Why Carriers Still Matter — for Better or Worse

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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