The enterprise mobile industry landscape is constantly shifting. Device makers (particularly Apple), content providers (Apple, YouTube, Netflix) and cloud service providers (AWS, Microsoft, etc.) are exerting more control than ever over what is sent to and received by mobile devices. Though carriers are constantly being forced to upgrade their networks, subsidize devices, and make huge investments in sales and marketing, they are cut out of the “rewards” side of the equation. For example, smartphones cannibalize carrier billable services with “free” alternatives for voice (Skype), data (WiFi calling), and SMS (OS-based messaging services like Joyn and iMessage). Spectrum acquisition and network investments costs carriers billions per year and are required in order to maintain subscribers; however most of the benefit is going to the services and applications that consume the bandwidth versus those that provide the transport. Device subsidies alone reduce carrier margins by 6-15 percent, but what carrier can afford not to offer the latest iPhone or Samsung device to its enterprise customers?
Carriers are not dumb. They understand these trends, the impact to their bottom line, and are devising strategies to minimize their impact when negotiating renewals and new deals with their enterprise customers. It is important to understand their position when developing a sourcing strategy, but also realize that competition and price compression is a reality and enterprises are in the driver’s seat.
All that being said, let’s look at eight key trends that are shaping the market landscape. Each of these areas has a major impact on the carriers and, in turn, will impact what they are willing—or unwilling—to do as part of a negotiation:
- Plan Structures: Do not fall into the trap that the structures offered are the only options. It’s critical to negotiate custom offers on multiple plan structures, such as pooled, flat rate, and unlimited, based on user profiles of consumption for at least the last three months. Understand who is consuming what and break your population into sub groups. Require the providers to customize an offer for the different types of user profiles in your organization. This is not as easy as it sounds, so work with a provider like Tangoe to build this baseline and identify the contract adjustments that can drive the most value.
- Growth in Data Consumption: Enterprise data consumption is growing fast, especially as more and more companies have moved from Blackberry to IOS and Android. However, consumption is a tricky thing. It varies by user, carrier, and device type. In many cases companies are emotionally attached to unlimited plans but are paying too much because many enterprise users don’t consume that much data. In essence, they are overbuying and a pooled data structure would be a better solution. Here are some graphs showing some examples based on Tangoe’s enterprise data:
- Decreasing Voice and Messaging Services: These services have become a flat-to-declining source of revenue as OTT apps and WiFi voice calling have carved out a lot this revenue. Carriers are now “locking in” unlimited voice and messaging for a fixed monthly charge, in essence subsidizing the data portion of the plan. This is a logical business move for the carriers as everyone needs some voice and SMS services. For enterprises, look to minimize the pain by negotiating a custom bundled access plan that includes all services including free unlimited messaging.
- International roaming: These charges are a constant pain point for many businesses, but they are becoming increasingly negotiable as T-Mobile has changed the game with free 2G international data roaming and $.20 per roaming minute. Work with your carrier to negotiate a custom voice and data roaming schedule, or look to T-Mobile for your international road warriors.
- New Devices: The huge hype around the iPhone 6 is just one example of the new era of “must have” devices. End users have come to expect new devices regardless of upgrade eligibility. How can you keep employees happy without breaking the bank? Negotiate device agnostic upgrades and activation credits as well as early upgrade allowances. Don’t forget to leverage promotions outside of corporate contracts.
- ETF charges: Due to the cost of having to support the most popular smartphones (essentially personal computers) on their networks, carriers have increased hardware subsidies to maintain established market pricing. Naturally an ETF on an $800 device is going to be more than one on a $400 device. To get the best deal, negotiate an ETF Waiver Allowance available from all providers and remember that some providers have an Early Upgrade Waiver Allowance as well. Also consider the relatively new option of buying the devices and paying over time in exchange for better rates.
- BYOD: When looking at the carrier landscape, it’s clear that BYOD offers are maturing. It’s important to negotiate strong employee liable discounts with all providers and enhance employee programs beyond friends and family discounting to specific plans for BYOD employees only.
- M2M devices: The proliferation of M2M devices (the fastest-growing segment of wireless) is having an impact on the carrier market as well. Everything is negotiable when it comes to M2M as, in most cases, the enterprise is buying the hardware and there is no subsidy. It’s important to negotiate M2M plans based on the specific application.
These key trends are just the starting point of what enterprises need to consider when negotiating mobile contracts. A wide array of additional pricing concessions can also be considered, but no matter the concession, what’s clear is that the world has become more complicated and there’s a lot more to consider.
In order to get the best deal it’s important to understand your unique needs and goals today, and look to the future to project your requirements a few years out. Most importantly, understand the carrier’s perspective and take the time to put together a solid sourcing strategy. In this way, you can ensure you’re getting the most out of your mobility without throwing money away.