App-Centric Operators on the Rise mobile trends_charging_report_h1_2014_lr_publish

App-Centric Operators on the Rise

Allot MobileTrends

Charging Report H1/2014

© 2014 Allot Communications. All rights reserved.Allot MobileTrends Report H1/2014

Executive Summary

Since the last Allot MobileTrends Charging Report was published in H1 2012, we have seen the introduction of many new mobile service plan offerings based on creative ecosystem partnerships between service providers and content providers. It is apparent that operators around the globe are transforming into much more than Internet data pipes selling bandwidth. They are now on the path to becoming providers of digital lifestyle services to their subscribers. Operators are cooperating with content providers to offer application-centric plans together with some of today’s most popular Internet giants. It seems the tide is beginning to turn as operators see that unique plans for popular apps and are valuable assets in local markets.

OTTs have become more a friend than a foe. It is common to see operators offer zero-rated Facebook or Twitter or WhatsApp. Change has come to the digital lifestyle ecosystem as OTTs and carriers work together to increase subscription and customer loyalty to both the app and the network that delivers it.

Globally, operators offering application-centric plans have a higher average ARPU and a lower average churn rate. This significant finding is even more prevalent in developing countries.

As the evolution of data plans continues, unlimited data plans are becoming an offering of the past. Operators are moving away from actions that degrade QoE such as throttling Internet speed and when usage exceeds the volume cap; they simply charge the overage and maintain QoE. As tablets have proliferated during the last two years, shared data plans have taken off (especially on LTE networks) and now come with various data sharing options. Data plans are evolving to accommodate the different devices connecting to the mobile Internet, including tablets, dongles, and smartphones.

Findings that we explore further in this MobileTrends Charging Report H1, 2014, include the following highlights:

• 85% of operators are leveraging OTT apps to attract customers, increase ARPU

On average, operators who offer application-centric plans show higher ARPU and lower churn.

• More mobile operators are choosing to collaborate with OTT app and content providers

37% of operators had at least one OTT partnership, up from 26% in 2012.

• Facebook is mobile operators’ top choice for zero-rated apps 45% of operators offer at least one zero-rated app, and 65% of those zero-rate

Facebook.

• Unlimited data plans are in decline. Shared data plans are on the rise Operators offering unlimited data plans have diminished from 35% in 2012 to

15% in 2014, while operators offering shared data plans with shared data caps

increased from 29% in 2012 to 42% in 2014.

Allot MobileTrends Report H1/2014 © 2014 Allot Communications. All rights reserved. 1

Main Findings

Operators are becoming digital lifestyle providers!The percentage of operators offering value-based plans, which include premium services such as video, music, cloud storage, location based, etc. grew from 35% in 2011 to 59% in 2012 and to 85% in 2014! Of all operators sampled – we see a definite trend toward matching their offering to the digital lifestyle. Application-centric plans are the driving force behind this growth with 55% of operators globally offering these services and with European operators leading the trend at 63%. Sponsored/toll-free data, zero-rated data, media streaming services and cloud services are leading examples of operators and content providers coming together to create popular offerings that generate incremental revenue.

Operators and OTTs are choosing collaborationMore operators globally are leveraging popular apps and content to create new service plans based on the digital lifestyle segmentation of their subscribers.

37% of operators sampled had at least one OTT partnership, up from only 26% in 2012.

The ecosystem is evolving in this direction because every byte counts more when partnering with OTTs. This partnership trend appears to benefit all three stakeholders in this ecosystem. Operators are attracting subscribers and improving ARPU; OTTs are gaining loyal mobile users; and subscribers are enjoying a better experience with their favorite apps.

Application-centric plans increase revenuesComparing the key performance indicators indicators of ARPU and churn rate, it is evident that globally, operators who offer application-centric plans present higher ARPU and lower churn.

This finding is especially strong in developing countries.

Offering App-centric

Plans

Not Offering App-centric

Plans

Global

Mobile Operators

55% 45% -

ARPU $16.71 $15.25 $16.00

Churn Rate 3.21% 3.71% 3.48%

No Application Centric Plans

No Application Centric Plans

Several Application Centric Plans

Several Application Centric Plans

ARPU

Churn

Churn 6.9%

ARPU $5.3

Churn 5.4%

ARPU $5.6

Developing Countries

Allot MobileTrends Report H1/2014 © 2014 Allot Communications. All rights reserved.2

Facebook is leading the trend of zero-rated appsThe leading social media OTT applications report that over 60% of social media engagement is via a mobile device. This trend is a clear motivation to attract customers to a given operator and to lower churn rates.

• 55% of operators in our study offer application-centric plans

• 49% of operators offer at least one zero-rated application and 65% of these zero rate Facebook usage

• In general, free social media access is a strong marketing tool for operators in developing countries

Context Matters! Not all zero-rating for social applications is the same. Some offer free Facebook only for newsfeed text and text postings. Some offer free Facebook messenger and some offer zero-rating on all Facebook traffic.

Shared Data PlansSharing data volume allowances between multiple devices of the same subscriber and between devices of different subscribers on the same account is a growing trend. 42% of operators sampled offered postpaid sharing plans, pre-paid sharing plans or device-aware sharing plans. 87% of North American operators offer shared data plans that include tablets - especially on LTE networks. This region is leading the shared data trend.

Tethering is OK with operatorsThe number of operators charging for tethering almost doubled from 15% in 2011 to 29% in 2012 and stayed steady at 29% in 2014, which indicates that mobile service providers are maintaining their ability to monitor multi-device usage. However, this charging trend is not growing. The need to charge more for tethering or to block tethered traffic has diminished because unlimited plans are fast disappearing (The percent of operators offering unlimited data plans has diminished from 33% in 2011 and 35% in 2012 to only 15% in 2014) and most data plans have volume limits and overage charges built in. Tethered traffic is simply aggregated with the subscriber’s total volume usage. Furthermore, blocking the tethering capability is seen as a negative policy and operators prefer to avoid this.

Parental Control/ Clean Data59% of European operators versus 27% of the global sample offer opt-in parental control plans at additional (and minimal) cost. European operators appear to be leading the trend of social responsibility by enabling parents to take actions to safeguard their children’s digital lifestyles.

Our report takes a closer look at each of these trends.

Operators have found that application-centric plans enhance their ability to monetize the network

Application-centric plans

Operator

Subscriber

OTT Content Provider

Value


OTT players realize that if their applications don’t run well on mobile devices, consumers will stop using their app. Customer retention and customer engagement are critical to apps, websites and content providers. Since many OTT business models are dependent on keeping users interested and engaged with the apps, they must also focus on how well their content is delivered to the consumer. OTTs want to be seen as part of the mobile world; with an app that works well on mobile devices. Consumers will abandon apps if they have connectivity problems that create an unacceptable quality of experience. OTT players understand that the service providers have the ability to help them deliver a good user experience. Since mobile operators and OTTs realize that they have to work together to deliver quality content to customers, application-centric plans have become more prevalent.

Since our last Allot MobileTrends Charging Report in 2012, we have witnessed a change in the way service providers and OTT players address mobile Internet customers. Our research shows that operators are responding to the digital lifestyle by evolving their data pricing plans and introducing a variety of opt-in services based on content, applications.

Background

Mobile Internet is driving the digital lifestyle. People all over the world are using the Internet anytime, anywhere and mostly via mobile apps. Furthermore, in developing countries where fixed networks are not available to the mass market or may never be deployed; people have Internet connectivity only via mobile devices. In emerging markets, the adoption of the digital lifestyle is even more prevalent than mature markets. Consumers are using advanced applications such as mobile wallet, mobile payments (mCommerce), mobile gifting and mobile medical services (mHealth).

OTT content providers have shifted their position and can be found as players in the telecommunication ecosystem. Service providers are acknowledging them as genuine partners in their business plans. This was evident at Mobile World Congress 2014 where for the first time, content providers like Facebook and Yahoo took an active role, just like the other players in the ecosystem.

Do NothingKeep Calm

Fight!Block

NeutralizeAggresive plans,

unlimited data plans

CompeteOffer OTT “like” service

Partner together!Application-centric plans

Evolution of the ecosystem relationship between Service Providers and OTTs*

*Based on OTT Monetization Webinar by Informa - 21 June, 2013


Detailed Findings

Digital Lifestyle Data plans – charging for valueOperators who segment their market based on the digital lifestyle of their customers have been introducing value-based plans, making it possible to charge for the value of the service to the customer, and not just speed.

The percentage of operators offering value-based plans grew from 35% in 2011 to 59% in 2012 and to 85% in 2014! Often, more than one value based plan is offered.

For example, subscribers may now be able to purchase a plan that covers multiple devices or includes anti-malware or parental control (i.e., safe browsing) as a value-added service.

Operators also partner with OTTs and content providers to monetize traffic on their networks. These joint services often consolidate the billing process and improve the user experience for subscribers. In contrast, OTT content is often zero-rated as a way to differentiate the operator’s offering and attract users.

This section presents a deep-dive into some of the most innovative data plans in use by operators today.

Cloud StorageSprint USA in conjunction with Pogoplug offers unlimited storage at rock-bottom prices. Cloud storage has become a popular way for people to keep data accessible, organized and safe.

Parental Control/Clean DataWith mobile data security becoming ever more complex and children increasingly accessing the Internet from mobile devices, consumers increasingly seek a way to protect themselves and their devices.

It appears that operators not only recognize the security challenge, but also are seizing the opportunity to provide subscribers with the personalized parental control services they want.

Operators Offering Value-based Services

27%

13%11% 10%10%

29%

16%

7%

12%

18%

24%21%

Cloud Storage

Parental Control

Social Media

Music Streaming

OthersVideo Streaming

2012 2014

T-Mobile Macedonia Parental Control

MTS Ukraine’s child protection service

Vodacom offers parental control for free

Vodafone Italy Rete Sicura (Parental Control and Anti Malware) charges a monthly fee for the service


Social Media Apps - Partnerships GALORE!Social media apps are at the center of the changing relationship between OTTs and service providers. It appears that a zero-rated Facebook, Twitter, or WhatsApp package is a must-have for operators around the globe. The following are just a few fresh off the press partnerships that are coming to mobile data subscribers. Free Facebook at Tigo

operators in LATAM

Albanian Mobile Facebook Zero

Free Facebook and Twitter from Claro Brazil

Free Twitter at Diraagu Mobile InternetThis service provider in Moldavia offers free Twitter access and use. Operators large and small see the value in special pricing on specific applications to attract subscribers.

2degrees New Zealand offers zero-rated Facebook using a special app branded 0.facebook.com This app was optimized to respond quickly to mobile devices of all kinds.

Tata Docomo, India: unlimited WhatsApp plan with special pricing

Djuice Norway offers unlimited Facebook with no subscription and no charges

Tigo Tanzania offers free Facebook in Kiswahili Co-branding shows the importance of the Facebook brand to the package offered by Tigo.

MTN Camroon combines WhatsApp with Prepaid

MTN Ivory Coast offers free Facebook SMS and Twitter


Shared Data Plans Trend, Global

Shared Data Plans for Families and Devices Shared data plans allow customers to share the same monthly volume allowance between devices such as smartphones and tablets and between different people on the same account. It differs from a tethering or hotspot plan because it is actually consolidates multiple bills into one. Customers can add a secondary device without purchasing a separate data plan for it. All devices share the monthly data allowance from a single plan. With the Internet of Things moving forward with new and innovative devices (smart TVs, smart appliances, wearables and others), we expect more sharing plans will come to light to cope with the new usage patterns these devices will create.

The percentage of operators offering a multiple-device plan has increased from 23% in 2011 to 29% in 2012 to 42% in 2014. This packaging approach has a regional nature with North America strongly in the lead, followed by LATAM. If this trend continues, the majority of operators worldwide will offer shared data plans within a year or two.

2011 2012 2014

42%

23%

29%

Africa APAC Europe Latin America

Middle East

North America

Global

20%

42%40%

87%

65%

32%

46%

TELUS Canada – two way sharing

Verizon Family Data Plans

Vivo Brazil Shared Data Plans

Operators Offering Shared Data Plans, Regional

Vodafone Greece – multiple devices share one account


Application-Centric PlansIncreasingly, we see operators offering subscribers a choice between different levels of access to different applications. For instance, unlimited social media usage or OTT VoIP minutes.

In 2012, 27% of operators sampled offered application-centric plans to their customers. In 2014 these partnerships are up to 55% globally!

40% of application-centric charging plans focus on zero rating, however, 60% of these are premium plans that cost more. Our findings reveal that operators are segmenting the digital lifestyle of their subscribers and offering premium plans based on customer preferences.

Application-centric plans include promotional plans for TV streaming, on-demand video streaming, music streaming and music storage, GPS location services, parental control, tracking, and many more. Below are several examples of this new and developing trend in mobile services.

Africa APAC Europe LATAM Middle East

North America

Global

50%55%

40%

52%59%

63%

50%

Operators Offering Application-Centric Plans, Regional

Tigo Brazil launched a special World Cup app

MTN Uganda has several charging plans based on popular apps such as African movies and music videos streamed directly to smartphone or tablet

MTN Radio

MTN Voice Chat


Airtel Tanzania: radio subscription charged per day/month

Watch streaming TV with Vodacom Tanzania

Get the NEWs – a digital newspaper

Get Music on your phone with the music app by Vodafone New Zealand

Deezer @ Hrvatzki Telekom Bosnia Herzegovina

Moldcell Moldova offers Internet entertainment with YouTube, Vimeo, Metacafe

LMT Latvia has TV viewing options

Mobile Video Sharing with O2 Ireland


More App-Centric Service Plans

Oi Brazil Maps and Navigation service

Kyvstar Ukraine offering Tracking and Map services

Parking application offered by T-Mobile Macedonia

Vivo Brazil: Digital Books in the cloud

Albanian Mobile Communications partnering with Deezer music app

MTS Russia offering TV streaming on tablets

Internet bundle with Rhapsody (Napster) from Vodafone Greece


Overage Policies Have EvolvedOverage policies were created for mobile operators to control mobile data consumption or to monetize it when became “excessive.” Also, overage notifications and fees allow subscribers to control their monthly costs. The challenge has always been that mobile data subscribers do not know and cannot control the weight and length of the data sessions they create, thus making it very hard for consumers to control their usage and costs. Policy control and charging (PCC) solutions have been developed to assist operators in a variety of ways and we see definite trends in the top overage policies chosen by mobile service providers around the world.

ä Basic Overage FeeOnce reaching the volume limit, a fee per usage is charged, normally at a very high rate. For instance, $10 for 2GB and $1 per additional 1MB. The percent of operators charging overage fees has dropped from 70% in 2011 to 61% in 2012 and 41% in 2014. Overage fees often caused bill shock that led to churn or caused users to switch to WiFi until the next billing cycle. This method is being slowly phased out.

ã Volume Top-upOperators typically offer subscribers a choice between several levels of usage caps. Once customers reach their cap, they can buy additional volume until the end of the month. The percentage of operators offering Volume Top-up has grown from 32% in 2011 to 39% in 2012 to 44% in 2014 of operators sampled.

ä Speed ThrottlingThrottling purposely slows down the delivery speed of data usage past the cap. Speed is usually throttled to such a rate that it is noticeable. Bandwidth-intensive applications such as video become practically unusable. This policy is now frowned upon as operators realize that subscribers are extremely disappointed when QoE is degraded. The percentage of operators throttling overage traffic is trending downward from 48% in 2011 to 33% in 2012 and 29% in 2014 of all operators sampled.

ã Real Time NotificationInstead of degrading QoE, operators now send real time notification of data cap proximity. It is common that mobile operators will send a text notification when a subscriber has used 75% of the cap, 90% of the cap and 100% of the cap. This information helps subscribers top-up more volume when they need it. Real time notification policy is up from 10% in 2011 to 17% in 2012 and 29% in 2014.

ä Hard CapNo data usage is allowed beyond a hard cap limit. The subscriber must wait for the next month to access the service again. This policy is fast becoming obsolete as it provides little or no value to either operator or subscriber. In 2012, 12% of operators sampled enforce a Hard Cap on data overage. In 2014 only 5% enforce a Hard Cap on subscribers. This policy creates dissatisfaction and can result in churn since mobile Internet has become so vital to subscribers.

It should also be noted that operators are expected to reduce bill shock by having transparent policies such as notifications and caps in order to help subscribers manage their mobile data usage. Unlike voice conversations, mobile Internet usage either by browser or mobile app is hard to quantify and subscribers need help to manage their consumption and eliminate bill shock. New regulations are shaping policy around the world such as Telecommunications Consumer Protection code (TCP) by the Australian Communications and Media Authority (ACMA) which states: “Customers will also benefit from better spend management tools designed to avoid bill shock, including improvements in billing processes and credit management, and the introduction of notifications about data usage and expenditure thresholds.”

Operators with Mobile Data Overage Policies 2011-2014

10% 17

%

29%

13%

12%

5%

48%

33%

29% 32% 39

% 44%

70%

61%

41%

2011 2012 2014

Real Time Notifications

Hard Cap Speed Throttling

Volume Top Up

Overage Charging


The statistics presented in this report are based on data collected during the first half of 2014 from almost 180 mobile operators worldwide.

Our global sample covers 2.4 billion subscribers.

The networks surveyed had an overall ARPU of $16 USD per month, churn rate of 3.5% and percent-of-income-from-data at an average of 37.5%.

The regional breakdown of our sample of operators was: 24% Africa, 17% APAC, 31% Europe, 10% LATAM, 9% Middle East and 9% North America.

Methodology

The data was collected from publically available sources. The report encompasses data plans and charging models for subscribers using smartphones, tablets and dongles. It presents a snapshot of mobile data charging and presents overall statistics, as well as real-world examples of some of the most innovative charging models in use by operators today. This data is being provided for information purposes only.

The regional distribution of subscribers on those networks is: 11% Africa, 45% APAC, 19% Europe, 11% LATAM, 4% Middle East, 10% North America.

Global Sample

Subscribers in Millions 2,407

Avg. Monthly ARPU (USD) $16.0

Avg. Monthly Churn 3.5%

Data Service Revenues % 37.5%

24%9%

10%

17%

9%

31%

Africa

APAC

Europe

LATAM

Middle East

North America

11%4%

11%

45%

10%

19%

Africa

APAC

Europe

LATAM

Middle East

North America

Regional Distribution of Operators Sampled

Regional Distribution of Subscribers


digital lifestyle ecosystem providing limitless ways to:

Generate new revenue from a variety of application-centric services and charging schemes that integrate seamlessly in the network and are managed from a single focal point.

Reduce costs by optimizing the delivery and performance of OTT content and cloud/data center services.

Improve customer retention by personalizing operator offerings with a vibrant choice of value-added digital lifestyle services.

Glossary

Prepaid Mobile Data Plan is a data plan for which credit

is purchased in advance of

Internet use. The purchased

credit is used to pay for mobile

Internet services at the point at

which the service is accessed

or consumed. If there is no

available credit then Internet

access is denied by the mobile

network. Users are able to

top-up their credit at any time

using a variety of payment

mechanisms.

Postpaid Mobile Data Plan (also referred to as a mobile

contract) is a plan that requires

the user to enter into a credit-

based billing arrangement with

a mobile network operator. The

plan typically includes usage

policies such as ‘no-tethering’

as well as details of any data

caps and overage charges. The

user is billed once in every billing

period.

Value-Based Charging is the ability to differentiate and

charge for types of data usage.

By implementing Value-based

Charging models, operators can

offer personalized service plans

that best reflect the unique value

of different applications and

usage patterns to different types

of subscribers.

Application-Based Charging is the ability to charge/not

charge for access, usage,

QoE of individual applications.

App-based charging enables/

supports app-centric services.

Volume-Based Charging refers to data plans in which

subscribers are charged

according to the Gigabyte

volume of data that they

consume.

Summary

Application-centric services are often the result of collaboration between OTTs and network operators. Mobile operators need application-aware solutions that support a dynamic variety of partnerships, policy, and charging requirements, and facilitate rapid rollout of new service plans.

Allot facilitates the partnerships between OTT content providers and mobile operators by providing a clear picture of OTT application usage and by optimizing the end user experience.

Allot’s intelligent broadband solutions allow mobile operators to elevate their role in the


Americas: 300 TradeCenter, Suite 4680, Woburn, MA 01801 USA · Tel: (781) 939-9300 · Toll free: 877-255-6826 · Fax: (781) 939-9393

Europe: NCI – Les Centres d’Affaires Village d’Entreprises ‘Green Side’, 400 Avenue Roumanille, BP309,

06906 Sophia Antipolis Cedex, France · Tel: 33 (0) 4-93-001160 · Fax: 33 (0) 4-93-001165

Asia Pacific: 25 Tai Seng Avenue, #03-03, Scorpio East Building, Singapore 534104 Tel: +65 67490213 Fax: +65 68481015

Japan: 4-2-3-301 Kanda Surugadai, Chiyoda-ku, Tokyo 101-0062 · Tel: 81 (3) 5297-7668 · Fax: 81(3) 5297-7669

Middle East and Africa: 22 Hanagar Street, Industrial Zone B, Hod-Hasharon, 4501317, Israel · Tel: 972 (9) 761-9200 · Fax: 972 (9) 744-3626

www.allot.com [email protected]

About Allot Communications

Allot Communications is a leading global provider of intelligent broadband solutions that put mobile, fixed and enterprise networks at the center of the digital lifestyle and workstyle. Allot’s DPI-based solutions identify and leverage the business intelligence in data networks, empowering operators to analyze, protect, improve and monetize the digital lifestyle services they deliver. Allot’s unique blend of innovative technology, proven know-how and collaborative approach to industry standards and partnerships enables network operators worldwide to elevate their role in the digital lifestyle ecosystem and to open the door to a wealth of new business opportunities.

D26

5026

Rev

1 ©

201

4 Al

lot C

omm

unic

atio

ns, L

td. A

ll rig

hts

rese

rved

. Spe

cific

atio

ns s

ubje

ct to

cha

nge

with

out n

otic

e. A

llot C

omm

unic

atio

ns a

nd th

e Al

lot l

ogo

are

regi

ster

ed tr

adem

arks

of A

llot C

omm

unic

atio

ns. A

ll ot

her b

rand

or p

rodu

ct n

ames

are

trad

emar

ks o

f the

ir re

spec

tive

hold

ers.

Allot MobileTrendsCharging Report H1 2014

Date post:	12-Jun-2015
Category:	Mobile
Upload:	abdallah-nabulsi
View:	148 times
Download:	1 times