In its new report, Visiongain believes that mobile cloud service revenues will reach $45 billion in 2016 at a CARG of 55.18% from 2011. The greatest mobile cloud revenue contributions will come from mobile cloud applications. This is primarily due to increasing Smartphone penetration, growth of 3G network coverage across the globe and deployment of LTE services.

With companies like Mavenir that have enabled Mobile Cloud Services since 2010,  mobile operators can offer move real-time communications services (voice, video and messaging) to the cloud. Mavenir’s converged voice, video and messaging solutions enable services like VoLTE, VoWiFi, CPM, RCS, Mobile Video, Group Chat and others.

Operators can monetize these new mobile services that are scalable, highly customizable, easy to implement and competitive by offering new real-time communications services and leveraging their huge key advantage of ownership of the network, subscriber, mobile number and billing relationship.

In a new study called “4G + Cloud”, Maravedis reported that “The predominant business driver in offering branded mobile services is to improve ARPU, followed by other main drivers of improving margins and reducing churn.”

Mobile operators worldwide are seeing huge growth in mobile data and bandwidth use so they need to offset this with new and innovative services to increase revenues.

At the same time, they are having to maintain and upgrade their 2G, 3G, and now, 4G networks. Unfortunately, most of the CAPEX (radio) doesn’t contribute much new revenue.

To ‘ride the wave’ of new apps and services, to get a percentage of revenue from OTT players, and avoid becoming just a “dumb pipe,” mobile operators must transform their networks to all-IP architectures, and raise ARPU by streamlining CAPEX and OPEX.

Findings from the recent OpenMobileSummit say “Carriers are struggling with the conundrum of delivering a marketable offering to consumers which delivers a proportional return on the network investment.”

Perhaps the key to increasing ARPU lies with innovation around subscriber identity. Mobile operators have the unique opportunity to integrate subscriber information with services and applications to offer streamlined and personalized experiences in real time.

Smaller vendors who are typically more innovative, offer convergence solutions that solve deployment challenges faced when migrating services and subscribers.  They can cut time-to-market by bringing ideas such as overlay solutions that obviate the need for CAPEX investment in the legacy network and optimize the OPEX spend to maintain complex functions.   

Companies such as Mavenir provide a flexible converged services platform (Mavenir’s mOne Platform) to cost- effectively deliver innovative services between next generation and legacy networks while offering proven time to market advantages.  Real time voice, video and messaging services such as RCS and VoLTE, tied to the subscriber’s identity and delivered quickly may be the answer to creating loyalty and increasing ARPU.

Who knows?  The chase for ARPU and loyalty is likely linked to the power of subscriber identity.

Why? There’s a large global ecosystem with a diverse vendor community and a strong future roadmap for the technology with, for example, LTE Advanced.  According to Ed Chao, Senior Vice President, Corporate Engineering and Network Operations, for operators like MetroPCS, the VoLTE deployment is part of the carrier’s strategy to optimize its scarce spectrum resources, as VoLTE is significantly more efficient than the existing CDMA network.

Traditionally, mobile operators have aligned themselves with a single vendor that tends to narrow offerings tied to that particular vendor, ignoring the opportunity to have “best of breed” technologies that might greatly reduce the cost of the network design and deployment. MetroPCS shows an alternative path.  Read the complete blog at SIP Mobile Matters.

With LTE taking hold, how will operators monetize beyond a simple broadband play and how will they protect their core voice revenues?

The reliance on 2G and 3G in the age of LTE networks will still be important to serve all mobile subscribers across the globe. Even as a new network technology comes out, it is still vital to have fall backs in place should capacity reach its limit or subscribers decide not to upgrade to the latest device. It is not enough to roll out next-generation networks without acknowledging how it will impact upon the wider market. Currently, operators deploying LTE technology have to assess how they will deliver their core communications services and continue to monetize them.

If operators can overcome these challenges, they stand to benefit greatly from migrating to new technology. According to research by Heavy Reading and Wireless 20/20 for Mavenir last year, launching 4G/LTE Services immediately will result in a tenfold increase in 10 year net profits, a 50 per cent increase in internal rate of return (IRR) and a 50 per cent increase in average revenue per user (ARPU) over a data-only service strategy. For operators seeking to launch LTE services, thinking about how to deliver services that mitigate the risk of losing subscriber loyalty is essential. They must  prevent losing services to third party, over-the-top providers that do not contribute to operator revenues.

The study also revealed that delaying  launch by just two years causes a net present value reduction of 20 per cent, a 10 years IRR reduction of four per cent, and an ARPU reduction of 7.9 per cent.

Delivering voice and video over LTE (VoLTE)

To deliver full service parity and intelligent network services such as Prepaid and Ring back tones or mobile switching center servers (MSCs) that support circuit-switched-fallback (CSFB), large re-investment in legacy technology is required. This would slow down the time to market for upgrades and back office integration – which is something operators would seek to avoid.

For some operators, this can be implemented via a solution for CSFB that includes an inter-working function where operators can preserve voice and SMS revenues to assure global roaming and interoperability.  For operators pursuing a multimedia telephony service-based (MMTEL) VoLTE, there’s an MSC telephony application server (TAS) solution that enables existing circuit switching to serve VoLTE subscribers (leveraging MSC services in an IMS environment) over IP domain. Finally, operators wanting to deploy MMTel solutions that provide a pure IP option can do so.  All of these solutions are currently available.

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The study also revealed that delaying  launch by just two years causes a net present value reduction of 20 per cent, a 10 years IRR reduction of four per cent, and an ARPU reduction of 7.9 per cent.

Mobile operators are showing interest in launching video services as it extends their value proposition as well.

The OTT players have brought innovation and a newly defined service experience to mobile video calling that has attracted consumers to use these new services.   But the game is just starting…

Operators control delivery and leveraging the interest that OTT players have generated, Operators can now capture that consumer base with a ‘better product’.

Why are services like mobile video calling and mobile video conferencing gaining momentum now?  There are three main reasons…first, new user interfaces make these services easy to use, new smartphones and tablets have enhanced capabilities and the networks are being upgraded to provide faster speeds and quality of experience.

The user experience will continue to improve and be more accessible (with Android and Apple apps) so it’s available on many devices.  This will make it even more mainstream and easily reachable by more people.

Mobile Video Calling

Video calling is not currently a critical service (yet) but it may become critical as more and more people get comfortable and collaborate on video.

Mobile operators have an opportunity to offer new video services that enhance the user experience as consumers are typically very comfortable and confident in the services offered by their operators.

How important is interoperability?  Video is a private service, can be invasive so it’s mainly used within known communities or groups.  It is also possible for the consumer to control and make the experience seamless by ensuring the group all uses the same service.  As long as the use for video calling and video conferencing is still mainly social, consumers will figure it out.  As mobile operators start to deploy these services, then interoperability will be another way to add value. In fact, ensuring interoperability between mobile operators is a key way to compete with the OTT players.

What will be the most viable monetization?  There are two models emerging and neither includes a special charge for video.  One model offers the service for free with ‘pay for data’ plans and one model will bundle video with a voice/messaging package for additional flat rate and make it an unlimited (premium) package.

You cannot really charge for it unless the value is established.  Once the service becomes critical, operators may try to charge separately.  There will likely be a way to charge for it since, for example, services like Skype charge to be unrestricted and OTT services aren’t free either.

As mobile operators contemplate their mobile cloud strategy, it is critical that they reinforce one of the key value propositions that truly separates them from OTT players, that being the relationship with the consumer.  Consumers will gravitate towards simple, trusted providers and solutions so if mobile operators could offer competitive cloud-based services that were integrated in the devices and the billing, plus add the reliability of the network, they will come. Here are three essential elements to consider when launching a carrier-grade mobile cloud:

1. Common computing architecture

To reduce complexity, ease network management, and lower operating expenses, mobile operators and their cloud service providers should employ a common computing architecture with off-the-shelf computing components from leading equipment manufacturers

While the industry moves toward standardized platforms for network infrastructure deployment, for now, components from these manufacturers are designed for high-availability environments.

For mobile operators, a cloud-services infrastructure must be carrier-grade  in order to offer unique ‘real time’ communication services. In contrast, OTT players simply do not come close to this standard of uptime but they offer primarily non-real tie services.

This is a key differentiator for mobile operators …. Delivering real-time, session-based mobile-cloud services.

2. Sharing / Pooling

Most cloud service providers operate different applications and services for different clients across the same network.

For example, cloud services provider Amazon  hosts both the online global travel network Swiftrank (www.swiftrank.com) and video delivery company Netflix (www.netflix.com) for their cloud-related needs.

But is this type of sharing (or pooling) of hardware resources feasible in the telecommunications world?

Maybe.

‘Non real-time’ or ‘Near real-time’ cloud services such as location-based services (LBS), content/data storage, B/OSS, and some customer relationship management (CRM) applications already are deployed in the mobile cloud by some operators.

However, real-time communications services such as voice, instant messaging (IM), file sharing, and video communications applications require virtualized software and updated hardware that is not fully available to deliver carrier-grade reliability.

3. Ownership

Mobile operators can build their own dedicated, private cloud or they can outsource it to a third-party to host. Operators around the world are giving strong consideration to outsourcing due to the economies of scale that cloud service providers offer and the capability to shift CAPEX to OPEX to better manage costs.

Some mobile operators already have started the transformation from a telephony service provider to a provider of IP-based applications and services.  An ideal partner to aid in this transformation is one that can provide the infrastructure as well as deliver the services and applications that run over it, typically starting with messaging (e.g., SMS/MMS, Rich Communication Suite, converged IP messaging, etc.).

The right partner should enable the transformation of an operator’s core network to monetize new mobile cloud services that are scalable, highly customizable, easy to implement and competitive.

This transformation also should facilitate collaboration with OTT players by creating a platform for new app development with web APIs for new third-party applications (e.g., Android apps) and user experiences (e.g., interactive IM and voice chat while playing games such as Angry Birds).

Conclusion:

-Providing communication services at very high scale with strong reliability is a classic MNO business.

-Given that OTT players have entered the marketplace and are reaping the benefits of delivering cloud-based services, the question is NOT whether operators jump into mobile cloud offerings. It is a matter of how they do it.

These three critical elements serve as a foundation for a  mobile operator’s mobile cloud strategy (#mobilecloudservices) to deliver real-time mobile communications.  They will achieve greater cost efficiency, flexibility and simplified service delivery, positioning themselves well-ahead of OTT competitors.

A recent report in TelecomEngine.com says that “mobile consumer cloud revenues are expected to reach $6.5 billion by 2016″.

This report talks about all the “non-communications” apps and how big the market is at $6.5 billion. The shift is happening from “initial consumer deployments in the cloud that were focused primarily on the social networking space to  music and video storage/acquisition services such as Amazon’s Cloud Drive and the forthcoming Apple iCloud.”  They are expected to gain rapid traction with substantial adoption with smartphones and tablets.

$1Trillion > $6.5 Billion

Let’s not forget that the real-time communication services such as voice, video and messaging are still a $1 Trillion market.   Heck, messaging alone is a $80-90 billion market.   Gartner is forecasting “the worldwide mobile voice and data market will see revenues of more than $1 trillion by 2014, and the market is headed to a new era that will focus on services and social connections.”

Mobile Cloud Services or the Telco Mobile Cloud really means opportunities to move these real-time communications services (voice, video and messaging) to the cloud.  Considering that moving these services to the cloud will reduce costs for mobile operators as well as create new business models, the business proposition is compelling.

Although Long Term Evolution (LTE) is best known for multi-megabit speeds,voice remains a killer app. In fact, operators that launch LTE with voice support (called VoLTE) can expect twice as much average revenue per user (ARPU) as rivals that offer LTE as a data-only service, according to a recent study by Heavy Reading and Wireless 20/20, two analyst firms.  Read the complete article.

This article appears in Vision2Mobile‘s digital edition…”Emerging Concerns in Mobile Broadband”.

But now, mobile messaging allows us to send way more than text, but all of the above AND other great things like location and coming soon, presence.

And it’s hot!  As Skype has just acquired group messaging service GroupMe, which will enhance Skype’s ability to facilitate text and photo messaging.  It highlights how important the mobile group messaging space has become.

The group messaging space is smoking with all the activity that has taken place recently including Google’s purchase of Slide, Facebook’s  Group Chat launch with acquisition of Beluga , and Apple’s announcement of  iMessage.

So, what are mobile operators doing to get into this mobile group messaging game?  Lots.  The Rich Communications Ecosystem (RCE) initiative is completely on the right track and will offer competitive features and capabilities with the added advantage of being based on consumer existing mobile number.  Question is, can it be done quickly enough?  Consumers will gravitate to these new, currently available offerings from the OTT players and it may be difficult to bring them back. 

In spite of the fact that the operator’s messaging service is under attack from those OTT players, operators can deploy their own Mobile Cloud-based messaging services to provide a more compelling user experience while protecting their service domain and revenues.   Mobile operators must meet the growing demands of subscribers for these advanced communications services and help to combat the increased competition that is eroding minutes, revenue and subscriber mindshare.

RCE delivers a simplified extension to voice and text, enabling subscribers to send instant messages, video chat, and image/video share and transfer/exchange files in real time.   The chat is based solely on the mobile number and can be on the device as a native client – no sign up, no download.

So, regardless of what happens to email, mobile group messaging is the hot ticket right now!

GSMA’s Rich Communications Ecosystem project is a substantial joint industry project enjoying broad support from leading mobile operators, OEMs and client application developers to develop new service packages for today’s ‘always-on’ mobile users. The RCE initiative is leading the way for next generation ubiquitous personal communications. RCE offers an innovative approach for customers to effortlessly access multimedia communications that enhance and expand personal mobile interactions.

The RCE project has developed a specification known as Rich Communications Suite (RCS) and RCS-e (Enhanced) which is was developed for rapid commercialisation in the marketplace. Read more….

Check out the new RCS Virtual Exhibition from GSMA.