Using LTE to Boost ARPU

Using LTE to Boost ARPU
Breakfast Briefing
By Zahid Ghadialy
Managing Director eXplanoTech Ltd.
And
Webmaster 3g4g.co.uk, 3g4g.blogspot.com

What is ARPU?
Average Revenue Per User (ARPU) is a measure used
primarily by consumer communications and
networking companies. It is the total revenue divided
by the number of subscribers
Source: Wikipedia
2

Mobile Traffic will keep growing
Source: 3GPP
3

New Sources of Mobile Traffic
Source: 3G Americas
4

Global ARPU Trends
Source: GSMA, Dec. 09
6

‘Dumb Pipes’
 All operators have some kind of flat rate ‘all
you can eat’ packages.
 Though most of them put an upper cap or
clauses like ‘fair usage’ policy
 These packages have put strain on the
network
 The packages are widely abused as well
 A recent report mentioned that 3% of the
users generate 40% of the traffic
 Some operators have started fighting back
 Vodafone recently announced that it will
charge people for out-of-bundle data.
 AT&T planning to go the Vodafone way as
well

‘Smart-Pipes’ and ‘Happy-Pipes’
 Some people now use the term
‘Smart-Pipes’ to emphasise
Policy Control, QoS and so forth
 Dean Bubley from Disruptive wireless recently mentioned the word
‘Happy-Pipes’ to emphasise:
 There is a huge value in deploying and running a network well
 The smartest networks are the ones which work collaboratively *with*
Internet and content companies, not antagonistically against them. This
specifically related to areas like policy management.
 There is much under-exploited potential for revenue around wholesale
models. There are many potential business opportunities, both for "bulk"
wholesale and "slice and dice" methods of deriving extra fees for capacity
and value-added services.

More users does not mean more ARPU
 Some operators offer huge rebates to get customers onboard
 Rebates don’t work well in most cases
 They assume, “more users means more ARPU”
 Their simplistic assumption relies on customer loyalty
 Customer loyalty does not exist in this day and age.

Capex/Opex savings via Network Sharing
Example: Two MNOs jointly rolling out an LTE network. Operators jointly roll out a new build
of 2500 sites in a developed economy. This will typically achieve a 30% capex saving
accumulated over five years and would also reduce opex by 15% per year by year five.
Source: Analysis Mason, May 2010
 Though these savings don’t translate to ARPU, they
can certainly reduce the pressure to increase ARPU

LTE Needed for maintaining existing ARPU
 This statement may be too simplistic

So how can LTE help boost ARPU?

Faster and more Reliable Mobile Broadband
 But this may not be enough

Lots of Amazing Applications
 iPhone has more than
185,000+ apps
 More than 4 billion Apps
have been downloaded
already
 50,000+ apps available for
Android based phones
 Over 100,000 apps
downloaded per month

Real Time Mobile Apps
 Live blogging with facility to easily add pictures and
videos
 Giving rise to m-Reporters and real time citizen journalism
 VoIP based Voice and Video calling and conferencing
apps
 Live Radio and TV Streaming
 Real time games

Positioning, Monitoring and Tracking Apps
 Find me or find my friend type applications
 Satnav
 Find the nearest xyz
 Guide me or guide someone
 Track my xyz in real time
16

And you can use these apps to your own advantage ;)
Social Networking Apps
Facebook, Twitter, Linkedin, Orkut, etc.
17

M-Health Apps
 If operators create a
complete health based
portal, can they charge
extra?
 Will users be willing to
pay extra for:
 Having a remote nurse
available all the time to
answer queries
 To have their health
checked remotely
 To remind them about
taking medicines, etc.

Killer App
 We are still waiting for the killer app

Are Apps the only way to increase ARPU?

Fixed Mobile Convergence
 Triple play
 Quad Play
 Quintuple Play
 Do subscribers become more loyal to operators and
give operators the right to charge more?

‘3D’ Mobile
 This is big on device manufacturers agenda.
 There are already plans for:
 3D movies
 Live games (Football, Soccer, etc.) in 3D
 3D Videogames
 No one is sure how much bandwidth will a ‘3D’
broadcast/streaming hog but few people may pay premium for
this service.
22

HD (High Definition)
 HD Voice on mobiles
 HD Video/Movies on mobile
 Blu-Ray for mobiles?

Quality of Service and Quality of Experience
 Are we willing to pay extra to:
 Always get connectivity
 Get high speed connectivity even if the network is congested
 Operators can give higher priority to their
own/preferred portals
 Faster songs download
 Faster movies download

Femtocells
 Are people willing to pay extra for:
 Reliable connectivity at home
 High speed data transfer while at home
 Differences with respect to WiFi:
 Mobile broadband consumes less power for the Mobile
 The security is far better in Mobile Broadband

Special offers for Premium Subscribers
 O2 in UK has a similar
concept called the O2
priority
 Orange in UK gives 2 for 1
for movies on wednesdays.
 Can this concept be
enhanced for premium
subscribers

Revenue v/s ARPU
 ARPU will only be a useful measure if:
 Revenue increases on a regular basis and
 Number of users increase
 Do we focus too much on ARPU?

Do passive ‘data only’ devices reduce ARPU?
 Operators can charge limited fees for data only
devices like the e-book readers, mobile Sat-Nav’s, etc.
 Should they be included in the calculation of ARPU?
 Do we need a different measure for these devices?
 The operators generally get much higher margin on
these with a much lower churn

Some points raised in discussion during
the ‘Breakfast Briefing’

Discussion Notes - 1
 Operators have to focus on much more than just
voice and video
 Do M2M devices take away the revenue from
operator
 Can content providers use the location information
for their own advantage
 Sending advertisement which are relevant to location
information
 What about Spam?
 Are people comfortable disclosing their location?
 Location can be used by employers/partners/stalkers; not
acceptable in either case.

Discussion Notes - 2
 LTE can allow people to get rid of their landlines and
instead the LTE to WiFi conversion could be used.
 Billing is a very important weapon in the hands of
the operator. They can use it to charge for services
and content thereby taking a cut.
 Users are willing to trust the operator more than 3rd parties
for charging them
 The credit card details, etc do not have to be disclosed to
others

Credits
 Thanks to the following people who attended the
breakfast briefing and making it a lively discussion:
 Gunnar Hakansson, Ericsson
 Michael Morash, Bridgewater systems
 Margaret Hu, Huawei
 Umesh Date, Mindtree
 Mehul Patel, Mindtree
 Mohammad Bin Aris, Mobily
 Thanks also to the various contributors at the LTE
group on Linkedin who contributed to this
discussion out there.

Using LTE to Boost ARPU

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