Mobile operator segment experiences challenges from digital transformation

There was a time when mobile operators provided wireless voice connections and people were happy. Then, when smartphones created customer demand, they provided data plans. Data demand paralleled the spike of mobile services and apps, and every mobile operator was happy.

Now, the newest digital transformation wave is having a serious impact on mobile operators. Consumer and business demands for high volume, unlimited data and always-on connectivity are ready to exceed capacity. Online video content is expected to account for more than 80 percent of consumer internet traffic by 2020. The Industrial Internet of Things (IIoT), flush with machine-to-machine (M2M) communications, is improving operational efficiencies in everything from manufacturing to healthcare. Business Insider predicted IoT devices will account for 24 billion of the estimated 34 billion connected devices online by 2020.

The eagerly anticipated 5G network is expected to be the backbone that makes true digital transformation possible. Automated vehicles, a global smorgasbord of streaming video, virtual reality and IoT/IIoT ubiquity will all realize their full potential in the 5G world, as the fantasy goes.

Follow the money

The economic opportunities of the digital transformation are driving a lot of new competition for mobile operators. Resellers already provide low-cost options to access mobile networks. Soon, they may well start offering access to multiple networks, letting consumers connect to whatever network has the strongest signal at any given moment. This is great for consumers, but would commoditize mobile network providers while hiding them away from direct consumer relationships.

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E-SIM technology, which will put reprogrammable SIMs in mobile devices, will let consumers compare and switch mobile operators easily and from within the device itself.

Mobile operators are also feeling pressure from the rise of over-the-top services (OTTs). OTT services such as Facebook Messenger or WhatsApp run through the mobile operators’ internet connections but circumvent their services. Video streaming services, such as Netflix and Hulu, are OTTs that deliver to mobile and TV screens. Most of what users do on their mobile devices isn’t necessarily a service provided by the mobile operator — consumers are just using the internet connection it provides.

The result is that while the value of the overall mobile market grows, revenue is flat for mobile operators.

What’s a mobile operator to do?

The first must-do is to modernize the architecture. According to Business Insider, 55 percent of North American mobile operators say they plan to adopt 5G technology within the next five years, as will 50 percent of South American operators. As the lottery cliché goes, you can’t win if you don’t play.

Mobile operators can take advantage of the 5G capabilities to improve their own operations and industry competitiveness. Boston Consulting Group has coined the phrase, “Service 4.0,” to describe how service providers can use the power of the digital transformation to provide true omnichannel customer service and reduce costs through smarter, more efficient provisioning and staffing.

Next, don’t fear the consumer-friendly E-SIM technology, but embrace it as an opportunity to expand services to all manners of connected devices, from home appliances to smart cars. Industrial M2M connectivity can provide the communication network between machines on a manufacturing line, or allow sensors in medical patient devices to send real-time data.

Indeed, mobile operators should look to expand the type of services they offer, not just the scope of devices they can connect. Creative partnerships with the same digital transformation disruptors could generate new revenue streams through digital advertising, on-demand video services and collaborative business services.

They can also look for ways to find commercial value in their low-level data streams. For example, Cellint developed technology that scoops up anonymous location data from mobile devices that can be aggregated in a variety of useful ways, from crowd management to local market trends.

The digital transformation pie will be huge, but there’s time and room for mobile operators to start making the transformation that will keep them going.

Written By

Elisa Silverman

Technology Writer

Elisa Silverman is a freelance writer, with a professional background in law and technology. She writes for technology companies and professional service firms. In addition, Elisa writes other types of B2B marketing content that help them establish authority and foster relationships…

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