MNOs - Smart Pipe, Dumb Pipe, You Decide

I’ve quoted the whole of the Juniper Research press release here about their latest report. It contains some challenging perspectives. On-Portal revenues, I think, are doomed, depending on the individual operator strategy. If MNOs are able to keep folk restricted to using shitty, limited devices then, yes, people will have no choice but to download a five quid ringtone… open it up to the marketplace in general though, and things might get a lot more innovative.

My personal favourite? Dump Pipe. Stick to the knitting Mr Operator!

Link: SourceWire | Press Releases – Smart-Pipe Strategy to Provide MNOs with 31% Share of $188bn Mobile Content Market by 2012

Non-messaging mobile content revenues (including advertising) will reach $188 billion by 2012, according to the latest report by Juniper Research Limited. However, the question of which category of player will retain the largest portion of this pool of revenues is still very much open to debate.

The focus in the industry is currently on how to generate revenues from non-messaging mobile content, but there is a very poor understanding of why revenues are being shared at all, and what is being paid for. The report explores new business models that will distribute revenues among mobile content providers under three different scenarios, identifying who will retain the greatest proportion of available retail revenues and why.

Dumb Pipe

In the first scenario, mobile network operators (MNOs) themselves are reduced to Dumb Pipe status by aggressive end-user retail revenue-seeking activity by content owners, search engines and other branded service providers. This is the fastest road to bankruptcy for MNOs, since they will only retain a maximum of 24% ($44.7 billion) of the non-messaging mobile content market, while content providers will make 63% ($118.7 billion) and third parties around 13% ($24.5 billion).

On-Portal

The On-Portal scenario suggests that MNOs will continue to attempt to implement the vertically-integrated model currently prevalent in developed North East Asian markets. Although MNOs will retain up to 30% ($57 billion) of revenues, the increased negotiating power of content providers means that the lion’s share of 67% ($126.3 billion) will go to them, while there will be less space in the market for third parties, who will only retain around $4.5 billion.

Smart Pipe

The Smart Pipe scenario enables new business and revenue models to emerge that support the delivery of flexible, applications-centric value configurations – like search, imaging and information services – based on the core competencies of the various players. Under this scenario, mobile network operators are able to generate a small retained revenue upside (31%, or $58 billion) by making a range of business-to-business services available to a larger number of third parties.

‘Mobile network operators have nothing to lose by looking at alternative business and revenue models that enable them to blend a retail strategy with a well-articulated business-to-business and wholesale approach that capitalises on the network- and subscriber management requirements of an increasing array of downstream service providers” says Sue Uglow, report author. ‘This requires a step-change in the mindsets of most MNOs, but we are beginning to see movement in this direction.”

Uglow maintains that reducing focus on retail revenues will increase profitability for many service providers. ‘Some providers may need to relinquish the end-user relationship as the costs associated with reaching consumers of non-messaging mobile content will exceed the revenues available. Profitability will become a more important long-term indicator of success than revenue”, she concludes.