Ofcom cuts to MTR presents opportunity to service providers – Gigamon comments

It has been revealed that Ofcom has proposed a new round of cuts in mobile termination rates (MTR) in order to reduce costs for consumers.  The UK’s telecoms industry regulator has said that more efficient mobile technologies, including 4G, have reduced costs for operators and MTR should reflect this in order for consumers to benefit.  Since 2011, MTR have fallen by around 80 percent from four pence per minute to 0.8 pence per minute and the latest proposals would see rates fall again to just under 0.5 pence per minute.

Andy Huckridge, director of service provider solutions at Gigamon, has made the following comments:

“This latest move by Ofcom is unlikely to please mobile operators.  While, at face value, new technologies like 4G may seemingly reduce costs for them, in reality the situation isn’t quite so clear cut.  Along with things like 4G, comes an increase in mobile subscriber expectation, with users demanding the ability to seamlessly connect 24/7 and without delay.  This places a huge amount of pressure on the network infrastructure, resulting in the need for service providers to ensure improved reach, performance and service.  None of which comes at low cost.

“While Ofcom has stated that it wants consumers to benefit from competition within the industry, the market is already incredibly fickle and customers are happy to transfer networks at the drop of a hat.  As such, service providers are seeing a fall in ARPU, and this latest news will only increase that pain.  Operators now need to re-asses their business models and look to create new revenue streams and profit from the increasing demand for content and applications.  By increasing visibility into their networks, service providers will be able to increase subscriber level intelligence and create tailored billing and pricing strategies based on actual usage, rather than the one size fits all contracts we see now.

“By implementing pervasive visibility tools, operators can take time to fully understand the drivers of traffic – whether it be applications, devices or subscriber behaviour – in order to make better business decisions and optimise the design of their existing network.  Understanding the usage, performance and consumption trends will be key not only to ensuring revenue is kept up, but will also offer customers a reason to stay loyal.  While Ofcom’s plans may seem like a blow, it could be the driver service providers need to move their businesses on to the next stage and, ultimately, increase their profits.”