It is certainly in the best interest of the network provider to build the right business model to monetize application development, although the process can be daunting. Many are overwhelmed by the process and the rapid pace of change in the ecosystem. Selecting the right business model is the first step to overcoming these challenges and making the most of the opportunities available in the market.

There are a number of different models identified by Alcatel-Lucent (News - Alert) that the network operator can rely on to drive success:

 

 

To select the right business model, the network provider must examine the different financial benefits involved in each one. They must also ask whether or not the model provides direct or indirect revenue and match the right model according to network operator position and goals.

The network provider must also examine the cost structures involved in each business model. They must consider the start-up, fixed recurring and variable recurring costs, as well as brand loyalty effects across Application Enablement models.

Those models with high startup costs and high fixed portion of recurring costs are considered to be high risk and the network operator's risk tolerance will have to be considered in the decision process.

 

In order to develop a business model that clearly communicates the required investment and expected returns, the network operator must thoroughly understand the cost drivers. Such drivers can reflect changes in the scale of the network provider's ACP program in addition to differences in the market context for an implementation.

Alcatel-Lucent used extensive modeling and analysis of network provider economics to build a solid body of experience and modeling capability to help network providers during the early stages of the ACP business model development.

And, while the market is still young, the emerging business models and their economics are clearly understood with sufficient confidence to allow more in-depth analysis. Alcatel-Lucent offers the expertise of understanding the risks and benefits associated with each business model to guide the network provider in the right direction.