How Mobile Network Operators Must Evolve as Data Ramps Up

4 Comments

It wasn’t too long ago that the path to success for mobile carriers was a straight one: Simply offer compelling handsets at competitive prices and maintain a top-notch network and your customers would be happy. And for those that weren’t, manage a competent customer-care division. That model is rapidly changing, though, as we reach the point of market saturation.

Carriers in Western markets have precious little room for growth unless they poach customers from their competitors. Cell phone penetration in the U.S. stands at 89 percent, according to CTIA, and Chetan Sharma pointed out earlier this month that mobile’s market penetration in America is 99 percent for people over than the age of five. The increase of machine-to-machine connections and the coming wave of connected consumer electronics (non-phones) will help, but carriers will have to evolve beyond being simple network operators if they’re to thrive in the coming world of mobile data.

Another factor beyond market saturation is at play here, too. Mobile is no longer just about being a provider of wireless phones and connectivity; it’s about adding value with applications that leverage Web 2.0 features like presence and community and combining them with mobile’s unique characteristics, such as portability and location awareness.

While the rise of mobile Web 2.0 is a looming threat for network operators, it also presents an opportunity to develop and market more compelling “over-the-top” offerings — applications and services from carriers that can be targeted at users on other networks. In my weekly column over at GigaOM Pro, I’ve taken a closer look at this topic, with a special focus on AT&T’s Buzz.com offering. I’m sure we’ll see more examples as carriers attempt to make a very difficult transition beyond their established business model into uncharted waters. What kind of opportunities do you see?

Image courtesy of Flickr user kevindooley

4 Comments

Tim Mattison

“…it’s about adding value with applications that leverage Web 2.0 features like presence and community and combining them with mobile’s unique characteristics…”

This is not what customers want. This is what carriers want. Providing reliable data will only cannibalize their current market by commoditization. The margins on data will get smaller and smaller so carriers can do one of several things:

1) Price fix to keep themselves as big and fat as they are now

2) Strip out their retail channel and the heavy sales and support team that comes with it to truly become a lean, network-only provider

3) Open their networks up to M2M so that device manufacturers can start pumping out millions of new devices that bring in recurring revenue with minimal support. Right now M2M is a big, expensive hassle and it’s holding up companies from just flooding the market with great devices.

I don’t want Verizon, Sprint, and AT&T trying to come up with the next Foursquare, Twitter, or Facebook. They had their chance when they locked us into their pitiful, closed “Get it now!” J2ME and BREW application stores. They blew it, made little money, and held up progress for at least a decade. Build a network, make it reliable, make it open, get rid of your retail stores and let other people sell the phones and support for you, and then I guarantee you that you’ll be making money hand over fist.

Oh, and please ignore suggestion #1 even though you’re doing it already.

A S

“Simply offer compelling handsets at competitive prices and maintain a top-notch network and your customers would be happy. And for those that weren’t, manage a competent customer-care division.”

IMO, this is the main (if not the ONLY) thing customers want even today. We really don’t want our cellular carriers trying to offer us anything more. Just give us a great, cheap data pipe, with plans and prices that make sense, and get out of our way. Amen.

slim

+1. carriers should stick to building networks. historically, their “media” creations have sucked and NEVER win in the market.

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