By Max Clarke

Apple’s latest quarterly results show they sold a massive 18.7 million iPhones in the last three months, proving that the popularity of smartphones continues to grow at an amazing rate and with it — the popularity of apps.

With communications service providers (CSP) predicting that within two years, less than 50% of their revenues will come from traditional voice and text message services, they must act now to ensure they capitalise on the opportunities apps can provide them to increase revenues. If they don’t, they risk being left behind by new entrants to the CSP market, according to a new paper from PwC and HP.

The paper ‘Embrace new revenue sources: Living in an apps driven world’ sets out the challenges CSPs need to urgently overcome in order to not get left behind in this rapidly changing market.

Kenny Fraser, partner and member of the PwC Global Communications Industry Leadership said:
“When you consider that watching a clip through a YouTube app uses the same network capacity as sending 500,000 text messages simultaneously, 71% of smartphone users now regularly use apps and the average size of an iPhone now being 14.9MB, it’s easy to appreciate the current pressures CSPs are facing on their networks.

“However, with innovation in mobile markets moving at the fastest pace since the industry’s inception and apps becoming the favoured way for users to receive content on their smartphones, now is the time for CSPs to urgently review their entire product strategy and business models. This will enable them to take the lead on the evolving app market and fend off the competition from new start-ups or ‘garage based’ entrants to their market who are contracting directly with corporates.”
Ole Krogh Buus, Associate Partner in HP Enterprise Services added:

“There are many opportunities to explore. These might be linking price to user demand and network capacity, for example charging for usage and at peak demand. CSPs could consider innovative pricing for new services in data security, smart-metering and location-based services. CSPs could also look at new ways of leveraging the billing relationships, which they have, not just with individual users, but also households and enterprises, to address the increasing demand for managing users’ dual domains of work and leisure.”

“There could also be opportunities for CSPs to leverage apps across platforms, from smartphones and tablets onto laptops and PCs. This could open up these traditionally low yield assets within the home to a new revenue stream in much the same way as the TV has changed from the ‘box in the corner of the room’ to an ever evolving revenue source.”

Kenny Fraser, partner and member of the PwC Global Communications Industry Leadership , concluded:

“In order to capture their share of the estimated €4 billion mobile applications market, CSPs need to have a greater degree of assertiveness and independence and collaborate more openly and effectively with other players in the industry. Now is the time for a change of mindset from one that concentrates solely on the network footprint to one of innovation, whilst working the traditional strength areas such as billing relationships with users and the existing retail networks.

“Innovation in applications, accelerated by increasing mobility, is driving the communications market towards a new and exciting era — CSPs will be need to be more open with enabling partners in order to realise the revolutionary benefits in this space.”