No one is debating whether wireless has benefitted Latin American consumers and enterprises. But that’s not the same as saying that all of the region’s mobile operators are making money hand over fist. Instead, it takes savvy to turn a profit on mobile services, particularly broadband.
Take video, which spans a wide variety of applications, from consumers watching soccer highlights to backhaul for enterprise security cameras. For consumers on flat-rate postpaid plans, part of video’s appeal is that they don’t have to worry about being surprised by a big bill after a month of frequent viewing.
In the process, consumers have been conditioned to expect video and other mobile broadband services to be available on all-you-can-eat basis. That expectation and usage put operators in a financial bind: Video contributes little in terms of revenue while using inordinate amounts of network capacity, but implementing bandwidth caps would drive customers to rival operators. In countries where regulators favor Net Neutrality for mobile broadband, operators have additional limitations when trying to keep video from ruining their bottom line.
Staying in Control
To transform video and other mobile broadband services from money-losers to money-makers, operators should implement policy-based bandwidth management, where tiered tariffs ensure that the most profitable traffic gets the lion’s share of network and spectral capacity.
For example, in price-sensitive markets such as Latin America, operators can give customers the option of downloading large files such as videos and games at night, when network traffic is low, for a tariff that’s significantly lower than if they did the download during peak-usage hours.
This strategy is better for the operator’s bottom line because it strikes a balance: Budget-conscious customers still can consume broadband services because they’re not priced out of the market by inflexible tariff structures. That directly improves the operator’s competitive position. Meanwhile, customers who are less price-sensitive can choose to pay a bit extra to access those services during peak periods, with the tariff covering the operator’s additional cost of delivering them at times when network capacity is at a premium.
