Commentary

Carrier Revenue Is Peaking - And The Scramble For New Streams Has Just Begun

Seems like only yesterday that skittish panelists at OMMA Mobile conferences used to look around the room before making anything but the most obsequious and deferential statement about the wireless industry and ask, “Any carriers in the room?”

Oh -- those were the days when red, orange and yellow gods roamed the mobile terrain, striking fear into any publisher or developer who wanted a coveted place on the sacred “deck.” Remember when the pioneers of mobile marketing at every MMA conference gently urged the multicolored gods to lift the skirts on all that amazing user data and let us eat the forbidden fruit of user log behavioral and location data?

Whatever happened to those guys?

Oh, they are still here -- and they continue to make so much money on voice and data channels that the mobile marketing revenue trickle they barely dabbled in for years seemed worth the time. Well, maybe not for long.

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According to Ovum projections, the great gravy train that is mobile operator revenue is going to hit its first speed bump in 2018 when the industry faces its first year of decline ... ever. They estimate compound annual growth rates worldwide for carriers of 4% between 2012 and 2018. The heart of the problem is simple saturation. The number of mobile connections will grow to 8.1 billion in 2018 for revenue of $1.1 trillion. But that is as far as the mobile expansion will take the industry, because after 2018 services revenue will decline.

And you know what that means. The gods won’t be happy. “As growth slows and ARPU continues to decline, operators will need to find new ways to serve customers more profitably, not just on increasing subscriber numbers,” the company states in its research. The carriers over the next five years will be looking to establish new revenue streams via new businesses, partnerships and innovative services.

In fact, this is going to hit the developed markets like Europe and the U.S. first, with declines perhaps starting earlier.

We are already seeing this among carriers that are once again showing interest in mobile marketing. Companies like AT&T and Verizon especially have programs in place for leveraging user location and data for opt-in marketing programs. AT&T has had its AdWorks subsidiary for a long time. It is unclear to me how developed these programs are. I know I get an unexpected ping from AT&T Alerts every few months advertising the Mailboxes Etc. store a mile away. Verizon has its Selects program as well.

No doubt the carriers will be sniffing harder and deeper into the mobile marketing pot for more comprehensive involvement.

Another historical note. Back in those antediluvian days of early MMA shows, then-Cingular’s head of Consumer and Business Data Jim Ryan addressed the marketer’s frequent lament about all “that data carriers are sitting on.” He said that indeed operators have unprecedented depth and breadth of data on users, but it was not in a form that any marketer could use. I recall Ryan admitting that his industry had never stored that data with marketing goals in mind, and so it was not even structured in ways that were accessible or meaningful to media and marketers. In other words, he seemed to be saying "we got the data, but we don’t know what we could do with it yet."

Well -- if they finally do have their data act together, then carriers certainly could come back into the mobile ad and marketing world with serious table stakes. They no longer control the gate to the “deck” the way they once did. But they sure should have the keys to the next great kingdom -- data. 

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