Android key to defining mobile experience from operators

BOSTON, USA: Due to the rise of mobile internet and its associated revenue opportunities, cell phone carriers are trying to wrestle control of the user experience away from device manufacturers.

Operators are focusing on open operating systems, such as Google’s Android, which allow them greater design input, and create additional revenue opportunities from application downloads.

The next big advance in mobile user experience will come from digital home convergence. These findings were based on interviews conducted with cell phone operators in the US and Western Europe. Details may be found in the Strategy Analytics Wireless Media Labs report, “Mobile Operators Aiming for Control and Convergence of the User Experience.”

“Cell phone carriers still face many barriers to delivery of an optimal user experience,” commented Chris Schreiner, Senior Analyst at Strategy Analytics. “Organizational structures that do not foster communication between different product and service groups are a major obstacle to developing a holistic experience.”

Kevin Nolan, Vice President in the Strategy Analytics User Experience Practice, added, "Operators that offer so-called ‘Triple Play’ packages combining broadband, TV and cell phones, have an immediate head start on the ability to make the next leap in mobile user experience into the digital home.”

Modest mobile growth in emerging markets

BOSTON, USA: The worst effects of the global recession may be over for mobile communications in emerging markets. Second quarter results from major operators in Asia, Africa, the Middle East and Eastern Europe show modest growth in subscriptions and usage, according to the recent report from Strategy Analytics, “Emerging Markets and the Financial Crisis at Midyear: Light in the Middle of the Tunnel.”

After three successive flat or declining quarters, average minutes of use (MOU) for a basket of 26 key operators climbed a respectable 5 percent in Q2 2009, a rate not seen since the same period in 2008. Total subscriptions rose 4 percent, continuing a recovering trend begun in the first quarter of the year.

“Don’'t open the champagne quite yet,” cautions Tom Elliott, director of the Emerging Markets Communications Strategies service and author of the report. “There is still a lot of potential weakness in these markets.” Handset sales remain well below the levels of a year ago, and many operators have been unable to convert growth in subscriptions and traffic into increased revenue.

Emerging market economies also remain highly dependent on conditions in the developed world; and the pace those recoveries can affect key factors like demand for commodity products, foreign aid and home-bound remittances from overseas workers.

Noting that the global crisis has debunked the myth that developed and developing economies have been decoupled, Harvey Cohen, President of Strategy Analytics, says: “Growth of communications activity is a good indicator of economic health, particularly at the so-called ‘bottom of the pyramid.’ If you don’t have the money you’re not going to buy that phone, or make that extra call.”

Mobile operators stand to gain little from unified communications revolution

MELBOURNE, AUSTRALIA: The market for Unified Communications (UC) is likely to grow significantly in the next five years. Even in the midst of the economic downturn, Ovum estimates over 16 million enterprise-owned mobile devices will be connected to UC platforms by 2014.

Fixed telecoms operators, IT services providers, UC technology vendors and specialists are all jostling to take a share. In the midst of this, Ovum has identified a significant opportunity for mobile network operators (MNOs) to influence and profit from UC.

Ovum interviewed a number of global wireless operators and UC platform providers. While many operators were aware of the opportunity UC provided, most were holding back from launching services in a market which is poised for dramatic growth. Based on feedback from enterprises large and small, Ovum has identified a gap in service provision which should be filled by mobile operators.

Evan Kirchheimer, Principal Analyst, comments: “Connecting enterprise mobile devices to a UC platform may be undertaken by enterprise IP telephony vendors, by large SIs, local IT-oriented VARs, device manufacturers, or by small independent middleware vendors which enable fixed-mobile convergence”.

“With such a varied array of players, Ovum has found that MNOs are not in the driving seat when it comes to mobile UC market development. There have been some early UC service launches, but for the most part many operators have held back,” he adds.

Kirchheimer believes the key for hesitant mobile operators is to focus on SMEs. MNOs have a natural advantage in their strong relationships with SMEs. In contrast, larger businesses most often have complex and varied fixed Private Branch Exchange (PBX) estates, and PBX vendors and large SIs will be in a more natural position to extend UC functionality to mobile devices via the PBX than will MNOs.

SMEs will not benefit from such high-end attention, and will be attracted to simpler solution bundles on simple terms. Several operators indicated that they plan to base their UC solutions for SMEs on mobile centrex services, thereby eventually aiming to fully displace fixed handsets with mobile devices in many smaller businesses.

However, continues Kirchheimer, “Centrex-based solutions will not appeal to all, especially larger enterprises with significant fixed investments”. “To attack this base of prospects, mobile operators should develop partnerships with some of those very firms they may one day compete against: IP telephony vendors, local value-added resellers and messaging software vendors (e.g., Microsoft).”

The report highlights that mobile providers should not be distracted by the buzz about mobilizing enterprise applications. Our recent survey of 2000 SME telecoms buyers indicated that most SMEs express much greater interest in core UC features (directory, presence, unified messaging) than in horizontal applications like mobile field force automation or fleet management.

“However, mobile operators do face major challenges in this market. UC is not a connection, but a service”, Kirchheimer adds. “A major obstacle for MNOs will be developing tariffs which accommodate device-independent employee behaviour, application management, and flat-rate bundled voice and data.

“The transition to UC will have significant implications for billing systems and internal cost allocations. Building a service infrastructure will be essential for MNOs, as they offer and support SLAs that involve elements in which typical operators will not have any expertise.”

Kirchheimer continues: “If mobile operators craft the right strategies and execute well, then UC could be the first application which enables them to provide more than just voice minutes, email and SMS to a large number of enterprises, and in particular, to small businesses.”

Beating the downturn -– back to basics

MELBOURNE, AUSTRALIA: Ovum, the global analyst and consulting company, advices on how mobile network operators can beat the downturn.

The Ovum report: 'Mobile operators in a recession: lessons and coping strategies' presents strategies that mobile operators around the world should adopt to beat the economic crisis.

Although the picture for the Asian mobile services industry is one of resilience, it would be a mistake to conclude mobile network operators are having it easy. Operators are suffering from reduced roaming revenue, declines in usage and spending, and currency fluctuations. So what can be done to thrive in this environment?

“The downturn intensifies the imperative for operators to get the basics right -- plan ahead, evaluate risks, and cut costs -– while treating the customer as king” said Nathan Burley, Ovum Analyst.

The economic downturn means those carefully prepared three-year-old plans are probably outdated. Now is the time for mobile network operators to reassess their core strategy. MNOs should ask themselves: Who are our customers and how much longer will they sustain their telecoms spending? Should we dispose our non-core assets? How will we adapt to new competitive threats?

This is the time to plan for the unexpected. How much operations can be sustain with reduced capital expenditure? What will happen to your profits if governments impose new taxes? What about increasing unemployment?

Slashing discretionary spending, trimming jobs, sharing networks, outsourcing network operations, streamlining supply chains and renegotiating dealer contracts.

“Although, while the temptation is there to cut marketing costs, this is no time to abruptly slash the marketing budget,” advised Burley. Customers need to know about all the good things MNOs are doing. “The recession may also open cheaper marketing opportunities, such as lower media costs, and MNOs should exploit those.”

Additionally, although this has always important, customer facing units must place a renewed focus on meeting and exceeding their customer needs. In an industry where churn is accepted as normal, now is the time to focus on holding on to customers. Good customer relations are a priority and this is the time to understand customers better — their wants, preferences, and spending habits.

During this downturn, MNOs need to empower their customers by offering them value-based products and services. “Low-cost providers in Asia have already mentioned the ‘positive’ impact of the downturn”, concluded Nathan Burley.

Mobile operators resiliently beating recession: Ovum

LONDON, UK: Mobile operators are comfortably and steadily beating the recession. This is according to the findings of a new report from global advisory and consulting firm Ovum, titled ‘Mobile operators in a recession: lessons and coping strategies.’

Ovum’s report tracked the performance of mobile operators across all regions in the world for 2008. Overall, operators maintained revenue and customer growth during the period, but the rate of growth is down.

While most operators in emerging markets are yet to see any significant pressures on their performance, operators in countries such as the US and across Europe, where the recession has had dramatic impact, operators’ revenues are holding out. Indeed, it is not about immunity from the recession per se, but rather, adaptability to the downturn.

“It is comforting that mobile operators have shown remarkable resilience”, says Emeka Obiodu, senior analyst at Ovum and lead author of the report. “Whereas other industries have gone to the government with their begging bowls, mobile operators are actually pledging to invest billions to roll out a new high speed mobile network. In fact, after scouring the world, we are yet to find any mobile operator that is calamitously struggling solely because of the recession.”

The report projected the three key mechanisms of how the recession affects mobile operators:
· The threat to the number of revenue generating customers has yet to materialize as operators are generally still growing and adding customers.
· While the fear that existing customers will reduce their spending is valid, mobile operators have taken steps to avoid or ameliorate drastic impact.
· The biggest threat to mobile operators is that currency fluctuations reduces the value of the revenue they get. Lower value means it is difficult to maintain repayment on dollar or euro denominated debts and to fund new network investment.

The report warns that going forward mobile operators have to get back to worrying about competition and regulation, as these are the main challenges facing them.

“It is no use bickering about the recession when rivals are positioning themselves to outsmart you. Neither is it savvy to fret about the fall in roaming revenues from business travellers when the EU can force roaming prices down easily”, says Obiodu. “On many occasions where an operator has complained about the recession, it is possible to show a corresponding non-recessionary force at play.”

However, Obiodu warns that the recession will force a change in future direction for operators. “While the short term impact is limited, the recession will ultimately engineer a paradigm shift in strategic thinking across the industry. On the ground, the basics of the industry will surely remain the same, but the approach to service delivery will eventually change.”

Top 10 telecom predictions for 2009: Deloitte

Deloitte recently came out with its TMT (telecom, media and technology) predictions for 2009. Here are some bits from the telecom predictions for 2009. May I also take this opportunity to thank V. Srikumar, partner, Deloitte Haskins & Sells, for sharing this study. Thank you, sir!

1. Smart phones: how to stay clever in the downturn.
Mobile phone manufacturers should focus on developing smart phones features consumers want to use and are willing to pay for. They should work closely with operators to create easy-to-use services based on specific functionality that users value, says Deloitte. Smart phone manufacturers could also consider selling devices as price-competitive replacements for laptops. For some workers a smart phone may address all their communications, connectivity and applications requirements.

2. Data ascends from the basement to the boardroom.
Indeed! Data on customer information has been residing with telcos since ages. It is time now for the telcos to recognize that the data or information assets could become as significant to value creation as physical assets. Deloitte recommends that this customer information be integrated, and not appended or archived. It suggests that telcos should consider how to structure their activities to utilize their full spectrum of information. Having a CIO on the top management team and further, implementing a data governance framework, may become essential.

3. Digital communication loses its message.
In 2009, employees are likely to communicate digitally with each other in more ways, and in greater volumes, than ever before, says Deloitte. However, email may become obscure. The success of instant messaging was based on its greater immediacy and lesser formality. Growth of services like text messaging, has been driven by similar benefits. Companies should consider discouraging email for one day a week. Even not making indiscriminate use of the ‘reply-all’ function could save them time and money. Also, social networks may find that the best approach is to offer ‘white-label’ solutions to corporations, advises Deloitte.

4. The joys of disintermediation: why operators should embrace the application store.
According to Deloitte, in 2009, mobile phone users are likely to download over 10 billion applications to their mobile phones. A majority of applications are likely to be sourced from sites managed by mobile device manufacturers, consumer electronics firms and software houses. Although some operators may launch their own application stores38, the majority are likely to see no alternative to allowing their customers to access third parties’ stores. As the consumer awareness of mobile applications increases, the number of voice subscribers that add data subscriptions may well rise, boosting revenues. Applications could be used to drive operator loyalty and reduce retention costs.

5. Integration unleashes mobile phone convergence, finally.
Deloitte advises that while mobile handset manufacturers are getting better at convergence, they would still need to proceed with care. They should not assume that the mere addition of more features would guarantee success. Operators should study the consumers’ use of converged products in detail. It may help them identify revenue opportunities relating to converged functionality. The mobile phone may soon come to be regarded as the most successful converged product of all time.

6. Farewell mobile phone, welcome the wireless device.
All players in the mobile industry should understand how they are affected, for better or worse, by the emergence of the low-cost, multiple-standard chipset. The business case for the integration of wireless technology into a range of devices may be stronger. Mobile operators should consider their positioning -- whether to remain focused on the provision of long-range cellular mobile standards, or to become the aggregators of multiple wireless standards. Similarly, companies in other sectors should consider what low-cost integrated chipsets could enable.

7. The mobile broadband accident in slow motion.
As per Deloitte's study, data now exceeds voice volume on some mobile networks68, and with data traffic growing by several hundred percent on others, the cost of carrying data traffic could rapidly erode margins. Where possible, operators should try to divert heavy data traffic from cellular networks, and route it via other networks, such as WiFi-hotspots or home-broadband connections, at structured data tariffs. The operators need to focus marketing attention on managing customer expectations. They should examine the business model for mobile broadband carefully as well. With PC manufacturers increasingly integrating mobile broadband connectivity into their devices, diversification may soon be necessary.

8. The third screen goes dark: mobile television loses its reception
Deloite's study points out that everyone involved in the mobile TV industry -- an operator, a handset developer or a creative -- should take a long, hard, look at the demand for mobile television so far. The downturn could be a perfect opportunity to call time on a format that has too many fundamental challenges to work. It does not mean there's no space for mobile TV! Mobile telephony could provide an efficient payment mechanism for VoD -– delivered to the home set-top box, particularly for smaller VoD players. They can also be used to control the DVR. TV broadcasters can use mobile as part of their CRM strategies. Lots can be done, actually!

9. One for all and all for one: fiber networks change the shape of competition.
Shared ownership may reduce fiber's cost and risk, but may also require a new, unfamiliar approach to competition. Telcos and other companies should determine which skills they may need to hire to be able to compete on basis of services, or service levels, alone. Also, fiber-to-the-node (FTTN) or street-side cabinets may provide more than enough capacity for consumer and small business broadband, at a quarter of the cost of fiber-to-the-home (FTTH). Further, governments should complement their commitment to fiber deployment with campaigns to encourage adoption.

10. Mobile termination rates in Europe: a cut too far or a cut too fast?
Mobile operators in Europe, especially, have acknowledged that mobile termination rates (MTRs) must decline. However, 2009 is likely to see them push for a less drastic descent than the EC proposes. Consumer groups should monitor progress very carefully. Operators' knee-jerk reactions to sudden cuts could disadvantage millions of consumers, particularly those on low incomes. It may be better to call for a more moderate approach, from both operators and regulators. The local regulators should consider developing MTR glide paths that respect operators’ costs and market conditions.