Business Innovation Strategies to Reduce the Revenue Gap for Wireless Broadband Services

Mobile broadband is increasing rapidly both when it comes to traffic and number of subscriptions. The swift growth of the demand will require substantial capacity expansions. Operators are challenged by the fact that revenues from mobile broadband are limited, just a few per cent of APRU, and thus not compensating for declining voice revenues, creating a so called "revenue gap". Concurrently, mobile broadband dominates the traffic, set to grow strongly. In this paper we analyze the potential of different strategies for operators to reduce or bridge the revenue gap. The main options are to reduce network costs, to increase access prices and to exploit new revenue streams. The focus in the paper is on cost & capacity challenges and solutions in the network domain. Operators can cooperate and share sites and spectrum, which could be combined with off-loading heavy traffic to less costly local networks. In the network analysis we illustrate the cost impacts of different levels of demand, re-use of existing base station sites, sharing of base stations and spectrum and deployment of a denser network. A sensitivity analysis illustrates the impact on total revenues if access prices are increased, whether new types of services generate additional revenues, and if it fills the revenue gap. Our conclusion is that the different technical options to reduce the revenue gap can be linked to business strategies that include cooperation with both other operators as well as with non-telecom actors. Hence, innovations in the business domain enable technical solutions to be better or fully exploited.