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Summary:

Carriers no longer dominate the mobile world thanks to the emergence of Apple, Google and the rise of third-party app stores. But they can retain — or even increase — their relevance by leveraging a few important things.

Managed services can carve one big pipe into many, tiny ones.

Carriers have long been perceived as devolving into “dumb pipes” that serve as high-tech mules, running low-margin businesses by doing little more than moving data from one place to another. And MobileCrunch last week performed a kind of post-mortem for carrier relevance by welcoming us to “the post-carrier-future,” citing AT&T’s proposed acquisition of an iPhone-less T-Mobile USA and Sprint’s recent embrace of Google Voice.

Indeed, the perceived inevitable slide by carriers toward becoming “dumb pipes” — that is, high-tech mules that run low-margin businesses by doing little more than moving data from one place to another — has long been an intriguing topic in mobile. But the operators still can play crucial roles that go far beyond transferring data. And they can pursue those opportunities by leveraging these important factors:

The networks. Mobile networks can provide an enormous amount of information about how consumers use their phones on cell networks, and that information can be leveraged to provide both customized service offerings and targeted ads to subscribers. And as Dean Bubley recently noted, network operators also have a chance to partner with businesses like Netflix and YouTube to offer quality-of-service guarantees to users for streaming video or other data-intensive activities.

The handsets. Verizon Wireless did a great job of identifying a solid new handset in Motorola’s Droid — which combined a top-notch operating system with an impressive screen and a QWERTY keyboard — and then marketing the phone aggressively. Which makes me think T-Mobile USA could have seen similar success with, say, the Palm Pre.

The subscribers: Verizon Wireless claims 94 million subscribers; those users are paying about $54 per month for the carrier’s services — far more than almost any user spends on apps in any month. One way to leverage that kind of subscriber base is by partnering with app developers and Internet companies to provide prime placement on the phone for those offerings in exchange for download (or advertising) revenues.

These are huge challenges for network operators, who have almost invariably failed in their attempts to generate substantial revenues beyond the traditional voice and data service models. But carriers remain a crucial player in the value chain, and not just because they can move data.

For more thoughts on how to get consumers to reach for their phones at the retail counter, read the full post (subscription required).

Image courtesy of: Flickr user Danndalf.

 

Carriers have long been perceived as devolving into “dumb pipes” that serve as high-tech mules, running low-margin businesses by doing little more than moving data from one place to another. And MobileCrunch last week performed a kind of post-mortem for carrier relevance by welcoming us to “the post-carrier-future,” citing AT&T’s proposed acquisition of an iPhone-less T-Mobile USA and Sprint’s recent embrace of Google Voice.

Indeed, the perceived inevitable (if slow) slide by carriers toward becoming “dumb pipes” — that is, high-tech mules that run low-margin businesses by doing little more than moving data from one place to another — has long been an intriguing topic in mobile. And it’s true that network operators have seen their control over the industry they once owned diminished considerable, thanks largely to the emergence of the iPhone and other smartphones and the app stores that support them – and that exist outside the carrier realm.

But the operators still can play crucial roles that go far beyond transferring data. And they can pursue those opportunities by leveraging these important factors:

The networks. Mobile networks can provide an enormous amount of information about how consumers use their phones on cell networks, and that information can be leveraged to provide both customized service offerings and targeted ads to subscribers. And as Dean Bubley recently noted, network operators also have a chance to partner with businesses like Netflix and YouTube to offer quality-of-service guarantees to users for streaming video or other data-intensive activities.

The handsets. Verizon Wireless did a great job of identifying a solid new handset in Motorola’s Droid — which combined a top-notch operating system with an impressive screen and a QWERTY keyboard — and then marketing the phone aggressively. Which makes me think T-Mobile USA could have seen similar success with, say, the Palm Pre.

The subscribers: Verizon Wireless claims 94 million subscribers; those users are paying about $54 per month for the carrier’s services— far more than almost any user spends on apps in any month. One way to leverage that kind of subscriber base is by partnering with app developers and Internet companies to provide prime placement on the phone for those offerings in exchange for download (or advertising) revenues.

These are huge challenges for network operators, who have almost invariably failed in their attempts to generate substantial revenues beyond the traditional voice and data service models. But carriers remain a crucial player in the value chain, and not just because they can move data.

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  1. Why should carriers matter? I don’t like the control they have now and I wish they were basically “dumb pipes”. They can always create/add services and functionality just like everyone else. They haven’t done a good job at the basics of voice and data yet. How many US carriers have support HD Voice? How many carriers work hard to offer added value added services that people actually want to have. They might get a slice of the NFC fueled mobile payments but one of the things I enjoy about GSM is the ability to use unlocked devices and do what I want, not what they want.

    A carrier would never sell dual-sim devices that would allow you to have a competitor’s sim being used at the same time as their sim. It might really benefit the customer and increase his coverage and allow him to have separate business and personal numbers on the same device.

    In the past they have removed/crippled wifi from devices. Limited the frequencies that their devices operate on so that they basically worthless to competitors. They have refused to unlock devices so that when travelers go overseas they to pay them absurd roaming rates and insane data-roaming rates. They have limited customizations and options with their specialized firmware. If their rates and service were great then they wouldn’t have to worry so much about churn.

    1. You make some good points, Stuart, and you’re absolutely right that carriers have repeatedly failed to leverage their dominance — in fact, I said as much in this post.

      But my point is that carriers still matter regardless of whether they “should.” And there are ways they can increase that relevance. Not that I’m holding my breath.

      1. Carriers will always matter as the spectrum is licensed and we can’t do without them. The wield incredible power and people looking to them for too many things can sometimes get the short end of the stick. For example, Amazon App store is not available for AT&T Android devices so no Angry Birds Rio for them. Why don’t the carriers make subsidiaries under a new name to offer different services or find ways to monetize the subscriber information they have and focus on their core business.

  2. I’m sorry, but I don’t buy that argument at all. Your first argument about networks I would argue as part of their core. Of course they should offer as good a network as possible. And with handsets, yes, some do a good job and there will certainly be a role for operators here, as they after all are the ones selling them in most of the cases.

    But when it comes to service, whether those are advertising placement, search, content, etc carriers have not proven themselves to be very good. What they should focus on, which is what they are good at, is to provide the infrastructure and access to all this, and let others do the work. This is a strategy similar to being a bitpipe – simply it is enabling the ecosystem by offering the core connections to the technology that enables services. That is a pretty good bitpipe role, and by far not dumb. And there is nothing wrong with being such a bitpipe, in fact, Japanese operators have proven it can be quite profitable: http://bit.ly/f9RlMo

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