It’s not as far-fetched as it sounds… downloading your preferred Mobile Network operator as an application is closer than you think.
Over the past 5 years alone we’ve witnessed an incredible shift in intelligence from networks to devices; a shift in the “VAS Intelligence Curve” if you will, from networks with legacy Value Added Service enablers towards smartphones with incredible display technologies, processing power and storage.
Once, the mobile network was the WHOLE phone. Now, at most it is simply a “phone” or “call” icon lost amongst hundreds of other icons on the phone’s desktop. Smartphones have ruptured the classic VAS applications from mobile networks – effectively detaching them from the mobile network and placing them on the desktop of the device.
The basics remain the same: voice & text messaging are still the most-used mobile apps, however applications that once needed the classic bearer technologies (GSM digital circuit-switching and SMS via the signalling channel) are now replaced with applications running over a meshed IP network topology, a mix of 3G, HSPA, fixed & WiFi networks, providing a vastly improved customer experience for end-users.
The majority of end-users are not overly concerned with the underlying technology of the network they are connected to – they are only interested in the service experience, i.e. the network must simply work, it must be fast enough for the application that needs the network connection, and it must be affordable.
Mobile Network Operators must make their brands relevant in the mobile space
With application competition fiercest at the device layer, i.e. at the smartphone OS, mobile network operators are yet to make a major play in terms of retaining their status as the preferred provider of messaging & VAS services, by packaging their services into a hybrid, downloadable smartphone application, with all traditional VAS services provided over IP through the client application.
The effect of smartphones is so drastic that the mobile network operator’s entire applications offering of 5 years ago (Text Messaging, Multimedia Messaging, Voicemail, Internet Browsing & Search, Location Services) which traditionally would have been provided by VAS platforms located in the operator’s network, has now been replaced by a single downloadable application client, typically under 1MB in size.
IP-based text messaging through BBM, Fring, Skype, Whatsapp allow end-users to send a far higher number of conversational-mode messages over IP at a much lower cost than SMS. Photo sharing, video clip sharing, audio clip sharing and location sharing is integrated into the IP messaging client, and provides first-time delivery as opposed to a typical inter-operator MMS experience. Advances in the processing power of end-user devices and improved network speeds have all but written off the need for standalone network-centric internet gateways. Search engines offer downloadable desktop clients. Voicemail messages are now captured and stored locally on the device. Combinations of GPS & A-GPS as standard features in smartphones have sparked a number of innovative cross-network location client apps that would not otherwise have had the same service uptake if limited to simply one mobile network operator environment. VoIP over mobile data networks using SIP-based or p2p voice clients have reached a maturity level in terms of QoS that makes it acceptable for most end-user requirements.
A Mobile Network Operator’s competitor’s subscribers are now reachable: Over-the-Top
The bottom line is clear: mobile networks operators no longer have exclusive ownership of their subscribers. The good news is that this means that neither does their competition – effectively opening up an opportunity for any mobile network operator to target it’s competitor’s subscribers with its own over-the-top services.
For example, a downloadable mobile network-branded application that incorporates a VoIP telephony client and IP messaging suite and gives the end-user preferred/personalised roaming data tariffs could potentially be offered not only at a mobile network operator’s own subscribers, but to any end-user. A supreme customer experience could be achieved if the application also included network discovery – removing the need for the end-user to search for and authenticate on any available GSM, 3G or WiFi network – let the app do that in the background and charge the user for the service only.
Network operators are in a position to innovate in the area of charges and tariffs related to network usage – all other internet and cloud-based OTT service providers make network discovery the end-user’s problem.
We now start to get into an interesting area – if it is possible for network operators to encapsulate their entire communications service portfolio into a single, downloadable client, then it’s a logical next step for network operators to go completely virtual, and not be limited to the coverage, speed and quality of their own physical networks. This is a radical shift in thinking and might only gain traction within the next decade, but all the signs point to a world of completely virtualised MVNOs offering network and geographically-independent communications and entertainment services.
SIM cards will not bind end-users to their network providers forever
If an end-user can select & download their choice of over-the-top voice and text messaging providers, then understandably they should be able to go the whole way and download their choice of network provider as well – depending on their needs, be it based on roaming location, preferred messaging features, tariff models or any other criteria. In other words, the geographic location of an end-user should no longer be a limiting factor in their choice of network provider.
The question is HOW would this work, in a world that’s dominated by one key aspect: the SIM card.
An end-user’s SIM card currently binds that user to a fixed physical mobile network, effectively tying that user down to a contract with that network operator, complete with all the frills of bundled circuit-switched minutes, SMS text messages, Itemised Billing and the like. Smart smartphone users currently feel shackled by these constraints, looking for any opportunity to break free into an open-networked world, where choice isn’t limited to a 1 or 2-year phone upgrade cycle dictated by their network operator.
In the future, a SIM card is not going to be enough to bind an end-user to a physical network. We see it already happening today: smartphones and tablets can connect to WiFi networks without SIM card identification, it’s simply a matter of time before software-based SIMs and SIM-less devices become ubiquitous – the first step towards liberating end-users from being tied down to a physical network.
Understanding that this change is on the horizon is critical for mobile network operators to understand TODAY… and take pre-emptive strategic actions to ensure their sustainability well into the next decade.
Competition and service differentiation moves to the cloud
In a future world where telecommunications end-users have free will, customer experience is king. Most end-users only ever have contact with the UI of the services they consume, with the complexity of the networks hidden below the IP layer.
Today’s smartphone end-users are realising that there are services and applications on offer from Internet-based companies that stretch far beyond what their mobile network service providers currently offer, and this trend is set to continue strengthening as more smartphone devices and tablets penetrate the high-end markets and filter down to the low-end markets.
In order to meet the needs of this next generation of end-user demands in a world full of OTT providers, traditionally-organised mobile network operators will start detaching their services business unit from their network and engineering units, effectively becoming MVNOs on their own networks.
This is simply the first step towards expanding the applications & services offered by an MVNO to a target market beyond simply their SIM-based subscribers. A true cloud-based MVNO will deliver services and applications independent of the network that the end-user is on – even if the end-user is on a competitor network – the makings of a mobile network-centric OTT business model.
In this new world, brand loyalty and the best deals of the day will reign, consumers will go for trusted brands and services, and expect to select from an array of communications deals on a monthly (if not weekly , daily or even hourly) basis.
Physical networks become commoditised, as OPEX optimisation drives efficiency
Building and rolling out mobile networks continues at a relentless pace, but as more and more mobile networks services units detach and become MVNOs, the physical network layer opcos will start to consolidate and mesh together in a connected series of interoperable data connectivity agreements. The network operators functioning in the physical layer will play a crucial role in carrying the massive amounts of data generated by the MNOs that have moved to the cloud-based services layer to become MVNOs.
The result will be a mash-up of fixed & mobile access networks, comprising of WiFi, GSM, 3G, HSPA, LTE, fixed ADSL, fibre and cable networks being managed by a conglomeration of mobile network operations units and telecoms vendors. The physical network operators will become pure (but happy) bit pipes, looking to differentiate from other physical network operators in a B2B context in areas of network coverage, data throughput, network latency and QoS.
A B2B relationship between the physical network operators and the cloud-based MVNO’s will emerge, with the transactional usage of end-users being reconciled from the MVNO’s towards the physical network operators. End-users will have a B2C billing relationship with the MVNOs, while the MVNOs themselves will have a B2B billing relationship with the physical network operators.
Some MVNO’s might tie up in exclusive partnerships, leveraging their unique differentiators such as content partners, or perhaps local, regional or community-based specialised services.
Future versions of the work that the Wholesale Applications Community (WAC) is pioneering could evolve to become the standard API between the physical layer network mesh and the cloud-based MVNOs. It is a positive cycle – the more operator services units detach into the cloud and become independent of their physical networks, the more physical networks there are to consolidate into the mesh, the more choice & network quality becomes available to end-users of the growing number of MVNO’s in the cloud.
Apps will be the frontends for cloud-based MVNOs
When an MVNO operates in the cloud, and with a vastly improved choice of network connectivity options available end-users, the focus is purely on the user’s interface to the applications and services, which can only lead to a superior customer experience. Consider the impact on end-user experience when no matter what network that user connects to, be it local or foreign, they pay the same price per megabyte, or even better – the user is charged for the value of the service package, irrespective of the data usage.
In order to get maximum reach to the user’s device desktop, MVNOs will need to distribute themselves through the existing App Stores. Imagine, as an end-user, arriving at Heathrow Airport and then browsing through a catalogue of MVNOs on the Android Market, Apple App Store, Nokia Ovi/Services Store or a WAC front-end store, shopping for the best VoIP/IP messaging airtime bundle on offer from an MVNO for your week’s stay in London?
Downloading an MVNO as an app on an end-users smartphone achieves two things:
1) It places the MVNO’s brand right next to the icons of all the other OTT providers, including other MVNOs, that are already on the user’s smartphone desktop;
2) It opens up a communications channel directly to the end-user, which, if used correctly, will become an incredibly powerful marketing and mobile advertising tool for the MVNO
Mobile network operators could go as far as creating special bundles, e.g. special discounted packages such as “100 minutes of VoIP” , upload it to the app stores and then use notifications services and push technologies to invoke the MVNO app on the smartphone desktop to promote the bundle to the end-user. This could spark a new level of hyper-competition between network operators with the battleground taking place at the App Store level and the smartphone’s desktop.
Exclusive time-window or territory-based partnerships between MVNOs and content providers will enable MVNOs to differentiate their offerings and tie in communications and entertainment options into attractive service bundles. Similarly, some MVNOs could tie up exclusive QoS or priority data-shaping agreements with the physical network operators to offer to end-users at a premium rate.
Customer Experience Management in the new world of multiple MVNOs
With end-users spoilt for choice, MVNOs can expect customer churn rates to increase exponentially. “Partial Churn” will become an industry catch-phrase, used to describe end-users that source their voice services from one brand of MVNO, their messaging services from another brand and their media & entertainment services from an array of OTT content providers. While multiple subscribers will churn out of an MVNO’s service offering on a daily basis, so too will multiple subscribers churn in.
The typical customer lifecycle of Awareness, Buy/Try, Use and then Care will rapidly compress from the order of a couple of years to months to weeks to days. End-users will constantly dip in and out of multiple MVNO offerings, always on the lookout for the best deals to be had – and all of this activity will take place at the network’s edge: the smartphone.
The winners in this new world of multiple cloud-based MVNOs competing with OTT players will be those that can adapt their business processes fast enough to keep up with the needs of this new breed of subscriber in terms of service package flexibility & payment, customer self-care clients, roaming service selection and exclusive content partner deals, to name a few areas of differentiation.
One thing is clear: the end-user’s power to choose continues to grow unabatedly with the proliferation of smart devices, the question is whether the entire telecommunications industry is ready to adapt to the new rules of the game.
Its fascinating that we now have the RICA law about to go live and potentially 2,5million SIM cards will be deactivated. One wonders how many of those phones will continue using telecommunications services such as Skype, Whatsapp, MobiSMS, etc using just the freely available and unregulated WiFi networks. I suppose at some point Big Brother will demand a license for owning a cellphone and will want to register the actual device!
Exactly Gary – thanks for the post. Since WiFi networks are so universal, end-users have become accustomed to running their device apps over any available WiFi, the split MVNO/network operator model might allow for a simless service model to emerge… the only thing perhaps holding this back right now is the fragmented regulation environment. But in an increasingly globalised world, I can’t wait to see who wins out, especially with the major driving forces being the applications themselves.
Interesting read… well written
Very interesting article. However so far all attempts of mobile operators into the OTT, web apps have not been very successful and I’m not sure they ever will be. From my point of view the operators should focus on providing flawless services at tiered pricing, reflecting the QoS and throughput they provide. Further they should offer excellent customer experience accross all major touch points, like subscribing, invoicing, and fault handling. And of course they need to provide all VAS required for the feature phones and all the smartphone users which simply do not want to fiddle with all these applications. Despite the hype of smartphones and the app environment I’m sure that the majority of the people only want:
– voice, messaging (sms) and voice mail
– web browsing
– facebook and
Hi Soenke, thanks for leaving a reply!
Fundamentally, I don’t disagree. But in an outlook that spans beyond 2015, when today’s smartphones have become tomorrow’s featurephones, and all OTT/cloud services have a downloadable frontend client application available, end-users will find it overwhelmingly difficult separating out virtual SP’s from access network SP’s when the apps are competing for space on the desktop of the user device (be it a phone, PC, TV, tablet, game console, etc.)
So the thinking behind this piece is to highlight that OTT is also an opportunity for operators, as long as the change from an ‘access/connectivity only’ proposition for subscribers in a limited geographic coverage area transforms towards a service-led ‘MVNO’ proposition targeted at a potentially worldwide customer base.
OTT providers don’t rely on their customers having SIM cards; if network operators want to flourish in that environment, they could also innovate around this business model, with this MVNO ‘detach’ from physical connectivity provisioning just being one option.
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