Coping with Data Growth

Coping with Data Growth

Nick Ballard, Director of Mobile, Geo Networks
Nick Ballard, Director of Mobile, Geo Networks

Nick Ballard, Director of Mobile at Geo Networks, examines how MVNOs are going to cope with the rapid growth in mobile data volumes.

Mobile data volumes soared in the last year as a rising number of consumers adopted media tablets, dongles and smartphones. Many would argue that this is just the beginning of a massive explosion in data usage and demand – the Yankee Group, a leading research and advisory firm, recently predicted that data growth will ramp up sharply by at least 30 times, putting severe pressure on already stressed infrastructure. Mobile Network Operator (MNO) Three (3), which carries nearly 50 per cent of the UK’s mobile data traffic on its network, has seen data volumes double over the last two years and is expecting the trend to continue in 2012. This massive increase in mobile data puts significant stress on both the operator’s air interface and its fixed backhaul and core network infrastructure.

This shift in usage and behaviour is also having a profound effect on Mobile Virtual Network Operators (MVNOs) who rely on their host operator’s networks to keep them attractive and competitive. While mobile and wireless operators have been running their core networks over fibre for some time, many are now looking to optimise their investment by extending the fibre into the aggregation/backhaul layer.

Successful MVNOs are those that run their operations in such a way so that customers cannot distinguish any difference in service or network performance from the MNOs. However, users will see a change in terms of value and the element of community. Unlike resellers, who offer very little brand recognition, MVNOs are typically larger mainstream brands with a good market presence and marketing clout. For example, Tesco mobile is a MVNO in the UK that uses its market recognition and physical high street presence to position itself as a Telco for selling directly to its customer base.

MVNOs do not typically own their own physical infrastructure; however some

leading providers are now choosing to invest in both fibre optic networks and capacity services. As such, MNVOs will often treat the host MNO’s infrastructure as a means to an end, offering its own special blend of products and differentiated services through the exploitation of their own intelligent network infrastructure. An MVNO would do this with the objective of offering innovative promotions and services to its own customer base, which may well be a special interest or ethnic group, thus avoiding the need to compete with the MNO on price alone.

The other interesting development is the rise of the Mobile Virtual Network Aggregator (MVNA) such as Cognatel and x-Mobility. The rationale is that the MVNA aggregates demand from smaller MVNOs and purchases mobile airtime in bulk from the partner MNO such as Vodafone in the case of Cognatel and Three in the case of x- Mobility. MVNAs provide the platform, underlying systems and value-added services to multiple MVNOs, with the objective of reducing the overall operational cost. In addition there is an increasing trend for larger MNOs to use an offshore MVNO to offer its customers the ability to consume data while overseas without incurring excessive roaming fees. This dual SIM approach makes sense as it makes the MNO’s proposition in their home territory more attractive. An example might be China Telecom, which is due to launch its MVNO on the Everything Everywhere network later this year.

The fast rise of data usage is set to continue for some time, particularly with the popularity of video on demand services such as YouTube, BBC iPlayer and Netflix the new entrant to the UK. Moving forward more MVNO/MVNAs will radically change the face of this sector. It is likely that there will be an increased number of operators that choose to own their own networks with dedicated fibre infrastructure.

Of course this focus on expansion of fibre infrastructure and capacity is a good thing for sophisticated 21st century mobile customers, who demand always-on connectivity and fast download speeds to support their ever-expanding media habits.

 

Challenges Lay Ahead

Michael Smythe, Marketing Director at Capstan Communications, has identified a number of challenges ahead for resellers this coming year.

“In my opinion the biggest challenges for dealers this year will be new customer acquisitions, lease acceptance rates, customer base churn and having the right technology in their portfolio.

“Capstan has a number of solutions for these problems already in place for our channel partners; for example, we have an end-user lead generation scheme in place which is providing invaluable opportunities for new sales. Once an agreement has been reached we then have our own leasing programme to help resellers secure the funds for their customers. The Capstan leasing programme involves no brokers and has direct contact with the funders. We also anticipate the launch of a zero per cent finance option imminently!

“This year will see an even greater importance being placed on customer retention so it is vital that resellers provide service excellence at all times. The pace of technological advances means that new systems and solutions can improve user business efficiency and reduce cost within a very acceptable time period for return on investment so it is important resellers keep revisiting their user base before someone else does. The good news from Capstan is that we have an easy migration path for legacy LGEricsson systems to this new technology.

“In fact Capstan has a fully rounded portfolio to address a wide range of applications including VoIP, routing and wireless and are actively in the process of preparing four new products for launch.”

As well as the threats Smythe also sees a number of key opportunities for the channel in 2012

“The biggest opportunities will be in emerging / growing technologies such as wireless access for BYoD, increasing demand for video & UC applications and cloud-based services.

“Here Capstan has a great portfolio of products and applications for resellers. The LANCOM wireless product range is exceptional in terms of feature set and value for money whilst the LG-Ericsson Mobile applications for UC due this coming quarter are set to change the way in which we view UC ease of use.”