Generating revenues from their long-term evolution (marketed as LTE and 4G) investments has been a challenge for Communication Service Providers (CSPs) the world over. The CSPs’ need to attain profitability after the capital investments in LTE has increased the importance of clearly laying out their application strategy – and their roadmap for application modernization.
What are their challenges?
Recouping sunken capital investments: Currently, CSPs prefer funding projects from OPEX as opposed to CAPEX. CSPs are focusing on leveraging existing infrastructure. Understanding their network performance and end-customer demands on a granular level will be necessary for network optimization. For example, carriers will possibly need to be able to redirect traffic and detect applications that are tying up their resources. Automation of manual processes and self-help for customer facing processes are other areas where operators are focusing on operational efficiencies as a means of cutting cost. Application modernization will be an important conversation for all of these endeavors.
Competitive pressure and the need to bring innovative products to the market quickly: CSPs are coming under huge amounts of pressure from Over-The-Top (OTT) Service Providers and direct competitors. Bringing cool and useful applications and services to the market quickly is an imperative for customer retention, maximizing average revenue per user (ARPU) and avoiding churn. Many CSPs are meeting this challenge by investing in their platforms and becoming enablers instead of innovators, thus focusing on an application strategy that facilitates partnerships with smaller firms and other 3rd party application developers.
Managing networks in a heterogeneous environment: LTE is focused on the hotspots, mostly urban areas. 3G is used for full coverage. This duality is increasing network complexity. Simultaneously, competition is mounting from OTTs and other CSPs. Because end customers have more choice, applications that empower CSPs to provide a high quality service experience and maintain a reasonable OPEX will be a strategic necessity.
Service the early adopters, courting the rest: LTE early adopters are savvy and have fundamentally different usage patterns than typical 3G end users. Video makes up for the large majority of data traffic on LTE networks. Being the digital enthusiasts they are, LTE users use social networks and cloud-based services more than 3G users. CSPs face the challenge of managing their networks so as to be able to provide a good service experience to LTE users. To overcome this challenge, they will need an application suite that enables a cost effective intelligent network.
Successes for Tier 1 Carriers:
In South Korea, SK Telecom has rolled out the first publically available LTE-Advanced network. The South Korean carrier plans to attract users with features such as sports offerings, free videos and HD video shopping. A substantial number of users have signed up for the service in the first weeks of its availability.
In the US, Verizon’s “share everything” plan has introduced a data-focused business model. Multiple users and devices can draw from a common pool of data for monthly access charges for each device. This plan is part of the industry’s desire to move away from unlimited data-usage plans and drive profits from data-intensive products such as connected appliances.