Improved traffic distribution indicates that operators are managing assets more effectively

There are likely to be a few last-minute adjustments to slides before this year’s Mobile World Congress, given that the industry’s most popular traffic forecasts were downgraded. Last week, Cisco released its latest mobile data forecasts, which show a significant decline from previous estimates. The company has lowered its figures by more than 30 per cent in the period 2012-2016 compared with their figures published this time last year.

February 2013: http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.html
February 2012: http://www.puremobile.com/media/infortis/documents/cisco_mobile_forecast.pdf

Some of the main reasons cited for the downgrade include

• The implementation of tiered mobile data packages.
• A slowdown in the number of mobile-connected laptop net additions.
• An increase in the amount of mobile traffic offloaded to the fixed network. Cisco says that about 33 per cent of mobile traffic was offloaded to the fixed network in 2012.
• Higher-than-expected tablet usage on wifi.

Although it is encouraging to see that Cisco has now brought its forecasts more into line with those of most other commentators, no one should be surprised to see further reductions as many of the points highlighted above bite down on future cellular usage.

Looking beyond the downgrade of its forecasts, another conclusion from the company’s research could bring much more positive news for the industry. Cisco has found that mobile data usage is becoming more evenly distributed among users. In 2010, the top one per cent of users generated 50 per cent of traffic; in 2012, the proportion dropped to 16 per cent, below the fixed-traffic ratio of 1:20 that has been evident for years.

Because of the dynamics of a growing market, this flattening of usage distribution was inevitable as we move to mass-market adoption; but the speed and scale at which it has occurred (according to Cisco) is surprising and just goes to show how fast the industry moves.
We can hypothesize a number of factors that have contributed to this change, including:

• Targeting of extreme usage by operators through yield-management strategies such as fair-usage policies, data caps and throttling.
• The increasing availability of free wifi acting as a substitute for cellular usage.
• The natural limit of consumption of high-bandwidth data on cellular. This is something that we have been saying for a long time at Informa. Essentially, high-bandwidth applications, such as video, are more suited to stationary, indoor consumption, which is not the natural sweet spot for cellular.
• The huge increase in the number of smartphone users attracted by affordable handsets and data plans

So why is this encouraging? Well, operators need to manage their core asset and scarce resource, namely bandwidth, as efficiently as possible. For years we’ve heard complaints about the “data hogs” that consume disproportionately large amounts of bandwidth for relatively low ARPU, but now it would seem that operators have been able to significantly modify usage to broaden the consumption on their networks. However, this is just part of the equation. Investors don’t care about traffic distribution: They want to see evidence that this traffic management translates into greater value.

The current reporting season has been littered with CEOs confirming that their traditional revenue streams of voice and SMS continue to fall against the relentless onslaught of free internet-communication services. Swisscom’s CEO believes that the company’s voice and SMS revenue will be gone within three years. If we strip away these declining revenue streams, we’re left with the future of an operator’s business, namely internet/data connectivity. To derive incremental value from this source, operators must therefore be able to differentiate the “data” they provide, a topic further explored in a recent Informa white paper, Understanding today’s smartphone user. We are indeed seeing evidence of progress in this area, and if you listen carefully, there are even murmurs that yield-management strategies are beginning to benefit bottom lines. For example, AT&T’s 4Q12 results show that the company now has “two thirds of smartphone subscribers on usage-based plans” (as opposed to all-you-can eat data plans) and cite take-up of these plans as a major contributor to increasing year-on-year wireless EBITDA by seven per cent.

It’s clear that it has never been more critical for operators to demonstrate that they can monetize their bandwidth, and although it’s taken a while, perhaps we’re now just starting to see real evidence of a more sustainable approach to network management and pricing in mobile. Cisco might have recently adjusted its view of the market but, thankfully, it would seem that operators have started to as well.

Source:  http://www.telecoms.com/96532/improved-traffic-distribution-indicates-that-operators-are-managing-assets-more-effectively/?utm_source=rss&utm_medium=rss&utm_campaign=improved-traffic-distribution-indicates-that-operators-are-managing-assets-more-effectively

Tablets, smartphones to fuel doubling of mobile marketing revenues

The explosion of tablet and smartphone use has spurred the migration of e-commerce to m-commerce, particularly in North America and Western Europe.

Retailers are predicted to spend $55 billion annually on mobile marketing by 2015, double the amount expected this year, according to a new report from Juniper Research.

In addition, couponing apps have become an increasingly popular way to distribute and store coupons, the report noted. In addition, mobile devices are being integrated into in-store retail strategies through augmented reality and near field communications.

 

Self-service BI/Analytics removes barriers between business users and their data, but it's harder to implement than it looks. Download a research report from the BeyeNetwork to learn the secrets of self-service success.

At the same time, many retailers have not optimized their sites for mobile browsing, registration or payment.

"If retailers truly want to maximize the mobile monetization opportunity, then optimization is critical. If you are using mobile advertising for consumer acquisition, you need to push users to a site with which they can comfortably interact; retailers that fail to respond to consumer demand will fall behind," commented report author Windsor Holden.

Holden advised brands to integrate their marketing campaigns across mobile social networking sites such as Facebook (NASDAQ: FB) and Foursquare and to limit mobile ad frequency, and to prevent overexposure.
In a report released earlier this month, Gartner predicted that mobile ad revenue would reach $24.5 billion in 2016, creating opportunities for mobile app developers and platform providers, as well as specialty agencies, ad networks and communications service providers.

Andrew Frank, research vice president at Gartner, agreed with Holden that tablets and smartphones are fueling the mobile advertising market "in more and more geographies as an increasing population of users spends an increasing share of its time with these devices."

It's time for mobile app developers and platform providers to tap into the opportunities being created by mobile advertising, whether delivered through the Internet or in the store through NFC.

Source: http://www.fiercemobileit.com/story/tablets-smartphones-fuel-doubling-mobile-marketing-revenues/2013-01-23?utm_medium=nl&utm_source=internal