Earlier this year it was revealed that more mobile users were sending messages via chat applications than traditional text messages. The popularity of WhatsApp, BlackBerry Messenger and iMessage was proved by analysts at Informa who estimated that last year almost 19 billion messages were sent per day on chat apps compared with 17.6 billion through SMS texts.
Already, that figure is likely to be significantly higher; WhatsApp chief executive Jan Koum told delegates at April’s ‘Dive into Mobile’ conference that they’re currently processing somewhere in the region of 20 billion messages every day, a figure which is comprised of some 8 million inbound and 12 billion outbound messages.
Confirmation of the shift from text to OTT services was greeted with glee by vice president of the European Commission, Neelie Kroes, who took to Twitter to proclaim that “the cash cow is dead”.
According to research firm Ovum, the cost to mobile operators around the world is considerable, with lost SMS revenue amounting to $23 billion. Kroes later clarified her tweet when she wrote that “mobile operators need to respond to what customers want, wants that may change quickly”.
IDC telecommunications senior research analyst Bhanu Chaddha says: “The ‘connected culture,’ with its availability of multiplatform and multiscreen services, is influencing consumer behaviour in terms of telecommunications preferences and that consumers are increasingly eschewing core telecom services, like SMS and voice, in favour of OTT services”.
Telecoms operators have a choice - they can collaborate or compete with OTT service providers. Chaddha says operators in the Middle East are taking both approaches. While incumbent operators in Saudia Arabia (STC), the United Arab Emirates (Etisalat) and Qatar (Ooredoo) are competing with OTT providers by either extending their IP TV services to OTT platform or by emulating popular OTT services, newer entrants to the market such as Saudi Arabia’s Mobily and Nawras in Oman have collaborated with WhatsApp to launch specific packages.
Nawras director consumer marketing segment, Simon Baldwin, highlights the operator’s exclusive partnership with WhatsApp as proof of the operator’s willingness to work with the OTTs rather than compete against them. “We have propositions that offer inclusive Facebook, Twitter and WhatsApp time built in because this is where our customers want to socialise and it’s important to us that we are the key enabler for this,” he says.
“The benefits are enormous; SMS is losing its popularity as instant messaging gains in popularity so selectively partnering with key OTTs ensures we are top of mind when customers are using these services. We have two key packages working with OTT. The Nawras WhatsApp bundle includes enough data to satisfy the most ardent of WhatsApp-ers and our Shababiah Plan provides an enormous amount of additional data - on top of the plan quota - specifically for Facebook, Twitter and WhatsApp.”
Batelco general manager consumer division, Muna Al Hashimi, says operators can act as a bridge between OTT players and the end user. The important thing is to occupy a profitable position in the value chain. She says: “The most compelling reason for mobile operators to collaborate with the OTT services, is the mostly social nature and instant behaviour that OTT services highlight. The popularity of these services have created a need - or rather an addiction - for users to be connected all the time, and hence, the inevitable role of the operators to provide mobile internet services. With this in mind, operators need to introduce innovative packages including the popular OTT services, and tailoring it to users in such a way that implies that the operator is the ‘virtual’ provider of the OTT services.”
Chaddha suggests even greater collaboration is likely, and that partnerships between telecoms providers and OTT providers will gain prominence in the Middle East. “Key motivation for operators will be better customer experience and higher revenues from data subscriptions while OTT providers will benefits from wider reach through operator-led marketing as well as in some cases assured quality of service,” he says.
The increasing popularity of OTT applications has highlighted the need for operators to make sure their tariffs keep pace with advances in technology and changing consumption patterns. But there has always been a requirement for compelling offers that provide value for money, long before the rise of WhatsApp and iMessage.
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Because the market in the Middle East has matured with multiple operators in each country and high levels of mobile penetration, market segmentation helps to make sure customers get what they want.
Tariff plans, Chaddha says, are the primary tools for implementing segmentation. He says: “GCC telcos have been using data mining techniques to analyse customer usage patterns to define new tariff plans or adjust existing plans by launching new add-on packages. The key motivation besides providing higher value to customers is to gain competitive advantage. To this end, service bundling, sachet-based tariff models, and bucket pricing are now common means used by the GCC operators.”
Better mobile packages come as a result of bundling a number of services together including voice, SMS and data - with an emphasis on the customer’s needs. “‘Talkers’ should be able to choose bundles which are heavy on voice minutes and ‘browsers’ should be able to choose a bundle that’s generous with data,” says Baldwin.
An operator’s overall strategy and target market will affect the range, pricing and packaging of tariffs they offer, but drilling down into the detail provides vital information. For Nawras, the best way to establish what a customer wants is through research at a number of levels. “We are part of a global group, Ooredoo, which gives us access to preferences in other markets, we have a state of the art data warehouse that gives us realtime customer metrics, we work with the biggest research agencies and above all we talk to our customers every day to get ideas,” says Baldwin.
Best practice involves studying the market and analysing customer behaviour and lifestyle needs, through surveys and focus groups, as well as investing in data mining and reporting tools, says Al Hashimi.
She says: “Results from these surveys and customer analysis aid in creating and designing the best mobile packages that suit each customer segment. In addition, the analysis could reveal new and untapped markets and segments which can form a new revenue stream for the operator.”
But trying to please all of the people all of the time can be problematic. Although it is important to identify and respond to the needs of customers, operators must make sure they do not confuse customers with a plethora of plans and packages. Indeed, fewer packages could mean better focus for customers and the provider. “Operators with a number of different packages can balance their offerings through target marketing, using the different channels, such as telemarketing and mass advertising which aims each package to the specific segment it is designed for,” says Al Hashimi. “This practice will minimise confusion and will allow operators to focus on the targeted segments and customer base.”
For Batelco, the most successful packages have been device-bundled deals and the offering of customised plans that suit the lifestyle of the customer. But it’s mobile users’ insatiable appetite for data points to the direction in which mobile tariffs are heading.
“Inclusive data offerings have also been successful in the adoption of our mobile packages,” says Al Hashimi, while Baldwin agrees that anything to do with data has been “phenomenally successful”. He says: “As more and more customers get smartphones the data requirements increase so we have to satisfy that demand with relevant data packages that are cost effective.”
But in order to offer innovative messaging tariffs, particularly those that combine bundles of data with various amounts of talktime and traditional SMS, operators also require flexible operating support systems (OSS) and billing support systems (BSS).
Klaus Middeler, director market development OSS/BSS, Ericsson, Region Middle East, describes OSS & BSS systems as “one critical component” to offer new tariffs and services to mobile consumers. “They are the toolbox marketing and product departments can play with to package operator capabilities into an offering. Once approved by the local regulator, consumers can benefit from a new way to access services which would suit their needs better than before and better of what the competition has to offer,” he says.
“The more features an OSS or a BSS System can offer, the more options are there to be creative. But more important than hundreds of new features are the ‘ease of use’, reliability and the time it takes to get a new service offering out.”
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Middeler says that “the name of the game” for OSS at present is automation. By this Middeler is referring to the ability of operators to allow consumers to order new services, upgrade tariffs and packages instantaneously and without complex procedures. “The key word is ‘catalogue driven order management’,” he says. “This is one of the key elements OSS will deliver to increase the overall customer experience. In addition OSS systems will have to deliver timely and accurate input to customer care as consumer today want to understand why something has happened and in best case are informed before it will happen.”
Middeler says that innovations in OSS and BSS come in “small but continuous steps”. One of the main areas of development for OSS/BSS currently is convergence of post-paid and pre-paid systems. “Post-paid and pre-paid systems today are two different systems managed in many cases by two different departments. Here we created a solution which allows operators to manage one converged system with a huge impact on internal efficiencies and speed,” Middeler says.
“For BSS the major building blocks for the future are convergence and real time data as well as the handling of what the industry today calls “big data”.”
Converged systems will allow operators to handle their product catalogue in one system instead of two, three or four different databases, as happens today, according to Middeler. “With mobile broadband being the major source of revenues in the future, real-time data handling becomes paramount,” he says.
“Future BSS systems have to be able to handle and analyse the huge amount of consumer specific data which is generated through the usage of operator and OTT services. This will allow mobile operators to segment their consumers better and therefore allow more tailor-made offerings,” Middleler adds.
Promoting your package
“The phrase ‘can’t see the wood for the trees’ is very relevant,” says Nawras director consumer marketing segment Simon Baldwin.
“Nawras is segment led which means we develop propositions and packages to suit segments rather than the whole base. Directing customers to the most relevant packages is where our innovative communications and advertising excels.” Baldwin stresses the importance of a clear and concise message that “answers all [a customer’s] questions in a split second and our 4G communications are a great example of this,” he says.
There are traditional ways of promoting new products and services such as billboards, flyers, newspaper ads, direct email and SMS broadcasts, but for Batelco general manager consumer division, Muna Al Hashimi, new and innovative methods of promoting tariffs include social media channels such as Twitter, Facebook and Instagram and online advertising, live toolkits on websites and in outlets demonstrating the new features and benefits. Choosing an approach depends on the product and the market segment.
Catering to segments
The ability of operators to identify the needs of various consumer segments, and to create meaningful services for them is key for operators to make a success of mobile broadband, according to Andreas Krenn, head of marketing and government and industry relations, region Middle East, Ericsson.
He said that Ericsson had indentified this ability, which it refers to as “unboxing”, as one of six “growth codes” that operators must adopt to make a solid, sustainable profit from mobile data. “Unboxing is about breaking up the traditional ways of selling data…when you look at most countries operators are selling unlimited 1Gb, 3Gb or 5Gb packages but that is about all the creativity we see. Unboxing is about looking at different consumer segments.
"We see great examples coming from some operators. In Indonesia people don’t have much money to spend but still want access to Facebook, so why not have a Facebook-only package for $0.20 per day, which is what one operator in the country is doing.”