|Issue:||Europe I 2012|
|Topic:||The potential for monetising|
Jürgen Samuel was appointed CEO of sicap in February 2009. His previous positions include Senior Vice President, Business Development, Marketing& Sales at Siemens IT Services, Chief Executive and Vice President Consulting of Oracle Germany and Chief Executive at Sony Germany.
Jürgen Samuel has a Master of Science in Management from MIT.
There is huge potential for mobile operators to deliver advanced services but their challenge is to generate bottom line profit from their efforts. Making life simple is the key to appealing services and profitability can be further enhanced by subscriber profiling. Mobile network infrastructure, from the USSD channel, through billing systems, to the remote control of devices and SIM, can be deployed to create a layer of value spanning across a very wide chain of business
Now that high-speed network technologies have been deployed, and smartphones brimming with applications have flooded the market, there is huge potential for mobile operators to deliver advanced services. But just how profitable can mobile money services be, and which ones will really take off? Can we take a significant margin on NFC-technology sales of transport tickets? Which services are company IT departments crying out for in order to manage their employee smartphones stuffed with sensitive data? The challenge for operators is to generate bottom line profit for their effort.
Return on investment is invariably volume-driven, principally because operating costs decrease significantly when fifty per cent or more of subscribed users are actively transacting. Marketing teams therefore have to make sure that a large number of their subscribers actually want the proposed service and will want to use it on a regular basis. Additionally, the majority of subscribers should be able to use it within the limits of their subscription package or given a strong incentive to upgrade in order to use it. Last but not least, the service must actually work on their device on their first attempt. If it doesn’t, the chances are that the subscriber will not bother trying again, and despite the initial appeal of the service, no revenue will be drawn from it.
Making life simple
So firstly, what makes a service attractive? Appeal depends largely on demographics. Let’s take the mobile money market as an example. West European city dwellers appreciate the speed and efficiency of touchscreen kiosks for their prepaid reloads. Subscribers with NFC devices can be recognised and their account credited in seconds by swiping their phone and inserting the coins. In Switzerland, reload kiosks are popular because they tangibly reduce waiting time in city centre phone stores. Unbanked West African subscribers on the other hand, prefer the kiosks as cash-in, cash-out machines to manage their money on a daily basis, or to send money to their loved ones. Mobile money transfers are simply credited or debited to the subscriber’s prepaid credit balance. These transactions are successful because they allow subscribers to make considerable savings on commission. In Cote d’Ivoire for example, the dissuasive 6 euro monthly account charges imposed by banks is equivalent to two days of salary for a security guard or shop employee. Though different in content, the West European mobile money example and the West African one allow their users to respectively save time or money. In a nutshell, they both serve a single purpose which meets a strong need. Often quoted as a showcase, the M-PESA mobile money offer in Kenya reached positive cash flow in the thirdyear of operations with nine per cent of total annual revenue because the marketing was focussed on a single ‘get money home’ message.
Making life simple has great appeal and can be monetised in just about any domain. On the corporate scene, operators have a new opportunity to offer digital security services which reduce the number of sign-in and authentication procedures down to one single operation on the mobile device. On the user side, the good news is that we will soon be able to throw away encryption keys and will no longer have to remember countless passwords with letters and digits that have to be renewed every month. I made a quick count of my own corporate applications while writing this piece, and realised that I have over a dozen different passwords on the go, and I will have to renew a good few of them in the coming weeks. M.Ink, (a short form of Mobile Ink) will soon change all that. It is a new mobile ID service for streamlined data security. The beauty of M.Ink is that, because it relies on an applet located in a supplementary security domain on the SIM card, it meets even the most stringent security requirements of the banking Industry. SIM cards are the natural keepers of operator-managed security, and operators are in a unique position to capitalise on the capabilities it offers. We can safely predict that M.Ink will become a prerequisite for m-commerce sales, on-line-billing, payment, order fulfilment, financial trading etc. What if, before concluding a deal, financial traders had to get M.Ink approval from their senior?
Over-the-air Device Management is another effective and lucrative means for operators to address the need for data security. Employees increasingly rely on smartphones and tablets to stay connected out of the office, yet a very large number are left behind on the back seat of taxis, or on restaurant tables. IT support costs are consequently increasing, and the data leak threat has become a corporate headache. Providing the means for a large company to control the devices of its employees can be as lucrative for the operator as it is valuable for the company. Using over-the-air Device Management, an IT department can for example control the use of corporate applications and Intranet, lock and wipe an employee device as soon as it is reported lost, or geo-locate it on a map. Employees can also back-up and restore their address book, SMS, multimedia and applications, and easily transfer them to a new device. Albeit a package designed for data security and integrity, once again, the incentive for endusers is the simplicity that the solution confers.
Now that we have established that the most appealing services are the ones which make life simple, and that profitability can be achieved by concentrating on high volume usage based on the USP of the mobile environment, how can profitability be further enhanced by subscriber profiling? Knowledge of mobile subscribers, their devices and how they use them are key contributors to marketing success for operators. In emerging markets, the challenge for operators is to make it easy for mainstream subscribers to get started on, for example, mobile Internet. Automatic, over-the-air Device Management tools recognise the subscribers in the network who have an Internet access subscription and trigger configuration updates to their devices. The process is intelligent, efficient on resources (since only eligible subscribers are targeted), and transparent for users. In monetary terms, feedback from operators in Eastern Europe indicates a forty five per cent increase in data service revenues after implementing automatic device configurations.
In mature markets, advanced profiling, including device knowledge, subscription data and socio-economic profile data stored in the operator databases is achieved by correlating data from a converged device and SIM management platform. The commercial advantage is the conferred ability for operators to correctly configure secure access to services requiring SIM-based security. NFC-based ticketing and vending machine purchases with applications such as Google wallet are the current flagship ventures in this domain, but analysts have predicted massive NFC take-up as soon as the technology becomes a standard integration in devices. Thanks to converged device and SIM management, NFC application stores can connect to the platform to check profiles and propose services which will work on the device in use.
Last, but by no means least, operators can look at re-monetising the foundations of their mobile business; the voice segment. Price pressure is taking its toll on revenues from voice traffic, but there are opportunities to create new voice business with a large subscriber segment which is often overlooked –the prepaid, low-budget segment of the population. There are prepaid subscribers who do not make a call because they are temporarily out of credit. Others, who are out of money, are reluctant to buy credit because of their low budget, or who want to save the credit for other calls. Though difficult to squeeze more revenue out of low-budget subscribers, a mobile sponsored call service can encourage their friends and family to cover the cost of their calls. Alternatively, mobile advertising can be leveraged to pay for those calls. By sponsoring a call, brands would gain in interactivity and the possibility to use location-based incentives. Based on a study in the Netherlands, twenty six per cent of subscribers are ‘interested’ and another twenty per cent are ‘neutral’ to listening to an advertisement if they get an incentive, such as a free call, in return. Operators can run the service in a very economical way by setting up the call request via an Unstructured Supplementary Service Data(USSD) channel, open to subscribers even with zero credit balance.
The successful examples we have looked at all have common denominators, namely wide appeal in the socioeconomic context and usability. In order to monetise their offer, mobile operators have acknowledged and embraced the need for a more customer-driven approach to their business. Mobile network infrastructure, from the USSD channel, through billing systems, to the remote control of devices and SIM, can be deployed to create a layer of value spanning across a very wide chain of business. Simple solutions, delivered intelligently, will reap the highest rewards.