Data Overload!

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When it comes to Mobile Data we are all using a lot more than we ever have previously and it’s only going one way. For resellers, dealing with mobile data usage trends may seem like a fairly simple proposition… just sell more of the same. There are distinct opportunities presenting themselves in the market at present, David Dungay went to find out more.

According to The Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast global mobile data traffic grew 74 percent in 2015. Global mobile data traffic reached 3.7 exabytes per month at the end of 2015, up from 2.1 exabytes per month at the end of 2014. In short, that’s a lot of data! But how is this rise affecting resellers?

Ricky Shock, Mobile Product Manager at Daisy Group said, “It has always been the case that the networks react to the usage trends and resellers tend to follow suit based on what they are able to sell, as such usage trends have never really had a massive knock-on effect. However, service providers like Daisy Wholesale are seeing an increase in partners buying data in bulk with a view to then splitting that out amongst their end users. The market as a whole seems to be gearing towards shared data.”

Screen Shot 2016-03-03 at 09.51.08Charles Towers-Clark, Managing Director of Podsystem Group, commented “Possibly the most significant driver of usage is the transition from 3G to 4G. Figures from ABI research show there were 1.37 billion 4G subscribers at the end of 2015 and forecasts suggest that this figure will increase to over 3.5 billion by 2020. Since the introduction of 4G, subscribers are increasing their data plans and consuming data more quickly than they did on 3G networks. Research from Ovum shows that users of Android 4G smartphones consume more than double the amount of data than users of 3G smartphones over the same time period. This translates into higher data revenues, increased device sales and consumption of new applications and services which is good for resellers in all these sectors. However, with the price of data decreasing as it becomes more commoditised, resellers (especially those focused on reselling network services) will need to look for new ways to differentiate themselves and add value to their offering.”
Mark Curtis-Wood, Head of Nimans’ Network Services added, “For resellers, data usage trends affect them in two ways. As consumers and business users we are all consuming more data. ‘Voice’ is in decline along with text messaging because people are using third party apps to communicate, often via WiFi at home or abroad. Where they can’t find WiFi it’s much more cost effective to switch on their data now.

More data is being consumed which should push the ARPU (average revenue per user) up but at the same time legislation is bringing it down because there’s a desire to create a level playing field. As a result the network operators have introduced pay-per-day data packages.”

International Opportunities

Ricky Shock March 2016In terms of our domestic expectations we expect to be constantly connected and downtime is considered simply unacceptable. Traditionally, when abroad we have forgiven lack of connectivity and where we have had it have been happy to use it sparingly to keep costs low… but not anymore! So what can resellers do to capitalise on the international opportunity?

Shock says, “Despite the new EU regulations, due to be imposed to manage the cost and simplify out of bundle charges, there are ways that resellers can encourage safe roaming through money-saving bundles. Bill shock is always a popular headline, so by providing end users with competitive data rates when abroad, resellers are able to capitalise on this. “

Towers-Clark added, “In order to take advantage of the best 4G coverage as it evolves, resellers of mobile data should look at options which allow them to “pick and choose” networks in countries across the world, rather than being served a menu of available coverage on one network. This means working with independent providers of data such as Mobile Virtual Network Operators (MVNOs) who are free to make agreements with many different networks around the world. Those that also manufacture and programme their own SIM cards can provide a tailored plan including coverage on specific networks in countries globally, allowing maximum 4G coverage as it evolves.”

Curtis-Wood “There’s definitely an opportunity for international deals for resellers although various networks are taking different views on it. Resellers need to remain competitive, that’s the bottom line. The international roaming arena has been complex but it’s also been lucrative due to high ARPU. The challenge now is depending on where customers are (EU or further afield) it probably won’t be as lucrative as it used to be. It’s a minefield but anyone that knows the arena very well can still offer a tremendous amount of value in terms of what should work and shouldn’t. The networks are losing margin so are looking to claw that back on other tariffs. It’s critical if you are a reseller to work with a service provider who can help navigate you through the minefield.”

Mark Curtis Wood March 2016EU Data Roaming

There has been a fierce debate in the industry regarding roaming charges for customers when abroad and until now operators have been enjoying the exorbitant charges they have been allowed to pass on to users. However, we are eighteen months away from a significant shift in the market.

Curtis-Wood said, “June 2017 will finally bring about the long overdue scrapping of mobile roaming charges in Europe. Customers will no longer be faced with uncertainty over confusing charges, data bars and ‘bill shock’. Instead calls, texts and data usage in Europe will be charged at standard UK rates. This is a milestone move which has been on the cards for some years with some operators already allowing customers to use their domestic allowances when in the EU on certain tariffs.”

Towers-Clark added, “A reduction in roaming rates will be applicable as from April this year, as operators are only able to charge a maximum of €0.05 per MB of data in addition to the user’s domestic data price (capped at €0.20 per MB). It is claimed that the legislation has served to increase the volume of the data roaming market by 630% since 2007. However, for heavy users of mobile data which includes most business users, roaming is still expensive. Increasing competition among European operators will doubtless push data costs down further, but for global roaming travellers still need to be careful about high costs in many countries worldwide.”

Ed Says…Mobile data presents an interesting challenge for some resellers but also a great opportunity to those who service growing businesses that operate internationally. Keeping an eye on what your customers are consuming is a good idea as you can be ahead of the game when it comes to renewing contracts. Potentially a competitor could be offering your customers cost savings and new products which you aren’t offering… get in there first!