NFV, IoT could save the day as OTTs cost operators $14bn – report

Report says operators have plenty of new wasy to offset revenue declines caused by OTTs.

According to a report published by Juniper Research operators are set to lose $14 billion worth of voice and messaging traffic to OTTs such as WhatsApp, Facebook and Skype in 2014 alone. The report claimed operators in many markets, including the UK, Italy and Spain, have seen 60% decrease in mobile voice revenues in five years.

The report titled Mobile Operator Business Models: Challenge, Opportunities & Strategies 2014-2019 primarily attributed the missed revenues to the combination of IM, VoIP and social media substitution, but also to costs accumulated from additional signalling traffic.

However, apparently it is not all doom and gloom for operators as the report also claimed to have identified a number of new revenue streams, which could add up to $66 billion revenue boost over the next five years. “In areas such as M2M (Machine to Machine) and mobile money, operators can achieve a substantial revenue uplift by focussing on full service provision rather than simple connectivity,” report author Windsor Holden said.

The report also recommended operators to consider direct carrier billing to take advantage of the mobile content space, as well as introducing higher-value shared data plans or bundling content, and enhancing analytics solutions to monetise on consumer Big Data.

The implementation of NFV solutions was also flagged as both a cost-saver on proprietary hardware and a way of reducing product time-to-market. The NFV point is interesting as illustrated by a recent example from Intel, which was involved in a cloud RAN implementation project for China Mobile. After implementing the C-RAN solution, China Mobile apparently reported cost savings of 40-60%.  According to Intel, $80 billion of 2013 total operator capex of $330 billion was directly attributed to network equipment. In this context it looks like NFV could bring some serious operator Capex savings.

Looking at the figures quoted by Intel, NFV certainly seems to boast really quite impressive cost-saving potential to telcos. In terms of the other ‘new’ revenue streams and cost-saving methods highlighted by the report, the big operators are already looking to capitalise on those. Telefónica, for example, has recently made it very clear Big Data is one of its key focus area. Orange also launched a number of new product and service in the IoT space.

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