For years, when seeking out examples of innovative and more dynamic approaches to monetising new mobile data networks, the easy path was to look to emerging markets. With relatively low ARPU and a customer base that needed some coaxing to fully embrace smartphones and mobile data, such carriers turned first to out-of-the-box data pricing – things like sponsored data, zero-rating, app-specific pricing (such as: social media tiers or buy a day of WhatsApp access).

Meanwhile, larger, tier 1 mobile operators – led by the ‘Big Four’ U.S. carriers – were happy, and successful, monetising mobile data by the bushel via relatively expensive postpaid subscriptions, big data tiers and even bigger shared data plans.

And the approach paid off. U.S. mobile subscribers today consume almost 4GB per month per user on average, growing to 10GB per user by 2020, according to 451 Research’s Mobile Data Forecast. U.S. operators used that boom to offset falling voice and SMS revenues; mobile data revenues outgrew voice revenues for U.S. operators way back in mid-2012, with mobile data representing more than 70 percent of mobile service revenue today. Meanwhile, U.S. operator ARPU remained relatively flat during this period – and at just under $50 on a mixed basis (accounting for pre- and postpaid), it continues to be double of Western Europe, the next closest region.

“Arguably prodded by the uncarrier, T-Mobile’s rivals are now tapping an array of unique approaches to service delivery and monetisation.”

If that represents a successful first act of the 4G/smartphone era, U.S. operators are now well into their second act – with early returns showing similar success, albeit via radically more disruptive tactics.

T-Mobile, of course, leads the way. Its ‘Uncarrier’ strategy has captured the attention of other operators worldwide, and resulted in both significant subscriber gains at the expense of rivals and compound annual revenue growth across the past three years of more than 15 percent – well above the subscriber growth and revenue growth – 2.5 percent growth 451 Research has calculated across more than 40 of the world’s largest mobile operators.

In many ways, T-Mobile broke nearly every rule in the U.S. mobile market – disrupting the status quo by ending two-year contracts and phone subsidies, doing away with data overages, drastically undercutting international pricing, zero-rating over-the-top music and video services and ultimately moving exclusively to unlimited data plans by down-encoding many high bandwidth services, lessening its network burden while giving customers more for less. More than anything, T-Mobile’s success demonstrates the power of out-of-the-box, customer-first thinking – even (or perhaps especially) in mature mobile markets.

Arguably prodded by that Uncarrier success, T-Mobile’s rivals have been forced to respond, tapping an array of unique approaches to service delivery and monetisation.

AT&T has made a tremendous investment in video services, acquiring satellite provider DirecTV, proposing to buy content house Time Warner and launching a full-scale telco OTT video service – DirecTV Now – that includes zero-rated mobile access to its streaming content.

Sprint has followed T-Mobile down the path toward a highly-optimised mobile network and unlimited data pricing, and has returned to subscriber growth via aggressive ‘Cut Your Bill in Half ’ data pricing.

LTE and fibre pioneer Verizon has been more challenged by disruption, but is looking to leverage new media investments in AOL and Yahoo into new digital service offerings.

The lessons are clear: even in a mature mobile market characterised by enviably high customer spend, successful mobile operators today must actively disrupt each other – and themselves – via aggressive digital re-invention, creatively rethinking their networks and tapping innovative monetisation approaches to meet their customers’ rapidly evolving mobile desires.

Download Rich’s report “The Offer-Driven Operator

Rich Karpinski,
Principal Analyst - Mobile Operator Strategies working as part of 451 Research’s Mobile Telecom team.
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