By subscription only? Redefining consumer business models for CSPs


In October I looked at subscription business models from an IoT angle. This time around, let’s discuss subscriptions from a slightly different standpoint. With the recent European Commission decision to effectively outlaw the current roaming charge model and the impending mainstream availability of standards-based remotely programmable embedded SIMs, things may never be the same again.

For the purpose of this discussion it does not really matter if we consider the programmable SIM to be a hardware module in the handset or a fully software-based solution. There are many pros and cons for each but I will not cover those here.

What matters in this context is the fact that we no longer need the separate piece of processing hardware embedded in a plastic container and tied to a single operator via hard-coded binding. Instead, the SIM functionality is now embedded in the device hardware itself and can be re-programmed more or less at will, using a standard interface, or at least a limited number of proprietary interfaces.

Now, the most obvious place where this is useful is in a roaming situation. Upon arriving in a new country, the device can be programmed to attach to a local network to use local services. It is quite likely that competition will be fierce. I’m expecting players to make a big moves towards “20 gigs of free data while in country X” style offers, in exchange for some personal info, naturally, as is the lay of the land these days. And it is not difficult to imagine the add-ons either. Various tourism related services, restaurants, transportation companies, etc. will gladly jump in to sponsor these kinds of services in exchange for some mindshare with the consumer.

Along similar lines, in 2014 Facebook acquired a small Finnish company called Pryte whose main claim to fame was excellent customer experience in purchasing flexible data packages in various national and roaming situations. Aimed primarily at the emerging markets, it does not take much imagination to see what Facebook’s basic concept, combined with their recently introduced payment facility, programmable SIM and something like Pryte’s client could achieve in terms of revolutionising the traditional prepaid model.

For players whose main business is more focused on the services – as opposed to the communications - subscriptions have traditionally been the main revenue model. However, difficulty in matching the differently structured metered access models of traditional CSP data packages with innovative, cross-operator service offerings has not always been easy.

Many service providers have therefore resorted to aggregators to handle the sometimes complex interfacing with the CSPs. As some of these aggregators are now part of some very large companies, with SAP’s acquisition of Sybase complete with their 365 hubbing service being a case in point here, they do possess a lot of bargaining power to wield on the CSPs.

Which could lead towards an entirely new kind of an offering where internet access actually comes bundled with a software subscription such as Microsoft Office 360 or Adobe’s Creative Suite. In some sense, this would be a natural extension of the speculation around Facebook and Google entering the access provisioning space; only in this case, possibly changing operators on an on-demand basis and with a different business model based on bundled subscription payments.

For the CSP, this means both a massive threat as well as a huge opportunity. Tapping into these new types of opportunities will open new, long sought after streams of revenue from the services layer. Those who dare embrace the change will be the first ones at the table negotiating with some very powerful players. But it takes courage, and maybe a little bit of new technology too, to jump on this bandwagon where the traditional roles of operator, service provider and customer will be redefined possibly forever.

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