Next Generation Services Now

Maximizing Revenues with Location-based Value Added Services

AfricaCom DailyNews 2010
November 11, 2010

THE MOVE FROM BASIC VOICE TO ENHANCED SERVICES RELEVANT AND OF VALUE TO SUBSCRIBERS WILL ENABLE AFRICAN MOBILE OPERATORS TO DIVERSIFY AND STRENGTHEN THEIR REVENUE STREAMS. LOCATION-BASED SERVICES (LBS) THAT REACH BEYOND SMART PHONES MAY SHOW THE WAY.

By Akif Arsoy, VP Marketing and Product Management, Telenity

Mobile operators around the world have turned to services beyond voice and data in an effort to generate new sources of revenue and cope with diminishing returns arising from intensive competition and lower tariffs on basic voice services. The competitive pressures are similar in emerging markets like Africa.

Africa is an exciting market with untapped potential for mobile services, which according to industry analysts will see a regional mobile penetration rate of 62.4 percent and a subscriber base of 911 million by end of 2014. Africa may still be a growth market but it has already completed its initial expansion phase. Therefore, service provider challenges and success factors are no longer unique to Africa as they have been in the initial expansion stage of the market. The market is now more in line with the rest of the emerging markets. This sets the stage for the need to establish revenue sources beyond voice for long term success.

Like their counterparts in developed markets, operators in Africa are also facing the problem of decreasing revenues, increasing churn and lower ARPU levels, and are looking to find new ways to maximize the return on their investment. And as in saturated markets, African mobile operators are now exploring ways to optimize their network operations and focusing on enhanced mobile services to lift the downside pressure on their ARPU. The mobile screen has strong competition in other regions but in Africa it remains the dominant method for subscribers for personal communications and Internet access. Most Africans’ Internet experience is governed by their experience on the mobile phone and the dominance of the mobile screen will put in play applications that have been unsuccessfully attempted elsewhere around the world. A good way to think about this is to look for free and popular services on the fixed Internet in other markets and apply them in Africa as paid services! If the price is right, the dominance of the mobile screen may help monetize free services of the fixed Internet in other regions.

The move from basic voice services to such enhanced services that are relevant and of value to the end-user will enable African mobile operators to diversify their revenue streams and keep them strong.

These services are not only limited to voice and text, but they also include data-based value added services including location-based services (LBS) such as people tracking, friend finder or mobile yellow pages. Locating people and services with the aid of mobile networks will enrich the subscriber experience.

According to ABI Research, global location based platforms revenues are expected to reach $1.8 billion in 2015 experiencing exponential growth in the next few years. LBS are highly personalized and targeted services that are finally finding massive uptake around the world. Some of the key factors in the recent fast uptake of the LBS are the availability of the application on multiple bearers including Unstructured Supplementary Service Data (USSD) and the service reaching subscribers using even the most basic mobile handsets, and the simplicity of the service. Africa can experience similar penetration and growth levels with LBS if mobile operators follow similar deployment paths.

Location-based services employ a convergence of three technologies – Internet, wireless communications and mobile positioning – to enable a whole new class of advanced applications for
wireless devices. LBS offer new types of innovative applications that suit all kinds of mobile users including enterprises, individuals and communities. With location aspect, all content services (news, weather, advertisement, etc.) gain a new perspective. The location information has the potential to enhance the personalization of content through additional filtering and subscriber preference matching beyond pure user driven profiling. This makes content more relevant and appealing for the user. The location information can be applied for providing completely new services that fall into the following two categories:

Pull Services – User driven LBS that enable the subscriber to determine the location of person, or physical object, and/ or guide the subscriber to this person or object. One example is the ability to see the location of friends in the buddy list within 300 meters of where you are or the ability to track children within set perimeters for security and parental control. Other scenarios would be city guides, local weather information, location-based fleet management services offered to transporters or hospitals offering people-tracking service, especially targeted at elderly patients and children.
Push Services – Event driven LBS, where the user receives a notification or an alert based on his/her preferences and current location or movement. Mobile advertising with leading brands - coupons sent from the nearest coffee shop or exhibition information sent from a nearby museum are such examples.

Location information brings relevance for the end user and makes it possible for operators to generate unobtrusive, more targeted, and context aware mobile content push and pull services for their subscribers. When searching for a restaurant or receiving an ad for a nearby restaurant according to the subscriber’s preferences offers additional value.

The deployment of successful LBS requires building subscriber trust at 100% with subscriber information and privacy protection, assuring accuracy of data with good quality maps, and finally offering easy-to-use user interfaces. Operators also need to consider a centralized strategy for deploying LBS. In the world of many pull or push based LBS, it is inevitable that most will fail to deliver the expected results and some will save the day. Diversity in applications and quick deployment times are critical success factors. The way to achieve this is to abstract the location information in the network to third party applications in a scalable manner so that each LBS connects via a simple API. The middleware that does the abstraction should control application access permissions, manage traffic flows, optimize between GMLC-based versus Cell-ID based location granularity, manage opt-in controls of end users and generate OSS reports. Such consolidation of location access to LBS is the key to a successful implementation to cover the long-tail in the application world.

With the right technology in place through partnering with players like Telenity that has already been working with operators to provide location based services around the world, the path is wide open for the African mobile operators to reach out to the end consumer and showcase the benefits of location based mobile services to the masses.