Location based services - why operators hold all the cards

Donald Stuart, CEO of Brainstorm, explains why mobile operators are well placed to take advantage of the revenue streams opened up by location technologies.

LBS – what’s the hype?

The area of Location based services (LBS) has been getting a lot of attention of late, and it’s no wonder, Juniper Research has highlighted that the Mobile Context and Location Services market is expected to generate revenue of $43.4 billion (£26.2 billion) by 2019, up from $12.2 billion in 2014. With this in mind it is clear why businesses within the OTT, telecoms and media space are vying to get their piece of this promising revenue stream.

Mobile marketing campaigns have now moved beyond offering mass indiscriminate communications, to focus instead on delivering carefully targeted personalised messages. This transition is in turn driving a higher ROI on marketing campaigns as the tools are now available to automate the slicing and dicing of audiences in a seemingly limitless array of permutations. Yet the addition of a further dimension; that of location; adds a powerful new trigger to deliver messages linked to your location at a given moment in time, the use of which has seen response rates surpassing those of standard generic campaigns by as much as 75%. It is this additional location capability which, when married with customer demographic and buyer behaviour information, is causing such a stir amongst the marketing populace driving both mobile operators, OTT service providers and mobile device manufacturers to consider ways to monetise the location network assets they hold, and their profile-rich subscriber database. After all, the marketing mantra of delivering the ‘right message to the right person at the right time’ still holds water but should perhaps now be amended to include ‘in the right place’.

The commercial opportunities offered by the addition of ‘location’ to the marketing mix, have not been lost on mobile network operators who have been busy developing a package of location services to sell to brands & retailers. They are quickly beginning to appreciate the value of the location information that they already possess. By combining this location intelligence with the subscriber data which they also hold in abundance, they have a winning combination for businesses seeking to tailor communications campaigns to hyper-targeted recipients at the time and location when they are most likely to be responsive.

The Importance of Opt-in

According to Cisco 47% of us are willing to receive vouchers to our mobile phone when we are at or near a retail store. This brings us to another important point which is in respecting the wishes of subscribers themselves and operators are working hard to develop ways to convince subscribers of the value of opting-in to receive personalised offers thereby ensuring a win/win arrangement for all parties concerned. What’s particularly impressive is that rather than conceding the upper hand to OTT players like WhatsApp and Viber as they did in the battle for SMS supremacy, MNOs have been quick to recognise the value of location based intelligence to enterprises. We have also seen an industry first in the UK where mobile operators have set aside their competitive instincts to form Weve, an affiliation that has sprung up between MNOs enabling them to capitalise on this thirst for hyper-targeted information so brands can target all their subscribers regardless of the mobile network owner. Far from dragging their feet, mobile operators are now at the forefront in offering innovative smart technology which can turn location data into a powerful business tool.

Separating GSM from GPS

There are a lot of location services already in operation – ranging from those that use GPS satellites to WiFi and even Bluetooth, used to provide location through Beacons; it’s creating some exciting engagements across multiple sectors from travel to retail. However these technologies all rely on ticking a number of boxes namely: the consumer having a smartphone, downloading an app and actively logging in or checking in to ask the app to ‘find my nearest’ of whatever service or product they are looking for.

While these location technologies are reliant on actively checking in, think Foursquare, GSM location data is passively collected by your mobile network operator along with lots of other ‘events’ that they collect every time you do something with your phone – turn it on, send a message, etc and by unlocking these location events, an MNO can effectively create highly-targeted location based engagement opportunities. According to a Morgan Stanley study, 91% of adults keep their smartphones within arm’s reach for 14 hours a day. The fact is that our smartphone knows more about our daily routines, likes and dislikes, than most of our family members. The data gathered by GSM is extremely valuable to operators who can build ever-greater detailed pictures of subscribers which can be leveraged to provide hyper-personalised, real-time communications, with greater ROI.

Why MNOs hold all the cards

So whilst the technology exists to create personalised messages for marketing campaigns the potential uses for location based technology goes way beyond pure marketing applications to include a myriad of other potential opportunities to enrich customer service activities, aid fleet management, logistics and even help to find missing children. The use of GSM location technology gives operators the opportunity to offer feature-rich, valuable services, above and beyond the data gathered by other location technologies. This is where operators are much better placed to execute smart engagement. GSM is more effective than say GPS, WiFi or Beacons for applications that rely on passively monitoring large volumes of user data without relying on a user to do anything other than opting into the service. Therefore services like fraud management and ‘lost children tracking’ are better suited to GSM services which are the domain of the operator. Get these triggers right and operators can ensure location based services not only become an unbeatable marketing tool, but have the potential to integrate themselves into the everyday lives of their subscriber base to create innovative services that add value for both consumer and marketer. Operators are in a unique position to leverage their golden pots of customer data to provide services which OTT players have no access to, which will inevitably lead to enhanced loyalty, reduced churn and growing revenue.

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Mobile operators ramp up their LTE network plans

Despite the early hype surrounding 5G, there’s plenty of life left in 4G. At the end of last month, there were commercial networks from 318 operators in 111 countries. The total number of commercial LTE networks is expected to be more than 350 by the end of this year.

But operators are already moving on to the next evolution of LTE – LTE-Advanced. As of the end of the first quarter, ABI Research estimates there were around 60 LTE-Advanced trials, commitments and commercial deployments worldwide. Of these, it believes 22 commitments were from Western Europe, 16 from Asia-Pacific, and five from North America. The firm also believes that there will be 22 million LTE-Advanced subscribers by the end of 2014.

Carrier aggregation (CA) is perhaps the most significant feature of the LTE-Advanced specification, which helps mobile carriers to utilise all spectrum resources to increase data throughput rates.

“In France, Bouygues Telecom first utilized CA to launch LTE-Advanced in six cities in mid-June, 2014, while Orange France and SFR also announced they will commercially deploy LTE-Advanced,” said Marina Lu, research analyst at ABI Research. “Apart from CA, LTE-Advanced also incorporates other enhancements, like advanced antenna techniques, interference management, and efficient use of heterogeneous networks.”

There’s also continuing movement with spectrum auctions. Among the recently completed and near-term 4G spectrum auctions, about three-quarters of upcoming 4G spectrum auctions will take place in Latin America, Asia-Pacific, and Africa.

“To date, most of the mobile carriers in Europe and developed countries of Asia-Pacific and Middle East have already secured 4G spectrum,” said Jake Saunders, VP and practice director for ABI Research. “A major spectrum auction of 1,700MHz and 2,100MHz will take place in the US in November. Competition is expecting to be robust between the major US carriers AT&T, Verizon Wireless, etc.”

LTE TDD

The Global mobile Suppliers Association (GSA) confirms that operator interest in the unpaired TDD variant of LTE (also known as TD-LTE) is increasing with 39 networks launched to date. This represents around one in eight LTE operators in 26 countries. Another 48 operators are currently deploying or planning networks. If you add in technology trials and studies, the GSA estimates that almost 120 operators globally are investing in LTE TDD.

Of the 39 commercially launched LTE TDD networks, 13 operators have launched converged systems using both TDD and FDD mode in the networks, which the GSA sees as a growing industry trend. For example, some operators in India are deploying converged networks using LTE FDD 1800MHz and TDD 2.3GHz, which is a combination supported by 152 user terminals.

“TDD operators are focusing more on personal mobility and the smartphone is the key segment,” said Alan Hadden, President of GSA. “Recent progress has been excellent and 184 TDD smartphone products have now been announced, which is 87 per cent more than the total in March.”

Of the 1,889 LTE user devices that have been introduced to the market, 530 devices from 85 manufacturers can operate in LTE TDD mode. Routers and personal hotspots make up 38 per cent of these TDD products, whilst the smartphone category has grown its share to 35 per cent.

GSA forecasts that the global TDD share of LTE subscriptions, fuelled by its popularity in China with 14 million subscribers by end June 2014, will grow from around 5 per cent in Q1 to over 15 per cent by the end of this year.

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Afghanistan Mobile Operator Overview

As of March 2014, the penetration rate in Afghanistan was estimated at 89% over a population estimate of 29.8 million.

The country's telcom regulator is the Afghanistan Telecommunications Regulatory Authority (ATRA). 

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Last week at an event in Washington, DC, Amirzai Sagin – Afghan Minister of Communications and Information Technology – said that in the last 12 years Afghanistan has come a long way in terms of developing the ICT sector (Information and Communications Technology). Today, there are five major telecom companies, and approximately 60 internet providing companies operating in Afghanistan. More than 90 percent of the Afghan population has access to mobile services, and 22 million of them own at least one mobile phone. The number of internet users continues to increase as the cost of internet has decreased from $1,000/mb in 2002 to $22/mb today. In addition, the Ministry has started issuing National Electronic IDs, which is a centralized system for avoiding fraud. At the end of his keynote address, the Minister said something very important that Afghanistan has the capacity to carry out the next presidential election, which will be in five years, via mobile phones.

All five mobile operating companies (Etisalat, MTN, AWCC, AfTel, and Roshan) are offering their own mobile money product. In 2008 Roshan began the use of the M-PAISA mobile money service. These products include mobile wallet technology, where customers can store their money digitally as opposed to using cash. Roshan’s M-PAISA operates in 6 major cities with 17,000 active users. The users portfolio is about to reach $79.5 million by the end of 2014. Most Afghans receive their monthly salary through their mobile phones, and relatives send money via phone from one province to another.

Last week at an event in Washington, DC, Amirzai Sagin – Afghan Minister of Communications and Information Technology – said that in the last 12 years Afghanistan has come a long way in terms of developing the ICT sector (Information and Communications Technology). Today, there are five major telecom companies, and approximately 60 internet providing companies operating in Afghanistan. More than 90 percent of the Afghan population has access to mobile services, and 22 million of them own at least one mobile phone. The number of internet users continues to increase as the cost of internet has decreased from $1,000/mb in 2002 to $22/mb today. In addition, the Ministry has started issuing National Electronic IDs, which is a centralized system for avoiding fraud. At the end of his keynote address, the Minister said something very important that Afghanistan has the capacity to carry out the next presidential election, which will be in five years, via mobile phones.

All five mobile operating companies (Etisalat, MTN, AWCC, AfTel, and Roshan) are offering their own mobile money product. In 2008 Roshan began the use of the M-PAISA mobile money service. These products include mobile wallet technology, where customers can store their money digitally as opposed to using cash. Roshan’s M-PAISA operates in 6 major cities with 17,000 active users. The users portfolio is about to reach $79.5 million by the end of 2014. Most Afghans receive their monthly salary through their mobile phones, and relatives send money via phone from one province to another.


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Roshan’s network now covers 60% of Afghanistan’s population. A third of the country’s subscribers are Roshan customers, giving it the largest market share of the five mobile network operators in the country. And there is plenty of room yet to grow. Though the Afghanistan Telecom Regulatory Authority puts telephone penetration at 72%, Ladak says the proportion of people with  phones is probably half that. Afghans, like their counterparts in the rest of the poor world, own more than one SIM card to take advantage of different rates and packages. 

That should mean there are millions of Afghans yet to connect.

Foremost among these, perhaps, is that 3G data and services such as ringtones and caller tunes make money, even in a very poor country.  When Roshan launched 3G services last year, the demand took it by surprise. Perhaps it shouldn’t have: Afghans, like anyone else, enjoy entertainment and music. Some 600,000 subscribers, or 10% of Roshan’s total customer base, now use 3G. Their top destinations are—yes—Facebook, YouTube and news websites. 

Mobile networks cover 88.5% of Afghanistan’s population.

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Togo’s 3rd mobile operator to boost mobile penetration

Togo does not only have one of the smallest populations in West Africa (close to six million), but it also boasts one of the lowest mobile penetrations (54%) in this part of the continent.

Mobile penetration’s average in West Africa is 75%.

The government announced the entry of a new mobile operator on June 12, and launched a tender the following week, sending a huge relief down experts’ spine and drawing scenes of joy in many parts of the country.

“To have a small population does not in any way means that there is a shortage of people to buy sim cards, airtime or data,” technology analyst John-Osei Seidu said.

“The third operator will undoubtedly add another flavour to the market, both in terms of quality of services and price. So, there’ll be people who’ll be attracted to the new network if these two aspects are much better than the others,” he added.

Togo’s mobile market is currently dominated by Togo Cellulaire – Togocell, a subsidiary of government-controlled Togotelecom – which leads by 73%, trailed by Moov (Etisalat Group) with 27%.

Togo’s mobile sector prices (local and international calls, SMS, data, among others) also appear to be higher than many countries in the region.

The mobile industry in Africa contributes US$56 billion to the economy, equivalent to 3.5% of total GDP, the GSMA’s African Mobile Observatory said, adding that there remains a huge untapped potential in Africa - 36% of Africans - within the 25 largest African mobile markets who still have no access to mobile services.

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Estonia Mobile Operator Overview

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Earlier this month, Estonia's largest mobile operator, EMT, announced that it had covered 95 percent of the country with its 4G LTE network.

According to EMT chief executive Valdo Kalm, Estonia is the first country in Europe, and the third in the world, to reach the milestone.

"Sweden and Denmark are the countries competing for the second and third place in Europe with about 50 percent of their territory covered with 4G LTE," he said, 

adding that globally only Estonia, Singapore and South Korea have passed the 95 percent mark.

EMT — which is owned by TeliaSonera, the Swedish telecommunications company that launched the world's first commercial 4G network in 2009 — opened Estonia's first 

4G network in February 2010, when it was the 11th such network globally at the time.

The second operator to come to the local 4G market was Tele2, the country's third-largest operator, which launched its network in November 2012. It was followed 

some months later by second-largest operator Elisa, which launched its LTE network in February this year.

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Three of Estonia's mobile operators are preparing to offer LTE-Advanced connectivity later this year in the country's capital, Tallinn. Next year, they hope to extend coverage to bigger towns and more densely-populated areas across the country.

According to the CTO of Tele2 Estonia, Ervins Kampans, during the recent upgrade work on mobile infrastructure in the Baltic states, the company rolled out LTE-Advanced tech capable of offering download speeds of up to 300Mbps.  With LTE-A already in place, the company is now waiting for end-user devices to enter the market before opening up the network to the public.

"In the areas where we do have 4G now, we actually have built in LTE-Advanced as well, but it isn't switched on yet. The hardware is ready and to light up the 

LTE-Advanced network; we only need to switch on software and adjust it according to the end-user devices," he said.

"The most important question for us now is, when will the end-user devices be ready for commercial use? We are expecting LTE-Advanced internet dongles to arrive first and

 then Cat 6 [LTE-category 6 connectivity with download speeds of up to 300Mbps] mobile phones."

Tele2 is the last of the three operators in Estonia to fully cover the country with 4G, having been awarded an 800MHz licence during the country's spectrum auctions only last year.

The operator hopes to achieve 95 percent LTE coverage during the summer months.

EMT, the biggest mobile operator in Estonia, has also started testing LTE-Advanced technology and, according to a spokesperson for the operator,

it's likely to be commercially available to consumers by the end of this year.

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China Mobile massively increases 4G growth rate

Chinese telco drives TD-LTE market as customer numbers exceed 8 million; China Telecom still reporting subscriber losses.
China Mobile had a 4G customer base of 8.11 million at the end of May having added over 3 million new users in just one month.

The telco, the world's biggest mobile operator and a key driver of the TD-LTE 4G standard, recorded 3.31 million 4G net additions last month, 
compared with just over 2 million in April. China Mobile launched its 4G service in December.

According to the Global mobile Suppliers Association, there are 300 LTE networks in commercial operation worldwide, of which 36 run on the TDD variant.

14 of those 36 are in the Asia-Pacific region, nine in the Middle East and Africa, and eight in Europe (see chart).

"Dozens more" LTE TDD networks are either in deployment or in the planning stages, the GSA notes.

In total, China Mobile had 787.3 million customers at the end of May, up by 2.7 million on the previous month and by just over 20 million since the start of the year.

It's a different story for China Telecom though, which is still suffering customer losses.

The smallest of the three Chinese operators saw its overall customer base decline by 950,000 in May to 181.2 million; 
it has lost 4.36 million since the start of the year. The telco has had a statement on its Website for the past few months attributing the decline to increased competition as a result of the launch of LTE services in China as well as strong marketing from its rivals.

China Unicom, meanwhile, added 2.7 million customers in May to take its total base to 293.3 million.
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New Zealand Mobile Operator Overview

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As of March 2011, the penetration rate in New Zealand was estimated at 124.326% over a population estimate of around 4.3 million.

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Vodafone and NZ incumbent, Telecom, have announced recently announced their mid-year subscriber figures and industry researcher IDC estimates that the country has now officially passed the 100% penetration mark to reach 101%, or 4.25 million mobile subscribers. This means that growth for the country's only two mobile phone carriers is reduced to stealing customers from each other - or as has happened in the past year - convince people they need a phone on both networks.

"The New Zealand mobile market is reasonably unique with a high level of maturity and above 100% penetration, yet only two operators present. Interestingly, we've hit 100% mobile penetration before Australia has. Last year, New Zealand saw an upheaval in the Internet sector, with the mobile space looking set to be next," said IDC telecommunications analyst, Darian Bird.

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Let's not forget 2degrees. New Zealand's third mobile carrier possibly already has more customers than Telecom NZ. It is currently positioned as the low-cost alternative. If 2degrees does nothing else, it puts price pressure on Vodafone and Telecom NZ.

But it does do something else. Something important. While 2degrees is playing catch-up in areas like 4G, it has been innovative in finding new ways to sell wireless services. The company's carryover plans and ability to share data between accounts have helped reshape the market.

So why is the mobile market flowering now? The arrival of a third carrier in the shape of 2degrees made much of the difference. Once it reached critical mass, Vodafone and Telecom NZ had to lift their games. All New Zealand mobile customers owe 2degrees founder Tex Edwards a debt for making that possible.

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Telecom Corp., New Zealand's second-biggest mobile phone operator, has been cleared to buy the final lot of 700 megahertz radio spectrum, flagged for fourth-generation mobile use, after proposed government allocations made it unlikely Two Degrees Mobile would gain any benefit if it managed to acquire the spectrum.

Telecom chief executive Simon Moutter said the clearance means the country's biggest telecommunications company will benefit its customers with faster speeds and more capacity on its 4G network.

"This fourth lot puts Telecom in the best position in the market to deliver a very high-performance 4G mobile network for New Zealand, including in less densely populated areas," Moutter said in a statement.

Telecom bought the fourth 2x5 MHz for $83 million in the second round of a government auction, having secured three lots of 2x15 MHz spectrum for $66 million in the first round. Vodafone missed out on the fourth lot, having bought three 2x15 MHz lots for $66 million in the first round, while 2degrees bought two lots of 2x10 MHz spectrum for $44 million.

While some 4G capability is already available on higher MHz spectrum, the 700MHz range is especially well-suited to pushing fast mobile broadband into rural areas because it requires fewer repeater stations to achieve coverage and into densely populated urban settings, such as commercial buildings.

As part of the auction’s conditions, the mobile phone operators will have to upgrade existing rural cell sites to 4G capability within five years and continue to expand their coverage. That’s to ensure at least 90 percent of the country has access to a 4G network within five years.

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Black+White launched with much fanfare but has almost vanished since then. CallPlus and Orcon –both big-name brands in the ISP space – have mobile offerings but you’d be hard pressed to find anyone using them. The plans seem uninspired somehow and certainly can’t compete with the big names, Vodafone and Telecom, despite using their networks.

In Australia MVNOs account for 13% of the market, yet in New Zealand the total for all MVNO offerings is probably in single figures.

I think I can see why – MVNOs in New Zealand are on account only, and New Zealand is predominantly a prepay market. Immediately, most of New Zealand’s customers are unable to consider switching to an MVNO provider because there is no prepay option.

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