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Surge in High-Tech Devices and Services a Double-Edged Sword for Carriers

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iappsU.S. mobile data revenues surpassed $19.4 billion in the first half of 2009, a 31 percent increase over the year-ago period, and data accounted for more than 25 percent of all wireless service revenues, according to the CTIA’s semi-annual industry survey. The report, which was released in conjunction with the kickoff of the International CTIA Wireless I.T. & Entertainment conference today in San Diego, also noted that text messaging continues to gain traction at a breakneck pace, with Americans sending 4.1 billion messages a day from their phones — nearly doubling SMS activity from the first half of 2008.

CTIA also said there are more than 40 million smartphones and connected PDAs in the hands of American users and more than 10 million laptops, netbooks and aircards. But it’s that uptake of high-end devices and the services they support that should be receiving the lion’s share of the industry’s attention. For as AT&T has learned the hard way, a surge in usage can highlight network shortcomings and infuriate users. Text messages are a great way to boost mobile data revenues without taxing networks, but the new wave of mobile devices encourage consumption of video, location-enabled services and other offerings. If carriers are going to push them, they had better make sure they can handle them.

5 Responses to “Surge in High-Tech Devices and Services a Double-Edged Sword for Carriers”

  1. Smartphones and the high ARPU data services that run on them are indeed a two-edged sword for the operator. Sometimes the markets move in ways that cannot be stopped. The migration from featurephones like the RAZR to smartphones like the iPhone certainly has proven to be a challenge, particularly for underprovisioned networks with the hottest phones. While one of the first and the biggest of the new superphones, the iPhone is no longer unique in bringing a user experience where using web and other data services moves from a theoretical possibility sipped lightly thru a martini straw to a practical reality chugged from a garden hose, putting new load on both towers and backhaul.

    That said, operators will either upsize their networks to cope with demand or downsize their customer base through churn to others who are willing to provide robust, reliable 3G and increasingly 4G services. Once the base infrastructure is sorted, the operators are going to, if they have not yet done so already, come to the conclusion that supporting smartphones is neither trivial nor cheap. At InnoPath, the figures we have seen from both operators and the likes of WDSGlobal (support outsourcing firm) are that smartphones are roughtly 4x as expensive to support as featurephones.

    With this in mind, (spin warning – I work at a vendor providing mobile support software to OEMs and Tier 1 operators) it is clear that something is going to have to change. We think that the use of technologies such as OTA support are going to be game changers for the world of smartphones. Just like remote administration tools made IT much less of a nightmare of big companies, OTA support is going to be an enabler for smartphones. I am sure that many who read this have had at least one nightmare support experience and I am sure that a quick poll around the water cooler would reveal that many others have has similar not so fun experiences as well. Imagine if the first person you talk to could actually fix your problem instead of putting you on hold again and passing you off to someone else? Imagine a world where it is far more likely that your problem is fixed quickly and painlessly over the air instead of one where you have to read this, do that, navigate down a maze of twisty little menus, all alike and in the end find yourself at Witt’s End, ready to churn.

    For those who are interested, we have taken a look at the financial end of things, which you can check out here: