Voice revenues of mobile network operators are under intense pressure from a combination of competition and regulation. Strong growth in mobile data revenues is now essential, in order to reverse falling ARPUs. Mobile network operators must look beyond mobile messaging for this growth, since mobile messaging (particularly SMS) revenues may decline, as they face competition from alternatives such as mobile email and social media (including Facebook and Twitter).
Mobile network operators have little choice but to drive mobile data revenues and yet, as I will show, this cannot realistically be achieved without significant network investment. Given declining ARPUs, the natural reaction of most mobile network operators, under pressure from their investors, is to find ways to cut costs and try to maintain profit levels. Capital investment is an all too easy target. However, at this critical time, mobile network operators need to invest significant sums or find cost-effective ways to dramatically enhance their mobile networks (for example, through network sharing).
Only with high-quality networks can mobile network operators realistically attract high take-up of mobile broadband services, as shown in the figure, below. The figure shows the clear relationship that exists between the penetration of mobile broadband dongles and datacards and 3G population coverage for a number of European countries (in January 2011).
Mobile network operators in Scandinavian countries, such as Finland, Sweden and Denmark, have developed a reputation for providing mobile broadband services with very high quality of service, and offer extensive 3G/HSPA coverage. This extensive coverage has helped them to achieve mobile broadband penetration levels well in excess of 10%. In comparison, operators in the UK and Germany and in some Eastern European countries, have much still to do to provide the necessary mobile network infrastructure needed to underpin high take-up of mobile broadband services.