Wireless data, or mobile content, is growing rapidly and taking an increasing share of the average revenue per user (ARPU) in nearly every region of the world. According to an industry analyst research firm, mobile content is increasing year-over-year by 35 percent, and is expected to grow as a share of ARPU from 20 to 40 percent by 2011. As providers scale their operations to support the growth and diversity of usage, they must simultaneously manage the risk of a revenue stream that is central to their financial performance and their ability to please their customers.

Mobile content is different -- very different

Mobile content revenue is starkly different than traditional voice revenue (that still composes 80 percent of ARPU today). First, mobile content includes both recurring and transaction-based revenue streams that may vary in pricing and complexity based on whether the provider delivers the content (on-deck) or the customers accesses and transacts their own content (off-deck). Mobile content also depends on an extended order-to-cash environment that includes a complex supply chain of content creators, aggregators, providers and resellers.

In addition to these more predictable revenue management challenges, there is a whole separate set of variables such as content costs, revenue sharing terms, and contract compliance obligations that can vary widely by content source, content type, intermediaries in the supply chain, and consumer use rights. Providers also have an ever-increasing stake in royalty management, as on-deck transactions must be reconciled at the atomic level and at more points across the extended order-to-cash process. Furthermore, the lack of
standard data formats across the many platforms and systems in the extended mobile content supply chain has increased the complexity of prior voice data exchange issues by an order of magnitude. Finally, adding to all of these changes is the need for providers to continue to scale and evolve the delivery infrastructure to support the growth rates and content diversity.

So what are the risks?

The central risk is driven from the simple fact that although mobile content revenue is starkly different than voice revenue, most analytics and controls used to guardrail order-to-cash performance were designed and optimized for voice services. This core risk is exacerbated by a scaling and evolving delivery infrastructure and a complex extended order-to-cash process. The resulting risks include:

• Revenue: Mobile content may realize as much as 6 percent leakage or higher as providers evolve service delivery platforms and order-to-cash processes.
• Content transaction margin: Communications providers are paying for some content that was not successfully transacted because they cannot reconcile the content provider's invoice at the transaction level, meaning they can incur costs without the associated revenue.
• Unsupported capital expenditure growth: Beyond the requirement to scale and strengthen their service delivery platforms with subscriber growth, providers may be forced to further increase capacity as some customers abuse fair use expectations and drive hyper-usage on flat-rate features (think of the high-consumption patron monopolizing the shrimp cocktail at the all-you-can eat buffet). This can require a capacity buildup that is not supported by incremental revenues.
• Credit management: Although inelastic mobile content volumes are heartening, given overall economic pressures, the volumes may not fully correspond to revenue as some post-paid users are not able to pay on time or pay at all for content transactions. Also, the system may not be able to prevent pre-paid users from transacting content when their contract is exceeded or expires.
• On-deck/off-deck margin performance: Providers generally realize better margins for on-deck versus off-deck mobile content transactions but may lack the visibility needed for fact-based decisions on what content to deliver on-deck, off-deck, or not at all.
• Customer experience: Consumer's sense of identity and online community is increasingly tied to mobile content services, especially for the rapidly growing "under-30" age segment. Provisioning errors, billing inaccuracies, content fulfillment issues or other errors can stimulate early life churn or "buyer's remorse" for wireless services and, in some cases, for an entire Quad Play package, for the immediate consumer and potentially their friends and relatives.

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