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Building Your Mobile Engagement Business Case

by Cathal Fitzpatrick | 23rd November 2017

At Openmind, we believe that there is a huge opportunity for mobile operators to take control of the fast-growing Mobile Engagement market, and take their services direct to high value enterprise, banking and government customers.

Mobile Engagement is now big business, and recent reports (ref listed at the bottom) highlight the potential for growth in this area, as well as the continuing importance of A2P SMS as part of the overall mix. SMS Aggregators are currently leading in this market, and are building platforms and APIs that Enterprise customers use to access communications channels delivered by mobile network operators. The Aggregators can charge a lucrative retail rate to their enterprise customers, and use low cost access to operators and even “Grey Routes” to deliver the content.

Enterprises have used text messaging (A2P SMS) for many years to stay in touch with their customers and inform them of new offers, promotions and other useful information. As mobile network services and devices become more feature-rich, enterprises also want to take advantage of these features, and so simple A2P SMS is evolving to multi-channel mobile engagement, where enterprises use other communications channels such as RCS, in-app Push Notifications and even OTT messaging apps to better interact with their customers.

Operators can offer a superior, more secure service to Enterprises than what Aggregators can offer. Only operators can provide 100% accuracy of delivery reports back to the sending enterprise. Using an Aggregator can also expose confidential content to potential eavesdropping or manipulation. Also, operators can be highly-price competitive compared to aggregators, as they do not have to pay termination rates for traffic delivered on their home network.

Openmind have launched a Mobile Engagement Platform, “Engage”, which allows operators to exploit the communications channels they support as high-value services for enterprises. However, sometimes the operators we speak to are uncertain of how the business case will work – a common question we get asked is “Will Enterprise’s want to connect with an operator who only services 35-40% of the market? What about subscribers of other networks, surely Enterprises need to engage with them too”?.

These are valid questions – fortunately there is an existing inter-connect framework that operators can use to provide full market coverage to enterprise customers. Further, although Engage customers will have to pay termination fees to other operators, the overall service can still be highly profitable. Operators can also use alternative delivery channels, such as OTT messaging apps, to deliver content at lower cost.

 

The diagram below illustrates how this works;

– the host operator providing the mobile engagement platform charges a retail rate to businesses wishing use the operator’s services.

– These businesses will then send large volumes of messages at this rate via the Mobile Engagement platform.

– The portion of those messages intended to home network subscribers can effectively be delivered for free.

– For other network subscribers, the host operator can use interworking agreements to deliver the messages at a wholesale rate, or where available via low-cost OTT channels

Table 1:

 

The table below shows the overall profitability of the service for different market penetration rates by the home network, assuming a retail rate of 5 cents, and a wholesale rate of 3.5 cents.

The average wholesale rate can be reduced using alternative channels such as the OTT providers, RCS, email and other channels where available.

 

Table 2:

Daily TrafficAverage Retail RateRevenueHome Network Market ShareAverage W/Sale RateTermination CostsNet ProfitsNet Margin
20,000,000€0.05€1,000,00020%€0.035€560,000€440,00044%
20,000,000€0.05€1,000,00030%€0.035€490,000€510,00051%
20,000,000€0.05€1,000,00040%€0.035€420,000€580,00058%
20,000,000€0.05€1,000,00050%€0.035€350,000€650,00065%

 

 

Ref;

[1] http://www.digitalistmag.com/customer-experience/2017/08/24/a2p-sms-remains-key-to-multichannel-mobile-engagement-05308224

[2] http://www.roamingconsulting.com/2017/05/15/rocco-research-new-report-published-into-mobile-engagement-and-the-rise-of-the-omni-channel/

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