Smart networks and smart services can more than double cash return for carriers

Mobile operators can more than double the returns on their cash investments by putting into place smarter networks and subsequently offering smarter services, according to a new report from Tellabs.

A study commissioned by mobile services solutions provider Tellabs, and undertaken by research firm STL Partners, revealed that cash returns on invested capital for mobile operators today are typically around 5.8 per cent. It noted that this is similar to the return made by water or gas firms.

However, operators should look to build on adding more value to their offerings than utility firms, according to the report, and by building smarter networks and delivering smart services, mobile operators can capitalise on that value and more than double cash returns to 13.3 per cent.

The report found that, by implementing smart networks, mobile operators can increase cash returns on investment by 1.6 per cent; from 5.8 per cent to 7.4 per cent. Meanwhile, delivering smart services over these upgraded networks can increase returns by a further 5.9 per cent; from 7.4 per cent to 13.3 per cent.

In order to see the 1.6 per cent increase derived from moving to a smart network, operators should put into place efficient network configuration, network security and device management processes, according to the report. In addition, they should take advantage of network sharing, wifi offload, traffic shaping and multicast and content delivery networks (CDNs).

To increase cash returns by a further 5.9 per cent, the report advises that smart services must be introduced. These should leverage assets such as customer data, making additional operator assets like location, presence, payments, identity and authentication, available to users and other service providers, and implementing differentiated pricing.

“The report confirms out hypothesis that not only are smart networks are imperative for operators, there’s a potential benefit in terms of cash returns, which are boosted further by implementing smart services,” Pankaj Shroff, director of technology strategy at Tellabs, told Telecoms.com.

He added that by implementing these changes, operators also stand to reduce customer churn.

“If you look at why churn even happens, there’s usually two reasons: either you’ve found a cheaper plan, or you were unhappy with the service and the best way to address both of those issues is through smarter networks. That’s really a no-brainer.”

“If I’m with one carrier and with that carrier I frequently find that when watching videos on Youtube a lot more, then I’m an unhappy customer. So what can a carrier do about it? Invest in smart networks at the right price points, so that they can efficiently deliver that within the bound of their own resources so that the customer is less likely to be unhappy with the service.”

The report surveyed over 100 operators across the world on their views on smart networks.