Using LTE to boost ARPU


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Presented on the 19th May 2010 in the Breakfast Briefing Session in the LTE World Summit 2010.

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Using LTE to boost ARPU

  1. 1. Using LTE to Boost ARPU Breakfast Briefing By Zahid Ghadialy Managing Director eXplanoTech Ltd. And Webmaster,
  2. 2. What is ARPU? Average Revenue Per User (ARPU) is a measure used primarily by consumer communications and networking companies. It is the total revenue divided by the number of subscribers Source: Wikipedia 2
  3. 3. Mobile Traffic will keep growing Source: 3GPP 3
  4. 4. New Sources of Mobile Traffic Source: 3G Americas 4
  5. 5. Global ARPU Trends Source: GSMA, Dec. 09 6
  6. 6. ‘Dumb Pipes’ All operators have some kind of flat rate ‘all you can eat’ packages. Though most of them put an upper cap or clauses like ‘fair usage’ policy These packages have put strain on the network The packages are widely abused as well A recent report mentioned that 3% of the users generate 40% of the traffic Some operators have started fighting back Vodafone recently announced that it will charge people for out-of-bundle data. AT&T planning to go the Vodafone way as well
  7. 7. ‘Smart-Pipes’ and ‘Happy-Pipes’ Some people now use the term ‘Smart-Pipes’ to emphasise Policy Control, QoS and so forth Dean Bubley from Disruptive wireless recently mentioned the word ‘Happy-Pipes’ to emphasise: There is a huge value in deploying and running a network well The smartest networks are the ones which work collaboratively *with* Internet and content companies, not antagonistically against them. This specifically related to areas like policy management. There is much under-exploited potential for revenue around wholesale models. There are many potential business opportunities, both for "bulk" wholesale and "slice and dice" methods of deriving extra fees for capacity and value-added services.
  8. 8. More users does not mean more ARPU Some operators offer huge rebates to get customers onboard Rebates don’t work well in most cases They assume, “more users means more ARPU” Their simplistic assumption relies on customer loyalty Customer loyalty does not exist in this day and age.
  9. 9. Capex/Opex savings via Network Sharing Though these savings don’t translate to ARPU, they can certainly reduce the pressure to increase ARPU Example: Two MNOs jointly rolling out an LTE network. Operators jointly roll out a new build of 2500 sites in a developed economy. This will typically achieve a 30% capex saving accumulated over five years and would also reduce opex by 15% per year by year five. Source: Analysis Mason, May 2010
  10. 10. LTE Needed for maintaining existing ARPU This statement may be too simplistic
  11. 11. So how can LTE help boost ARPU?
  12. 12. Faster and more Reliable Mobile Broadband But this may not be enough
  13. 13. Lots of Amazing Applications iPhone has more than 185,000+ apps More than 4 billion Apps have been downloaded already 50,000+ apps available for Android based phones Over 100,000 apps downloaded per month
  14. 14. Real Time Mobile Apps Live blogging with facility to easily add pictures and videos Giving rise to m-Reporters and real time citizen journalism VoIP based Voice and Video calling and conferencing apps Live Radio and TV Streaming Real time games
  15. 15. Positioning, Monitoring and Tracking Apps Find me or find my friend type applications Satnav Find the nearest xyz Guide me or guide someone Track my xyz in real time 16
  16. 16. Social Networking Apps Facebook, Twitter, Linkedin, Orkut, etc. And you can use these apps to your own advantage ;) 17
  17. 17. M-Health Apps If operators create a complete health based portal, can they charge extra? Will users be willing to pay extra for: Having a remote nurse available all the time to answer queries To have their health checked remotely To remind them about taking medicines, etc.
  18. 18. Killer App We are still waiting for the killer app
  19. 19. Are Apps the only way to increase ARPU?
  20. 20. Fixed Mobile Convergence Triple play Quad Play Quintuple Play Do subscribers become more loyal to operators and give operators the right to charge more?
  21. 21. ‘3D’ Mobile This is big on device manufacturers agenda. There are already plans for: 3D movies Live games (Football, Soccer, etc.) in 3D 3D Videogames No one is sure how much bandwidth will a ‘3D’ broadcast/streaming hog but few people may pay premium for this service. 22
  22. 22. HD (High Definition) HD Voice on mobiles HD Video/Movies on mobile Blu-Ray for mobiles?
  23. 23. Quality of Service and Quality of Experience Are we willing to pay extra to: Always get connectivity Get high speed connectivity even if the network is congested Operators can give higher priority to their own/preferred portals Faster songs download Faster movies download
  24. 24. Femtocells Are people willing to pay extra for: Reliable connectivity at home High speed data transfer while at home Differences with respect to WiFi: Mobile broadband consumes less power for the Mobile The security is far better in Mobile Broadband
  25. 25. Special offers for Premium Subscribers Orange in UK gives 2 for 1 for movies on wednesdays. Can this concept be enhanced for premium subscribers O2 in UK has a similar concept called the O2 priority
  26. 26. Things to think about
  27. 27. Revenue v/s ARPU ARPU will only be a useful measure if: Revenue increases on a regular basis and Number of users increase Do we focus too much on ARPU?
  28. 28. Do passive ‘data only’ devices reduce ARPU? Operators can charge limited fees for data only devices like the e-book readers, mobile Sat-Nav’s, etc. Should they be included in the calculation of ARPU? Do we need a different measure for these devices? The operators generally get much higher margin on these with a much lower churn
  29. 29. Some points raised in discussion during the ‘Breakfast Briefing’
  30. 30. Discussion Notes - 1 Operators have to focus on much more than just voice and video Do M2M devices take away the revenue from operator Can content providers use the location information for their own advantage Sending advertisement which are relevant to location information What about Spam? Are people comfortable disclosing their location? Location can be used by employers/partners/stalkers; not acceptable in either case.
  31. 31. Discussion Notes - 2 LTE can allow people to get rid of their landlines and instead the LTE to WiFi conversion could be used. Billing is a very important weapon in the hands of the operator. They can use it to charge for services and content thereby taking a cut. Users are willing to trust the operator more than 3rd parties for charging them The credit card details, etc do not have to be disclosed to others
  32. 32. Credits Thanks to the following people who attended the breakfast briefing and making it a lively discussion: Gunnar Hakansson, Ericsson Michael Morash, Bridgewater systems Margaret Hu, Huawei Umesh Date, Mindtree Mehul Patel, Mindtree Mohammad Bin Aris, Mobily Thanks also to the various contributors at the LTE group on Linkedin who contributed to this discussion out there.
  33. 33. Presented by Zahid Ghadialy © eXplanoTech Ltd. 34
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