Collaboration is key to mobile network operators' survival: Ovum

MNOs building their own app stores and developer communities are doing it wrong.

Ovum research reveals that operators in emerging markets, which should include Singapore telcos with emerging market presence, will be better off collaborating with developers and device original equipment manufacturers (OEMs) in particular segments.

Such a collaboration should be matched with leveraging assets, a two-pronged "winning approach" that will help MNOs stay relevant in a world with faster networks, more powerful yet affordable devices, and new channels for content and apps.

If operators do not adapt, they run the risk of getting sidelined altogether.

"The dominant role of mobile network operators (MNOs) in providing value-added services (VAS) for emerging markets is unlikely to last, according to Ovum. Changing consumption patterns around mobile content and apps means that VAS business models will be disrupted in a world with 3G and LTE services and smartphones," Ovum said.

“The biggest driver of change is the rise of affordable ‘smarter’ devices and data access plans, which are driving consumers to the mobile Internet and beyond the walled-garden offerings of the operators,” says Shiv Putcha, principal analyst for emerging markets at Ovum. “As a result, developers are also shifting away from the MNO orbit as they see greater opportunities through apps stores driven by device OEMs.”

“The biggest opportunity for operators is within mobile entertainment services,” says Putcha. “The high costs involved in the purchase of PCs, fixed broadband, and gaming consoles will drive less affluent consumers in emerging markets to opt for the mobile device as the primary screen for entertainment, creating an opportunity for telcos to grow their subscriber base with the lure of new content services.”

However, Putcha foresees some bumps in the road ahead: “MNOs will face monetization hurdles due to users’ low ability to pay and piracy, especially for content categories such as music. But by creating effective pricing strategies and offering localized content, operators will make the most of the growing consumption of video, music, and gaming services.”

Elsewhere, mobile utilities (m-utilities) offer an alternative approach. MNOs, content providers, and application developers can engage with emerging market subscribers, offering them access to practical content and services that will positively impact their well-being. “From an MNO perspective, these services and applications will serve to bolster the business case and ROI of improving network coverage and expanding to rural areas, but MNOs will need to tailor services accordingly to maximize the revenue opportunity,” explains Putcha.