David Sharpley looks at how the mobile industry can manage the current mobile data explosion, prevent mobile ‘bill shock' and impress its customers in the process
The days when the mobile phone was only used for voice calls are over. Data services have become just as essential as voice for many mobile customers and are a major factor in their choice of operator, tariff plans and device. This is good news for mobile operators, but it also creates some challenges. While billing for traditional voice and text services on a time and distance basis is well understood by customers, things get a little more problematic when it comes to offering high bandwidth services oriented around content. It's fast becoming clear that mobile operators need far more flexibility and control when it comes to these types of service if they're to make the most of them.
Customers will always prefer an operator who offers a transparent, consistent relationship with a high degree of personalisation and control. Today - especially for a mobile sector facing explosive demand for content, social networking and entertainment services - it's fast becoming clear that a much more intelligent, adaptive and flexible approach to the issue of balancing customers and resources is desperately required. Without the ability to manage access to services, content and applications at ever-finer levels of detail, customers face the risk of experiencing the mobile data equivalent of electricity ‘brownouts' - or the unpleasant experience of suddenly receiving unexpectedly huge bills for content downloads.
At the heart of the problem lies the increasing demand on network and air-path capacity that are being made around the world by users of many different types as they take advantage of the new generations of data-centric devices and services now available. It's generally estimated that a smartphone uses around thirty times the bandwidth of an ordinary handset, while a laptop pushes this to a massive 450 times. In the longer terms, it's expected that mobile data traffic will roughly double each year through to 2012, while general industry sources also indicate that revenues from mobile data in the US and China are growing at around 50% per year. In Europe alone, it's reckoned that revenues from the current mobile data market add up to around $36 billion - forecasting growth to continue at 21% a year to 2011. By contrast, revenues from voice services remain static, pushing mobile data centre-stage in any mobile operator's plans for growth and innovation.
While mobile operators can respond to this by increasing network capacity, this not only takes time and money - the latter currently being in short supply - but also runs up some inconvenient laws of physics in terms of wireless spectrum capacity. If they impose blanket bandwidth and download limits, or just offer ‘best-effort' connectivity, they run the risk of alienating some of their potentially most profitable and high-spending customers with the brownout scenarios highlighted above. Alternatively, if they try to throttle back traffic through high tariffs and roaming charges, they'll alienate customers even more as the newspaper stories already circulating about ‘bill shock' and roaming fees totalling tens of thousands of Euros highlight. For customer communities already hit by the global recession and watching every penny, such strategies will not win operators any loyalty or encourage experimentation with new services
Indeed, the European Union has recently passed legislation that not only limits the fees that operators can apply for data roaming, but also makes it a legal requirement for them to alert customers as soon as their transactions reach a pre-set financial limit.
So, something must be done - but what?
The first thing is to realise that the crucial balancing point for matching services, network availability and customer demand lies in the policies applied to each customer's account. While policy control in its broadest sense has always been an integral part of any mobile service, the tools that have often been applied in the past have been far too heavy-handed for operators to really turn them to either their own - or their customer's - true advantage. ‘Best effort' or throttled-back service is no longer sufficient especially where the experience of enterprise applications or high-value content is impacted. Alternatively, the use of blunt generic pricing policies or caps on service access can have a similarly brutal effect on the customer's trust and their future spending patterns.
It is Bridgewater's argument that what is really needed is an ability to apply a ‘Smart' policy approach to handle this increasingly complex and sensitive relationship with the required levels of personalisation. But what precisely do we mean by ‘Smart'?
There are essentially three components to applying such a strategy:
Firstly, there must be ‘Smart Controls' in place. This means giving customers access to self-service portals or automated alerts that allow them to send top-up or bandwidth boost requests, change their service packages, get information on their usage and calling patterns, and set individual limits on roaming or downloads. In practice, this translates into a far higher degree of personalisation for the user, reduces customer support overheads, encourages experimentation and take-up of additional services and, very importantly, prevents bill shock.
Secondly, ‘Smart Apps' describes the increased control of the reality of the customer experience that can be achieved through a far finer granularity of detail. Both the customer and the operator can start to tailor policies to support specific applications - video and music downloads, web browsing, email, etc. - while also taking into account the customer's own real-time behaviours and preferences as well as the wider network conditions at different times or in different places.
Finally, ‘Smart Caps' can provide a more flexible, real-time and customer-friendly approach to the issue of setting bandwidth caps by allowing operators to act appropriately depending on whether they're facing heavy or abusive users - or customers who inadvertently exceed a set limit by downloading a movie. By optimising and rationalising the allocation of bandwidth across customers - and prioritising those prepared and able to pay for it - the user gets a consistent, fair experience while the operator avoids the need for expensive network upgrades to relieve network congestion.
In practice, a smart policy control strategy can add an unprecedented richness and flexibility to each mobile operator's palette of service and billing relationships - and keep the customer feeling that they're in control of that relationship and the money that they are spending. For example, by monitoring a postpaid customer's behaviour over long periods in real time, an operator can readily offer personalised bandwidth limits - or alternative tariffs - along with appropriate warnings to ensure fair usage or alerts to new service plans. Alternatively, prepaid customers can be monitored and offered relevant opportunities to upgrade their contracts through a portal as their circumstances change. On top of this, the inherent flexibility of the concept - and its easy integration with standard mobile network architectures - makes managing the charges and service quality parameters for accessing third-party content and applications much easier and more transparent.
The complexity of the relationships between individuals and enterprises and the ever-lengthening content and applications value chain isn't going away and can only increase. Customers demand to be recognised as individuals and only if we have the systems and processes in place to support that individuality will operators keep their loyalty and their revenues coming in. Policy control in the form of a combination of Smart Control, Smart Apps and Smart Caps approach is the most powerful tool operators have in their armouries to achieve that end.
David Sharpley is Senior Vice President, Marketing and Product Management, Bridgewater Systems