A 2011 Interim Financial Report made by former TeliaSonera CEO, Lars Nyberg, revealed that the telco operator was investing a s much as five times in data, but revenues from voice were five times that of data.
In Kenya, Safaricom saw data contributing 8 percent to 2012 revenues and 5 percent in 2013. At the same time, a huge chunk of network investments in 2012, reported at 24 percent of revenues, went to data related investments. 2013 sees Safaricom investing KSh 10 billion ($117 million (Revenues KSh. 124 billion)) on roll out of a 2,500 kilometre fibre network expected to provide back haul amongst other services, including fixed lines and managed services to corporate clients.
Even as the shift to data starts to take place, it appears it will be a while before revenues from data rival or even come close to those from voice. The uptake of smartphones has also been increasing, though the number is still picking up. In March 2013, Safaricom reported having 1.2 million smartphones in the firm's network, compared to a client base of about 20 million.
Competitor Airtel, has come up with a strategy where it offers tailor made bundles, where clients select a cokctail of voice minutes, SMS and data bytes according to what they feel their consumption might be. This is in a bid to rack up market share in a market were Safaricom has consistently maintained domination, with more than 60 percent of SIM card share and 80 percent of call volume being on Safaricom (Communication Commission of Kenya statistics).
Orange, also playing in the competitive Kenyan market, has opted for a strategy to target high worth data subscribers through generous "unlimited" and other data offerings. This is probably with the aim of later down selling other solutions.
Meanwhile, the use of mobile broadband and smartphone applications is set to become the largest use of phones and mobile networks. Claus Cegrell, Chief Technology Officer at Ericsson, representing the business unit quotes an Ericsson report that shows that 40 percent of Android smartphone users in Sweden use applications on their phone first thing they wake up. Additionally, Ericsson predicts that of 9 billion mobile subscriptions by 2018, 5 billion of them will be broadband.
At the same time, Ericsson predicts video will grow 60 percent year on year till 2018. Already, some networks are already seeing average video consumption of 2.6 GB per person. Revenues though, are not expected to grow at the same rate. The increase in smartphones and mobile broadband penetration is posing challenges for mobile operators, who are faced with an increasing unfamiliar and uncertain market. Consumers are bypassing mobile operators and establishing royalty with device vendors and relationships with developers.
Claus says that for operators, there is no predictability in the new app and device world, where few or business cases exist and content keeps evolving - no one app dominates year on year. Operators, instead, are preferring to maintain their focus on maximising core revenues in the familiar voice, SMS and data areas.
Through operations support systems and business support systems(OSS/BSS), Ericsson is looking to help operators bridge the gap between core services and to help them benefit from the consumer/partner ecosystems.
By opening up their core systems to developers and offering new services to customers, operators stand to benefit from a thriving partner ecosystem and an improved customer experience.
Operators can enable developers use their payments systems and access customer information, and reduce product and solutions launches from weeks to days or even minutes. They can also automate services reducing the burden on their call centres, and increase revenue at a low cost.
Claus says operators also stand to benefit from better OSS/BSS solutions through network management including data policies, provisioning and fixing billing which has traditionally being a mess.
Simplification does increase flexibility and improves customer experience, leading to a reduction in churn.
Ericsson, based on its experience as the leader in prepaid solutions, handling 2 billion prepaid subscriptions in 180 countries has come up with a layer that enables operators build web and mobile applications that improve customer experience. Though such apps, operators can give real time account status and sell promotions and services.
Currently, many operators interact with their clients through USSD and Interactive Voice Response, customer support, resellers, operator stores and even posters in some countries. A self provisioning app would introduce a new way of interacting with clients. Ericsson claims the app leads to an 18 percent increase in average revenues per user and a 20 percent reduction in service calls in the United States and Europe.
Tunisiana was the third operator in Tunisia to get a 3G license. The telco subsequently deployed a selfcare app where users could buy services such as DailyMotion(the video site) and Facebook, which are popular in the country. The telco saw a 50 percent increase in data sales, reduced opex through off loading of customer care, and an improved customer experience due to usability of the app. In addition, Tunisiana was able to upsell additional offers. The success of the solution has attracted interest from two other operators in Tunisia who are now looking to deploy similar products.
In further case studies, we will look at how Volvo has integrated a similar solution resulting in vehicles connected to the cloud, and also at how AT&T is now providing remote patient monitoring using their network.
Dennis Mbuvi has been writing at CIO East Africa Magazine and CIO.co.ke since May 2010. His key focus is the use of technology to solve day to day business challenges and product reviews. Mbuvi has been invited to speak at various IT, Telecom and Media events in the region. He was also a keynote speaker at the inaugural Joomla day in Kenya talking on possibilities of the Joomla Content Management System. Mbuvi holds a B.Sc in Computer Science degree from Kenyatta University. He is on Twitter as @denniskioko