Regulation, OTT threat and spectrum dominate operator challenges

The most serious challenge mobile operators face over the next five years is the competitive threat from OTT players, according to overall respondents to the Intelligence Industry Survey 2014. Almost 50 per cent of respondents rating the OTT threat a six or seven on a one-to-seven scale of severity. But  operators in isolation judged regulatory pressure on pricing to be the biggest threat, with almost 60 per cent of operator respondents giving this a high rating for severity.

Indeed when respondents were asked to rate a number of challenges that mobile operators are likely to face over the next five years there was a marked difference between overall responses and operator responses, although the same factors featured in the top three.

A greater number of operator respondents, 47.4 per cent,  gave the cost of infrastructure investment a high severity rating than respondents overall, 41.4 per cent of whom rated it as such. As illustrated in the table, the only challenge for which the two groups agreed a ranking was ‘limitations of network technology’, which was considered the least severe across the board.

Availability of spectrum was also widely viewed as a serious challenge and a majority of respondents indicated that shared spectrum strategies (licenced shared access/authorised shared access/white space, etc) would likely be used by operators in their markets to meet some of their capacity requirements within the next five years. More than half of respondents agreed with this, with 32.8 per cent indicating strong agreement. More than one quarter of respondents felt that this would not happen, however.

The importance of spectrum holdings was also made apparent in a question that asked respondents to identify the three dominant forms of competitive differentiation employed by mobile operators in the market where they live. Network quality emerged as the most popular, selected by 65.1 per cent of respondents, followed by service pricing (58.0 per cent) and customer service/CRM (37.3 per cent).

What will be the greatest challenges faced by mobile operators over the next five years? (Percentage of respondents who ranked the challenge 6 or 7 on a 1 – 7 scale where 7 = extremely challenging)

Rank Overall respondents % six and seven Operator respondents
1 OTT competitive pressure 49.9 59.2 Regulatory pressure on pricing
2 Availability of spectrum 47.2 52.7 OTT competitive pressure
3 Regulatory pressure on pricing 45.3 48.2 Availability of spectrum
4 Inter-operator competitive pressure 41.7 47.4 Cost of infrastructure investment
5 Cost of infrastructure investment 41.4 44.8 Inter-operator competitive pressure
6 Limitations of network technology 17.0 16.7 Limitations of network technology

The 2014 Intelligence Global Industry Survey drew responses from more than 2,000 industry professionals, including more than 700 operator representatives. The full report from the survey will be made available in mid-February. You can register to receive the report here.

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