#5 – Traffic management
In 2011, operators will discriminate on data usage policies in order to lower CAPEX, increase revenues and improve service quality – the regulator backlash may take place in 2012.
Northstream expects that mobile operators will gear specific data price bundles according to specific high bandwidth services, content and applications. Almost all operators have started to introduce “fair use” policies and data caps in order to protect the quality of service delivered to its users.
All major international operators have also purchased contracts with Policy Control and Rules Function (PCRF) device vendors to monitor usage even more effectively. Furthermore, according to Infonetics Research, 60% of operators polled planned to use such devices to increase ARPU and potentially deliver tiered pricing for some services. In Australia and South Africa, operators have introduced data caps, time based billing, walled garden networks and favour some content partners according due to their high transatlantic data charges.
The European regulators seem content to sit back and let this happen – for now. The European Commission recently stated that there would be no net neutrality legislation in Europe and highlighted examples of reasonable service differentiation occurring across Europe today. The market has therefore been left to regulate itself while the European Commission keep close watch.
Northstream believes that while operators have dodged the net neutrality bullet for now, they can expect further intrusion from the European Commission in the not-too-distant future. The smartphone explosion has enabled a completely new market opportunity for over-the-top online service providers. Mobile operators will be sorely tempted to do all they can to block the competition and stop them from cannibalising their revenue streams. Tiered offers that limit user choice and restrict service competition, in combination with unjust prioritisation of paid content, will provoke regulators to step in sooner than anticipated. To preserve the golden compromise of self-regulation, operators must undertake a careful balancing act.