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do not act to secure their role as a provider of voice and messaging services – regardless of the bearer – that recognition may very well transfer to an OTT provider of IP-based voice or messaging, such as Skype or Apple. If that happens, mobile operators are at risk of relinquishing the right to charge for the services that they do provide.
KPN AND VODAFONE RESTRUCTURE SERVICE PLANS TO MITIGATE CANNIBALIZATION
The operators have good reason to be afraid. Even as the G5 operators were outlining their RCSe plans at Rich Communications, KPN Netherlands announced its 3Q11 results, which included the information that the number of outgoing SMS messages per customer had declined 5% year-on-year. Even more significantly, the figure among its Hi brand customers declined 24% year-on-year, a significant change from the 8% year-on-year decline reported by KPN in 1Q11.
Overall, KPN experienced a decline in its voice and SMS traffic and revenues in 3Q11, which it attributes to changing customer behavior – that is, increased take-up and use of OTT services. That OTT activity has, however, increased the data traffic flowing over KPN’s network, which has in turn helped keep ARPU hovering at €24-25 (US$32.80-34.20) since 2Q10 (see fig. 2). The operator says that smartphone penetration among its postpaid customers is 67%, with 74% of postpaid customers also subscribing to KPN’s data plans.
In South Korea, SK Telecom has also experienced a significant decline in its
Fig. 2: KPN Netherlands, consumer wireless ARPU, 1Q10-3Q11
10 15 20 25
0 5
10 20 30 40 50
1Q10
Note: US$1 = ¤0.72 Source: KPN
SMS and mobile-instant-messaging (MIM) traffic as a result of the proliferation of OTTs in the country. Between June 2010 and May 2011, SKT’s SMS traffic slid down from 10.6 billion messages a month to 3 billion, while traffic on its MIM service declined from 260 million messages a month in June 2010 to almost zero in May 2011.
SKT attributes the precipitous decline to the penetration and use of OTT services, including two of the most popular services in South Korea, Kakao Talk and MyPeople. KakaoTalk, which provides an IP-based messaging service for mobile phones, had 25 million users globally (about 20 million in South Korea) by October 2011, who were generating 600 million messages a day. Meanwhile, MyPeople has 13 million users. Between them, KakaoTalk and MyPeople have achieved 40% penetration on smartphones in South Korea, according to SKT.
KPN is restructuring its service plans to encourage those postpaid users who were going out-of-bundle by accessing services such as WhatsApp to stay within their bundle of services. KPN
said it has been able to convert 35% of the customers it targeted with the new offers. In September 2011, the operator also introduced new service plans that include a combination of voice, SMS and data. It has also attempted to differentiate these plans based on quantity, speed and quality of service.
Vodafone Group is pursuing a similar strategy: In its 1H12 results announcement, Vodafone said it is using pricing strategies to avert potential revenue loss associated with the substitution of voice and SMS with data. Specifically, the mobile operator is focused on migrating postpaid customers to tariffs that bundle voice, SMS and data; by end-1H12, about 24% of its contract customers in its five largest European markets had been moved to these integrated tariffs.
This research is taken from a new report published by Informa Telecoms and Media entitled “VoIP and IP messaging: Operator strategies to combat the threat from OTT players”. For more information please visit:
www.informatandm.com/messagingip 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 0
Nonvoice as % of ARPU
ARPU (¤)
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