Facebook Plans Mobile Money Based on New Cryptocurrency

U.S.-based internet giant Facebook has announced its intention to launch a mobile money platform in 2020, based on its own cryptocurrency Libra, which will debut by the end of 2019. The Calibra digital wallet, which is designed to make it easy to save, spend and transfer money over the internet, will be available in Facebook Messenger, via Facebook-owned WhatsApp and as a standalone app, the company said.

Facebook said the new service aims to reduce financial exclusion, as many people around the world still lack access to basic financial services. With it, users will be able to send Libra over the Calibra wallet “to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost,” Facebook said. In time, it plans to offer additional services for consumers and businesses, like paying bills with the push of a button, retail purchases via code-scanning and public transit rides without needing to carry cash or a pass.

The company promised security protections “using all the same verification and anti-fraud processes that banks and credit cards use,” as well as automated systems that will proactively monitor activity to detect and prevent fraudulent behavior. Live customer support will be available.

Facebook also pledged not to use Calibra customers’ account information and financial data to improve ad targeting on the social network or its other apps. In limited cases, personal data may be shared “to keep people safe, comply with the law and provide basic functionality to the people who use Calibra,” Facebook said. Any other data sharing with third parties or other Facebook services will require prior consent from users. The company noted that the Calibra service is still in development and that it will be consulting experts “to make sure we can deliver a product that is safe, private and easy to use for everyone.”

Mobile money platforms are a major force in the mobile telecom market today. They originated as a source of liquidity for the unbanked in developing economies and have expanded rapidly over the past several years to provide financial services of many kinds to users at all levels of wealth and sophistication. Concomitantly, the range of goods and services that can be paid for via mobile money platforms has also greatly widened.

In this context, Facebook’s intention to enter into the mobile money sphere should be taken very seriously—and particularly by mobile operators. MNOs have taken the lead in creating and spreading mobile money platforms. The most important service worldwide, M-Pesa, was developed by Vodafone for Safaricom in Kenya and Tanzania and has gone from dominance in Africa to success in India, Egypt, and Eastern Europe. Other operators have started their own mobile money services, either on their own or in partnership with banks.

For Facebook to create its own is a major challenge thrown down to operators, not only because Facebook is not an MNO but because of the company’s worldwide reach, deep pockets and vast pre-existing user base of nearly 2.5 billion. MNOs have already dealt with incursions into their traditional areas of business by disruptive players such as OTT providers; now they face a challenge in one of their innovative, non-traditional spaces.

However, we should ask ourselves to what extent Facebook can challenges the MNOs with respect to mobile money. The social-media giant is basing its forthcoming service on an as-yet-unlaunched cryptocurrency, not on national currencies. While cryptocurrencies such as Bitcoin now appear to be finding favor in the global marketplace, the sector has been plagued by controversy. As recently as 2018, Facebook itself banned cryptocurrency advertising on the grounds that many of the offerings were “not currently operating in good faith.” In addition to possible concerns over pyramid-scheme-like cryptocurrency fraud, privacy is likely to be a serious issue when it comes to Facebook’s Libra. While the blockchain technology on which cryptocurrencies are based promises high security, that assurance may well be considerably offset by widely-expressed worries about Facebook’s alleged violations of users’ privacy, for which the company is facing massive scrutiny. And although Facebook is touting the Calibra mobile money wallet as a boon to the unbanked, it is unclear whether a cryptocurrency will fit the needs of users in developing economies.

A useful way for MNOs to respond to Facebook’s mobile-money challenge would be to focus on the issue of privacy and security. Operators already have a reserve of customer goodwill to build on, and they should remind their subscribers that they have already been keeping their financial and other data secure and will continue to do so.

Tarifica’s products and services are powered by large-scale data from the global telecom industry and a deep level of expertise gained from our singular focus. We leverage these core attributes to help our clients understand their markets and answer their most challenging questions. Our team of analysts, software engineers and data scientists deliver real-time dynamic solutions for the telecom industry. Our software and state of the art data extraction techniques enable our clients to make smart decisions in real-time based on insightful, actionable data.

We are the telecom plan & pricing experts.

 If you have any questions about this article, feel free to contact our Editor-in-chief John Dorfman at jdorfman@tarifica.com

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WhatsApp Announces Fix for Spyware Vulnerability

Facebook-owned WhatsApp, the international OTT messaging and voice-calling platform, said on Monday that it had released a patch to fix a vulnerability in its system that could allow hackers to implant spyware in mobile phones remotely, just by placing a call to the phone, even if that call is missed. The move came after reports that such a security breach did occur.

The Financial Times identified the entity that caused the breach as NSO Group, an Israeli company that designs spyware. The newspaper stated that the targets of the attack included a London-based lawyer who is an adviser on a case that accuses NSO of providing the functionality to spy on a Saudi dissident, a citizen of Qatar and a group of Mexican journalists and activists.

It is not clear to what extent the remote implantation of the software allowed for actual access to private data, since WhatsApp released the patch very quickly. According to news reports, NSO denied the accusation and stated that it “would not or could not use its technology in its own right to target any person or organization, including this individual,” referring to the London lawyer, whose name has not been published in connection with this incident. NSO further said that its technology is licensed to governments “for the sole purpose of fighting crime and terror” and that NSO has no role in deciding how and against whom those governments use it.

In addition to fixing the vulnerability, WhatsApp said it urges users to update to the latest version of the app, “out of an abundance of caution.”

WhatsApp is used by some 1.5 billion people around the world, so the potential for harm is obviously very great if weaknesses such as this one occur, and even greater if they go undetected for longer periods than this one. WhatsApp has proudly advertised its end-to-end encryption, so it probably comes as a big surprise for most users that this attack was even possible. The nature of the vulnerability, according to reports, was the phenomenon of buffer overflow, in which excess data residing in a temporary storage location is overwritten to an adjacent memory address. The malware or spyware injects code that causes a buffer overflow, and then exploits the data that is moved out of the encrypted area.

We think mobile operators should be aggressively using this story in their marketing campaigns. WhatsApp has long been eating into their core businesses, first with text messages and now with VoIP calling and enhanced messaging to send video and documents. Now that a frightening vulnerability to invasions of privacy has been discovered, MNOs could benefit from reminding their customers and potential customers that cellular mobile telephony is still the safest option, and to beware of promises about encryption by OTT players.

Of course, the networks of mobile operators are by no means perfect; they, too, could be breached by sophisticated software. However, at the very least, the relatively local nature of a mobile network provides some assurance that global bad actors will not target them but instead go after an OTT that is more or less present everywhere. It is, of course, also important for MNOs to keep on top of network security, and they are well advised to do so and advertise that fact. An invidious comparison with WhatsApp, at least at the present moment, will likely be very effective in terms of public relations. Today, WhatsApp says it has fixed the breach; tomorrow, however, others may be discovered and exploited.

Tarifica’s products and services are powered by large-scale data from the global telecom industry and a deep level of expertise gained from our singular focus. We leverage these core attributes to help our clients understand their markets and answer their most challenging questions. Our team of analysts, software engineers and data scientists deliver real-time dynamic solutions for the telecom industry. Our software and state of the art data extraction techniques enable our clients to make smart decisions in real-time based on insightful, actionable data.

We are the telecom plan & pricing experts.

 If you have any questions about this article, feel free to contact our Editor-in-chief John Dorfman at jdorfman@tarifica.com

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U.S. Congress to Get Rid of Internet Privacy Protections

Last Thursday the U.S. Senate voted 50 to 48 to dismantle rules enforcing internet privacy protections, an outcome that is expected to be repeated (and therefore made into law) when the House of Representatives votes this week. The existing rules were created at the end of President Obama’s second term, in October 2016, under former FCC (Federal Communications Commission, the main regulatory agency) chairman Tom Wheeler, and were scheduled to go into effect at the end of 2017.

Under the new rules, operators will not have to ask users’ permission to track their browsing habits, and will be allowed to share and sell data about consumers to retail companies and mobile and web advertising providers. They will also be freed from the mandate to take “reasonable measures” to guard consumer data against hacking, as they would have been required to do under the Wheeler rules.

These regulatory changes, which are almost certain to go through, are in line with the Trump administration’s aggressive anti-regulation approach, as spearheaded by the new chairman of the FCC, Ajit Pai, a Trump appointee. Pai has argued that the existing rules are unfair to operators, which would be regulated while internet companies such as Google and Facebook would not. The new rules would level the playing field. Operators would benefit by monetizing customer data and metadata, deriving revenue directly from selling it to commercial entities.

While this will be good news to operators, a note of caution should be sounded. Consumer advocate and privacy groups have decried the new rules, and operators should be aware of the need to balance revenue opportunities and business freedoms with customer satisfaction. It has been shown that customers may not mind having at least some of their data or metadata shared, as long as there is transparency about it. On the other hand, if customers feel that something secretive is going on, they will be much less receptive. Taking the new regulatory climate as carte blanche to disregard customer sensibilities would be a big mistake. 

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.

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Facebook Launches Low-Cost WiFi in Kenya

Facebook has activated low-cost internet access in Nairobi, Kenya’s capital, according to a report. The launch, which is part of the U.S.-based internet giant’s “Express Wi-Fi” program, is a joint project with Surf, a Kenyan ISP, and went live about three weeks ago.

The service is currently available in Nairobi and surrounding areas. Express Wi-Fi offers a 10-day package in which users get 100 MB free per day, after which they need to top up through recharge agents. Daily internet bundles cost KES 10.00 (US $0.10) for 40 MB and KES 20.00 (US $0.19) for 100 MB, while weekly Express Wi-Fi bundles cost KES 50.00 (US $0.48) for 300 MB and KES 100.00 (US $0.96) for 500 MB. Monthly bundles cost KES 200.00 (US $1.93) for 1.25 GB and KES 500.00 (US $4.81) for 3 GB. Surf Kenya CEO Mark Summer said that the prices are subject to change subsequent to the launch.


Express Wi-Fi is Facebook’s latest attempt—under its Internet.org initiative—to spread internet access in developing countries, the intent, of course, being to add users to Facebook. Before Kenya, it recently launched in Uganda, Nigeria and India. A previous program, called Free Basics, ran into trouble because by offering zero-rated access to Facebook and selected other sites, it ran afoul of net neutrality principles and was banned by India’s national regulator in February 2016. Express Wi-Fi is different in that it will not zero-rate and there will be no free connectivity.

The question is, will Express Wi-Fi be a genuine threat to mobile operators in Kenya? Its data is certainly much cheaper than that offered by the MNOs: Safaricom sells a 65 MB daily internet bundle for KES 50.00 (US $0.48), and Airtel and Orange charge the same amount for even less data, 50 MB and 40 MB, respectively. However, it is by no means clear what quality level Facebook and Surf will be able to deliver, what the actual footprint of the service will look like and how many hotspots there will be.

Even if Express Wi-Fi delivers on its promises, we believe that there are things the MNOs in Kenya can offer potential customers that Facebook cannot, at least at this point. Beyond the idea of cellular data versus Wi-Fi, operators in the African markets have discovered the power of mobile money services—notably Safaricom’s M-Pesa—as a way of attracting and keeping customers, and from all the evidence we can see, access to mobile money is going to continue to be a very important priority for users in this region. Stand-alone, non-MNO data services, since they lack this incentive, may have a hard time catching on despite the low initial pricing.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.

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Free Telecom for Vodafone Portugal While 3 UK Asks Britons to Turn Phones Off

Vodafone Portugal is offering free communications on 24 and 25 December for its customers. They can choose one of two options: voice, SMS and MMS communications or free data for internet access. The offer is valid for the first 500,000 individual customers and must be activated by 21 December in the My Vodafone App, or by calling the number 1275. Meantime, 3 UK has launched a marketing campaign encouraging Britons to not use their phones at all on Christmas Day. The “Go Cold Turkey” campaign will run on social media, urging people to “properly enjoy the wonders of a delicious Christmas dinner, paper hats and watching TV repeats with loved ones,” the mobile operator said. A short film produced by the company—viewable on Three’s YouTube, Facebook, Instagram and Twitter pages—speaks of “a Britain afflicted with extreme device addiction” and shows the extremes to which people will go in order to use their smartphones, such as unplugging the Christmas lights to charge a phone.

 
 

Christmas has traditionally been a time for creative and generous promotions from mobile operators, who offer discounts and free services in celebration of the holiday. Such initiatives can increase customer satisfaction and loyalty and thereby boost retention—while costing the operators relatively little. This season, we were struck by the sharp contrast between two approaches by two operators in two different countries. While Vodafone Portugal takes the tried and true road of offering free communications—with a choice of either voice and text or data—3 UK is actually encouraging Britons—and not just its subscribers but all Britons—not to use telecom services at all during the holiday.

 

It certainly seems counter-intuitive and even self-destructive for a telecom operator to try and inhibit use of its core services, but arguably 3’s strange initiative could actually serve a similar purpose to that of the Portuguese promotion. By identifying “device addiction” as a social ill and making a token gesture toward fighting it, 3 UK will potentially accrue positive feelings from customers, which could have the effect of bolstering the company’s image and brand and thus helping with retention and even acquisition. And from a different angle, it is possible that taking a one- or two-day hiatus from mobile services could have the effect of increasing customers’ appetite for those services after the hiatus is over and end up driving up net consumption.

 

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.

To learn more about Tarifica, please visit www.tarifica.com 

WhatsApp to Roll out Video Calling

WhatsApp said it will be introducing a new video calling service to its over 1 billion users worldwide on iOS, Android and Windows Phone. The OTT provider stated that the service is meant for every type of phone, from the most expensive to the least expensive. The service will be rolled out to all users over the next few days. According to reports, during a video call, users will be able to switch between the forward-facing and rear-facing cameras, mute the call or press the red button to hang up. WhatsApp, which currently offers messaging and voice calling, says that video calling has been one of the most-requested features from users.   As we have noted frequently in these pages, free or nearly-free OTT services that compete with the offerings of MNOs have been proliferating over the past several years, posing a challenge to the mobile operators. Along with Skype, Facebook-owned WhatsApp has been one of the most vigorous challengers, fueled by its huge worldwide base of subscribers. First with text messaging, then with voice calling, it offered services that closely paralleled or duplicated those of mobile operators. The expansion of high-speed LTE networks (built with the investment of the MNOs) and the increasing availability of budget smartphones have made video calling a possibility for a vast number of users worldwide, so the time is right for WhatsApp to offer it. In this case, however, we do not see it being as significant a competitor to MNOs as with its earlier offerings. While some mobile operators have created native video calling services, for the most part consumers rely on third-party apps for video calling. Probably the company that will be most threatened by WhatsApp’s new offering is Apple, whose FaceTime feature enjoys great popularity. WhatsApp video calling is platform-agnostic, and therefore users no longer have to buy an iPhone to make video calls. The question will be how high the quality of the calls will be, and that will have a great effect on the uptake rate for WhatsApp’s video calling service.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. To learn more about Tarifica, please visit www.tarifica.com

Facebook CEO Visits Kenya, Generating Speculation

Mark Zuckerberg, the co-founder and CEO of U.S.-based internet giant Facebook, made a surprise visit to Kenya on September 1, giving rise to speculation that Facebook was interested in acquiring Safaricom’s mobile money platform M-Pesa. M-Pesa CEO Bob Collymore denied the rumors, saying that if Facebook wanted a mobile money service it could create its own. Zuckerberg toured iHub, the tech development center in Nairobi, and met with executives at BRCK, the Wi-Fi modem manufacturer that has been described as potential rival to Facebook’s plans to spread connectivity throughout Africa. He also met with Kenya’s cabinet secretary for ICT.   Even if the story of Facebook aiming to buy M-Pesa is, as Collymore said, a fabrication, Zuckerberg’s visit highlights the growing vitality of the tech sector in Kenya and points to the very real opportunities for outside companies to do business in this vibrant “mobile-first” region. It also suggests that lessons learned from the rapid and successful uptake of mobile money in Africa could be of interest to entrepreneurs in the developed world, as well.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.  To learn more about Tarifica, please visit www.tarifica.com

U.S. Government Said to Be Pressing WhatsApp to Break Encryption

According to a report in The New York Times this week, the U.S. Justice Department is engaged in a standoff with OTT messaging-and-calling service provider WhatsApp (owned by Facebook) over encryption. The dispute is said to be over a terrorism case in which the government wants access to messages sent over WhatsApp but cannot gain it because of WhatsApp’s end-to-end encryption. With end-to-end encryption, no one except the sender and the recipient of a message—not even WhatsApp itself—can read it. Details of the case have not been revealed, but sources connected to the matter said that a wiretap order was being stymied by the encryption and that the Justice Department was considering how to proceed—whether or not to open a court fight with the OTT player. Encryption is a new feature for WhatsApp, having been added only during the past year. Recently we wrote about the very public confrontation between Apple and the U.S. Federal Bureau of Investigation over the encryption on an iPhone formerly owned by a suspect in the San Bernardino terrorist attack that occurred in December 2015. The reported impasse with WhatsApp threatens to take the question into new terrain. With Apple, the debate is over the status of a single mobile device; with WhatsApp, the status of a worldwide network of communications, independent of any device, is up for grabs. If WhatsApp were to agree to change its encryption so that messages could be accessible to the company if subpoenaed in a criminal investigation, WhatsApp’s standing with its users—who number approximately a billion—could be damaged. In the Apple case, we noted, the technology giant has to weigh the maintenance of its brand as a provider of secure devices against the harm that could come to it if it fails to comply with government demands in the U.S. and potentially elsewhere, the consequences of which could include restriction of its ability to sell devices. As for WhatsApp, on the other hand, all it is selling is a service, and the security of that service has come to be a key selling point because it allows people all over the world to communicate with each other despite the efforts of repressive regimes that seek to impede freedom of speech. Now, it is true that a government could take the step of shutting down WhatsApp, as Brazil briefly did late last year when WhatsApp refused to comply with wiretapping requests. But WhatsApp has become big enough, with so many people depending on it, that we venture to say that it has more leverage than Apple with which to prevail in the encryption wars, and more motivation, as well.

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Indian Regulator Bans Zero-Rated Services

The Telecom Regulatory Authority of India (TRAI) has issued a ruling that zero-rated data services will be banned in the country. The rules state, in part, “No service provider shall offer or charge discriminatory tariffs for data services on the basis of content.” Violators will be fined INR 50,000 (US $734.00) per day. While this dictum (which makes permanent a temporary measure put in place in December 2015) is general in nature and singles out no entity, in practical terms its principal target is Facebook’s FreeBasics service. Offered under the company’s global Internet.org initiative and in partnership with Indian mobile operator Reliance, this service offers users access to Facebook without it counting against their data allotments. TRAI’s announcement comes after months of criticism of Facebook by industry participants and net-neutrality advocates in India. It also follows a campaign by Facebook called “Save FreeBasics,” which created controversy and provoked more opposition than support. By issuing this ruling, TRAI has apparently decided that net neutrality is more important than spreading the internet throughout the country. Facebook’s FreeBasics was created to serve the internet giant’s stated goal of increasing access to the internet by making data available to emerging users who otherwise might not be able to afford it—or at least to incentivize them to use mobile data more than they ordinarily would. Facebook CEO Mark Zuckerberg sees Internet.org as a public service (although ultimately a revenue driver), but it seems that Facebook miscalculated in assuming that FreeBasics would be seen as a disinterested contribution to India’s welfare. In a sense, TRAI may be responding to public opinion in ruling against Facebook; the negative reaction to the “Save FreeBasics” effort indicates that the U.S.-based internet company has generated less goodwill in India than it had hoped.  Reliance’s competitors, such as market leader Airtel, will doubtless appreciate the ruling. The question remains, though, whether TRAI’s ruling truly helps the Indian data ecosystem. This is an emerging market in which a rapidly growing number of customers are using data for the first time. While we sympathize with TRAI’s desire that they not be exploited or misled by MNOs or content providers and that fair competition be encouraged, we wonder whether an initiative that spurs adoption of data services might not be ultimately more beneficial to the Indian market.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile, fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. To learn more about Tarifica, please visit www.tarifica.com

Tuenti Ecuador Launches Referral Offer

Spain-based international operator Telefónica has announced the launch of a friends’ referral scheme to help boost uptake of its Tuenti Movil MVNO service in Ecuador. Under the offer, any Tuenti prepaid customer can access their account online and send an invitation to friends via email, Facebook or Twitter. The friend who sets up a Tuenti account and as the friend who made the referral each receives US $5.00 in promotional credit. Tuenti Ecuador offers a series of data-focused prepaid plans, ranging from a 7-day bundle with 100 MB of data, 15 minutes of calls and 15 SMS for US $5.00 to a 30-day bundle with 400 MB of data, 60 minutes of calls and 60 SMS for US $15.00.

  

The MVNO market in Ecuador is in its infancy; when Telefónica, which operates under the brand name of Movistar there, launched Tuenti there in June 2015, it was the first MVNO in the country. There are currently no independent MVNOs in Ecuador. So while Tuenti has no direct competitors, it still needs to establish itself in a marketplace that is unused to such offerings. In order to distinguish itself from Movistar’s other offerings, as well as from those of competitor MNOs, Tuenti has emphasized the social media angle with unlimited zero-rated WhatsApp and Facebook usage. This brand identity harmonizes well with a socially driven promotion campaign such as this friends’ referral scheme, which operates via social media, as well as email. We believe that it is particularly persuasive, in that the amounts of credit received for a referral is quite large in the context of Tuenti’s prepaid tariffs, since it is equivalent to a week’s worth of services. In addition, the fact that both the referred friend and the one making the referral get a credit makes the offer even more attractive.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. To learn more about Tarifica, please visit www.tarifica.com

Redefining a Mobile Service Provider

There is a paradox at the heart of the mobile telecom industry. Despite skyrocketing data use and proliferation of connected devices, the industry is facing a structural crisis that raises serious questions about its sustainability and growth. With mobile penetration rates in almost all markets well above 100 percent, competition among MNOs has grown fiercer and more focused on price reductions. Traditional sources of revenue have been undercut by OTT services such as WhatsApp and Skype. The increase in consumer data usage has been a mixed blessing in that it has placed pressure on operators to make expensive improvements to the capacity and coverage of their networks. Finally, national regulators have become increasingly activist with regard to pricing, M&A activity and service requirements, further increasing costs for providers.

In the face of this paradox—increasingly large amounts of money flowing through the mobile industry while operator revenues grow ever flatter—we expect to see new business models, revenue drivers, pricing strategies and even leading players. Ultimately, the results of these changes could be the redefinition of the term “mobile service provider.” We have already begun to witness the first steps of this process. MNOs have worked to reevaluate their core offerings in order to find new sources of revenue or to reduce churn. The defining trait of 2014 was MNOs’ drive to acquire the infrastructure needed to offer converged packages. Operators around the world—but particularly in the hypercompetitive European markets—pushed to lock in customers and raise monthly spending by offering quad (mobile, fixed voice, broadband and cable television) packages. Further, non-core value-added elements like Spotify, Netflix and other content-driven services became increasingly important in plan construction, forcing operators to branch out into new partnerships and ventures.

A dramatic recent example of this occurred in the U.S. with Verizon’s US $4 billion acquisition of AOL—a play to secure AOL’s mobile ad software, more proprietary content and new revenue streams in an increasingly competitive market. This type of news is an illustration of how the distinction between content creators, information aggregators, device manufacturers and service providers continues to grow blurrier. Just as we expect mobile operators to be packaging more non-traditional features in with their mobile packages, we believe that there is an opportunity for other types of companies to enter the mobile services space and use these services as a way to augment their traditional packages.

With Facebook’s acquisition of WhatsApp and Google’s ever-expanding reach across all realms of digital life—including its recently launched U.S. MVNO running on the Sprint and T-Mobile networks and its discussions with Hutchison Whampoa for international expansion—we would not be surprised to see either of these entities begin to pivot increasingly into mobile service as an add-on to their traditional offers. While projects like Google Loon/Fiber and Facebook Zero made headlines before retreating from the industry consciousness, the economic conditions that initially drove these initiatives remain—giant internet content providers that have significantly higher margins are growing impatient with mobile and broadband providers’ ability to connect their potential customers. Further, MVNOs like FreedomPop are experimenting with new business models like ad-based data sales. Finally, whether through mesh networks, ever-expanding Wi-Fi hotspots or new technology solutions, MNOs’ hegemony over mobile data is likely to be challenged in the coming years. The high and growing demand for large volumes of fast data makes the industry a prime target for disruption if an adequate alternative presents itself.

There are so many variables in play that it is impossible to make a firm prediction as to the precise long-term evolution of the industry. However, this much is certain—for MNOs to be successful in the future they will have to be adaptive and flexible in terms of developing new revenue streams and fending off non-traditional rivals. Maintaining outmoded plan structures and customer acquisition strategies will almost inevitably lead to painful disruptions. The current structural and competitive environment have the potential to change the core MNO business model in a way not seen since the launch of the iPhone in 2007 and the beginning of the mobile-data revolution. As such, strategic choices made by operators in the coming years will have an outsized impact on the future of the industry as a whole.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. Click here to contact a Tarifica Analyst