@CTIA: Operators Back Open Networks, But Want To Maintain Some Control, Too

“Choice, control, convenience,” is how Alltel’s (NYSE: AT) SVP of product management and development, Wade McGill, characterized his company’s mobile content strategy at the State of Mobile Content Mini-Conference at CTIA. A panel of content and data execs from the other top four US operators echoed the sentiment, saying they want to offer customer choice, particularly with off-deck content, but not at the expense of a good user experience.

“Having a clean vending machine for the mass market is a better experience” than a wide open, unsupported environment, said John Burris, Sprint’s VP of wireless data programming. “How do we go open as quickly as we can, but still have a clean experience for the mass market?”

Different carriers, different goals: While hitting on the same general themes of ease of use and giving customers a choice of services, different operators have some different goals for their content offerings. AT&T (NYSE: T) VP Mark Collins and T-Mobile’s mobile web and content director Ian McKerlich hit on the importance of having content and data services that drive communication among their subscribers. Collins said that 70-80 percent of AT&T’s data revenues come from messaging, so the opportunity for data services that offer communications is clear.

The future of off-deck content: All the speakers stressed that they want to see the off-deck market grow, but they want to play an active role in the value chain. AT&T’s Collins: “We don’t want to limit, decide or define what customer’s going to do, we just want to make it easy for them… but that doesn’t mean we won’t invest in our own content and our own store. If I’m in the value chain and I’m adding value, I want to be compensated.”

Several of the panelists mentioned the burden of supporting off-deck purchases, both in terms of dealing with customer support calls, and in refunding purchases. Lee Daniels of Verizon Wireless (NYSE: VZ) also cited the impact of off-deck content and services on the network as a major concern, and that network usage represents a significant cost for the operator. This led to a question from the audience if he was saying that the operator’s network wasn’t robust enough to support widespread usage of multimedia services, since his repeated statements about such products “killing the network” implied that. Daniels said that Verizon wanted to consider such content on a case-by-case basis to ensure it was using the correct delivery model (ie unicast vs. multicast).

On using consumer behavior to guide service offerings: T-Mobile’s McKerlich says that its “young millenial” users spend two times as much time on the internet as they do on their mobile devices. “These folks are relentless communicators,” he said, and following their communications patterns offers a lot of insight into what they want. For example, MySpace was one of the most popular sites visited by users of its Sidekick device, leading T-Mobile to develop a special MySpace application.

For Alltel’s McGill, the operator’s geographic footprint leads some people to believe that its users in rural areas or smaller towns have very different demands and interests than those in urban areas. McGill said this is a misperception, since trends and information travels so quickly these days. One significant difference, he added, is that “in some rural markets that are more economically depressed, the mobile phone is their internet connection,” and PC ownership is low, changing some usage patterns.

Ad-supported content remains a ways off: Sprint’s Burris said that low usage of many services remains a stumbling block to driving large revenues from ad-supported content, and that the premium highly targeted mobile ads are supposed to deliver is being offset by the low volume. Operators also want to move very cautiously into advertising, for fear of upsetting their customers: “We have to move very cautiously because the mobile phone is so personal, the screen size is limited, so real estate is precious,” said McGill of Alltel. “We only have so much subscriber info we can share, and we don’t know as much as you think we do.”

How to work with the operators: Moderator Douglas Garland of Kleiner Perkins asked the panelists to give content providers who want to work with the operators some advice.

Sprint’s Burriss: “Understand what Sprint (NYSE: S) offers today. You’d be surprised by the number of partners who aren’t aware of what’s part of our portfolio today.”

McGill, of Alltel: “If it takes an hour or two hours to get through what a product is, it’s not going to sell. Show me the value in the first five minutes.”

Daniels, of Verizon: “You have to understand the network impact of your application. How often is it hitting the network? How much data is it sending? Companies come in with the perfect application, but it’s killing my network with streaming audio and video.”

T-Mobile’s McKerlich: “Take time to know how our business is different from other operators. We all go to market differently. Tell me how it adds value to the consumer, how we can make money, and how you can make money.”

Collins, of AT&T: “What’s the customer experience and why should a customer be interested in what you have to offer? If the customer isn’t going to have a good experience, neither of us is going to make money.”

Adult content: An audience member asked when US operators would become more open to adult or “semi-adult” content, and no panel members leapt at the chance to answer the question. Collins said that such content was “not consistent with” AT&T’s brand, so it wouldn’t look to monetize it, though it wouldn’t stop subscribers from accessing it through an open browser and network — adding that plenty of its customers already do.

Our CTIA conference coverage is sponsored by Cellfish.

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