Are Mobile Firms Devoting Too Much Effort to Internet of Things?

Are mobile service providers spending too much time on Internet of Things and too little on their data roaming businesses? Some think so.

So it is that a study by Strategic Economic Engineering Corp (SEEC), underwritten by Syniverse, suggests mobile service providers distracted by growth initiatives might be sacrificing chances to earn as much as $30 billion in roaming revenues, including a loss of about $16 billion

in roaming revenues earned for communications in the United States, United Kingdom and Germany, for example.

SEEC pegs the opportunity cost of neglecting roaming revenues at $46 billion. That is based on an assumption that roaming revenues will generate an incremental $30 billion, with potential losses of $16 billion in revenue.

On a country-by-country basis, this works out at risk values of $13.4 billion in the U.S., $1.7 billion in the U.K. and $1.7 billion in Germany due to subscribers switching service providers to benefit from better roaming offers.

Some might downplay the estimate of “opportunity cost,” as it assumes mobile service providers cannot or will not craft offers that generate the incremental revenue, as they are distracted by other concerns.

Others might argue mobile service providers can, and will, accomplish both. But data roaming fees might be a substantial revenue generator.

How important might data roaming fees be in 2018? They might represent $90 billion in roaming revenues by 2018, up from $57 billion in 2014, according to a March 2014 report from Juniper Research.

The GSM Association pegs the numbers at the same level, estimating roaming represents 4.4 percent of $1.3 trillion in total mobile revenues in 2015, according to the GSM Association, and could rise to 6.4 percent of total revenue by 2018.  

Data roaming represented 36 percent of global mobile roaming revenues in 2013, according to Juniper Research.   

Mobile data roaming could represent as much as $32 billion, if data roaming is 36 percent of total roaming revenue, at such levels.

At such levels, roaming will represent over eight percent of global mobile service provider billed revenues in 2018.

The global roaming market is worth in excess of $57 billion today. It is expected to rise to an estimated $90 billion by 2018 if mobile operators implement the right pricing strategies to unlock increased roaming demand, according to Juniper Research.

Most organizations facing challenges in its core revenue model will spend some amount of time or effort trying to create new revenue streams. But there always is a risk that effort expended on growth initiatives comes at the expense of effort spent to defend the existing business.