A new study from Juniper Research has found that Mobile Network Operators (MNOs) will need to fundamentally change their mobile content business models by emphasizing ‘shared value creation' in order to avoid becoming ‘dumb pipes' in the future. Only if they can transform their businesses into ‘smart pipe' service providers, can they significantly increase their income from mobile content – estimated at $23bn in 2008, rising to $52bn by 2013 according to Juniper.
The global mobile content market will be worth $167bn by 2013, shared among players such as MNOs, Content Providers and third parties such as content aggregators and billing companies.
Currently MNOs take a significant percentage of the revenues generated by Content Providers when they use their networks. This has resulted in high prices for end-users and consumers being deterred from accessing mobile content on a wider scale. This unattractive situation has become a disincentive for MNOs and Content Providers alike, with some Content Providers attempting to bypass the MNOs or exit the sector altogether. Clearly, the situation needs to change. But it will be down to the MNOs to make the first moves, says the report.
The new report examines the three main scenarios facing the operators and the sector as a whole – the ‘Dumb Pipe', ‘Smart Pipe', and ‘On-Portal' routes. Modelling the market in such a way is said to have enabled Juniper to create a detailed forecasting and modeling tool to examine how a future market may develop under different conditions.
According to report author Andrew Kitson, "One single scenario will not win out since different business and revenue models have to co-exist in the mobile content market. Players will adopt multiple approaches that best fit their markets. Crucially, if MNOs are to benefit financially, they need to move away from their Dumb Pipe roots to the Smart Pipe model, though they will clash with the content providers which already dominate the Smart Pipe. A compromise needs to be found."
If MNOs can change their ARPU-driven mindsets to focus on value creation and support for their partners, they can swiftly make the change.
Other findings include
- Under the Smart Pipe model, MNOs will not see their share of the overall mobile content market rise appreciably, but revenue will rise in value by 125% over the 2008-2013 period.
- Under the On-Portal scenario, content providers will see their share of the market rise from 54% in 2008 to 68% by 2013, providing they can secure more attractive terms from MNOs.
- Third parties – especially aggregators and billing service providers – will come under pressure from larger players (such as MNOs) seeking to achieve horizontal integration and economies of scale.
The report provides coverage and forecasts from a global perspective as well as from a regional viewpoint by looking at how the market will grow or wane under the On-Portal, Dumb Pipe, and Smart Pipe scenarios around the world.