This document is the Mobile Operator Guide: Innovation and Transformation published by SAP Mobile Services. It contains articles and insights from thought leaders in the mobile industry on key topics such as LTE, RCS, VoLTE, IPX, messaging, analytics, and more. The guide aims to help operators, providers and partners better understand and navigate the fast-paced changes in mobile services from both technical and industry perspectives. It provides international views on innovation and transformation happening today to help all players in the ecosystem.
4. 54 Mobile Operator Guide Innovation and Transformation
38 Deriving Value from Big Data
The amount of data being collected by mobile operators is accumulating
fast. Operators now need to realize the full value of this store of information
and start monetizing it.
By Kevin Outcalt, Vice President, Mobile Analytics and Consumer Insight,
SAP Mobile Services
42 PART 3: EMEA
43 EMEA’s Rapidly Changing Market
Regional differences are still prevalent when it comes to mobile communications.
The issues, challenges, and opportunities facing the countries of Europe, the Middle
East, and Africa (EMEA) are unique to the region.
By Mark Weait, Vice President, SAP Mobile Services
48 VoLTE: An Essential Part of Every Operator’s LTE Strategy
VoLTE will continue to make steady progress, and 2014 is likely to be a
big year for deployments.
By Dan Warren, Senior Director of Technology, GSMA
51 Multimedia Content on LTE Devices
Can mobile service providers get a piece of the pie?
By Michael Van Veen, Group Director IPX, SAP Mobile Services
54 SMS Monetization
Simplify your SMS business model with the right partner to ensure
maximum SMS monetization.
By Toni Eid, Founder and Editor-In-Chief, Telecom Review
58 Maintaining Privacy in the Age of Big Data
Mobile networks are producing huge amounts of data on consumer behavior and
habits which are a treasure trove to marketers looking to understand and capture
new customers. How do you balance this “big data” influx with customer privacy?
By Guy Rolfe, Head of Global Mobile Practice, Kantar
61 The IPX: The Time is Now
High-speed networks, new-capabilities devices, new competition from online
service providers, and more demand for IP-based services are challenging the
status quo. The IPX is part of the solution.
By Philippe Bellordre, Project Manager, Future of Interconnect, GSMA
65 LTE Roaming Market Developments
Look for 2014 to be the year when LTE roaming becomes a crucial element
of LTE network monetization across Europe.
By Dimitris Mavrakis, Principal Analyst, Informa Telecoms & Media
70 Have Operators Decoupled Themselves from the Reality of New
Roaming Regulation?
Operators could be looking at changes to roaming regulation as a chance
to drive mobile broadband usage, but they’re far from ready.
By Ian Grant, Mobile Europe
74 Data Collection’s Changing Regulations
The European Union is looking to change and improve rules around collecting
and sharing mobile consumer data. Mobile marketing has a lot at stake. If done
correctly, it can fulfill the promise of one-to-one marketing.
By Paul Berney, Co-Founder and Managing Partner EMEA, mCordis
78 PART 4: AMERICAS
79 Mobile Market Activity in the Americas 2013
Mobile industry continues to expand the subscriber base, add new services,
and show revenue gains.
By William Dudley, Group Director, Mobile Evangelist and Global Solutions,
SAP Mobile Services
5. 76 Mobile Operator Guide Innovation and Transformation
83 US LTE Market Offers 4G Test Lab
The US mobile market has emerged as a valuable stage for testing the
dynamics of LTE-driven competition.
By Rich Karpinski, Senior Analyst, Yankee Group
89 The Skies Clear for IPX Delivery of Cloud-Based Services
The IPX establishes the network connectivity and the necessary quality for
cloud-based services – and it reduces time to market and decreases initial
capital investments.
By Rich Lindstrom, Sales and Business Development, IPX/RCS/LTE Roaming,
SAP Mobile Services
92 Ramping Up LTE in Latin America
Telefónica is in the early stages of building out its Long Term Evolution (LTE) network
in Latin America, a market poised to grow by leaps and bounds in the next five years.
By Pablo Alfageme, Head of Business Development, Latin America, Telefónica
Global Roaming, Telefónica
96 Exploiting the Operator Big-Data Dilemma for the Future Digital Economy
Mobile changes consumer behaviors.
By Sheryl Kingstone, Director, Mobile Leadership Strategies, Yankee Group
102 Scam-Busters
How SMS phishing uses area codes in credit union, bank, and child support scams.
By Neil Cook, Chief Technology Officer, Cloudmark
108 The Next Wave of Text Messaging
Get ready to communicate via SMS to any phone number, whether it’s mobile,
landline, or toll free, and from non-phone devices like your PC, laptop, tablet, and TV.
By John Lauer, CEO, Zipwhip
112 Move Over SMS, Here Comes RCS
Mobile operators are planning for Rich Communications Services to regain
market share lost to free over-the-top services. It’s time to put aside competition
and co-operate over standards and internetworking.
By Adrian Synal, Principal Engineer, System Design and Strategy, T-Mobile USA
116 OTTs Take Up the Mantle of Communications Innovation
With texting and chatting becoming free commodities, how do over-the-top
players innovate and stand out in a crowded field?
By Greg Woock, Co-Founder and CEO, Pinger
120 PART 5: ASIA
121 Asia-Pacific Stays in Front of the Telecoms Race
Operators respond to declining revenues and increasing competition from OTT
providers with LTE roaming, RCS, and monetization of mobile consumer data to
stay ahead of the game.
By Matthew Tonkin, Vice President Sales, SAP Mobile Services
125 VoLTE and RCS: Network Evolution and Services Revolution
Elements and roadmap for successful implementation of VoLTE and RCS.
By Sachin Bagul, Senior Manager, Product Strategy and Marketing,
Mavenir Systems
128 Best Practices for LTE Roaming
Six technology and operational considerations for operators undertaking LTE roaming.
By Russell J. Green, CTO and Vice President Technology Group,
SAP Mobile Services
132 LTE Roaming Grows in Singapore
Roaming represents a growth area for mobile operators, who see LTE as a
way to meet the diverse needs of a wide variety of subscribers, including the
budget-conscious as well as the tech-savvy.
By William Ku, General Manager, International Business, StarHub Ltd
136 The Wide, Wide World of the IPX
The IPX delivers end-to-end management and quality of service for voice
and other essential IP services such as roaming for high-speed mobile data.
By Michael Van Veen, Group Director IPX, SAP Mobile Services
6. 98 Mobile Operator Guide Innovation and Transformation
Simplifying Complexity Drives Innovation
By Sethu M, President, SAP Mobile Services
We have always lived in a world of complex systems. Our ecosystem’s
diversity is unique, and that variety makes for some lively debates
among its constituents. As always, we are evolving by sharing our
points of view and our ideas, creating new perspectives while
debating the merits of them. This makes complex things simple
and simple things automatic.
FOREWORD
This guide helps to evolve complex systems
by bringing together new perspectives and
different points of view. We have rounded
up thought leaders from every region of
the telecoms ecosystem to analyze what
has happened in the recent past and to
look forward to what is coming our way.
Amid the differences, there is consensus
that change is the overarching theme.
The telecoms sector reinvests 15% of its
revenue into research and development.
Only one other industry, pharmaceuticals,
pours more into R&D. You can see the
evidence of these investments in the fast-
paced developments of 2G, 3G, and now 4G.
As we move to 4G, competition will become
more heated. The up-and-coming initiatives
of Rich Communications Services (RCS),
LTE roaming, Voice over LTE (VoLTE), and
P2P and A2P messaging will blur the lines
between traditional service providers and
over-the-top players while adding complex-
ity to integration, product management,
and pricing. Operators will constantly be
140 Asian Giants Catching Up with the Global LTE Leaders
LTE continues to gain converts as it moves across continents picking up
subscribers. One-third of the subscribers are in China and India.
By Sohag Sarkar, Manager, Strategy and Operation – Technology,
Media and Telecom, KPMG Advisory Services
150 Tapping Into the Data
Axiata is embarking on a project to put its wealth of customer data to work.
By Karan Henrik Ponnudurai, Chief Innovation Officer, Axiata Digital
154 Contributor Companies
160 Acknowledgements
7. 1110 Mobile Operator Guide Innovation and Transformation
balancing between collaborating with
their partners-sometimes-competitors to
improve their position and at other times
flying solo to move to the front of the pack.
This guide will help everyone in the telecoms
ecosystem better understand the coming
mobile services from both a technical and
an industry perspective. You will get an
up-close-and-personal look at the innova-
tion and transformation that is happening
today among mobile operators, providers,
and their partners from an international
team of contributors.
Long Term Evolution: Ready for
4G and beyond
If you’re curious about LTE, read about this
“next big thing” from all sides; what it means
for consumers, operators, the ecosystem,
and technology in “The Many Facets of LTE.”
For an interesting overview of upcoming
services available through LTE read “IPX,
LTE, and RCS: The Trifecta for Mobile
Operator Success.”And to get a market
backdrop, Yankee analyst Rich Karpinski
weighs in on LTE in the Americas (“US LTE
Market Offers 4G Test Lab”), while KPMG’s
Sohag Sarkar brings an Asian perspective
to LTE (“Asian Giants Catching Up with
the Global LTE Leaders”).
Freedom to roam
New subscribers to LTE will move frequently
across networks. LTE roaming is a must-have,
and work is underway to make the service
seamless; Informa analyst Dimitris Mavrakis
tackles the global market (“LTE Roaming
Market Developments”), while StarHub’s
William Ku describes what is happening in
his own backyard (“LTE Roaming Grows in
Singapore”). And, take a practical, real-world
view in “Best Practices for LTE Roaming.”
Services with long-term appeal
LTE subscribers will expect familiar stand-
ards like voice and text as well as options
for video chat, location services, and
presence. Mavenir Systems' Sachin Bagul
looks at another service enabled by LTE,
VoLTE (“VoLTE and RCS: Network Evolution
and Services Revolution”), and the GSMA’s
Dan Warren adds his voice to its future
(“VoLTE: An Essential Part of Every Opera-
tor’s LTE Strategy”). New services such
as RCS promise to return to operators
revenues that over-the-top players have
been siphoning off. T-Mobile’s Adrian Synal
sees RCS gaining prominence over the
familiar SMS a few years out (“Move Over
SMS; Here Comes RCS”).
Get the benefits of membership
at the hub
Underpinning all these services is hubbing.
The GSMA’s Philippe Bellordre makes a
case for IPX hubbing in “The IPX: The Time
is Now.”We also look at successes hubs are
having with messaging in “Blurring the Lines
Between A2P and P2P Messaging.” Still
think hubs are onerous? In “Scam-Busters,”
Cloudmark’s Neil Cook describes how hubs
add a layer of protection that can help oper-
ators pursue and catch targeted phishing.
Analytics that influence
and motivate
Gathering consumer insight is always a con-
versation starter. Mobile operators have
access to an incredible amount of data. How
can the ecosystem leverage this information
in ways that appeal to consumers and main-
tain their privacy? Kantor’s Guy Rolfe takes
that topic on in“Maintaining Privacy in the
Age of Big Data.”As the rules around big data
are changing rapidly, Paul Berney of mCordis
offers an update on potential European
changes that could have global impacts.
As you can see, there’s something here for
everyone. We have a vibrant set of voices
in the telecom community with plenty of
opinions and ideas. If you have something
you want to add to the conversation, go to
http://bit.ly/1hry3fn
Enjoy.
Sethu M. is President of SAP Mobile
Services. With more than 25 years of
experience in enterprise system software
development and management, Sethu is
focused on finding opportunities that extend
customers’ strategic goals. His work with
customers includes providing technology
industry intelligence, managing business
services and IT assets, and leveraging tech-
nology trends and SAP’s new technologies
in big data, mobile, machine to machine,
information management, and social media.
8. 1312 Mobile Operator Guide Innovation and Transformation
Today’s digital ecosystem provides many
ways to make our lives easier. Whether it’s
getting directions from the latest smart-
phone or being able to use a mobile wallet,
things we could only imagine just a few
years ago are now possible.
This new digital world offers great opport-
unities for communications service provid-
ers, and a number of major operators
around the world have already created
separate entities focusing specifically on
digital services. AT&T Digital Life, Telefónica
Digital, and SingTel’s Group Digital Life are
just few examples of large industry players
that are actively looking for ways to grab
a bigger share of the digital pie.
However, to date, the most successful
digital services have come from non-
traditional players such as Google, Apple,
and Facebook, the so-called over-the-top
(OTT) providers that have been able
to quickly develop, release, and gain
broad adoption of new and interesting
services. By doing so, they have been
able to reinforce the image of telecom
companies as just a “dumb pipe” provider
with limited innovation power.
It is crucial for communications service
providers to dispel this notion in order
to establish themselves profitably as the
epicenter of the new digital economy. Here
are a few key areas where established com-
munications service providers can stake
their claim in the digital world:
Going over the top
Communications service providers have
had to deal with OTT players for several
years now – social media apps such as
Facebook, Instagram, and Twitter; commu-
nications upstarts such as WhatsApp, Viber,
Skype, and Snapchat; video alternatives
such as Netflix, Hulu, and YouTube (owned
Seizing Opportunities
in the Digital World
As communications service providers continue to face increased
competition, declining revenues, and margin pressure, they need
to turn to new ideas to help them achieve long-term success.
By Stephan Gatien, Global Head, Telecommunications Industry
Business Unit, SAP
PART 1:
INTRODUCTION
PART 1: INTRODUCTION
9. 1514 Mobile Operator Guide Innovation and Transformation
by Google). The OTT threat has been some-
thing to take seriously, diverting billions of
revenue from them in the recent years.
The very recent acquisitions of WhatsApp
and Viber (by Facebook and Rakuten respec-
tively) clearly demonstrate that the pressure
exerted by large OTT players will continue to
increase as consolidation takes place.
But telecoms operators are in a bit of a conun-
drum regarding these companies, which use
existing mobile infrastructure to get their
services to customers. Do they go head-to-
head against the OTT players, or do they
instead strike a“co-opetition”deal and work
alongside them to reap some of the benefits?
On the partnership side, communications
service providers may want to consider
agreements that complement their existing
offerings rather than those that involve com-
peting products. In return, operators can
consider opening their networks via APIs to
monetize their network and customer data.
Operators are also looking at launching their
own OTT services to secure additional revenue
streams. But due to the inroads already made
by established OTT players, getting these
services off the ground may be difficult. If they
are to succeed, operators should make sure to
differentiate their services and the value they
provide to the customer.
Aiming for the cloud
Another big opportunity to create new
revenue streams for communications
service providers is in the area of cloud
services. Over the past several years,
the telecoms industry has seen a number
of cloud-based acquisitions and partner-
ships; for example, NTT acquired Virtela
and RagingWire. Operators have also
been bolstering their portfolios by offering
enterprises services such asinfrastructure-
as-a-service (IaaS), platform-as-a-service
(PaaS), application hosting, data center
capabilities, and unified communications.A
case in point is Telefónica, which has launched
IaaS for mobile, enterprise, and M2M.
The cloud makes a lot of sense for telecom
operators, which will be able to fully leverage
the platform for seamless, integrated any-
time-and-anywhere services and content.
Looking forward, operators have the poten-
tial to evolve into cloud “rainmakers” due
to their perfect positioning to serve the
B2B cloud market, horizontally for specific
segments such as SMB, functionally with
dedicated functional services such as HR
or procurement, or vertically with cloud-
based industry specific scenarios.They are
also in a perfect position to enable B2B2C
scenarios. By extending their network
management capabilities into a cloud
management and delivery infrastructure,
service providers can establish themselves
as trusted partners for cloud services.
Making sense of big data
In a connected society, as the volume of
data being collected continues to grow
dramatically, gaining insight from this “big
data” represents a formidable opportunity
for communications service providers.
On one hand, this insight can have a direct
impact on the quality and level of personal-
ization of each customer experience. By
analyzing the services consumed by sub-
scribers, the network experience they get
while using the service, and the devices
they use to do so, service providers can learn
how to best interact with each customer and
how to tailor unique offers and activities
to each individual.
On the other hand, opportunities will
increasingly emerge to monetize the data
collected by service providers in domains
such as subscriber behavior, services
consumed, and geo-location activities.
Despite the sensitivity of some of this data,
it is widely believed that the data mone-
tization space can represent a significant
new revenue stream for telecoms opera-
tors. Initially, subscriber opt-in models or
anonymized and aggregated insight (for
example, by geo-location fence and time
slice) will likely represent the most effective
strategy for communications service pro-
viders to start their journey in this domain.
The center of the digital universe
Communications service providers have
a distinct advantage in the digital world.
Most of them have strong name recogn-
ition, are trusted partners, and hold close
relationships with their customers. But
to fend off advances by aggressive new
entrants or OTT players and reverse
the trend of declining revenues in their
10. 1716 Mobile Operator Guide Innovation and Transformation
The mobile sector has become the most
important global communications medium,
generating over 60% of global networking
revenues in 2013. Most importantly, mobile
technology and adoption is a dynamic
cultural and socio-economic phenomenon.
The proliferation of connected devices, in
part facilitated by the mobile infrastructure,
will transform all industries and human insti-
tutions for decades into the future. During
2014, key mobile themes will include the
continued adoption of mobile broadband,
the growth of connected devices in retail
and the automotive sector, and the strong
growth of enterprise mobility.
The mobile market continues its steady
growth, and IDC is projecting continued
annual growth in subscriptions of 6% over
the next five years. Global mobile subscrib-
ers will grow from 6.6 billion at the end of
2013 to 8.5 billion by the end of 2017.
This growth is driven by the increasingly
popularity of smartphones, which will
top one billion units shipped during 2013.
Smartphones comprised 55% of all mobile
phones shipped in 2013, and will continue
to increase their market share. Asia-Pacific
will continue its reign as the overall market
leader; sheer size, first-time user oppor-
tunity, ongoing replacements, and an
appetite for smartphones are the factors
driving volumes in this region. Europe,
the Middle East, and Africa (EMEA) will
follow next with just over a quarter of all
mobile phone shipments. Latin America
will extend its lead over North America in
2014, while North America will show flat
growth throughout the forecast period.
Broadband-capable devices will have a
tremendous impact on the overall mobile
ecosystem. This is evolving from the con-
sumer to the enterprise sector as well,
where a“mobile-first”strategy of deploying
mobile devices to the workforce is emerging.
3G phones will still represent the majority
of all mobile phones shipped until 2015,
but with more 4G networks going live, the
number of 4G mobile phones is expected
to grow 10 times faster than mobile devices
overall. Mobile operators are working fever-
ishly to keep up with demand of mobile data
traffic, which IDC estimates will grow nine-fold
over the next few years,from approximately
100 MB to 1 GB per month per subscriber by
Worldwide Mobile Overview Trends
The mobile themes for 2014 are the continued adoption of mobile
broadband, the growth of connected devices in retail and the
automotive sector, and the strong growth of enterprise mobility.
By Courtney Munroe, Group Vice President, Worldwide Telecommunications, IDC
PART 1: INTRODUCTION
core business of voice and messaging,
they need to think outside the box and
reinvent themselves.
The strategies outlined are just a few of
the options available to telecoms providers
to establish themselves at the center of the
digital world and to transform. The potential
rewards are huge but the risks of commoditi-
zation are real. It is time to be bold.
Stephan Gatien is Global Head of the
Telecommunications Business Unit at SAP.
In that capacity, he is responsible for the
vertical portfolio strategy in Telecommu-
nications, oversees related solution man-
agement activities, and leads the industry
go-to-market initiatives globally. He has
a broad background both in the commu-
nications industry, including assignments
for wireless carriers, and in SAP, including
assignments in Corporate Strategy, Sales,
Solution Management, and Operations.
Share your comments, thoughts,
and updates to this article — join the
conversation here: http://bit.ly/1iuPUAB
By analyzing the
services consumed by
subscribers, the network
experience they get while
using the service, and the
devices they use to do
so, service providers can
learn how to best interact
with each customer and
how to tailor unique
offers and activities to
each individual.
11. 1918 Mobile Operator Guide Innovation and Transformation
2015.According to the Global Mobile Suppliers
Association (GSA),as ofJanuary 2013 there
were a total of 145 LTE networks operating
in 66 countries. This is expected to grow to
over 200 networks commercially launched
in 75 countries by the end of 2013.
TV everywhere: The impact of video
The ongoing strong global demand for
smartphones and media tablets continues
to grow the addressable market for mobile
and multiscreen video services, and con-
sumers adopting these devices have been
increasingly using them to access video
content both streamed and downloaded
from the internet. Consumer video services
continue to evolve beyond traditional con-
sumption platforms. In China, more than
30% of users consume more content online
than over broadcast networks. Online, or
over-the-top (OTT), services have moved
well beyond the PC as smartphones and
tablets reshape the consumer internet.
At the same time, multichannel pay TV
services, previously tethered to the tele-
vision typically via a set-top box, are now
moving toward PC, smartphone, and tablet
distribution as part of TV Everywhere (TVE)
strategies. On a global level, by the end of
2012 over 180 million mobile phone and
tablet owners used their devices on at least
a monthly basis to stream TV shows and
movies. Viewers of downloaded TV shows
and movies topped 94.2 million smart-
phone and 35.7 million tablet users.These
numbers will continue to grow as more
operators implement Rich Communications
Services (RCS).
Big data and business analytics have been
adopted by many mobile operators to help
them clarify a diverse list of issues. These
include internal issues such as network
performance and customer experience,
as well as external, customer-facing issues
such as transforming call detail record
(CDR) and end-usage patterns into new
revenue-generating services. Operators
have a wealth of data available at their
disposal, including CDRs, transactions,
customer correspondences, and GPS and
Wi-Fi usage data. Another major source of
data that is being actively mined is social
media, such as Twitter and Facebook.
Early adopters include Telefónica Digital,
which has introduced Smart Steps, a
product that leverages anonymized and
aggregated mobile network data to
provide extrapolated demographic data
which can then be sold to enterprises and
government agencies. Verizon Mobile’s
Precision Market Insights also leverages
anonymized mobile data to help the retail
sector refine its marketing strategies.
During 2014 the Internet of Things will
have a profound impact on the mobile eco-
system. Several verticals will lead this revo-
lution, including connected automobiles and
consumer wearables and the connection
of smart cities. IDC is projecting, by 2020,
a market of 30 billion connected devices
which will in turn spawn a rich market of
supporting devices, applications, connect-
ivity, and IT support services.
Mobility in the enterprise segment will
continue to evolve during 2014.“Bring
your own device” (BYOD) will give way to a
more manageable “choose your own device”
(CYOD) from a restricted pool of corporate
supported devices. As the mobile-first
strategy gains momentum in the enterprise
segment, an integrated approach to manag-
ing mobile devices and applications will be
important to companies. While the initial
customer hook may be around a point
solution, the core components of mobile
enterprise software – security, manage-
ment, and apps / app development – are
rapidly converging, and as the enterprise
mobility market matures customers are
going to be looking for companies that
can provide them with a solution-oriented
approach. Most importantly, mobility will be
an integral aspect of Enterprise IT, one that
shares the same roadmap as cloud and
network and infrastructure.
Courtney Munroe manages global telecom-
munications research at IDC. This includes
end-user consumer and enterprise demand-
side trends, as well as CSP strategies and
transformation. He has more than 20 years’
experience as an industry analyst and con-
sultant, and is a frequent speaker at industry
events around the world.Twitter: @ccmunroe
Share your comments, thoughts,
and updates to this article — join the
conversation on SAP Mobile Services
community here: http://bit.ly/1d6eGYu
12. 2120 Mobile Operator Guide Innovation and Transformation
LTE, short for Long Term Evolution, is the
next big thing. It’s a part of 4G, the fourth
generation of mobile technology. Carriers
around the world have upgraded – or are in
the process of upgrading – their networks
to the new technology.
In many ways it could not have come at
a more appropriate point in time. Develop-
ed markets are at saturation point, with
100%–plus market penetration rates, and
operators facing both price erosion and
competition from new non-telco entrants
into the mobile ecosystem. Against this
background, current networks are at times
overloaded for voice and data services as
available capacity is taken up by increased
use of smartphones and apps. And finally,
in highly regulated markets (such as the EU)
new pricing pressures are put on many
services and in particular on reducing
the costs for roamers.
While some past technologies have seemed
to be answers to questions no one is asking,
it seems that LTE is the answer (nearly) to
all of these challenges.
The consumer side
For consumers there are many clear
advantages to moving to these new 4G/
LTE networks.
They will be able to stream music and
video, upload, download, and essentially
do anything on the Web using mobile
devices almost as fast as if they were at
home on a (fixed) broadband connection.
PART 2: 2014 Themes
The Many Facets of LTE
LTE/4G is set to make a much bigger impact than 3G
did. Consumers want next-generation services, devices
are ready, and operators will gain many new benefits by
moving to this next mobile standard.
By Diarmuid Mallon, Director, Global Marketing Solutions
and Programs, Mobile, SAP
PART 2:
2014 THEMES
Developed markets are at saturation point, with
100%-plus market penetration rates, and operators
facing both price erosion and competition from new
non-telco entrants into the mobile ecosystem.
13. 2322 Mobile Operator Guide Innovation and Transformation
This standard, unlike previous ones, is not
just focused on improving download speed,
but has been designed to improve upload
speed too. It supports a theoretical peak
upload limit of 50 Mbps, orders of magni-
tude faster than what you get from 3G.
LTE’s faster potential upload and download
speed (100 Mbps or more), in turn, will give
application developers more options for
creating better user experiences on mobile
for gaming, banking, socializing, shopping,
watching videos, and more via the Web or
apps. So in the future, when you use mobile
banking you will be able to have a live video
chat with an advisor about which loan is
best for you, or doctors will be able to use
telepresence on their mobile to provide con-
sultations to patients anywhere on the globe.
How will LTE change the oldest telephony
service: voice? With 3G, voice calls over
a mobile phone are circuit switched,
which means there is a dedicated circuit-
to-voice session. So, even when you’re not
talking the resources are dedicated to your
conversation, eating up limited bandwidth
and increasing the chance that the network
will run out of capacity. If you’ve ever tried to
make a call in a crowded space like a music
festival,where too many people have to share
the available bandwidth, then you know
the pain of not being able to make a call.
LTE, on the other hand, supports packet
voice (Voice over LTE, or VoLTE). This
is a fundamental shift, and will improve
network capacity because operators can
share packet voice links between many
communication sessions and conversa-
tions. At a crowded music festival, LTE
can shuffle and re-allocate bandwidth in
real time between many different callers.
In effect, the pregnant pause in your con-
versation doesn’t waste bandwidth.
The operator’s side
From the operator perspective, LTE has a
number of other advantages, most notably
speed and efficiency. 4G will change both
the radio interface and the core network
that operators currently use for their 3G
networks. LTE is an all-IP network, similar
to the internet but with better reliability
and quality of service. It improves call
set-up time. It has a higher data-carrying
capacity and a higher spectral efficiency.
It also lowers the cost-per-bit for operators.
LTE is important for operators for two
main reasons then. First, it will increase
the efficiency of their entire network.
Second, it will make their operations
easier and less expensive to manage.
Greater interoperability
LTE changes the telecoms ecosystem on
two more abstract levels that will affect the
dynamics of the industry. First, LTE is the
new common standard for further evolution
of competing groups of telecom technolo-
gies such as GSM and CDMA. Verizon is
a CDMA operator and AT&T is GSM, so in
the new LTE world these two operators will
be operating on the same technological
standard. Even non-3GPP access technolo-
gies such as Wi-Fi complement LTE through
Hotspot 2.0 air interface, and these can be
imagined to interwork with LTE to enable
seamless data access for the customer.
And second, in the LTE world operators will
have to rely more on competitor networks
to enable efficient roaming.
Smarter roaming
Just as subscribers expect their data ser-
vice to be available when they roam, they
will expect the same for new 4G services.
With current networks, roaming is (basic-
ally) limited to just three elements: voice,
messaging, and data. How each of them is
handled is independent, and often in what
looks to be a fairly arcane manner. If you
told two tourists on vacation that when
they text each other, even when they’re
sat next to each other, their text messages
traveled all the way back to the home
country before being sent, or the even
(potentially) longer route mobile data goes,
then they would be amazed. LTE enables
If you told two tourists on vacation that when they
text each other, even when they’re sat next to each
other, their text messages traveled all the way back
to the home country before being sent, or the even
(potentially) longer route mobile data goes, then
they would be amazed.
14. 2524 Mobile Operator Guide Innovation and Transformation
operators to rely more on visited networks
to enable efficient roaming.
Operators will be able to offload roaming
traffic to local operators rather than carry it
around the globe. However, that can only work
if there are systems supporting local offload
and, more importantly, there is a higher level
of trust and co-operation among operators.
With the increase of subscriber-facing
services, we really need to think about
service-based roaming. When you roam,
video (sharing), location, presence, IM,
and HD voice will now be available, in
addition to voice, messaging, and data.
Simplifying infrastructure
The traditional approach to adding a new
service to a mobile network was to purchase
a new network element and install it in your
switch. While this approach was great for
core services, there were challenges when
it came to services whose demand was hard
to predict, and it of course required opera-
tors to keep making capital expenditure.
Now with LTE (and new infrastructure
such as the IPX), there is the opportunity
to simplify the network.
Moving to an all-IP network enables opera-
tors to create architecturally flat networks,
with few network elements in the call (sorry,
data) path, which reduces cost, decreases
latency, and improves reliability.
Operators will also be able to move services
completely out of their networks, as the new
architectures support cloud-based services.
Moving services outside the cloud started
with services such as SMS hubbing, but now
the entire service can move away from the
operators’ switch to the cloud.
Rich Communications Services (RCS)
looks to be one of the first of the services
that operators will deploy, but more will
come. While operator services will be the
first to go this way, the IPX enables services
for enterprises such as video streaming to
move also to the (telco) cloud.
New services
New services such as RCS have already got-
ten a fair amount of coverage, but LTE has
provision for other new services. One of the
more interesting of these is LTE Broadcast.
Cell congestion is always a challenge, and
particularly at large sporting events or
concerts where you have a large number
of people concentrated in a relatively small
area. Temporary cells and even blocking
certain sites or streaming are all approaches
operators take to help maintain service.
LTE Broadcast enables operators to broad-
cast, much like traditional TV services, to
alldeviceswithacell.Now,ratherthanworry-
ing about bandwidth issues, subscribers in
the stadium could be offered camera feeds,
play guides, or even “referee cam” direct
to their phone.
Prime time for 4G
LTE/4G is set to make a greater impact
that any of the previous generational leaps
managed. With the previous jumps, either
the technology or the consumer was not
ready, and so a hard sell was needed.
2.5G came with neither the right devices
nor the actual capabilities to match the
hype. Similarly, 3G was launched ahead
of devices needed to make it a success
and (to the consumer) seemed fixated
on services that were of limited interest.
But LTE/4G is different. Consumers
(and many smartphones) are looking for
network capabilities way ahead of what
current net-works can deliver; moving
to an all-IP network finally enables
operators to simplify networks and not
add incremental complexity. Finally, the
technology will enable operators to create
new services to meet consumer demand
and regulatory requirements.
Diarmuid Mallon is Director for Global
Marketing Solutions and Programs at
SAP. This encompasses all mobile-related
products and solutions from SAP, including
the Mobile Services division. He has worked
in mobile messaging for more than 18 years,
in a wide range of roles from business
development to product evangelism.
Follow him on twitter @diarmuidmallon
and read his blog: www.zdnet.com/
topic-ubermobile
Share your comments, thoughts,
and updates to this article — join the
conversation on SAP Mobile Services
community here: http://bit.ly/1nxaOnv
Consumers (and many smartphones) are looking for network
capabilities way ahead of what current networks can deliver;
moving to an all-IP network finally enables operators to
simplify networks and not add incremental complexity.
15. 2726 Mobile Operator Guide Innovation and Transformation
Being a traditional mobile operator hasn’t
been easy during the last decade. While
smartphone and mobile app sales continue
to rise, mobile operators have seen voice
and SMS revenues decline. Subscribers are
moving to an all-data model for services and
content. Add to the mix over-the-top (OTT)
players, whose voice and video apps bypass
the traditional wireless networks, and you
can see why operators’ existing business
models are suffering. Thus, as communica-
tions habits change, operators are respond-
ing with new business models and strategies
to win back subscribers and add revenue.
Getting on board with the IPX
As the mobile industry enters this new
phase of all data packet networks, launch-
ing LTE services in their home country,
mobile operators are migrating both tra-
ditional (that is, voice) services and new
data services to all data packet networks.
For international connectivity, IPX
networks are facilitating this migration.
Navigating Complexity: The Quest for True
IPX,1
a survey of 170 respondents employed
in the wireless, wireline, integrated, wholesale,
and other telecom sectors, and released by
Telecom Asia / TelecomsEMEA in October
2013, found that just over half (55%) have
connected to an IPX network. Of those,
almost 80% have deployed Voice over IPX,
and almost half have deployed other services
such as SMS and video (fig. 1). Looking at
the respondents who said they had not con-
nected to any IPX network yet, only 12% had
immediate plans to do so, while almost half
(48%) were looking at 1-3 years down the
road and the rest either 4-5 years in the
future (15%) or never (25%).
Unfortunately, the IPX still causes a lot of
confusion in the industry, and it is often
defined depending on whether you’re
coming from the data side or the voice side.
But no matter your position, IPX networks –
the ability to run multiple services over
a single IP connection in a highly secure
environment – have matured to wide-
scale adoption. Among the many services
The IPX, LTE, and RCS: The Trifecta
for Mobile Operator Success
Mobile operators are poised to take on the OTTs
through next-generation data services.
By Matthew Tonkin, Vice President Sales, SAP Mobile Services
Have you connected to an IPX network?
Figure 1. More than half of survey respondents said they have connected to an IPX, and of those a vast majority have
launched Voice over IPX, with SMS and video also proving popular.
Based on data from Telecom Asia / TelecomsEMEA.
FOOTNOTEs
1. John C. Tanner and Michael Carroll, Navigating Complexity: The Quest for True IPX,
Telecom Asia / TelecomsEMEA (October 2013): http://www.fiercewireless.com/europe/
story/navigating-complexity-quest-true-ipx
PART 2: 2014 Themes
This year 1-3 years
4-5 years Never
If no, when do you plan to
connect through IPX?
If yes, what services have you
deployed through the IPX?
12%
55.6% 44.4%
X√
14.8%
28.4%
Diameter
79.5%
Voice
Fraud
Detection45.5%
SMS
42%
Video
40.9%
GRX
22.7%
M2M
35.2%
SIGTRAN
48%
15% 25%
16. 2928 Mobile Operator Guide Innovation and Transformation
supported across the IPX, LTE roaming
has been a key driver towards adoption.
LTE lights the way for
next-gen data services
LTE deployments are starting to proliferate
globally. The past 18 months have been
extremely active for LTE network deploy-
ments in Asia and the United States, with
operators in many countries taking their
networks live. The Middle East has been
seeing deployments for about the past 9-12
months, and there will be LTE launches in the
Europe and Latin America throughout 2014.
While most operators focus to launch their
domestic LTE rollouts first, they are also
looking toward roaming as a critical piece
of the high-speed data puzzle. About one-
third of the respondents to the Telecom
Asia / TelecomsEMEA survey said they
could offer LTE roaming at launch.Almost
one-quarter said they would be able to offer
it within a year of launching LTE, and 10%
said it would take them over a year to
get to that point (fig. 2).
Just as with voice roaming, data roaming
over LTE promises to be a revenue generat-
ing opportunity for mobile operators, but
it’s not without its challenges. Operators –
preferably upon launch – need to have
partners in place in selected countries.
Rather than taking a blanket approach, they
should strategically focus on countries and
network affiliates that will help them
get immediate returns.
LTE roaming is still in its early stages, and it
is inconsistent across regions. For example,
LTE operates at different frequencies in
different parts of the world. In the United
States, it runs in the 700-800 MHz range,
while in Europe and Asia LTE operates at
1800-2600 MHz. For roaming to be effective,
networks need to be able to work on the
New revenue stream
69.5%
Figure 3. Rich Communications Services is being viewed by a majority of operators as a way to generate additional revenue,
with some also seeing it as a key competitive advantage.
Based on data from Telecom Asia / TelecomsEMEA.
What do you see as the main driver for RCS?
Other
1.5%
Fight off OTT
29%
Figure 2. As LTE roaming becomes an important revenue source, more than half of survey respondents said they would
offer roaming either at the same time as their commercial LTE launch or within one year.
Based on data from Telecom Asia / TelecomsEMEA.
Once you deploy LTE, when will you offer LTE roaming?
Not applicableAfter one year
of launch of LTE
Within one year
of launch of LTE
Commerically ready
and can offer from
the start
34% 23% 10% 33%
17. 3130 Mobile Operator Guide Innovation and Transformation
same frequency. Thankfully, handset manu-
facturers have developed devices that work
across multiple frequencies, helping LTE
to reach across borders and networks.
Banking on RCS
Once operators have built out their LTE net-
works and formed partnerships for roaming,
the next step is to leverage the high-speed
capabilities with next-generation services.
Rich Communications Services (RCS)
enables operators to deliver new services,
and new revenues, through the offering of
OTT-like services to their subscribers.
In the Telecom Asia / TelecomsEMEA survey,
almost 70% of respondents viewed creating
new revenue streams as the main driver of
implementing RCS, while about 30% viewed
fighting off OTT as the main driver (fig. 3).
WhatsApp, Viber, and Skype are a handful of
the free OTT apps that enable voice, video,
and instant messaging without traversing
the traditional mobile network. Mobile
operators find themselves at crossroads
where they have to choose between partner-
ing with OTTs and competing against them.
For now, they will likely do both, and the
challenge is to build a compelling business
case to invest in RCS.
Even if operators develop services that are
similar to what the OTTs are offering, why
should consumers give up their free apps
to pay for a similar service from operators?
Actually, operators can make a strong case
to their subscribers. OTT apps generally
require that each party download the app
in order for a call or text to be sent between
them – each app is essentially a disparate
island that doesn’t interconnect. A carrier’s
RCS service, on the other hand, being
standards-based, would work across differ-
ent handsets and networks. The GSMA has
released joyn, an RCS technical standard
that simplifies real-time data communica-
tions through mobile devices. More than a
dozen operators around the world and lead-
ing handset manufacturers support joyn.
Another advantage for operators is the
billing and customer service relationship
they have with their customers. With this
key relationship with their subscribers,
operators have the opportunity to price
a small premium for RCS services.
RCS is still in its very early days, but opera-
tors and regions are aggressively pursuing
deployments. The US and North Asian
(Korea, Japan) markets are stepping up
to take the lead, with operators already
offering commercial services.
The proliferation of faster networks, the
availability of advanced handsets, and the
development and rollout of new services
will enable mobile operators to recapture
the leadership position in the digital world.
Matthew Tonkin is Vice President for
Asia-Pacific, including Japan, and Global
Head of IPX Business for SAP Mobile
Services, a division of SAP. He oversees
the company’s global GRX/IPX/LTE
Roaming business and helps drive pipe-
lines and revenues with local teams in
every region. In addition to his global
IPX role, in Asia Matthew is responsible
for managing and driving the company’s
growth, market leadership, product
definition, and geographical expansion
in both Enterprise Services and Mobile
Operator Services businesses across
the region, through a combination of
direct sales and a partner and alliances
sales network.
Share your comments, thoughts,
and updates to this article — join the
conversation on SAP Mobile Services
community here: http://bit.ly/1iUfwd2
Mobile operators find themselves
at a crossroads where they have
to choose between partnering with
OTTs and competing against them.
18. 3332 Mobile Operator Guide Innovation and Transformation
SMS hubbing made its debut in the early
2000s. InphoMatch, one of the companies
that eventually constituted SAP Mobile
Services, first launched SMS hubbing in 2001.
Around the same time, across the Atlantic,
an independent small startup called Nilcom
(likewise a predecessor to today’s SAP Mobile
Services) launched a different flavor of hubb-
ing. The core concept was that mobile net-
work operators (MNOs) would make a single
connection and extend their reach to many
other operators. That helped give rise to the
texting revolution, not only in the Americas,
where previously there had been no bi-lateral
SMS interoperability, but globally as well,
through bi-lateral connections where MNOs
connected directly to one another as well
as to hubs.
Today, a global network of hub providers
enables SMS interoperability/interwork-
ing throughout the world, making SMS the
most ubiquitous person-to-person (P2P)
non-verbal communications medium in the
history of mankind.Additionally, over the
last 10 years, a robust application-to-person
(A2P) ecosystem has emerged.Traditionally,
this has been through the use of common
short codes within a national or regional
marketplace; however, standard telephone
numbers are also used by the application,
or enterprise, side of the equation. Like the
P2P world, there are also A2P hubs, typically
called aggregators.A2P aggregators provide
a connection to the application server on one
side and a“reach”to multiple MNOs on the
other, through both short codes and standard
telephone numbers (a.k.a. long codes).
Portio Research notes: “At the end of 2012,
83% of worldwide SMS traffic was P2P
messaging, and A2P/P2A traffic made up
the remaining 17%. With the increasing
focus on mobile banking, mobile payments
and mobile health, etc ... , we believe that
contribution of the A2P/P2A category will
increase over the next five years. According
to our forecasts, close to a quarter of total
text messages will either originate from or
terminate at an application server by the
end of 2017.”1
A2P (including, occasionally, P2A) messag-
ing is a huge business. Portio Research est-
imates that A2P messaging will grow at a
compound annual growth rate of 3.9% and
the revenue for A2P messaging will continue
to grow (fig. 1).2
A2P messaging is certainly
an area where the pure over-the-top (OTT)
messaging plays have not made any inroads
– you don’t see WhatsApp or Line users
texting to a short code, and likely won’t any-
time soon. Portio notes: “MNOs are now
banking on the P2A/A2P SMS segment
to increase their messaging revenue and
are thus aggressively promoting services
such as mobile banking, social network-
ing, voting, ticketing, coupons, quizzes,
mobile payments, and SMS marketing.”
While P2P messaging gets fragmented
and cannibalized by various OTT service
providers, it is the A2P capabilities provided
by standards-based SMS that will help
0
10
20
30
40
50
60
Year
2010
F – Forecasted
Figure 1. A2P messaging will grow at a compound annual growth rate of 3.9% and the revenue for A2P messaging
will continue to grow.
Based on data from Portio Research Ltd.
2011 2012 2013F 2014F 2015F 2016F 2017F
SMSrevenue
(inUSDbillion)
P2A and A2P SMS revenue - worldwide
In USD billion, 2010-2017F
53.553.752.7
50.4
48.2
44.3
33.6
39.8
Blurring the Lines Between
A2P and P2P Messaging
SMS hubbing is evolving, and messaging capabilities
and subscriber messaging plans will need to adapt.
By William Dudley, Group Director, Mobile Evangelist and
Global Solutions, SAP Mobile Services
FOOTNOTEs
1. Mobile Messaging Futures 2013-2017 (Portio Research, July 2013), 45: http://www.portiore
search.com/en/major-reports/current-portfolio/mobile-messaging-futures-2013-2017.aspx
FOOTNOTEs
2. Mobile Messaging Futures 2013-2017 (Portio Research, July 2013), 45: http://www.portiore
search.com/en/major-reports/current-portfolio/mobile-messaging-futures-2013-2017.aspx
PART 2: 2014 Themes
19. 3534 Mobile Operator Guide Innovation and Transformation
in some markets, such as the United States
and Canada, OTT players that fully interop-
erate with SMS and use traditional tele-
phone numbers could potentially be part
of similar payment schemes.
The bottom line is that services like these –
especially those that require or promote the
exchange of value or payments, whether in
real or virtual currency – can be delivered
using simple SMS with a variety of security
mechanisms, often using the existing mes-
saging infrastructure, in particular A2P (and
to an extent P2P) hubs. While there certainly
will be some back-end requirements, such
as linking telephone numbers to accounts
(whether banking, payment, credit card,
or some other type of account), the ability
to then leverage a well-known and uni-
versal medium is paramount. This type of
service shows that a subscriber’s telephone
number can become a highly valuable proxy
for a variety of services.
Today’s messaging hubs are not like the
hubs of old. A2P hubs are evolving, incor-
porating multiple channels including SMS,
MMS, and Push notifications, and will
certainly incorporate Rich Communications
Services (RCS) capabilities as that standard
becomes ubiquitous. Additionally, P2P
messaging is expanding beyond simply
connecting MNOs to including innova-
tive OTT service providers – those offering
cloud-based, multi-device services that
also interwork with SMS and MMS and now
landline and toll-free numbers. The latter
category opens up vast new capabilities and
tens of millions of additional destinations
and enables new business models. Imagine
people being able to call or text a well-
known vanity toll-free number to engage
with a brand – a brand that might have sig-
nificant equity in a vanity toll-free number
that is now fully messaging-enabled.4
This is becoming a reality today, and will
become more commonplace in 2014 and
beyond in the US and Canadian markets.
In the United States, toll-free numbers
and landlines are increasingly becoming
SMS-enabled. That means that subscribers
can initiate texts to businesses and brands
in a P2P style. One interesting example
keep SMS very relevant for a long time and
potentially backfire on the OTTs. One of
the reasons is that mobile messaging, in
its various forms, is one of the several key
mobile engagement strategies that enter-
prises and brands can use to keep consum-
ers and employees engaged and connected.
An innovative example of A2P messaging
originated in the United Kingdom in January
2013, as announced by BBC News with
the headline: “Payments by text message
service to launch in UK in spring 2014.”3
This story is fascinating, though not to the
extent that UK payments will be made by
text message, as this has been done for
years in various other markets such as
Kenya. (Nowadays one can also send money
via smartphones, using apps.) No, what is
fascinating is that text messaging is once
again the bearer of this payment information.
What this really means is that the banks
involved (the BBC story lists eight), which
cover 90% of account holders in the United
Kingdom, specifically want to use not
another app or an OTT app, but SMS, the
most ubiquitous and far-reaching text-
based communications medium ever.
The SMS payment scheme is very well
thought out by the UK Payments Council;
in this implementation, the subscriber’s
mobile phone number becomes a proxy
for their bank account information.
UK mobile operators must be welcoming
this development with open arms, because
out goes another reason for subscribers to
migrate their texting to a non-SMS-capable,
OTT service such as WhatsApp, which has
caused SMS traffic drops in many markets.
The scheme is a rich testament to the
stability and ubiquity of SMS. Additionally,
Mobile operators must adapt their subscriber
messaging plans to include geographic, IP, landline,
and toll-free numbers just as they do traditional
mobile numbers.
FOOTNOTEs
3. "Payments by text message service to launch in UK in Spring 2014," BBC News
(15 January 2013): http://www.bbc.co.uk/news/technology-21032503
FOOTNOTEs
4. We start to use the term “messaging-enabled” as a generic description for SMS/MMS/RCS
messaging or telecom-standards-based messaging. Today, users (or “subscribers,” as we like
to call them) do not differentiate: they will send/receive media at will, whether it is text, images,
or video. Note that many just say,“Text me that picture.”
20. 3736 Mobile Operator Guide Innovation and Transformation
bank-account proxy or supporting subscrib-
ers texting to well-known vanity toll-free
numbers, this helps keep the subscriber
engaged with the mobile operator. Then
the MNOs can ease in all of the new
cloud-texting and RCS-based solutions
that will wow their subscribers. Do that,
and they’ll have a much better chance of
bringing back the messaging subscriber.
William Dudley has almost 30 years of
experience building and managing tele-
communications network infrastructure.
He defines SAP Mobile Services’ global
solutions strategy within the mobile eco-
system, focusing on solutions for mes-
saging, next-generation networks (LTE,
IPX), and mobile consumer engagement.
As mobile evangelist, he communicates
through both internal and external public-
ations and is active in industry groups. His
blog can be found at: http://scn.sap.com/
people/william.dudley/content
Share your comments, thoughts,
and updates to this article — join the
conversation on SAP Mobile Services
community here: http://bit.ly/1g2kUIZ
is that many public safety agencies have
begun to SMS-enable their non-emergency
numbers. Subscribers can then send tips
and information to local police departments,
and typically a dispatcher will respond back
personally to further engage the subscriber.
Additionally, some public service agencies
will include an auto-responder message
back to the sender, stating that a dispatcher
will get back to them (as sometimes dis-
patchers are busy with more pressing,
emergency matters).
Herein, then, is where we see the “blurring”
between A2P and P2P. Traditional A2P has
it that one side of the messaging commu-
nications is not an individual person, but a
business – an enterprise or brand or even a
public agency. Traditional P2P was supposed
to be two individual subscribers texting
with one another. But the P2P of today and
tomorrow will be individuals reaching out
to brands and businesses by texting to their
well-known landlines – customer support
numbers or ordering numbers, for example
– which were traditionally voice-only. The
responses will be both automated and
human-generated and may include rich
media. Further engagement must seam-
lessly switch to other mobile engagement
methods including rich media, coupons, and
payment arrangements that could be more
“A2P” in nature. In these models, a messag-
ing hub’s importance is paramount. Whether
the subscriber uses an MNO service, an
MNO’s cloud service, an RCS chat via text,
or multimedia, the messaging hub environ-
ment should be able to deliver, transcode,
and route that traffic using the appropriate
protocols and capabilities for the traffic to
reach its intended destination. Messaging
hubs in this new environment must provide
intelligent solutions engagement to enable
this new world of connectivity.
Additionally, as what we call traditional P2P
and A2P messaging evolve, mobile opera-
tors must adapt their subscriber messaging
plans to include geographic, IP, landline, and
toll-free numbers just as they do traditional
mobile numbers. That way, their subscribers
will have full access to an amazing array of
new “text-enabled” or “messaging-enabled”
services that the OTT players (who have
cannibalized MNOs’ existing messaging
traffic and revenues) aren’t able to provide.
By simply supporting millions of additional,
simple SMS destinations, they take away
one more incentive for a subscriber to forget
SMS and move all their communications
to pure OTT. Whether through supporting
payment options with a phone number as a
Messaging hubs in
this new environment
must provide intelligent
engagement solutions
to enable this new
world of connectivity.
21. 3938 Mobile Operator Guide Innovation and Transformation
PART 2: 2014 Themes
The term “big data” has been hanging over
mobile operators for the past several years
as their networks collect huge amounts of
customer data and other information. While
the concept of big data is nothing new, oper-
ators are now at the point where they realize
its value and that now is the time to take
an active role in managing and analyzing it.
Big data has been a sort of dark asset for
operators because they have been unable
to unlock the hidden value of the data and
turn it into a revenue stream. But they know
the data isn’t going away, so the present
challenge is how can they turn their big
data into a viable and lucrative business.
Overcoming big-data pain points
To get to the point of monetizing the
big-data opportunity, mobile operators
have to clear several hurdles that are
slowing their progress:
• Data size and volume. Compared to a
year or two ago, operators are dealing
with 10 times the amount of data on
mobile-user activity, and that’s continuing
to increase. With such a massive amount
of data, they will need a database system
to store and organize it and to run analy-
tics against. The sheer volume makes
these tasks a challenge.
• Accessing the data. The data is stored
in numerous silos across the operator’s
infrastructure – customer relationship
management data in one location, call
records in another, billing somewhere
else, and so on. It isn’t uncommon to
find data locked in 16 or more data-
bases within a single mobile operator.
• Analyzing the data. To make sense of
the raw data coming in at a steady clip,
operators need to analyze it.The process
could be as simple as auto-correcting
for age and gender, since many custom-
ers have family, corporate, or prepaid plans
where it might be difficult to know exactly
who is doing what. Demographic inform-
ation combined with a user’s usage
history–through the use of predictive
analytics– can give an operator a good
idea of likely areas of interest, such as if
that user might be receptive to new offer-
ings based on fashion, sports, or cars. This
type of data can be extremely valuable
to marketing agencies and brands.
• Analyzing “on the fly.” Operators
need to be able to conduct data analyt-
ics quickly so that clients asking for data
insights don’t have to wait days or weeks
for a report to be generated. If clients have
to wait, then the information may not be
as valuable or relevant as it might have
been when the data was first requested.
• Sales expertise. On the business side,
operators realize that while their sales
divisions may have the expertise to sell
mobile communications services, they
don’t necessarily have the skillset or
connections to sell business or market-
ing services, which is how data presents
itself to end users. Having sufficient
breadth and depth of sales coverage
will be critical to monetizing big data.
• Data protection and privacy. This
issue is of the utmost importance when
it comes to big data. Mobile operators
must figure out how to monetize their
data in such a way that they are comply-
ing with privacy regulations and safe-
guarding their customers’ information
Deriving Value from Big Data
The amount of data being collected by mobile operators
is accumulating fast. Operators now need to realize the
full value of this store of information and start monetizing it.
By Kevin Outcalt, Vice President, Mobile Analytics and Consumer Insight,
SAP Mobile Services
Big data has been a
sort of dark asset for
operators because they
have been unable to
unlock the hidden value
of the data and turn it
into a revenue stream.
22. 4140 Mobile Operator Guide Innovation and Transformation
while protecting their own brands.
The last thing they want is to be at the
center of a massive data breach or for
the service to negatively affect their
customers or their own reputations.
Taking big data to the next level
Mobile operators clearly desire to monetize
and get value from their big data, but as yet
not a lot of them are doing this on a large
scale. In 2013, we saw a shift toward external
monetization of big data by a majority of
operators. Prior to that they had been lever-
aging this information internally, in order to
better serve their own customers in areas
such as lowering churn, fraud reduction,
and upselling new products and services.
Today, most of these external uses of big
data tend to be one-off projects that require
the operator to put in a lot of time and effort
to gather and analyze the requested data.
The next step is to replicate that process
in an automated manner, so clients can
get the data whenever they need it. Retail,
consumer goods, and other industries are
already taking advantage of mobile operator
customer data; logistics and transportation,
finance, and government agencies could
also greatly benefit from big data.
Operators will need to make some up-
front investments to launch these services.
Since they are pulling and collating inform-
ation from a number of databases to get
the complete picture, some operators are
relying on a mediation layer to extract
information – demographics, radio network
details, call detail records, and more – and
put it in a standard format amenable to
database queries. Without this mediation
layer, it’s very difficult to offer big data as
a service to customers.
Data as a revenue stream
The good news is that big data provides
tremendous internal value. Operators are
justifying the business case for investing
in additional software and solutions to help
internal teams pull and analyze the inform-
ation. Once these internal systems are in
place, it’s not a big leap to leverage the data
to create new client offerings for external
revenue generation.
Due to the extensive requirement for
database servers, software licenses, IT
expertise, and processing and storage
capacity, some operators are looking to
cloud-based services to lighten the finan-
cial burden. In this scenario, a cloud
provider receives data from the operator
and provides the technology in the cloud,
lessening the operator’s upfront cost. It’s
a good way to drive new revenue streams
without a huge capital cost and ongoing
expenses, especially when you consider that
all of this big data isn’t just sitting in one
place, but rather is widely dispersed across
numerous systems within the network. This
entire undertaking – from collecting data
to storing and processing it – amounts to
a big investment for mobile operators.
Down the road, once operators have the
process of gathering and making sense of
their big data running smoothly, they can
take the next step and provide a full service
to their customers. Services might include
ad placement or tracking based on data
results – operators would function as a
service bureau giving companies a one-
stop shop for data, plus actionable services
based on it.
Valuable space
“Big data” may still sound daunting to
a lot of operators, but the vast majority
of them are quickly getting on board due
to the many benefits and value that it
can bring. These operators want both to
internally improve their businesses and,
potentially, to provide data-derived services
to external partners. The data isn’t going
away – by leveraging it and hopefully
making some money from it, operators
can realize big advantages from what
otherwise would simply be taking up space.
Kevin Outcalt has over 20 years’experience
with telecoms and information technology
companies, ranging from AT&T to Cisco
Systems and SAP, where he has held
positions primarily in telecom product
and solution development, management,
and marketing.
Share your comments, thoughts,
and updates to this article — join the
conversation on SAP Mobile Services
community here: http://bit.ly/1cPHJz0
Down the road, once operators have the process of gathering
and making sense of their big data running smoothly, they can
take the next step and provide a full service to their customers.
23. 4342 Mobile Operator Guide Innovation and Transformation
Communications has helped bring the world
together. Even as the world seems to be
getting smaller, thanks to communications
tools and technologies, when it comes to the
mobile industry, different regions still have
their own characteristics.
EMEA– Europe, the Middle East, and Africa–
is a designation that’s often seen in the
business world to group the many countries
across this wide area. It might seem strange
to lump such a large and diverse region
together under one label. Certainly many
differences exist within this geographic
space, and considering the many changes
happening in mobile communications
specifically, it’s useful to break down the
market to better understand the issues and
challenges within.
Think global, act local
Within the EMEA region, each sub-region
experiences business, cultural, language,
and many other differences. Take the advent
of MVNOs. In Europe particularly they
play a dominant role, with a market share
7% above the global average. As a result,
whereas 10 to 15 years ago markets like
the UK and Western Europe had just two or
three operators per country, more recently
we’re seeing an influx of MVNOs within
those markets that are successfully taking
on the incumbent operators and making
significant strides, through a mixture of
competitive pricing, innovative branding,
and effective targeted marketing – for
example, serving ethnic communities with
EMEA’s Rapidly Changing Market
Regional differences are still prevalent when it comes to mobile
communications. The issues, challenges, and opportunities
facing the countries of Europe, the Middle East, and Africa
(EMEA) are unique to the region.
By Mark Weait, Vice President, SAP Mobile Services
PART 3:
EMEA
Part 3: EMEA
Whereas years ago an operator could find
new subscribers simply through extending its
network to convert hitherto unreached parts
of the populace, this is no longer possible in
extremely saturated markets.
24. 4544 Mobile Operator Guide Innovation and Transformation
Finding common ground
Mobile operators everywhere are dealing
with similar economic situations of recovery
from several years of recession. In most
places, operators are doing everything they
can to transform into lean operations that
focus on driving revenues and margins
while reducing churn and bringing in larger
numbers of subscribers.
One way to reach these goals is to look for
new sources of revenue, a universal chal-
lenge regardless of what type of network
an operator is running. New revenue could
be generated from mobile banking and
payments, which have found great success
in the African market. Leveraging “big data”
within operators’ own networks, for both
internal use and as a product offered to
external marketing organizations, is another
potential new revenue option.
To increase efficiencies, mobile operators will
need to“sweat”their assets – that is, become
more efficient by realizing as much value as
possible from their existing infrastructure
instead of building out new networks.
This has been evidenced by the pace
of European 4G rollout, which arguably
has fallen behind its compatriots in Asia-
Pacific and the United States. However,
2014 should be the year where we see
rapid expansion from European and Middle
Eastern operators. Hopefully they will not
be put off by escalating costs; for example,
Ofcom, the United Kingdom’s independent
communications regulator, has announced
that is it may look to quadruple 4G license
fees. Operators in Asia-Pacific and North
America have undoubtedly taken the lead
in terms of rolling out 4G networks, and
the Middle East seems to be following
that lead, with operators perhaps aided
by their more nimble ability to upgrade
their network infrastructure.
Upon completion of LTE domestic deploy-
ment within various countries, the next
step will be to look internationally and
ensure international roamers are supported.
Indeed, some of the early adopters across
the world are now really starting to appreci-
ate the importance of managing quality of
service for 4G international roaming. This is
directly in response to the high expectations
their subscribers have when surfing on 4G.
service packages focused on low-cost calls
and texts to international destinations.
Incumbent operators thus have to contend
with new competition that is attacking their
subscriber bases. Whereas years ago an
operator could find new subscribers simply
through extending its network to convert
hitherto unreached parts of the populace,
this is no longer possible in extremely sat-
urated markets. Some, like Germany, are
operating at over 138.7% penetration
(Informa Q2 2013) – that is, mobile phones
and contracts already outnumber people..
To respond to these developments, opera-
tors have to become much more agile in
their service delivery. But at the same time,
due to the increase in competition from
MVNOs and other providers, they enjoy
much less flexibility in terms of setting prices.
Furthermore, margins are being squeezed
by ongoing investment in building out ever-
changing infrastructure and technology,
such as the roll-out of the new 4G networks.
As a result, one of the major challenges for
European operators is to maintain revenues
and subscribers while driving margin improve-
ment.Pending EU roaming regulations –
proposals that would reduce,and even
eliminate,roaming charges across the EU–
will likely make meeting it even harder.
The Middle East and Africa, meanwhile,
are moving along the same track as parts
of Europe, sharing many of the similar
trends. Yet there are also differences.
While MVNOs are certainly present in some
countries, what you find across much of the
Middle East is more of a duopoly situation
– the UAE, for example, boasts only du and
Etisalat – and this creates a different chal-
lenge. In Africa, by contrast, what is preva-
lent is the hotly contested battle between
the “super groups” (Airtel, Vodacom, MTN,
and Glo). Both scenarios deliver the same
net result: extreme price pressure; nonethe-
less the advantage many of these countries
have is that there are still gains to be made,
because market saturation levels are typi-
cally significantly lower.
Wherever these countries are on their
journeys, competition, however it is played
out, is rife. Once saturation is reached, this
will lead to many similarities in terms of their
future opportunities and roads to success.
25. 4746 Mobile Operator Guide Innovation and Transformation
The Middle East and Africa will see
increased competition from within their
borders as well as from foreign operators
interested in increasing their geographic
footprint. This region will experience new
investment, new economies of scale, and
new market entrants, all of which will have
to be managed. In addition, if as expected
the EU relaxes regulation around mergers
and acquisitions, we could see a ramp-up in
market consolidation across Europe, as has
occurred in Germany and Ireland recently.
Another interesting trend among mobile
operators in EMEA, as in other parts of
the world, is trying to get as close to the
customer as possible through owning the
“last mile.”When customers look at their
banking or supermarket app, they aren’t
thinking about the carrier that’s working
behind the scenes to deliver the content
they’re looking for; they’re thinking of the
company whose brand appears on the app.
One way for mobile operators to jump into
this game is by developing their own apps or
by co-branding apps with content providers.
Some operators are looking to Rich
Communications Services (RCS), which
allows them to offer services similar
to those currently being brought to
market by over-the-top (OTT) operators.
New services might include combining
voice with video sharing and messag-
ing into a single offering. In addition, we
can also expect a proliferation of oper-
ator-owned and -branded applications
and services, such as mobile banking.
A time for change
No matter where you look, from Northern
Europe to South Africa and across the
Arabian Peninsula, one consistent theme
evident throughout this vast region is
change. Whether it’s upgrades to LTE
in Europe, increased competition in the
Middle East and Africa, or some of the
more universal issues such as managing
the big data explosion, preventing fraud,
reducing churn, and driving new revenue
opportunities, EMEA mobile operators
will certainly be kept busy.
Meanwhile, each region is becoming more
connected to others as operators work
toward the same goal of bringing people
together, no matter where they are. The
world is becoming smaller.
As Vice President for SAP Mobile Services,
the mobile interconnection and mobile
consumer engagement services division
of SAP (formerly Sybase 365), Mark Weait
is responsible for the continued growth of
SAP Mobile Services’ messaging revenues
across all market segments in EMEA,
including telecom, financial services,
fast-moving consumer goods (FMCG),
manufacturing, and logistics.
Share your comments, thoughts,
and updates to this article — join the
conversation on SAP Mobile Services
community here: http://bit.ly/1fQxxpC
Trends to Watch in EMEA
•• Competition in the United Kingdom
and Western Europe is getting stiffer as
MVNOs enter the market, often targeting
ethnic minorities and other niches.
•• The European market is saturated, with
110% and higher penetration. Operators
will introduce innovative services to
create new revenue streams.
•• Middle Eastern and African operators
face fewer competitors and less market
saturation than those in the United
Kingdom and Western Europe. Compe-
tition from within their borders as well
as from foreign operators will increase.
•• Rapid expansion of 4G rollouts from
Middle Eastern and European operators.
•• Across all regions, operators are inter-
ested in increasing profits by adding
efficiencies and new revenue streams.
Operators are exploring big data and
mobile banking as potential new
revenue sources.
•• LTE deployment will continue through-
out EMEA and extend to international
roamers next.
26. 4948 Mobile Operator Guide Innovation and Transformation
Take a look at your mobile phone.You might
have a smartphone, a feature phone, or, if
you’re really old-school, one with a mono-
chrome screen where Snake is the only
game on offer. Nonetheless, regardless of
the manufacturer or model, there will be
a green button for making a voice call.
Punch a string of numbers into the phone,
press that green button, and somewhere
in the world another phone starts to ring.
When the person you are calling picks
up, you can speak to them. It is such a
fundamental part of telecoms that you
could think it is impossible to conceive
of anything ever changing.
And yet, with the growing deployment of
LTE, voice services from mobile operators
will need to evolve to meet the challenge
from alternative service providers.
In truth, voice has been somewhat taken
for granted by operators for some years. It
is a given that all mobile phones will support
voice, and the equipment for supporting TDM
voice and circuit switching has been present
in mobile networks for a very long time.
Operator voice revenues have been squeezed
by the growth in popularity of alternative VoIP
services to the point where, in some markets,
revenues have declined at a small but steady
rate for a number of years.That said, voice
calls do still contribute almost $1 trillion to
operator revenues globally.
LTE disrupts
So, what changes with LTE, and why does
it create a threat?
First, LTE delivers a lot of bandwidth to the
end user. This is great for customers who
want to watch videos or play games online,
but it also means that Voice over IP (VoIP)
services can use this bandwidth to deliver
much higher quality voice calls as well.
Where LTE coverage is strong and available
bandwidth is good, voice calls on VoIP are
of considerably higher quality than those on
mobile operators’ circuit-switched networks.
LTE also has much lower delay on the
radio interface, which means that the other
limiting factor of VoIP service providers’
calls – end-to-end latency – is significantly
reduced, and so perceived quality gets a
second boost. High bandwidth and low delay
amounts to a network technology that could
be taken as being optimized for VoIP delivery.
These positive aspects of LTE should offer
an opportunity for operators to upgrade
their voice services to compete with VoIP
providers. However, when standardizing LTE,
3GPP did not specify a voice implementa-
tion; it was decided that circuit-switched
voice would not be used, but no alternative
was explicitly identified. Four years ago, this
was a major discussion point in the industry,
and it was not until early 2010, when the
GSMA began working with a group of oper-
ators and vendors calling themselves “One
Voice” that a definition for Voice over LTE
(VoLTE), based on the IP Multimedia Sub-
system (IMS), came into being.
2014: The year of VoLTE?
Even with this definition in place, issues have
arisen. IMS is not a straightforward technol-
ogy to implement, to the point where some
operators were reluctant to countenance
the need for IMS as a requirement in LTE.
A number of technical challenges also pre-
sented themselves, including how roaming
would work and the need to support inter-
working back into existing circuit-switched
networks. On top of that, the industry
continues to use TDM for voice intercon-
nect, even when most operators and carrier
networks have IP-based transport networks.
It is a classic Catch-22: even though the
networks on either side of an interconnect
are using IP, the link connecting them is
based on TDM, with the result being that
TDM remains cheap because of call volume,
and continues to have high call volumes
because it is cheap.
Nonetheless, VoLTE has made steady
progress, with 2014 likely to be a big year
for deployments. So far there are four VoLTE
deployments of scale, these being by the
three major Korean operators as well as by
MetroPCS in the United States. All report
very good voice-call quality and very low call
setup times. Other major carriers are on the
verge of VoLTE launches including Verizon
Wireless, AT&T, and China Mobile, while
plenty more have tested VoLTE in pilots
and laboratories.
The challenge ahead
Challenges still remain. Technically, imple-
mentation of IMS and VoLTE requires a very
different skill set to that by circuit-switched,
while interconnect and roaming will be some
way off. Perhaps more difficult for operators
VoLTE: An Essential Part of Every
Operator’s LTE Strategy
VoLTE will continue to make steady progress, and
2014 is likely to be a big year for deployments.
By Dan Warren, Senior Director of Technology, GSMA
Part 3: EMEA
27. 5150 Mobile Operator Guide Innovation and Transformation
to comprehend is the business case
for VoLTE – there is a CapEx outlay asso-
ciated with IMS, but there isn’t an obvious
incremental revenue stream as a result of
VoLTE. VoLTE is not really about increasing
revenue though; it is more about maintain-
ing the revenues that operators gain from
voice already. VoLTE will allow high-defin-
ition voice codecs to be used, and is based
on the same technology as Rich Com-
munications Services (RCS), meaning that
instant messaging, video chat, and file
transfer – all available today from VoIP pro-
viders – can also be offered by operators.
As a result, the question operators should
ask themselves is not “Why should I imple-
ment VoLTE?” but “What happens if I
don’t?”Without VoLTE, operators will be
faced with some stark choices. One option
is to keep voice on 2G and 3G, using Circuit-
Switched Fallback (CSFB); this is a path
being taken by many operators as a short-
term solution, but it stifles innovation in
voice services and also makes the refarm-
ing of 2G and 3G spectrum bands much
more difficult. Alternatively, operators could
deploy their own proprietary VoIP services,
but this would make the existing capability
to “call any number in the world” a very diffi-
cult service expectation to meet, since every
VoIP variant would require a specific tech-
nical interworking definition to every other.
VoLTE provides a standard for voice calls
over LTE, with the potential for operators
to evolve and innovate their voice services
both now and in the future while also
maintaining full interconnect for customers,
as they have today with circuit-switched
voice. It enables the green-button service
that end users have today. It is this that
makes VoLTE an essential part of every
operator’s LTE strategy.
As Senior Director of Technology at the
GSMA, Dan Warren is a technology subject
matter expert across all of the GSMA’s
project and working groups and key spokes-
person for the GSMA. Dan currently leads
the GSMA’s definition of Voice over LTE
(VoLTE) for the global industry, as well as
being a lead technology expert on rich com-
munications and all IMS-based projects,
embedded mobile, and Wi-Fi roaming.
Share your comments, thoughts, and
updates to this article — join the
conversation on SAP Mobile Services
community here: http://bit.ly/1hreksd
Every time you call a friend abroad using
a traditional phone, you will somehow pay
your service provider for this service.Your
service provider won’t keep all of the revenue;
a part of it will be cashed in by the service
provider serving the friend you are trying to
call. It is common practice for service provid-
ers to charge for incoming phone calls and
text messages, but it is not common practice
at all to charge for incoming data traffic. Now,
this is about to change.
Mobile service providers typically pay a
straightforward bandwidth-based fee for
connectivity to the GRX. This business
model is easily justified, since the revenue
generated by data roaming far outweighs
the cost of a GRX connection. But once
again, the roll-out of LTE is changing
the game: as download speeds to mobile
devices go up, so does the need for IP
bandwidth to carry inbound traffic. In the
case of basic content like web pages, all
that’s required is more and more upstream
internet capacity. The cost of that type
of revenue is easily recovered by the
retail price of LTE data packages. But in
the case of content for which subscribers
are prepared to pay, another mechanism
can be put to work.
Companies like Netflix offer a growing
library of TV and movie content over the
internet. People happily pay for this content
and enjoy it on their mobile devices. But
as the displays of these devices get better
and better, they will not settle for a poor
viewing experience. And for as long as the
internet is the only network available for
content delivery, viewing quality cannot
be guaranteed. After all, we all know how
slow the internet can get on a rainy
Sunday afternoon or when the kids get
home from school. This presents mobile
service providers with a business opportu-
nity: to offer high-quality termination of
data traffic – in return for a piece of the
pie, of course.
Multimedia Content on LTE Devices
Can mobile service providers get a piece of the pie?
By Michael Van Veen, Group Director IPX, SAP Mobile Services
It is common practice for service providers to
charge for incoming phone calls and text messages,
but it is not common practice at all to charge for
incoming data traffic.
Part 3: EMEA
28. 5352 Mobile Operator Guide Innovation and Transformation
QoS on the LTE RAN with that level of
granularity are simply not there yet. In
the longer term, mobile operators will
need to face the challenge of having to
deal with different commercial agree-
ments with different content providers,
and with the accounting complexities of
having to charge for volumes of traffic
based on the origin of the traffic. But
where there’s complexity there’s opportu-
nity, and in this case one would expect a
small number of IPX providers to provide
specialized services around accounting
and settlement of high-QoS IP traffic.
All of this may sound far-fetched, but
mobile service providers are highly
motivated to explore these new business
opportunities. After all, the roll-out of
LTE networks requires substantial invest-
ment, and the prospect of new revenue
streams generated by LTE being largely
directed elsewhere is hard to digest. A
number of mobile service provider groups
have faced the challenge and, working with
the GSMA’s Future of Interconnect group,
have designed and assessed different new
interconnect models. No doubt, this will
be reality within two years if not sooner.
Michael Van Veen is responsible for
managing and driving the GPRS Roaming
Exchange (GRX) / IP eXchange (IPX)
product line for SAP Mobile Services.
He began his career at KPN Telecom,
where he worked on major projects includ-
ing the international standardization of
ISDN and Fiber-to-the-Home systems,
and the establishment of an opera-
tional management center for the first
GSM network in the Netherlands. He
is also the current Deputy Chairman of
the GRXIPX Working Group, which is a
sub-working group under the GSMA’s IREG
(Inter-Working Roaming, Expert Group).
Share your comments, thoughts,
and updates to this article — join the
conversation on SAP Mobile Services
community here: http://bit.ly/OnB9ER
On paper the proposition looks simple: the
content provider connects to the mobile
service provider, typically via the IPX, and
the quality of service is guaranteed from
the content-streaming platform down
to the mobile device. The novelty is that
rather than paying for bandwidth, as is
the case with the GRX, the mobile service
provider will charge for bandwidth. Dif-
ferent scenarios can be considered, but
they all boil down to the same thing: the
content provider ends up paying some of
its revenue to the mobile service provider
in order to ensure that its subscribers enjoy
the best possible viewing experience.
As always, the devil is in the detail. Accord-
ing to the 2013 IPX survey carried out by
Questex Media Group and sponsored by
SAP Mobile Services, it will be a while before
mobile operators are able to create the
perfect individual content delivery service.
This requires the capability to fine-tune the
appropriate quality of service (QoS) per
service on the LTE radio access network
(RAN) for each individual subscriber.
The systems needed to get control over
But where there’s
complexity there’s
opportunity, and in this
case one would expect
a small number of IPX
providers to provide
specialized services
around accounting and
settlement of high-QoS
IP traffic.
29. 5554 Mobile Operator Guide Innovation and Transformation
In today’s fast-paced, technology-driven
environment, it is good to know that some
things are still valuable. One of these things
is SMS. The Short Messaging Service has
not died yet; it has retained technological
consistency and remained true to its objec-
tive from the very beginning. When SMS
celebrated its 20th birthday two years ago,
global traffic volumes were about 350 billion
messages per month. It is no secret that
revenues from SMS have been declining for
several years; however, operators are still
leveraging the service not only because of
its popularity, but also because of their
ability to monetize it.
For the past several years SMS has been
dismissed as dying or even dead, a view
perhaps brought about by the decline in
revenue streams for operators, or perhaps
by the popularity of instant messaging apps
that are slowly gaining traction with the
advent of smartphones. By contrast, SAP
believes that SMS volume is still the bread
and butter for operators. SMS remains a
huge business with huge margins. It is still
an extremely important business area if well
managed and monetized.
The global advantage of SMS
Currently, well-known messaging apps
like Facebook Messenger, WhatsApp and
Viber require both sender and receiver of
the message to be using the same app and
do not rely on the mobile phone number
to establish a connection. They use the
internet and IP addressing to provide the
service to their customers.
More and more end users have been using
these over-the-top (OTT) services because
of their enhanced features and the price,
which is generally zero. OTT services are
gaining popularity, thus affecting the bus-
iness of operators. Operators are seeing that
this extra data is creating extra pressure on
their networks which they are paying for –
these services that seem free are in fact not.
In order to have access to these services,
subscribers are upgrading their data plans;
it is like a sort of switching of services.
However, the limitation of OTT messaging
services is due to the fact that these they
tend to be region- or country-specific. For
example, WhatsApp messenger might be
popular in the Middle East but not in Korea,
Australia, or the United States.
The number of OTT messaging providers
is growing, but messaging apps have many
platforms, as opposed to SMS being one
platform. For example, when two people
meet, they are more likely to exchange an
SMS first, then an OTT message. With SMS,
users don’t need to have engaged with each
other or have a direct social relationship
with each other.
SMS has a global reach; it is able to reach
any network around the world. It is based on
a single platform. With a single connection to
an aggregator, operators can reach hundreds
of networks worldwide – half of those
directly for messaging and data services.
Part 3: EMEA
SMS Monetization
Simplify your SMS business model with the right
partner to ensure maximum SMS monetization.
By Toni Eid, Founder and Editor-In-Chief, Telecom Review
It is no secret that revenues from SMS have been
declining for several years; however, operators are
still leveraging the service not only because of its
popularity, but also because of their ability to monetize it.
SMS has a global
reach; it is able to
reach any network
around the world.
30. 5756 Mobile Operator Guide Innovation and Transformation
SMS hubbing
From operators’ perspective, SMS usually
sits under the wholesale department, or the
roaming department sometimes, and they
are constantly looking for ways to simplify
their SMS business for daily operations.
A typical operator will have various bilat-
eral roaming agreements enabling its
subscribers to use roaming while abroad.
So, if you want to send a message from
the United Arab Emirates to someone
in the United States, unless your UAE
operator has agreements with all of the
US operators and is connected to a Mobile
Number Portability (MNP) database, the
message might fail to be delivered.
If the message is not delivered, not only will
the operator lose customer satisfaction, but
also it can’t charge for it, thereby causing a
loss in retail revenue. Moreover, SMS traffic
is typically balanced – in most cases one
expects a reply – so the operator will lose
the value of incoming wholesale. Therefore
the operator must ensure that the MNP
element is solved.
This is a role that aggregators can take
by solving the MNP issue in countries that
complements an operator's direct coverage
to easily establish a seamless connection.
With the growth of mobile operators and
the services they offer, global message
exchange has become highly complex and
resource intensive. The bilateral agreement
model can restrict operators from realizing
an interoperability footprint, and there
are significant costs associated with the
co-ordination of global services and imple-
mentation of each operator.
Thus the operator has to maintain day-to-
day reports in its SMS center, updating for
new networks and adding new roaming
partners. And if one of the roaming partners
has changed something technically in the
network, then the operator has to follow.
The operator also needs to run reports of
traffic balance. For example, if there is huge
imbalance in traffic between a local operator
and an operator in the United States – say,
the US operator is sending five times more
messages than the local one, congesting its
network – then the local operator will charge
a certain amount for the excess.
This indicates the need for SMS hubbing.
SMS hubbing allows operators to signifi-
cantly expand the reach of their SMS
services by simplifying the interwork-
ing arrangements between operators. In
addition to the benefits of expanding SMS
coverage to new destinations, SMS hubbing
offers increased operational efficiencies
and financial savings by removing the need
for time-consuming bilateral agreements.
The SMS hubbing model allows an operator
to interwork SMS with other operators
connected to the same hub, or intercon-
nected hubs, using a single multilateral
agreement. This is a significant improve-
ment from the current bilateral interworking
arrangements, whereby operators have to
establish one agreement for every SMS
interworking partner.
For operators to simplify their SMS
business model, they should select one
single partner with one single hub that can
manage global connection, solve the MNP
issue, and remove the daily operation of
reporting, reconciliation, and settlement,
leaving them free to take care of other
services and focus on their customers.
Toni Eid started his media and publishing
career in 1985 and has been involved in
international business in the Gulf, Europe,
and North America since 1986. He often
participates in industry events as a speaker,
judge, moderator, or chairperson.
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The bilateral agreement model can restrict operators from
realizing an interoperability footprint, and there are significant
costs associated with the co-ordination of global services and
implementation of each operator.
