Monetizing Mobile Networks: It's Not as Easy as it Sounds

The amount of money spent on mobile spectrum by mobile service providers is enormous. In 2000, European mobile service providers spent $129 billion on 3G licenses, and in 2010 mobile service providers in India alone spent a staggering $14.5 billion on these licenses.  Now, LTE/4G licenses are starting to be awarded.  In Germany in 2010, the spectrum for LTE/4G cost $5.5 billion.  These sums are just for the right to use the spectrum and don’t include the costs of the infrastructure required to build these networks out.  Clearly, there is money to be made by operating a mobile network, but care must be taken to properly monetize the networks.

With increased competition for personal communications coming from both expected and unexpected quarters, how can mobile service providers “monetize” their investments and their networks to insure they are profitable and insure their spectrum costs are being recovered?   If you look at competition for subscribers, they would typically fall into one of these categories:

• Other “winners” of the spectrum so that the subscribers have multiple wireless service provider options, with built-in competition for these subscribers, so that market-based pricing and innovation can continue to occur
• Social networking forums and from email, which have slowed the growth of voice services
• “Over the top players” such as Skype, Google and Facebook that use the network infrastructure of the spectrum winners, and increasingly include VoIP based voice and text services

In very simple terms, monetizing the mobile networks involves two basic concepts – increasing revenue and lowering the operating costs of the network.  (Check out a recent video interview I did with TelecomAsia to learn more.)  However, just because it sounds simple doesn’t mean it is simple.  At a high level, monetization involves the following:

• Increasing Usage, and revenue from the usage, of the mobile network
• Tiered Pricing so that heavy users pay for their usage
• Optimization of the existing network
• Increasing Value-Added Services and revenue from these services
• Paying for Quality of Experience
• Subsidization of the network through advertising

In my next few blogs, I’m going to talk about each of the above monetization techniques a bit more…then I’ll tell you how Dialogic can help in each of these areas.