Operators should tap assets to plug dipping revenue

Despite revenue crunch from declining value-added services revenue and increasing cost from data demand, carriers have underutilized location data assets that can be monetized, says industry player.
Written by Jamie Yap, Contributor

COMMUNICASIA, SINGAPORE--Mobile operators are caught in a revenue squeeze as earnings from value-added services (VAS) slide, while costs to satiate subscriber demand for data increase. But operators have "underutilized" and "undercapitalized" asset commodities such as user location and user identification, which can be monetized and help "diversify" their revenue, notes an industry player.

Conrad Labonte, Asia-Pacific business development director of wireless network solutions at CommScope, said operators have been dependent on a "relatively low number of revenue sources".

"That's the way banks worked 20 years ago [having just a few services]. Now they have a profusion of fees and charge you for anything they can think of," Labonte highlighted during his presentation at the mobile VAS strategy conference held Thursday at CommunicAsia.

Mobile operators today are experiencing a tight revenue squeeze, he pointed out.

The advent of apps, appstores, smartphone features and the open Internet model has caused traditional VAS such as SMS to become "obsolete", further exacerbating dipping VAS revenues for carriers which already face a "dramatic" increase in competition within the ecosystem and overall market.

At the same time, Labonte added, data-hungry third-party apps have led to more subscribers demanding and using more data. For carriers, this translates to "more backhaul, more gateway, more cost" to expand their networks--all while missing out on any "real" returns from existing VAS, he noted.

The solution out of this bind is not only to "increase and diversify revenue", but to do so by leveraging on what the operators already have, he stressed.

He noted that mobile operators possess two compelling and unique assets: unique user identification and user location.

Labonte said: "[Operators] know where you are. This [knowledge] is underutilized and undercapitalized, [and] it has been partially encroached by recent trends such as GPS-enabled smartphones."

In addition, several apps use location-based information and developers of such apps are beginning to realize they do not have to depend on platform owners such as Google or Apple--and can turn to operators--to provide user location and identification data, he added.

In other words, he explained, by making use of user location and identification resources they already have, mobile operators can provide and monetize various offerings that will address challenges currently evident in third-party apps, he noted.

Location assets "tradable commodity"
Network operators have the "best" ability to provide location data, Labonte said. So they can charge third-party app developers a fee to support location-enabled services that enable users to determine locations even in areas where GPS (global positioning system) "frequently fails", or takes at least "30 to 180 seconds" to determine or may not function as well, such as inside buildings and underground, he added.

Furthermore, Wi-Fi databases are always "somewhat out of date and inaccurate" and many devices "still do not offer GPS at all", he said.

Mobile operators can, hence, make money from charging app developers for a "micro-dip" of location verification, Labonte said.

He added that carriers can also provide "identification enablement" for a fee. For example, the location of a mobile device can act as a "micropayment identity" when it is close to the point of transaction via near-field communications (NFC). This can be an alternative to the one-time password (OTP) used by banks which some customers may find "annoying" to use for micropayments, he noted.

"Adding location in the context of verification and authentication is critical and can be monetized," Labonte said. "Banks will pay money if you can improve the nature of verification."

He urged mobile operators ensure their networks are location-enabled.

Fraud prevention and protection are becoming essential in online commerce as wireless data connections are increasingly used to commit fraud, he said. As a result, financial institutions are willing to "pay for security" if network operators can help them detect cybercriminals whose location can be tracked through the mobile network--even if they carry used pre-paid unregistered 2G phones, he noted.

Labonte added: "The driver for location-positioning has mainly been for emergency services, however, rising interest is coming from [the need to] control fraud for finance and mobile payments.

"Location information for [user] identity and verification is a tradable commodity in mobile operators and needs to be monetized to diversify their revenue," he said.

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