Revenue Still the 4G Question
CHICAGO -– The wireless industry remains deeply divided on how best to monetize the deployment of next-generation wireless technologies, if comments made Monday at Light Reading's Backhaul Strategies & Core Convergence for Mobile Operators Summit are anything to go by.
In his opening comments at the event (collocated at the 4G World trade show in Chicago), Heavy Reading senior consultant Berge Ayvazian shared research findings that show how average revenue per user (ARPU) figures flatten out over time unless a mobile data service provider is able to offer value-added services.
That's a viewpoint that squares with Verizon Wireless 's approach to the market, says Nicola Palmer, the operator's vice president-network. Eschewing the walled garden approach, Verizon is partnering with companies such as Skype Ltd. and Google (Nasdaq: GOOG) and looking to capitalize on LTE's higher bandwidth and lower latency to enable a new generation of games and deliver tailored applications for verticals such as healthcare and security.
Sprint Corp. (NYSE: S) has also made a commitment to openness, says Iyad Tarazi, vice president of network development and engineering, and it's giving its users more control over how their existing applications, including Google Voice, are set up on their phones. But he adds that Sprint's early efforts in 4G, over its WiMax network, are all about maximizing penetration and getting as many subscribers on-net as possible.
Based on its existing deployments, Sprint sees an increase in Web usage, social networking and Google apps, Tarazi says. Consumers are doing much more on the Web when it's mobile, but they're not going to want to pay a wireless provider for those applications when they can get them from Google and Skype, he adds.
"We've taken an approach to encourage 4G deployment as much as possible," Tarazi says. "If we really want to see the future world, we have to encourage adoption -- we are not going to make money by telling people not to make the next step."
Telstra Corp. Ltd. (ASX: TLS; NZK: TLS), which is rolling HSPA+ as its next-gen infrastructure, is also encouraging penetration, but working with partners and trying to expose network capabilities in a conservative way to let those partners use network assets in building value-added services, says Mike Wright, executive director, wireless, for the Australian operator.
"We tried to get into market early and encourage penetration, and we are exposing capabilities to keep partners in relationships with us," he says. "To develop assets that we want to sell, we will expose those same capabilities externally as we better understand how to manage those interfaces. We can't let it go too early or we risk losing control."
Using the network to do things such as dynamic provisioning of bandwidth to enable specific apps at specific times can generate new revenues, says Doug Wolff, vice president and general manager, LTE product unit for Alcatel-Lucent (NYSE: ALU).
"The network will have capability to provision itself for what users want if there is a willingness to pay," says Wolff, who adds that the same capabilities can be used for ad insertion.
Wireless operators also need to pursue new business models that address the proliferation of wireless devices being used per user, and the explosion of machine-to-machine (M2M) communications, notes Telstra's Wright. Consumers will pay for a wireless service that lets them easily share content between devices, he says, but new business models are needed to support M2M.
There will be 50 billion devices connected by 2020, says Georges Antoun, head of product area IP and Broadband Networks for Ericsson AB (Nasdaq: ERIC), which is one reason why scale is important to LTE and not just bandwidth.
"The question is -- how we get into the middle and drive revenue into the network?" he asks.
— Carol Wilson, Chief Editor, Events, Light Reading