Costly Mobile Data Plans Limit Service Rollout to MNC Employees

(Business News & Technology News, 9 May 2008)

Multinational companies are putting mobile data first on their shopping list for telecoms services. But they say the high cost of mobile data plans could limit their rollout of services to employees. They also want mobile operators to improve billing and usage reporting.

According to a new report from advisory and consulting firm Ovum, the top three budget priorities for CIOs at large enterprises are mobile data, IP convergence, and overall cost management. But there are signs that budgets are being directed towards mobile data in particular.

Ovum's latest research among members of the Enterprise VPN Users Association (EVUA), whose members include companies such as PWC, Mars, GSK and Shell, suggests that more companies are moving from talking about fixed-mobile convergence as a concept to undertaking practical integration projects.

As a result, MNCs expect spending on mobile data to increase faster than any of the telecoms services they buy. Overall, balanced over all areas of expenditure, telecoms budgets are expected to change little over the coming year. However, 71 percent of EVUA members expect mobile data budgets to increase significantly over the same period. Mobile data traffic is predicted to grow much more quickly than budgets, however. EVUA members expect their service providers to come up with increasingly competitive deals, especially internationally.

Accrding to Ovum, cost management remains a major area of concern for all telecoms services. While many MNCs have had success in bringing core fixed voice and data network costs under control, there are still issues around the cost of provision in less developed countries. And it almost goes without saying that in multinationals it is the cost of mobile (and, increasingly, mobile data) that needs most attention.

This need for greater visibility and control of mobile costs is seen as a barrier to greater acceptance and usage of mobile data applications and convergence. The uptake of mobile data services has been fairly slow in multinationals to date. "Arguably the rate of growth has been limited by lack of global contracts, multinational service availability and consistency and continuing high prices for international data roaming," says Pauline Trotter, Principal Analyst at Ovum's Enterprise practice.

In the past, EVUA members have not held back in expressing their frustration with the level of support from mobile operators in supporting mobility on an international scale. This is a continuing area of concern, since it makes managing mobile usage and costs difficult for MNCs. However, there has been progress in getting "enterprise-grade" service from mobile network operators. One sign of this progress is that major managed services or outsourcing contracts for mobile dominate new sourcing strategies. Forty-seven percent of respondents in Ovum's survey said that they are considering such contracts in the coming two years.

While many companies to still procure and operate mobile nationally, there is a trend towards regional and even global contracts and agreements, as well as a trend towards longer contracts.

Cost management, performance (delivery to agreed SLAs) and geographical coverage are the highest rated delivery criteria for service providers among EVUA members. For mobile services, the quality of billing and reporting is also high on the agenda—this (along with cost management) is the main area where they would like to see improvement from mobile providers.

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