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Lifeline providers

Increasing Margins of US Lifeline Providers

How can US lifeline providers reduce their per-minute cost

Lifeline providers

Thanks to the FCC-mandated, government-sponsored program, called Lifeline, the financially disadvantaged in the US can receive a cell phone and anywhere from 500 minutes to an unlimited number of minutes and texts every month — at no charge! The Lifeline program ensures that all Americans have the opportunities and security that phone service brings, including being able to connect to jobs, family and emergency services.

As of December 2016, lifeline providers are required to provide a minimum of 500 minutes per month and 500 MB per month at 3G speeds. As of December 2017, lifeline providers will have to provide a minimum of 750 minutes and 1GB per month and as of December 2018, a minimum of 1000 minutes and 2 GB per month. The Lifeline program provides a discount (support) on monthly service of $9.25 per month for eligible low-income subscribers.

Increasing minimum service standards

The FCC and Universal Service Administrative Company (USAC) are increasing the requirements of minimum voice minutes and MB data while reducing the discount on monthly services, meaning that lifeline providers will have to provide more voice minutes and mobile data while receiving less support funds (in US$) from the FCC program.

As of today, a Lifeline provider (MVNO) pays a high wholesale per-minute price (around 1.5 cents) and per 1 MB data price (around 1 cent) to Mobile Network Operators (MNOs). As a result of the increasing minimum requirements and high wholesale prices, the lifeline wireless providers are expecting a decrease in margins and ARPU. In addition, the increasing number of lifeline operators offering smartphones instead of feature phones increases the competition even more since offering smartphones makes their service more attractive to eligible consumers.

Reducing per-minute cost

To increase their margins, lifeline providers can offer voice over WiFi and data cellular services as an alternative to MNO’s high cost GSM service. This way Lifeline providers need only buy wholesale data from MNOs without GSM minutes. The new service decreases the per-minute cost by more than 50%. This technology enables MVNOs to offer 4 voice minutes for every 1 MB. Assuming an MNO wholesale 1 MB price is 1 cent, then a 1-minute call will cost just 0.25 cents. Thus, the Lifeline MVNO reduces its per-minute costs from 1.5 cents to 0.25 cents (excluding termination cost).

For a lifeline provider serving 50,000 eligible consumers consuming 500 minutes per month each, having 50% of their calls over WiFi and paying 0.15 cents per-minute termination, the total monthly savings amount to around US$ 300,000.

Lifeline providers may offer the service through low-end, used or refurbished Android-based smartphones to their subscribers or provide it through an OTT app supporting BYOD for iOS and Android-based smartphone devices.

Wifi first does increase margins

AudioCodes MobilityPLUS, a WiFi First wireless solution, reduces the lifeline MVNO per-minute and message costs by over 50%. It enables voice and messaging services over WiFi and cellular data networks, providing seamless interconnections from WiFi to cellular networks and vice versa, a process that significantly extends coverage areas and potentially lowers costs for providers and end-users alike. MobilityPLUS is delivered from the cloud as a service (SaaS) ensuring minimal initial setup and monthly costs, and fast deployment. AudioCodes’ field-proven underlying voice technology assures crystal clear HD voice quality that boost the subscribers’ satisfaction.

Full line of service for mvnos

AudioCodes and its US partners have come up with a complete, cost-effective and innovative service that truly does provide MVNOs and other providers a real competitive advantage in the wireless marketplace

  • White-label voice and messaging over WiFi and data service
  • Customized and pre-loaded into Android OS as an integrated dialer
  • Full support for BYOD, supporting iOS and Android-based smartphones
  • Wholesale voice minutes and messages
  • Wholesale cellular data
  • Integration with billing and CRM
  • SMS-enabled DIDs
  • Long distance termination

To learn more about AudioCodes MobilityPLUS, please contact mobilityplus@audiocodes.com

MobilityPLUS MVNO Service Architecture

Google Project Fi Challenges Incumbent MVNOs

Mobile communication is a competitive space where operators are striving to introduce new services to better compete with OTT and increase ARPU.

On the other end, mobile operators are looking to reduce their operating costs. One way to do so while also increasing user satisfaction is by enabling WiFi calling in their networks.

Earlier this year, competition in the US got even stronger with Google’s announcement of Project Fi. In essence, Google became an MVNO. Will they go global with Project Fi? If the pilot in the US succeeds, why shouldn’t they?

Project Fi

For Project Fi, Google partnered with Sprint and T-Mobile, using their LTE data networks. Users of Project Fi can make voice calls and send text messages over WiFi or the cellular data network with a seamless switchover between the networks. A call that started on a user’s home WiFi network will automatically switch over to Sprint or T-Mobile’s cellular network f when the user steps out of the house.

Putting the address book in Google’s cloud allow users access to the service also from their PCs and tablets.

Google also changed the standard cost model, offering a low-cost, monthly fee of $20 for unlimited domestic voice and text, unlimited international text and coverage in over 120 countries. Data runs at $10 per 1 GB. If not all the data is used, Google refunds the user for the unused portion of the package.

If Google is now an MVNO, where does this leave incumbent MVNOs?

MVNOs should innovate their services

MVNOs work differently than Google did in building Project Fi.

The typical MVNO buys voice, text and data in bulks from operators, puts their own service management on top and resells it to users at a lower cost than that offered by the operators.

Project Fi on the other hand, offers a device that uses only the data network (cellular or WiFi). Thus the service is part of the device dialer and operational costs for Google are lower.

The challenge for MVNOs in offering a service similar to Project Fi include:

  • The need to replace the device dialer to optimize user experience
  • The network should be able to receive calls on behalf of the user and direct them to his device as a VoIP call
  • Switching between cellular data and WiFi should be automatic and seamless. This needs to be supported both on the device and in the network.

 

AudioCodes’ MobilityPlus, provides MVNOs a way to realize this transition.

MobilityPLUS MVNO Service Architecture

Client side

The solution comprises of mobile clients that MVNOs can adopt and configure to be the default dialer of the Android device they offer to their customers.

The SIM card offered to the users will have cellular data services only, while the phone number is managed by the network. The device switches between cellular data and WiFi as required.

The dialer application includes AudioCodes advanced voice quality enhancement algorithms together with with modern voice codecs with error resiliency.

Network side

The network side includes AudioCodes SBC and an application that manages the user’s identity.  It places and receives calls on the user’s behalf and bridges between the VoIP network and other networks of termination partners, ensuring users can call destinations globally regardless of the operator they are using.

Switching between cellular data and WiFi is also supported by the network, allowing for in-call switch over.

Conclusion

Switching to pure IP based services allows MVNOs to reduce operation costs.  They won’t need to pay for the use the operator’s voice network by minutes but rather will use the cellular data only when the user is not connected to WiFi.

As competition in mobile market intensifies due to new offerings such as that of Google, cost reduction translates into the ability to reduce churn.