Guest Author: Chetan Sharma, Founder and President, Chetan Sharma Consulting

3 October 2012: Mobile operators around the world have had a great 30+ year run. Mobile as a service has evolved from basic 1G voice service to 4G data driven application computing service. Mobile has become an integral part of everyday life and is clearly the engine of growth for every economy.

However, change is in the air.

We are living in a data-driven mobile era. Sooner or later, most operators’ revenues will be derived from data services, whether it is age-old SMS, access, or next generation communications or value added services.

In Japan, in Q2 2012, Softbank’s data services contributed to over 65% of the overall revenues. The other two operators – NTT DoCoMo and KDDI were at the 60% mark. It is safe to assume that all the three operators will have more than 80% of their revenues come from data services by 2013.

Mobile data growth in this stage is expounded by the ever growing ecosystem of developers, new data services, and the transition of the legacy network framework into the network as a platform with monetizable open APIs that empower the ecosystem to build compelling experiences and applications.

Mobile Internet 3.0 combines the openness of the core network with the ubiquity of the billions of IP nodes to create compelling, intelligent user experiences that delight consumers.

The global mobile data revenues contributed over 30% to the service revenues. Messaging continues to be a big revenue generator but its share of the overall data revenues is gradually declining. Access is becoming a dominant revenue category especially for the western markets. This trend is even pronounced for the smartphone users. Consumers are paying $20-30/month for access but it is directly impacting the messaging revenues for some operators as consumers chose to use social networking tools to do the bulk of their messaging. Additionally, the VAS revenue is also lost as this revenue moves to the over-the-top (OTT) application providers such as Google, Facebook and others.

Given that there is constant pressure on the access profits, the issue of declining margins must be tackled head-on. Mobile operators must look at ways to move beyond just providing access services and position themselves from being service providers to becoming service innovators.

It is clear that the operator business is going to get segmented into two clear categories – access business that includes the current voice/messaging/data segments (the first three revenue curves) and the digital solutions business that is a portfolio of solutions across verticals running different business models.

Mobile operators who are able to transform themselves into digital lifestyle solutions providers (DLSPs) who go beyond just providing access and devices to their customers to empower consumers and enterprises with solutions – end-to-end solutions – will reap greater benefits from the 4th curve of revenue stream. Such operators go beyond just being an enabler of the ecosystem; they actually launch complete end-to-end solutions in given verticals.

Obviously, any given operator could play a different role on the various mini-curves that make up the 4th curve. For example, they could be a DLSP when it comes to security services, and an enabler for the advertising services, and a utility player for the cloud services. The net performance of any given operator will be measured by how they perform in aggregate on the 4th curve.

The next 2-5 years will be critical for operators worldwide. The strategies they pursue and the investments they make will define their future existence for the coming decade.

Operators who are investing heavily in the 4th curve have a good shot at seeing the end of the decade – but a good many will succumb to the powers of the growth curves, leading to consolidation in almost all markets or they will gradually morph from operators to utility providers. Many will be caught unawares by the shifting sands of revenue and their inability to mutate to compete effectively in the IP world.

Those that successfully make the transition to becoming the DLSPs are likely to have another successful 30+ year run.