taking advantage of the opportunities that these changes have brought about.
Taking advantage of rapidly increasing smartphone penetration, OTT messaging services such as Viber, WhatsApp and KakaoTalk have grown exponentially during the past year. Operators have been unable to respond quickly to the challenge of these IP-based players and are feeling the effect in their SMS (texting) ARPUs. Network operator CEOs object that OTT players benefit directly from operator investment in networks without incurring any of their own costs. According to CEO Talmon Marco, Viber, whose users have increased to more than 170 million from 90 million in July 2012, costs just $200,000 per month to run.
As well as the OTT threat, operators voiced concern that excessive regulation and inefficient spectrum allocation were hampering their efforts to develop the infrastructure required to satisfy the everincreasing demand for data.
Key Data Points:
• Network Operators stressed that the regulatory environment needs to be in sync with network investment cycles in the
• Network Operator revenues are stagnating in developed markets, but increasing capex is required to build out 4G LTE infrastructure
• OTT players are eating into operator revenues, and they benefit from operator investment at no cost to themselves
• Current regulation seeks to increase competition but operators say there is too much competition in many countries already, especially in Europe
Spectrum was also high on the agenda for operators, with GSMA chairman Franco Bernabè calling for more efficient allocation as well as greater harmonisation of spectrum for LTE. These are crucial issues, notably in Europe where LTE technology currently accounts for less than 1% of mobile connections in the region – compared to more than 10% in North America, Japan and South Korea.
Operators require a portfolio of frequency bands to ensure that economically viable infrastructure solutions can be deployed nationwide. At present, pieces of the puzzle are missing, with digital dividend frequencies yet to be assigned in several European countries. Availability of spectrum in the 800 MHz band in the region is critical to ensure that LTE coverage is sufficient to meet escalating demand for data services.
There were a number of announcements from European operators focused on network expansion to accomodate greater demand for mobile data services.
Key Data Points:
• O2 UK announced a partnership with Ericsson to deploy LTE this year
• In the UK, EE announced that around a quarter of its customers living within range of its 4G LTE network have upgraded to one of its 4G plans
• O2 Germany is launching an LTE network in Munich and Berlin on 31 March 2013, followed by four other large cities in Q2 2013
• Unlike its competitors that started by covering ‘white spot areas’ (rural zones underserved with broadband connectivity) under licence obligations, O2 Germany says it will focus on large cities
• Vodafone Germany already reports 60% LTE coverage by area and said that 20 million households now have access to its highspeed network
• Telstra claimed that demand for LTE is exploding as one in five Australian smartphone owners plan to buy a 4G handset in the next 12 months. There are 19 LTE devices available on the market
• Telstra has sold 1.5 million 4G LTE devices since September 2011 and aims at increasing coverage to two thirds of the population by June 2013
• China Mobile claimed that its TD-LTE network will be launched in Q3 2013
LTE pricing models vary between operators and regions. Most operators in North America focus on consumption-based tariffs while operators in Europe tend to include a speed-based element to their data plans. In the latter region, competition is intensifying around LTE tariffs, notably with operators such as 3 (Hutchison) promising no LTE premium to consumers in the UK.
O2 Germany claimed that “the German consumer is comfortable with paying for quality of service and different speeds
with data”. The operator unveiled four new O2 Blue tariffs aimed at smartphone users that will better prepare it for an LTE future. The two premium plans support download speeds of rates up to 50 Mb/s and data allowances of up to 5 GB, as well extra SIM cards to enable data to be shared between a smartphone and tablet or laptop. The entry-level plan starts at €19.99 per month, while unlimited voice and SMS is included in all new plans. Bolt-on options are also provided to
enable subscribers to add extra data at LTE speeds.
Wi-Fi hotspots occupy an increasingly important place in the data-centric world that mobile operators are creating, to help manage mobile data traffic, network capacity and high-speed data network coverage. Telefónica demonstrated during Congress a technology that enables smartphone and tablet users to move between Wi-Fi and mobile networks without losing coverage, and said this service could be available in the next year.
Sunil Bharti Mittal, Chairman of Bharti Airtel (India), challenged network infrastructure vendors to offer integrated networks with support for both TD-LTE and FDD LTE technologies – alongside support for various frequency bands – in order to control its infrastructure cost. Bharti has over 20,000 TD-LTE customers in India, and is looking to deploy the technology in the 1800 MHz band using the FDD LTE variant in the near future.
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