How North American operators are using smart pipe strategies
Mobile network operators are under pressure.
With the rise in smartphones and tablets and huge growth in 3G/4G traffic, operators must use new strategies for network intelligence.
With a more consolidated market than Europe, U.S. operators are big players with more power. The 4 major players in the United States — AT&T, Sprint, T-Mobile and Verizon — account for more than 90% of the market share. The 2 leading operators, AT&T and Verizon, have more than 100 million subscribers each. These operators are taking different approaches to make their networks smarter.
Tellabs’ CTO, Vikram Saksena, described how smart services will deliver more value and increase operators’ profitability. Operators must balance the needs of the end users, web service providers, device players, and network and software venders--while also increasing their own profitability.
Operators can face these challenges by delivering intelligent networks and services. Operators can use one of two “smart pipe” strategies, according to a recent report from STL Research and Tellabs.
The first smart pipe strategy, the “Happy Pipe,” uses network intelligence to route traffic efficiently--giving the end customers a higher quality of service. With this approach, the operator focuses on efficient transport rather than services.
The second strategy, “Full Service Telco 2.0,” increases profitability by incorporating the 2-sided business model and improving the service for end users and other service providers. The strategy allows network capabilities, such as location services or payments, to integrate with personal services like games, or enterprise applications, such as cloud-based CRM.
Smaller U.S. players benefit from Happy Pipe: Sprint and T-Mobile
The smaller 2 mobile players, Sprint and T-Mobile are pursuing the Happy Pipe strategy. While Sprint has specialized in wholesale voice and messaging, T-Mobile USA has good customer satisfaction ratings based on a solid HSPA+ network.
Smart services for command and control: AT&T
AT&T, the largest player in the United States, uses a traditional strategy--command and control the market. With exclusivity over the Apple iPhone, AT&T seized the smartphone market. And when its exclusivity period ended, it expanded to support a broad range of smartphones.
With its command and control approach, AT&T demonstrates a “Telco 1.5” strategy, according to STL Research. For example, AT&T supports the deployment of third party services on its devices--but prefers its own brand services. AT&T has also been hesitant to open its services to developer communities.
Through its participation in ISIS and other projects, AT&T is positing itself as a guardian of customers’ digital identities and data. Additionally, AT&T has been early to introduce usage caps and volume pricing for users.
Smarter service opens options for new business models and technology:
Verizon, on the other hand, adopts a different strategy. As the number two player in the United States, Verizon’s willingness to move into new markets makes it a “Telco 2.0” platform, according to STL Research.
Verizon has been open to new business models and technology options--especially in the development of the M2M market. Its Open Development Initiative (ODI) will make it easier for new M2M devices to use its network.
As the first operator with IPv6 and the first to deploy LTE, Verizon anticipates total mobile penetrations will eventually approach 400%. In anticipation of the large growth, Verizon sees its advancements in LTE as a way to minimize the configuration process for M2M devices.
Verizon’s approach to over-the-top voice and messaging services is progressive. It was one of the first major carriers to strike a deal with Skype, and allowed “Skype Mobile” on its devices. Its strategic investments, and developments in the M2M market, make Verizon a “Telco 2.0” platform.
More intelligence for more operator profitability
While the North American operators vary in level of the Telco 2.0 approach, operators recognize the need for smart services. With options for pricing and service differentiation from the network’s intelligence, the “smart pipes” will prove helpful for future profitability and business models.
How smart are your network and services? Read the STL report to learn more about how to implement “smart pipe” strategies.
