Will Mobile Operators Embrace Changes?
Our mobile industry will go through fundamental changes over the next few years and they will have a profound impact on the Mobile Network Operator (MNO) business.
Network traffic will continue to grow fuelled by an improved underlying delivery engine (4G/LTE roll-out being one of these) and by changing consumer usage behaviour of services. Looking at recent statistics, (tefficient, June 29th 2016) in 2015 DNA operator from Finland had probably the highest average mobile data usage in the world. The usage was close to 6GB per month per customer. Many other markets will follow this, as data traffic growth is expected to be 49% CAGR during the period of 2015 to 2020 (GSMA, The Mobile Economy 2016 report).
A major shift is taking place where MNOs will move on from building network coverage (yes I know, in many places there is a lot of room for improvement, at least indoors) to building sufficient capacity to serve customer needs. Building coverage is a rather straightforward process, but building sufficient capacity is a much more complex task.
The competitive context is ever more demanding; hence MNOs need to be continuously aware of where they stand. Traditionally, measuring has been done with annual or semi-annual field measurements. Recent emergence of crowd-sourcing based solutions has enabled MNOs with a new data source, which can be used for continuous tracking.
Mobile Network Operator Challenges
Operators are suffering from a declining EBITDA trend (Strategy Analytics, Jan 2015, Global trends for mobile operators show stagnant revenues and declining margins). This has resulted in increased cost consciousness. Mobile network operators need to be more careful in deciding where and when network investments will be made, and how large they will be. For the first time ever, in 2015 the global mobile operator Capital Expenditure (CAPEX) declined on a year-on-year basis (GSMA, The Mobile Economy 2016 report).
Many MNOs have realised that marketing and technical teams should work closer together as decisions done by one team will have direct impact on the other. However, in many cases this effort has not been successful as common language, metrics and goals are missing.
MNOs do collect a lot of data on their customer, business and network performance, however we have not seen many MNOs linking these data points with each other – this is surely a critical step in moving from measuring to managing. In the traditional voice-era, network quality criterion was fairly simple but in the data-era quality criteria are dependent on the actual application being used. MNOs have adopted various tools and methods for performing customer analytics (usually these involve customer level insights, which are used for up- or cross-selling services), however only a very limited number of MNOs have started to use network analytics in their business decision-making.
Network investments are still quite frequently made using rules of thumb and more importantly, on a best effort basis. This is because MNOs cannot typically predict what improvement an investment will have in the network KPI, let alone service, consumer or business KPIs.
Value Based Network
I believe that MNOs must increasingly adopt a value based network approach. MNOs need to firstly identify their value drivers, e.g. service quality leadership, churn management and loyalty, customer satisfaction and alike. Following value driven target setting, links must then be created between network metrics and consumer, service and business metrics.
Having accomplished this, MNOs will be able to make network investment decisions in a way that achieves targeted quality level (note that there is a big difference to a best effort based approach). In addition to this, the resulting business impact of this investment is known. Surely there are many other factors impacting a business in addition to the network. However, as typically one of the biggest CAPEX items in the MNOs’ profit and loss statement, network cannot be overlooked.
For competitive reasons, MNOs will need to initiate continuous measurement of their relative market position, leveraging crowd sourcing data to complement more traditional field measurements. Results of these measurements must have a closed loop link to improvement actions in the above-mentioned value based targets.
What role will you take?
One could say that there are three types of people – and companies. Those who observe change taking place, those who are involved in the change and finally those who will drive the change.
Who do you want to be?