Telecom operators are set to dive further into sponsored data, which will also drive mergers, including one between Verizon and Comcast.
Editor’s Note: With 2017 virtually upon us, RCR Wireless News has gathered predictions from across the mobile telecommunications space on what they expect to see in the new year.
The evolution of the cellular phone has changed how we live, how we interact and how we consume information. From initially offering the flexibility and mobility to call anyone from anywhere, it has quickly grown into a personally connected device people rely upon on a daily basis to socialize, to explore, to learn and to be entertained.
As the mobile phone has evolved, especially following the release of the Apple iPhone in 2007, so has the way people consume data as on-the-go access has become more commonplace. An increasing number of people are cutting their cable contracts and using their phones to access their favorite apps, movies and shows. Mobile video traffic accounted for 55% of mobile data traffic in 2015, and is expected to reach 75% of total global mobile data traffic in 2020, according to a recent estimate by Cisco. While these shifts provide more flexibility in how content is consumed, the consumer is increasingly burdened with paying for the high cost for this data usage.
Mobile carriers have recognized this pressure, but face their own pressures to grow stagnant average revenues per user. To address customer needs and Wall Street concerns, mobile carriers are turning to content-oriented models with the help of some of the biggest content providers in the world, and sponsored data is playing a key role. Sponsored data allows brands and content providers to pay the cost of the data on behalf of customers, providing sponsored access that allows users to engage with or view their favorite content. AT&T, Verizon Communications and T-Mobile US are all invested in the new business models for sponsored data, and 2017 will surely be the year this new access model becomes widely available worldwide.
Over the next year, Syntonic expects to see the following shifts, which reflect a continued expansion of sponsored data and video services, and global partnerships between mobile carriers and content providers:
Sponsored data will transition from early adoption to mainstream deployment with mobile operators worldwide
AT&T, Verizon and T-Mobile US have all rolled out free data services to U.S. customers and are building content-oriented models to better serve their customers. While sponsored data is now mainstream in the U.S., Syntonic expects more mobile carriers around the globe will partner with content providers to capture the enormous untapped prepaid market of nearly 2 billion mobile subscribers. Mobile operators in Latin America, Africa and Asia are also exploring sponsored data models and will begin to market them in the coming year – marking a global shift to content-first data models. Prepaid subscribers in emerging markets will benefit from these models more so than any other geography as the prepaid data plan is inherently restrictive. Sponsored content essentially eliminates access barriers, encouraging users to engage with content they may not have consumed when rationing data.
A wave of ad-supported mobile video services will come to market
Mobile video consumption is growing at a fervent pace. With this growing wave of data use, alternative content-centric business models will arise to bolster the economics of video delivery – ad-supported video services, included. 2017 will be notable for the exploration of ad-supported mobile video services, including everything from user-generated content to premium entertainment and short-form music videos.
Over-the-top mobile content services will emerge as cable operators and major content providers begin offering programming content directly to mobile consumers across carrier networks
The 2000’s were the failed decade of large content brands venturing into mobile as mobile virtual network operators. The cost of device hardware, customer acquisition, operations and support far outweighed the value garnered from their premium content. Moreover, the lock cable had on big screen programming started to erode with the rise of Internet protocol, user generated content and ubiquitous “4G” mobile access. Leveraging existing mobile carrier sponsored data platforms, content providers and cable providers can now offer their content and programming directly to the end user’s smartphone, irrespective of the mobile network.
In 2017, we will witness the accelerated alliance between content companies and mobile carriers: Verizon will merge with Comcast; AT&T will receive approval to acquire Time Warner; and other carrier-content company mergers and alliances will follow in Europe
Consumers have made their needs abundantly clear – they can’t get enough video content on their terms, when and where they want it. Now, the onus is on mobile carriers to accommodate this new consumer expectation.
The big guns are already laying groundwork. AT&T’s acquisition of DirecTV and its planned acquisition of Time Warner for more than $85 billion will change the industry. But this is just the beginning. In 2017, Syntonic expects more unions will occur as Verizon formally merges with Comcast, extending the NBC Universal assets onto mobile. The mergers will continue across the Atlantic with major European carriers like Vodafone, O2 and Orange following suit and acquiring popular content companies in their respective markets.
Sponsored data is primed to change how every player in the mobile ecosystem operates. Mobile operators are crossing lines to become entertainment companies; content providers are finding ways to connect with a mobile audience; and consumers are interacting with content they may not have accessed if they were paying for the mobile data. Sponsored data is providing new business models for the mobile ecosystem to attract, engage, and monetize customers and the industry is responding directly to the needs of consumers – providing access to content for a mobile audience.
