Chris Newton-Smith Issue: India 2015
Article no.: 1
Topic: Data Hypergrowth: Unlocking the potential of new revenue streams
Author: Chris Newton-Smith
Title: VP of Marketing
Organisation: Redknee
PDF size: 410KB

About author

Chris Newton-Smith is the Vice President of Marketing at Redknee. Chris is responsible for developing Redknee’s market strategy and enabling our global partnerships. In this function, he also has responsibility for product management, corporate and product marketing, and Redknee’s CTO office, which leads the development of Redknee’s portfolio of patents in the real-time monetization space.

Prior to joining Redknee, he was responsible for business development and product marketing for the Application & Content Services (ACS) business unit of LogicaCMG Telecoms (Acision). He has held positions in Sales, Marketing, Product Management, Software Development, and Technology Evaluation at Redknee, RIM (BlackBerry), Encana, and UBS AG.

Mr. Newton-Smith has a Bachelor of Engineering and Management degree from McMaster University in Canada. He is also a member of the IEEE.

Article abstract

Call out: Data monetization – and the ability to launch new offerings, content and applications with the marketing campaigns and pricing plans to support them, to stimulate increased usage – will be critical to success 

Full Article

It wasn’t too long ago when the search was on for the “killer application” in Mobile Internet. While we may have moved on from that specific discussion, the essence of the search – i.e how can we monetize new revenue streams? – stays true. When assessing revenue opportunities for communications service providers in 2017, Gartner believes that the ‘next big thing’ in telecoms is, in fact, not in telecoms. In fact, there is not one ‘next new big thing’ that will drive revenue for CSPs but rather the opportunity to deliver value by providing the connection and the monetization of non-telco services.

Which new connected service will drive the revenue? Will it be e-health, connected cars, interactive video, or a combination of all? The value-add from CSPs will be their ability to launch new connected services on the fly and their ability to help these new services and service providers to make money. Gartner projects that revenue from adjacent markets can range depending on a CSP’s approach. Conservative forecasts show that revenue from adjacent markets will account for eight percent of CSP revenues by 2017; for more aggressive CSPs, Gartner believes that the opportunity for CSPs can reach an astonishing 15 to 20 percent of their total revenue by 2017 – showing that this opportunity is clearly one ripe for picking.
For CSPs, revenue from adjacent markets will not be derived from the traditional model, where services are built by the CSP, but instead will be derived from services connected by the CSP. Data monetization, and the ability to launch new offerings, content and applications along with marketing campaigns and pricing plans to support and stimulate increased usage – will be critical to success. India alone saw a 74 percent rise in mobile data traffic, generated by both 2G and 3G mobile broadband services, in a one-year timeframe according to a study by Nokia Networks. Recently, Vittorio Colao, CEO of Vodafone Group, the country’s second highest ranked telecom company, further validated this study by stating: “Growth in India has accelerated again, driven by data”. The company now has 59 million data customers, which is 30 percent higher than the same period a year earlier. Of these customers, 16.6 million are using high-speed 3G data.

While data growth continues to explode, one key challenge for a CSP’s business is that the growth of data services is not necessarily matched by the growth in revenue. According to a report from Informa Telecoms & Media, mobile data traffic will grow from 3.89 trillion megabytes in 2011 to a forecasted 39.75 trillion megabytes in 2016 – which will be a tenfold increase – while mobile data revenues will nearly double from US$325.8 billion to US$627.5 billion during the same period.

From a technology standpoint, this is also where the roadblocks appear for most legacy billing systems. It is here where new services that need to launch ‘fast and light’ to small segments of the market, are not only difficult to implement at any speed, they also represent a distraction from important IT support resources. Ironically, what is essential for CSP growth becomes impossible to deploy in a legacy environment. And when the third parties who created the services want to be paid, legacy billing and charging systems are challenged to settle the bill.
More and more we see the forward-thinkers among CSPs breaking their “new wholesale” businesses away from their legacy IT. Whether by standing up a new division within a company, by dedicating specific business resources within existing groups, or even spinning off subsidiaries branded for the new wholesale, CSPs are beginning to establish distinct organizations for their non-telco revenue lines. Done right, these separate groups are getting their own charging, billing and customer care systems, and their own IT budgets, thus enabling them to move with the speed, flexibility and expandability that their business models demand. Because these groups are not fettered with legacy back office designs, their own systems can include settlement (critical to this new paradigm) as an architectural centerpiece rather than its usual afterthought status. At the same time, CSPs need to recognize that customers don’t want separate bills for these services and therefore the new wholesale model must integrate with legacy core billing systems.

As CSPs explore new ways to maximize their revenue from the bandwidth they are offering while at the same time look for new sources of revenue, they are finding that all of this data consumption is increasing demand and putting stress on their network infrastructure, as well as on the business support systems that enable them to generate revenue from these services.

So what does this mean for the legacy billing and monetization systems in place today that support your business? This new era of connected commerce requires modular, flexible and comprehensive charging, billing and policy management coverage for the new wholesale business, solutions that are fully integrated between the retail side and the wholesale settlements side of the business. At Redknee, we believe that overlay systems can easily work with legacy systems, and can offer unique value to the wholesale business. In particular, CSPs should consider:

• A light footprint approach and the ability to deploy virtually, and through variety of deployment and business models
• A configurable product that doesn’t require a ton of customization, provides CSPs with the ability to launch the hundreds of offers that support new revenue streams quickly and cost-effectively.
• Real time analytics and context-based campaign management, which is essential to enabling CSPs to add unique value to their customers.
Fundamentally, this shift toward non-telco revenues is not an admission that CSPs are mere dumb-pipe providers. In fact, it is just the opposite. Their value-add has never been higher – they can aggregate services, bundle them creatively, provide quality-of-service and other policy-driven differentiators, and of course bill on behalf of the OTT players. In addition, with the intelligence that real time analytics provides, CSPs can bring additional value in terms of contextual real-time marketing campaigns that individual OTT/connected systems cannot.

CSPs are changing from subscription service providers to brokers and it is now up to CSPs to decide if they want this opportunity to reach 8% or 20% of the pie in 2017.

For additional guidance on data monetization strategies, visit www.Redknee.com or email us at Marketing@redknee.com.