With ageing 2G/3G networks – as well as a proliferation of complex tariffs and policies – 4G represents an ideal opportunity for CSPs to reposition their businesses (in particular as Over The Top players) and make them more profitable.
Uncertainty from investors and changing customer behaviour, from voice-centric to data-centric usage, means that CSPs cannot rest on their laurels and must find ways to monetise their LTE investments. Unlike with 3G, they can’t afford to wait years for this to happen.
With LTE viewed as a serious game-changer the benefits need to be fully demonstrated to customers in order to reap the potential financial rewards available. Expectations will have to be met – customers will need to see how LTE is able to improve the speed, quality and personalisation of services. If CSPs can demonstrate this, the result should be happier customers who might be encouraged to use additional telecoms services.
Of course the main motive for CSPs to upgrade from 3G is that once upfront costs have been paid, 4G networks offer lower operating costs than their older counterparts. As older infrastructures are retired, CSPs could make substantial cost savings – 2G/3G was optimised for voice usage and not data, this has led to operators struggling to cope with increased data usage.
All this means that the operational costs of running ‘enhanced’ (i.e. modified) 3G networks is rising due to diminishing efficiencies as the designed running capacity of networks are breached. What’s more, network failures and dropped connections have increased, which in turn raises operational costs – not only due to the requirement to handle complaints by customers but also to investigate issues (and pay compensation where necessary).
However, if CSPs were to only reduce operational costs, they will not be taking full advantage of LTE. CSPs should not be asking themselves how they can monetise LTE but rather how they can create a profitable business simply from satisfying customers’ needs, enabled by it.
Early adopters are not likely to be just consumers but also businesses seeking to become more efficient by using telecoms technologies to connect better with customers. The need exists to find ways to add value to their 4G services, especially for businesses, which are increasingly working outside of the office and have ever-increasing needs for cloud-based storage and services.
CSPs will need to push new value propositions that include compelling products, different business models that deliver new revenue streams and transparent pricing that customers believe offer value for money. There is also a lot of scope for CSPs to offer a customer experience that differentiates their offering. As suggested, this doesn’t just apply to consumers, this also includes businesses.
Undoubtedly CSPs are going to have to better understand who their customers are, as well as their needs and what they are willing to pay for these to be fulfilled, in order to succeed in monetising 4G.