YOU ARE AT:Uncategorized2014 Predictions: Driving carrier ARPU through messaging, mobile payments and mobile advertising

2014 Predictions: Driving carrier ARPU through messaging, mobile payments and mobile advertising

Editor’s Note: With 2014 now upon us, RCR Wireless News has gathered predictions from leading industry analysts and executives on what they expect to see in the new year.

A recent report from the GSMA predicts an increasingly tough few years ahead for mobile carriers, with global revenues dropping 16% by 2017. With subscriber penetration in the developed world now between 70% and 90%, text message volumes declining for the first time and voice revenues continuing to fall, many commentators are repeating that old line that the era of the “dumb pipe carrier” is here.

From where we stand – as one of the only mobile companies with direct connections to all the main U.S. carriers – this is far from the truth. There are a number of trends that will drive revenues for carriers in 2014, across messaging, commerce and advertising.

We see three major areas of opportunity:

An acceleration in the growth of multi-media messaging

When MMS launched in 2001, the technology was arguably ahead of its time as phones did not yet have the cameras required to create rich content for consumers to share. The experience for consumers was not compelling, and as a result growth was slow.

Subsequently, consumer attention turned to mobile apps as the best way to consume and share rich content on the mobile device. But as smartphone penetration has grown, consumers have embraced the utility MMS provides, boosting it to the second most used data application (after text messaging). In 2012 alone, MMS volumes grew by 40% even as SMS traffic was shrinking. The revenue picture is even more positive, with analysts predicting that while MMS will only make up 1.7% of total mobile messaging volumes by 2016, it will contribute 10.6% of total mobile messaging revenue.

Aside from the desire to share content, a major driver behind MMS is the fact that it counts as part of consumers’ data plans, which are often unlimited, allowing rich data to be shared at the same cost as simple text. This makes MMS a compelling option for mobile marketers. Text message marketing achieves a significantly higher open rate than e-mail marketing so 2014 will likely see the major email marketers move strongly into MMS, further driving volumes and revenues for carriers.

In fact, we believe forward looking carriers will embrace MMS for their own marketing and customer communication purposes, significantly increasing loyalty and reducing churn.

Mobile payments will give carriers a share of over-the-top revenues

The application ecosystem has made purchasing digital goods and services seamless, disenfranchising carriers in the process. Carrier billing – a two-click mobile payment process that adds digital purchases to a carrier bill – is growing in popularity thanks to a better revenue split than the main app stores.

While many believe near field communication is the mobile carriers’ only real stake in the mobile payment ecosystem, this is far from the truth. Direct-carrier billing will continue to grow rapidly in 2014, thanks to lower fees and a growing desire among consumers to make transactions on mobile devices.

As carrier billing is designed specifically for digital goods and services, it’s an ideal solution for carriers to take a share of OTT revenues. Take Skype – a classic OTT service – that many have argued will ultimately kill carriers. Skype uses direct carrier billing platforms to allow its customers to top up their Skype credits in just two clicks, adding the payment directly to their carrier bills.

Mobile solutions for the advertising space, driven by big data

Generic banner advertisements on mobile sites and poorly targeted in-app advertising are being replaced with richer, more personal mobile experiences. With access to a wide range of data from millions of subscribers – including location, age and gender – carriers have the potential to lead the ad tech sector with highly targeted and relevant solutions. Carriers can build permission databases of their customers, segment and analyze this rich data to build solutions that offer the most personal and localized approach to advertising yet.

The mobile advertising industry is currently worth $24.5 billion and is growing fast. Analysts predict mobile advertising will be 12% of carrier revenues by 2015. Through partnerships with mobile aggregators and API platforms and by sharing rich data with publishers, advertisers and app developers, carriers will be at the heart of the next generation of mobile advertising.


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