The ARPU of Identity: A Working Model for Telcos
October 29, 2014

The Open Identity Exchange (OIX) has recently published a white paper, “Generating Revenue and Subscriber Benefits – An Analysis of: The ARPU of Identity” that examines the role telcos serve in the expanding identity ecosystem. The report provides a primer on digital identities and explains how telcos can serve vital roles as credential service providers. In this paper, SecureKey provides technical insights, business perspectives and examples of a working model for the ARPU of Identity and the potential identity-centric revenue impact for telcos.

SecureKey served as one of the expert sources for the in-depth paper. Following is an excerpt from the paper that succinctly hits on the impact small changes can make on ARPU for telcos:

Yet, according to Robert Blumenthal, EVP of Marketing and Business Development at SecureKey Technologies, ARPU is very much alive and well in the minds of telecom executives. “Maintaining ARPU is a constant focus in telecom. There are many factors like churn that can drag ARPU down so telcos are always on the lookout for new ideas and strategies that move ARPU back in the right direction. When you have millions of subscribers, raising ARPU by just one penny a month can have a big multiplier effect. That single penny increase in ARPU for an MNO with 50 million subscribers adds six million dollars to the company’s annual revenue. Even for a company with annual revenues in the billions, these amounts are noticed since they go right to the bottom line.”

The paper continued along the lines of ARPU as it relates to identity projects by highlighting SecureKey’s contribution to OIX in the form of a working financial model:

SecureKey has developed a financial model as a means to support these arguments – a large, fairly detailed spreadsheet that he uses to calculate revenue potential over the next few years from multiple types of identity projects. The model quantifies what has been difficult to pin down up until now: the potential identity-centric revenue impact for the telcos articulated as monthly ARPU Contribution; i.e., the Average Revenue Per User for Identity, or ARPU-I. SecureKey has granted the Open Identity Exchange the right to publish an open source version of their model and to include its details in this white paper. The OIX ARPU-I Model is available as a working spreadsheet on the OIX website.

In addition, the paper provides a detailed account of the identity landscape, the stakeholders and roles they serve, and the opportunity for telcos to embrace identity – both for business benefit and subscriber convenience. The OIX also clearly outlines the challenges facing telcos as it relates to identity: the competition (yet, a need for competitors to cooperate/collaborate), government regulation and the impact on customer experience (a domain owned and driven by the CMO).

All in all, identity is at an exciting time in an increasingly connected economy. Telcos have a tremendous opportunity to fortify their role in technology, deepen their relationships with subscribers by providing value added identity services and grow their ARPU to contribute to their bottom line. It’s time for telcos to establish their identity– and this OIX paper is a great guide to getting it right.