OTT could push mobile expenditures past revenues
| 23 November 2014
With ever more video on the rise, annual mobile operator expenditures are now in excess of $800 billion, with several leading players face the possibility of costs exceeding revenues by the end of the decade without remedial action.
That’s according to a report from Juniper Research, which said that a combination of flat-lining revenues allied to surging data traffic costs could ultimately threaten the viability of network operations.
In an analysis of 12 international operators, the report found that margins had fallen by an average of 6.4% over a three year period, with fiv of those surveyed experiencing decreasing margins in every year throughout the period. Furthermore, a number of major operators now have single figure margins: with costs currently increasing at 1.5%-2% per annum, the situation is unsustainable in the longer term.
Meanwhile, the report found that without more widespread network optimisation, the situation could become critical in a number of developing markets. It argued that with surging mobile Internet adoption in the Indian Subcontinent, regional operators could see data costs outstrip data revenues by $45 billion within 3 years unless networks are optimised.
The report also pointed to a number of success stories, particularly in the US, where players such as Verizon and AT&T have bucked the trend in falling margins by introducing shared data plans. It observed that Verizon had seen wireless revenues increasing by more than 7% despite operating in a saturated market, while AT&T now had more than 14 million households on shared plans.
"Given the threat from OTT, the US emphasis on focusing the value on the data element is absolutely the right way to go,” said report author Windsor Holden. “This is particularly true within an increasingly 4G environment."