5G to be the first “G” transition to face downward revenues

Mobile Network Operators
5G to be the first “G” transition to face downward revenues
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or mobile network operators (MNOs), revenues are slipping and under pressure. With smartphone penetration around 95% and the industry upgrade cycle above 3 years, the search for new revenue streams has begun. Adding new subscribers is tough, and retaining customers is proving to be costly as well – a tough position to be in with 5G on the horizon.

All of these factors are fueling predictions that say MNO core revenues will drop $50B by 2024. Mobile has ceased its long growth spurt and prices have dropped as a result of the pricing wars amongst operators. What can be done?

Even more challenging is that amidst consumer demand for mobile devices, MNOs are having a hard time profiting. According to Ovum, 2018 may be the first year that the global mobile market sees a revenue contraction, after seeing less than 1% growth from 2012 to 2017.

Big costs for 5G

For the first time ever a new “G” is coming along when revenues are down for MNOs. 5G and the Internet of Things will help MNOs stay competitive, but the cost of the towers and antennas are going to pose serious costs.

Traditionally, operators have focused on revenue from mobile to justify new infrastructure investments. With this “G” transition, however, wireless carriers will need a wider range of revenue-generating services to demonstrate success in key growth areas. Here are several ways MNOs can optimize costs, improve pricing and increase revenues:

1. Make the most of mobile cloud

Consumers want more cloud services around augmented reality and real-time translation. MNOs are in a powerful position to provide mobile cloud services, given they already have the infrastructure set up for it. According to recent research, roughly half of mobile users prefer using their MNO for mobile cloud services while only 20% prefer web companies.

2. Improve over-the-top (OTT) alliances

Over the top content providers (i.e. Netflix, Hulu) are going to consume network bandwidth. Wireless carriers should think about creating partnerships with these companies to improve collaboration. Forging relationships with key OTT players can create new value for both carriers and consumers. One way wireless carries can add value is by providing content providers with data. Location, connection type and history are valuable data points that can help content providers improve over time.

3. Embrace the Internet of Things (IoT)

During times of uncertainty, looking to the past can help us plan for the future. At the beginning of the mobile revolution, MNOs capitalized by converting people to the mobile way of life. Once the market hit the ceiling, smartphones came along and MNOs profited by converting the same customers to new contracts. Now that data plans have gone mainstream, MNOs are looking towards the next wave of growth: IoT.

According to Cisco, by 2020 there will be 50 billion devices connected to the Internet. This will create new opportunities for MNOs, who are already in the middle of the mobile network. However, it also gives them the the opportunity to create unique solutions through value added services.

In Q1 2018, 90% of net new customer additions came from IoT devices and connected cars. Over the past few years, IoT has cemented its position as a top-of-mind opportunity within the marketplace. Ninety percent of the sector’s net customer additions in Q1 2018 came from connected cars and IoT devices alone.

But the success of IoT will largely depend on user experiences consumers have with the devices that help them every day. Fridges, garages, and thermostats are all quickly coming online. But how many of these devices still rely on a smartphone? IoT is the next technological wave, but the truth is that not all consumers yet have the technology or willingness to adopt it. Before mass adoption occurs, additional shifts need to happen.

4. Win in the age of Mobile+

The age of Mobile+ will set the stage for eventual complete dominance of IoT. In Mobile+ economies, smartphones act as the bridge between us and the devices we use every day. We can see markers of this trend already present in our day-to-day lives with the following innovations:

The mobile industry, has always been agile, transitioning first from flip phones to smartphones and then beyond, reimagining the way smartphones could integrate with our daily lives. Our smartphones have become digital remotes that control our world. Today, we are living in the age of Mobile+, and the automobile is the new frontier for MNOs.

5. Democratize the connected car

The connected car is a powerful way for network operators to drive net adds. The IoT in connected cars continues to dominate, accounting for over 74% of net adds in 2018!

Original equipment manufacturers (OEMs) can produce internet connected cars like the Tesla that will communicate a variety of things such as diagnostic data along with traffic updates. As autonomous vehicles become more prevalent it will continue to be the center of technology. All manufacturers are likely to see significant returns on their investment with these vehicles, but MNOs will not get any new data plans from the OEMs that produce these new cars.

So, how can MNOs benefit from the IoT opening up new streams of revenue? Mobile + auto is what we believe will be the next frontier for wireless carriers to drive revenue!

AT&T Mobility’s president recently stated, “The car is becoming a smartphone on wheels,” as companies are racing to create more connected vehicles. While some of the use cases involve entertainment, a more profitable area for MNOs is driving safety.

6. Turn safety into a profit center

With Zendrive, MNOs can unlock the connected car as a revenue stream for all of the drivers on their networks, not just the ones that can afford brand new connected cars. This can help MNOs connect with users in new ways by improving safety on the roads while improving profits with:

  • Automatic collision notification – automatically detect collisions and then notify emergency responders within 8 seconds
  • Reward users for great driving – Identify driving behaviors and then coach drivers to improve their driving habits
  • Help your users save money with reduced fuel usage – Educating users can help them become more efficient drivers. Reducing speeding, hard braking, and rapid accelerations can reduce fuel consumption by 40%.

New revenue streams in a 5G world

It seems like every day we hear more about how 5G is getting closer; however it’s going to be the first transition where net revenues are under pressure as MNOs struggle to make this change. MNOs need to find new ways to ramp up their revenue while transitioning to 5G networks.

Wireless carriers can now convert any vehicle into a connected car. No longer do people have to afford a new Tesla or BMW in order to have the benefits. Hardware solutions are too expensive. Zendrive has moved these features into the smartphone, allowing MNOs to add powerful features to their mobile apps that enhance driving experiences.

Contact us to learn more about our solutions.

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