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Operator business model for LTE?

Key words: LTE, Business Model

default_news16LTE World Summit 2012 left me with mixed feelings. The event was great; not so big and everybody had a focus interest on the topic. The presentations and discussion panels were divided into multiple parallel streams ranging from spectrum management to data offloading and device management. It was enjoyable to follow experts describing indoor solutions, QoS deployment strategies and other focus topics.

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However, one critical stream was very hollow and raised more questions than answers: ”Operator business model for LTE”

First of all, if you think of it, the whole topic is quite wrongly set. LTE is just a new radio access technology. LTE improves spectrum efficiency and offers higher data rates – but at the end of the day it is just a new modem in the network. Maybe combining topics “LTE” and “business model” was just Informa’s not so successful way of naming the stream. My real fear is not about Informa, but that the telecom industry still believes that a new radio technology would somehow change the business model – it won’t. Omnitele studies show that HSPA+ networks will service the data rates and capacity for many years to come. LTE is a revolutionary technology – yes. Does it change the operator business model – no.

Where is the value of mobile broadband? The customer perceived service experience, the value he receives and eventually his loyalty to the service are primarily determined by

  1. Characteristics of the network access
  2. Handset capabilities
  3. Attractiveness  of the content

Operators are increasingly losing the control or even the influence on the latter two service components. Introducing an enhanced radio, LTE, does not change this trend, does it? Let’s accept this and stop sticking to three magic letters as a saviour or revolution of MNO business case.

The great history of WAP based services and provisioning of ringing tones is all gone. But hey, in the middle of all sorrow MNOs can stick to the fact that terminal manufactures and content providers come and go, but networks – they stay. It used to be Motorola, Nokia, Netscape and Yahoo. Today we have Facebook, Apple and Google.

How about tomorrow? We don’t know who will be the dominant players, let the consumers decide. But networks, they stay – let the LTE rule!