With the appointment of Ajit Pai, the new pro-business chairman of the U.S. Federal Communications Commission, many experts predict fortuitous years ahead for communication service providers.
But instead of rejoicing, communication service providers, especially those with mobile products, should survey the telecom landscape and the challenges that await them.
Smartphone oversaturation
Who doesn't own a mobile phone these days? Not many, according to the Pew Research Center. In a January 2017 study of consumer mobile technology ownership in the U.S., Pew found 95 percent of Americans own a cellphone. Seventy-seven percent own a smartphone, a meteoric rise from 2011 when only about one-third did.
For mobile CSPs, this saturation has been problematic for growth and a major contributor to nearly industrywide decreases in revenue over the last decade. As smartphones grew in popularity and consumers signed on to contracts, traditional telecom service providers with no mobile products entered the mobile arena, making mobile services even more accessible to consumers and increasing competition. Aggregating data on major telecom players in North America, one PricewaterhouseCoopers study found that per-user revenues across the telecom industry fell, on average, 2 percent each year between 2011 to 2016.
Major cable multiservice operators – Comcast and Charter to name two – are dipping their toes into mobile as well, and when they do the competition will decidedly move to bundled product offerings and price, a trend that's already taken hold of telecom. The race to zero may be underway.
Unlimited plans and the limited future for 5G
Verizon's recent decision to offer unlimited data plans has become something of a cautionary tale for mobile CSPs – and in more ways than one.
After taking potshots from competitors T-Mobile and Sprint, Verizon started offering unlimited plans to subscribers just this past year. This again plays into the larger narrative of product competition versus price competition in telecom. Now that major player Verizon has officially entered the fray, CSPs may have reached a dead end of sorts. With almost nowhere else to go in terms of product offerings, they may all have to duke it out over price.
Looking ahead, many have questioned Verizon's ability to support the tremendous influx of subscribers seen in recent months, not to mention similar assumptions regarding legacy subscribers moving to unlimited plans and soaking up data. Fortune reported that, although Verizon has invested more in infrastructure upgrades in the past year than T-Mobile and Sprint combined, it started at a deficit. Verizon has less per-user airwave spectrum than Sprint and half that of AT&T or T-Mobile.
Investment into network capacity is the biggest obstacle revenue-strapped mobile CSPs will face well into 2020. Not only is the industry inundated with smartphone-using, unlimited data-having subscribers, but 4G LTE availability in the U.S. has surpassed 81 percent, according to Open Signal.
More importantly, although Open Signal ranked the U.S. 10th internationally in 4G availability at the end of 2016, it ranked the nation 69th in average 4G speed. All the more reason to heavily invest in developing 5G infrastructure as fast as possible. But without the revenue generation to feed that initiative, mobile CSPs will continue to linger in a limbo of languor.
Mobile profitability and advanced telecom billing software
In the ensuing kerfuffle over how to differentiate innovative products, strategically drop prices – but not too much – and sock away profits for 5G investment in a tight-margin environment, consider the telecom billing department the battlefield.
Telecom billing professionals will no doubt feel the brunt of cost competition, as their companies push to promote a diversity of promotional rates with varied characteristics. As the administrative minutia multiplies, the problems will no doubt complicate billing workflows, decrease efficiency and hurt customer service. In short, without the proper back-end solutions, it will cost CSPs more to earn less in revenue. These businesses need billing and operations support systems to organize the chaos they're experiencing today and plan for better, less costly approaches to tomorrow.
CostGuard®, the award-winning all-in-one advanced B/OSS from IDI Billing Solutions, was designed with the challenges of mobile communications billing in mind. With a dynamic rating engine and an integrated tax database built right into the BaaS infrastructure, CostGuard is equipped to handle complex rating schemes and myriad promotional products with speed and simplicity of design.
Mobile CSPs will love the unbillable usage dashboard, which identifies problem areas where users are missing out on possible revenue and drills down to their root causes to plug up the leaks for good.
Click through for more information on the state of today's mobile communication market, CostGuard B/OSS and how IDI Billing Solutions separates itself from other telecom billing software providers out there.
