Despite more demand for 4G, simply launching it does not guarantee success. Telecom operators from the United States to India have experienced significant downsides to their 4G deployment.
Even with the heavy investments needed to deploy 4G services, operators should not discount how much subscribers covet 4G. A telecom operator in Japan waited a year after the first 4G service was launched before it launched its own 4G services. Because of late entry, it lost 15% of its market share even after three years of continuously promoting its 4G products.
Our conservative estimates indicate that it will take more than five years to regain market share lost to a first mover that offers 4G services.
Roland Berger has helped more than 15 operators in Southeast Asia and Europe successfully launch 4G in the last 18 months. We identify four most-pertinent factors to successfully launching a 4G service to gain market share and achieve profitability.
First and foremost, telecom executives must decide what they want from launching 4G. Beyond protecting and growing market share, objectives can range from preventing their most-profitable customers from migrating to other networks or expanding portfolio of products, to attracting new subscribers and being the first-to-market to offer 4G.
To be sure, this first step can be used not only in launching a new service, but also to relaunch 4G services that didn't achieve the critical mass that was intended.
Second, demand for 4G must be determined for viability. Telecom executives must ask: what will compel conversion to the service? Examples of answers could range from price packages or service levels to ease-of-conversion and free trial periods.
Ambitious management teams must also consider what investments need to be made, for excellent access to 4G services. This can be done using a proprietary methodology called the Value-Centric Network where, through big data, the most profitable customers are determined and the right investments are made to meet their needs to ensure they remain with the network.
Third, there are a number of incentives operators can offer to convert 3G and nondata users to 4G services.
One is free data access. Offer trial periods or give out free gigabytes of data for a limited time to incentivize users. This will additionally heighten the experience of fast-speed data and demonstrate the network's capabilities.
Another is a discount on 4G-capable mobile phones and free conversion of SIM cards. Operators can offer discounts for handsets, which include reducing device payments upfront, providing periodic cash-backs or by offering monthly installments at low or no interest. They can also issue 4G-capable SIM cards for free.
Still another incentive is partnership with content producers and social networks. Operators can consider offering specific content and free access to popular sites to enhance the experience.
An operator in the Philippines offered unlimited data access to Facebook, even for users who did not have credit on their phones and deployed large sales teams to directly educate customers. The results are a 17% rise in the telecom operator's subscribers, a 100% increase in data users, and a 34% jump in ARPU after campaigns.