Mobile network operator, Three UK has admitted that 97% of its network traffic is sourced from data. Data traffic is steadily increasing and operators are turning to LTE (Long-Term Evolution to 4th Generation) networks to support this growth.
Mobile network operator, Three UK has admitted that 97% of its network traffic is sourced from data. Data traffic is steadily increasing and operators are turning to LTE (Long-Term Evolution to 4th Generation) networks to support this growth.
However, despite this solid growth, operators’ profit margins on data traffic are still extremely low, which poses the question as to how operators are going to fund the development of LTE networks.
This is the view of Jonathan Bell, vice-president of Product Marketing at telecoms software provider, OpenCloud. He comments: “If operators choose to divert spare capital into the roll-out of LTE, but not to invest in differentiating their services and tariffs, they risk becoming ‘bit pipes’. The solution for operators is to cultivate data margins in order to help fund a profitable, and sustainable, path towards LTE.
"Operators must release capital for further service and rate-plan differentiation and be innovative with their data tariffs. For example, operators can leverage chargeable bolt-ons for unlimited YouTube streaming or Twitter usage. This sort of model gives an operator a path to monetise data and offers subscribers value over an unclear ‘per megabyte’ tariff. Quite rightly, operators are gearing up for LTE to support data traffic growth, but they are not set up to profit from LTE. That will only happen if carriers innovate to improve the margins they receive from data, through rate-plan and service innovation,” Bell concludes.
