The LTE Tariffs & Business Models 2011-2015 report

Click here to find some extracts from “The LTE Tariffs & Business Models 2011-2015 report”, a survey about how mobile carriers plan to make money from their 4G investments.

It is becoming increasingly apparent that mobile operators will not be able to make a profit out of 4G if they stick to current business models.

Flat rate, all-you-can-eat broadband data plans overload the networks with traffic. Watching YouTube eight hours a day generates no more carrier revenue than checking email.  Handset and tablet subsidies eat into the rest of the profits that operators may still manage.

Yet, as mobile data traffic will increase at 70% a year by 2015, mobile data revenues will rise by only 17%. That's if the current charging structures are retained. This is just one of the trends explored in a new survey called “The LTE Tariffs & Business Models 2011-2015 report”.

The study, conducted by Rider Research partner, Rethink Technology Research addresses this dichotomy. It explores how creative thinking in new business models will be essential if 4G investment doesn't disappoint in the way that 3G initially did.

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Over 66 pages and illustrated with over 40 diagrams and charts, this in-depth survey draws from interviews with 90 operators about their plans to deploy LTE and/or HSPA+ in developed markets between now and 2015.

At the heart of the report is the identification of five broad strategies that mobile carriers believe they can use as weapons in making their data businesses profitable. The five strategies are:
1) A host of new charging structures, looking well beyond simple tiered pricing;
2) An end to device subsidies;
3) New ways of generating revenue from devices such as tablets;
4) Revised revenue streams harnessing the new networks;
5) Lower cost of data delivery through 4G.

By detailing these five strategies, readers will learn how mobile operators' 4G business models will be impacted. The focus of the survey is on developed mobile economies where mobile data usage is already rising quickly and 4G roll-outs will be made in the next few years.

The results are broken down by region and carrier profile.

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Here is just a handful of some key findings that readers of “The LTE Tariffs & Business Models 2011-2015 report” will learn:
* 28% of operators say their primary reason for investing in LTE is to reduce cost of data delivery but over half of those remain unconvinced of the positive revenue model.
*  The opportunity to introduce new approaches to data charging is seen as the most powerful competitive weapon for 4G.
*  Cellcos believe 4G will enable them to increase overall data revenue by over 40%, and to treble revenue from non-traditional sources (eg M2M).
*  The typical cellco will use 12 different data pricing instruments by 2014, compared to three now. Popular approaches will include QoS and time-of-day pricing and many carriers will experiment with consumer designed tariffs.
*  The value of a Mbyte to the carrier has fallen from $260 for SMS at the start of the 3G era, to less than one cent for mobile broadband by 2014.

 

Who should read this report?
Every business involved in the cellular industry. Everyone will need an outlook on LTE charging mechanisms. Operators need a firm grip of what's possible and a clear strategic plan. Equipment and device vendors must offer pricing and partnership based on what is possible for the operator. Software and service businesses need to help enable new pricing paradigms.

The report is therefore essential reading for device manufacturers and their designers, applications houses, content owners, wireless operators, components makers, device and content distributors and the financial and investment community.


“The LTE Tariffs & Business Models 2011-2015 report” pricing is as follows:
Single reader                Corporate Licence
US$1,995                     $3,990
GBP1,250                     GBP2,480
EUR1,375                     EUR2,750

A corporate licence which includes permission to distribute throughout the company, plus the use of graphs and data in corporate presentations and brochures, costs $3,995.

Prices are per organisation and do not include outside contractors, advertising agencies or public relations companies.

To order, please download the extracts and order form and return the attached form to simon at riderresearch dot com

We will send you a copy (as an Acrobat file) upon receipt.

If you would like any further information, please do not hesitate to contact Simon Thompson
 

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Information Express, Rider Research's partner
PO Box 2077, Buckingham, MK18 1WQ, UK
Tel: +44 (0)1280 820560 

Rider Research (www.riderresearch.com)
13188 Perkins Rd, Baton Rouge, Louisiana 70810, USA
Main: (225) 769-7130  
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+++ TABLE OF CONTENTS +++

Executive summary 4
Introduction: Traditional data models 9
1. Operators' mobile data challenges 11

Failure of 3G charging 14
The subsidy trap 16
The flat rate data trap 18
2. Towards a solution with 4G 21
Top level forecasts 23
3. A new approach to subsidies 26
The changing role of subsidies 26
How to lure users away from subsidies 30
4. New data charging mechanisms 33
A history of data tariffs 33
New trends in data charging 36
Tiered pricing 38
The role of DPI 41
Case study: Verizon versus Clearwire 42
Other tiered structures 45
Flexible contracts and prepaid 46
Wi-Fi and data offload 50
5. The impact of new kinds of mobile devices 53
6. Embedded wireless models and new revenue streams 57
Device MVNO 58
On-demand wholesale 59
Content revenue sharing 60
Personal routers - sign of things to come 63
The five billion devices 64
The voice issue 65
New revenue streams 66
Fixed broadband over wireless 68
Conclusions 69


DIAGRAMS & TABLES
How operators weigh the five key 4G data weapons 6
EU 3G data ARPU as projected in 2000 15
The real picture of EU 3G ARPU 15
The carriers vicious circle 16
Phone price and subsidy trends 17
Data cost outruns revenues 19
The falling value of a Mbyte 20
Key LTE investment priorities 22
The five key weapons for 4G data profits 23
Targeted improvements in cost and ARPU from new data policies 24
Rising cost of subsidies 27
Rise of unsubsidized devices to 2014 28
The mobile data charging landscape 2004 33
The mobile data charging landscape 2010 34
The mobile data charging landscape 2014 35
The example of Sprint 36
Carrier intentions to adopt new charging mechanisms 37
Uptake of various forms of tiered pricing among cellcos 40
Investment in core and DPI drives offload and QoS tiers 44
The cost of carrying mobile video 46
Growth of prepaid plans in developed economies 48
Pros and cons of femtocells 52
Device mix in 4G to 2015 53
New device types drive flexible charging 54
The fragmentation of device branding 59
Embedded wireless revenue streams 61
Differences in charging on smartphones and other devices 62
Key new revenue streams 66
ARPU projections with and without new services on LTE 69

 

About Rider Research
Rider Research (www.riderresearch.com) publishes specialist bulletins, newsletters and reports about digital content, online entertainment services and broadband networks. It follows these businesses on a weekly basis through the strategy bulletin, 'The Online Reporter'.

About Rethink Technology Research
Rethink Technology Research offers consulting, advisory services, research papers, plus two weekly research services; Wireless Watch, the WiMAX, Wi-Fi & LTE newsweekly; and Faultline, the Journal of Quadruple play Economics.

Report methodology
An in-depth survey of about 90 operators was conducted in order to research the most comprehensive study yet of what mobile operators intend to do about the 4G dilemma. They were questioned about their plans to deploy LTE and/or HSPA+ in developed markets between now and 2015.

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“The LTE Tariffs & Business Models 2011-2015 report”