In Business Model, Internet Access, Mobile, Spectrum

As always is the case, contestants in the telecom services business will use tools in ways viewed as helpful to their revenue models. Upstarts trying to take market share are more likely to try disruptive tactics. Market leaders are more likely to seek ways to directly monetize new technologies and platforms.

In other words, attackers are likely to “give away value and features” if it helps them grow share, while leaders are more likely to want to try and charge for new value and features to directly boost average revenue per account.

Ways to bond capacity from mobile–Long Term Evolution (4G) and coming fifth generation (5G)–are likely to follow that pattern.

T-Mobile US, for example, already is exploring ways to use pre-standard Long Term Evolution aggregation of mobile and Wi-Fi assets. In part, that is because T-Mobile US arguably has fewer assets in the network coverage area, compared to AT&T and Verizon.

So bonding its mobile network assets with any available Wi-Fi will improve user experience, giving customers an experience equivalent to, or better than, having a mobile network infrastructure that is more developed (capacity and geographic coverage).

As would any challenger, T-Mobile US might see bonding of mobile and Wi-Fi assets as a way to monetize the feature indirectly, in the form of greater customer numbers, if other competitors try and do so.

In other words, if some of its leading competitors did try to meter all access (mobile only or using Wi-Fi bonded assets such as LTE-Universal or License Assisted Access), T-Mobile US likely would refrain, to create marketing differentiation from the other carriers.

To some extent, the current interest on the part of mobile operators to combine access assets across Wi-Fi and Long Term Evolution and all subsequent mobile networks (fifth generation and beyond) is a play to boost the profitability of a current revenue stream, namely mobile Internet access.

The prevailing model for mobile Internet access is the purchase of a bucket of usage. Bonded mobile plus Wi-Fi access, in principle, creates an ability to bill for Wi-Fi usage the same as mobile usage, without having to build and operate the access assets.

In other words, users would be charged for use of LTE-U or LAA or MuLTEfire access as though the consumption occurred on the mobile network.

Offload of mobile device traffic to Wi-Fi generally is seen as a positive by mobile operators, as it often results in better user experience, while not debiting mobile data allowances.

The ability to combine mobile and Wi-Fi access assets might turn on the potential revenue upside, however.

Compared to a scenario where users switch to Wi-Fi for access, not using the mobile network at all, Long Term Evolution-Universal (license assisted access or Qualcomm’s MulLTEfire) could represent some incremental ability on the part of a mobile service provider to directly bill for Wi-Fi usage.

Of course, that also was the hope when mobile operators launched Long Term Evolution as well, so nothing is assured. As it turned out, operators generally are unable to charge any premium for LTE access, compared to 3G.

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