Download Impact of Data Traffic Explosion on Mobile Operators

MTN Swaziland
Impact of Data Traffic Explosion
on Mobile Operators
By Thembi Mkhonto
Agenda
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Mobile Industry and Economy
Mobile Traffic Trends
Key Drivers for Data explosion
Challenges with Data explosion
Operator’s Strategies
Conclusion
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Mobile Industry and the Economy
• The rapid spread of mobile technology has a profound
socio-economic impact on the economies of every
country in the world.
• The mobile ecosystem makes a significant direct
contribution to GDP
• The mobile industry has impact on the wider economy
– Enhanced productivity for “highly mobile” workers
– Improves education, health and agriculture sector in
developing markets like Swaziland
– Creates employment and entrepreneurial opportunities
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Mobile Traffic Trends
• Voice revenues have stagnated in recent years
• Drastic decline in SMS traffic
– Most Swazi mobile users prefer whatsapp over traditional sms
• Exponential growth in mobile data usage
– The number of mobile-connected devices exceeded the world’s
population in 2014
– MTN Swaziland has seen a 15-fold increase in data traffic over
the past three years
• Flat rate pricing typically used - margins are generally
lower than the historical voice-dominated traffic
margins and, more important, show a declining trend
– MTN Data Bundles offered at a lower rate that out of bundle
usage
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Key Trends for Data usage,
Revenues and Cost
Source: Alcatel Lucent 2011
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Forecast Growth by Cisco
Device Type
2014
2019
Nonsmartphone
22 MB/month
105 MB/month
M2M Module
70 MB/month
366 MB/month
Wearable Device
141 MB/month
479 MB/month
Smartphone
819 MB/month
3,981 MB/month
4G Smartphone
2,000 MB/month
5,458 MB/month
Tablet
2,076 MB/month
10,767 MB/month
4G Tablet
2,913 MB/month
12,314 MB/month
Laptop
2,641 MB/month
5,589 MB/month
Source: Cisco VNI Mobile, 2015
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Key Drivers for Data Explosion
• Mobile penetration rates: 2007 forecasts for mobile
subscriber numbers in 2020 have already been exceeded
• Availability of faster networks
– MTN has deployed 3G technology with theoretical connection speed
ranging between 3.6 Mbps and 42 Mbps
 About 80% country coverage
 97% of the country covered with GPRS and EDGE
– MTN has plans to implement LTE (4G) technology in the near future
to offer theoretical speeds of up to 672 Mbps
• All-IP mobile networks to serve an ever increasing volume
of data, enabling a vast array of innovative services.
– Although the MTN is not an All-IP network, the core and the 3G
network are based on IP. The plan is to have an all-IP network within
the next 3 years.
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Key Drivers for Data Explosion
• Device evolution is one of the key enablers of the data traffic
explosion
– Swaziland has seen proliferation of smartphones, dongles, tablet
devices
• Thousands of interesting applications are also fueling mobile
data subscription and revenue growth
– Data customers have access to a wide spread of applications from
wherever they are
• M2M connections, which includes a range of devices and
objects
– A number of local entrepreneurs are offering car tracking services to
individuals, businesses and the public transport operators
– Smart TVs are already available in the local in the market
– Utility companies using telemetry services to monitor remote sites
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Challenges with Data explosion
• As users demand more from networks, they expect that a
network should “just work”, anywhere and any time
• Network coverage gaps, network congestion and service
degradation are more apparent than ever and threaten to
affect customer loyalty.
– Challenge covering a mountainous country like Swaziland
– Customers concentrated in towns while they expect the get same
experience in the rural areas
– Country being affected by SA Power Load Shedding which reduces
available capacities
• Operator faces growing restrictions from limited available
resources with a decline in revenues from legacy services
such as voice and messaging
– Customers complain about high data charges (comparing Swaziland
with countries that have liberalised the telecommunications industry)
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Challenges with Data explosion
• Limited local content – most content is hosted in South
Africa
–Results in increased bandwidth cost
• OTTs present a high risk of disintermediation – turning
the operator into dump pipes
– Facebook, Whatsapp and Skype are the most commonly used
OTTs within the country
– IP-based messaging, voip and mobile video not only drive the
explosion of mobile data traffic but also massively impact carrier
revenues
• High level of capital investment required to increase
capacity
– No opportunities of sharing costs with other operators
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Network Strategies
• Improving operational efficiencies – capex and operational
expenditure now goes under considerable scrutiny to
make the business case for continued network evolution
viable for the operator
– Network Optimization –Operator always looks for intelligent ways to
expand their network capacity
 QoS and policy-management techniques to offer differentiated services to
users, manage network congestion - more “selfaware” and dynamically
configurable network
 Offloading traffic onto local access points femtocells to free up mobile
network capacity
 Carrier aggregation, network analytics and caching to allow operator to get
the most out of their infrastructure
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Network Strategies Cont’d
– Network Sharing
 Sharing passive network components (such as sites) with other service
providers, e.g. SPTC, Police, Broadcasters
 Outsourced network maintenance to hardware vendors
 Mobile services are increasingly being migrating into the Cloud to
deliver on the promise of service access anytime, anywhere through
any device at reduced cost
• Continuous Innovation
– Operator has confidence that their infrastructure is future-ready
and that they can depend on the availability of new innovations
– Continually investigates the alternative ways to access disruptive
technologies, which may be in the form of internal development,
strategic alliances and acquisitions.
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New Business Models
• Redefined Business models
– Key focus is on Data Revenue
– Policy management is being implemented to form new business
models and maximize the service monetization.
 offering tiered service levels that guarantee superior performance and
quality to higher paying subscribers
• Strategic Partnerships that focus on value creation
– Operators collaborates with the service providers, suppliers and
distributors for continuous operations improvement
– Outsourcing of non core functions to allow more focus on
customer and strategic issues
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Recommended Political Strategies
• The Regulator and policymakers must be careful not to
hinder the growth opportunities through short-term
polices
– create an enabling environment
 Allowing operators to continuously innovate to meeting the
unsurpassed demand for data
• Private and public sectors need collaborate to support
the development of a mobile innovation ecosystem.
– “m:Lab” in Nairobi, which is a centre for mobile entrepreneurship provides incubation, developer training, application testing, and
ecosystem building, with support from The World Bank,
Qualcomm, Samsung, Nokia, Microsoft, and others.
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Conclusion
• MTN is faced with the challenge to continuously scale their networks
to support bandwidth-hungry applications and keep customers
satisfied.
• The operator’s revenues are not keeping pace with the increase in
traffic.
• The operators has realized the importance of embracing the fact that
the traditional telco business model is facing competitive threats and
adopt new strategies
– The difficulty faced by established players is to reinvent themselves into agile
entrepreneurial start-ups
– Their natural response is to try to resist disruptive technology to protect their
existing market share and revenues.
• MTN key strategy is to create a Telco 2.0 ecosystem – a multi-sided
business model with the mobile operator at the centre, acting as an
enabler between upstream partners (software developers, content
providers, consumers, public sector, vertical industries) and
downstream private and enterprise customers.
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