There’s no question that we’re in an evolving mobile market when it comes to VoIP and messaging apps and phone carriers, and a new report from Juniper Research has found that with annual mobile operator expenditures now in excess of $800 billion, several leading players face the possibility of costs exceeding revenues by the end of the decade without remedial action.
According to the report, a combination of flatlining revenues attributed to surging data traffic costs could ultimately threaten the viability of network operations.
In an analysis of 12 international operators, the report found that margins had fallen by an average of 6.4% over a three year period, with 5 of those surveyed experiencing decreasing margins in every year throughout the period. Furthermore, a number of major operators now have single figure margins: with costs currently increasing at 1.5%-2% per annum, the situation is unsustainable in the longer term.
“Given the threat from OTT (Over The Top) VoIP and messaging services … focusing the value on the data element is … the right way to go.”
Meanwhile, the report found that without more widespread network optimisation, the situation could become critical in a number of developing markets. It argued that with surging mobile Internet adoption in the Indian Subcontinent, regional operators could see data costs outstrip data revenues by $45 billion within 3 years unless networks are optimised.
Things aren’t as dire in the United States, according to the report, which pointed to a number of success stories, particularly in the US, where players such as Verizon and AT&T have bucked the trend in falling margins by introducing shared data plans. It observed that Verizon had seen wireless revenues increasing by more than 7% despite operating in a saturated market, while AT&T now had more than 14 million households on shared plans.
According to report author Dr Windsor Holden, “Given the threat from OTT (Over The Top) VoIP and messaging services to core service revenue, the US emphasis on focusing the value on the data element is absolutely the right way to go. This is particularly true within an increasingly 4G environment.”
Are shared data plans really what carriers need in order to survive? Not necessarily, but a renewed focus on mobile data plans and away from voice and messaging could be a way for carriers to adapt while also meeting the needs of their customers.