Chetan Sharma Consulting says that cost reduction strategies and new service revenue models for a “sustainable mobile data future” could bring down operators’ costs by 60%. Now, if we can only pass that on to the end-user.

The study, called “Towards a Profitable Mobile Data Business Model” and funded by Ottawa-headquartered Bridgewater Systems, highlights the cost reduction strategies that it claims can save mobile operators up to 60% a year by 2013.

The study reveals the impact of growing 3G penetration, lower cost smartphones and USB dongles, new tablets like the iPad, and the popularity of mobile applications on the growth in mobile data traversing operators’ networks.

It also investigates the causes of mobile network congestion and methods to alleviate it, looking at both network congestion management strategies and operator data pricing models.

“Operators must adopt a range of technical solutions to manage costs, from traffic management tools, through to data offload and LTE or WiMAX,” says Chetan Sharma, President, Chetan Sharma Consulting. “However, these will need to be allied with commercial approaches that protect revenues, such as tariff innovation and the enforcement of fair usage policies.”

Steven Hartley, a senior analyst at telecom consultancy Ovum, notes that the popularity of smartphones, mobile laptop dongles and flat-rate data plans has brought explosive growth in mobile data traffic.

“A holistic approach to managing this traffic including policy control, mobile data offload, and evolution to 3.5G and 4G is critical,” says Hartley. “[Otherwise] costs could exceed revenues and become unsustainable by 2012 or sooner.”

The following conclusions emerged from the study:

• Policy control could contribute substantial annual cost savings of over 10%, equating to more than $15 billion in annual cost reduction by 2013 in the US market.
• Operators deploying a data traffic offload strategy to Wi-Fi, femtocells or 4G could expect savings of 20% to 25% per annum by 2013, representing $30 to $40 billion in the US market.
• The evolution to HSPA and LTE could save just under 20 per cent in network costs by 2013, saving US operators $25 billion by 2013.
• Flexible, dynamic, and personalised pricing models that reflect subscribers’ preferences and context, bandwidth and application usage, and network conditions will better align data revenues with network costs for the first time.

New pricing models highlighted in the study include:

• Tiered and usage based models that take a smarter approach to service personalization and fair usage;
• Application-specific charging, to generate appropriate revenues from high-bandwidth services;
• Time-based models that charge based on time spent on the network; and
• Mobile advertising and mobile commerce funded approaches.