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July 21, 2011

50 Percent of Mobile Use Will Be Content Related in 2016

By Gary Kim, Contributing Editor

“By 2016, only about half of consumers' usage of mobile handsets will be dedicated to voice or text-based communication, down from two thirds in 2011,” according to the latest study from Analysys (News - Alert) Mason. In part, that is because of increased use of content on mobile devices and the additional impact of media consumption on tablet devices. 

Consumers in Western countries also will increase use of telecom, media and technology services by almost 40 minutes per day between 2011 and 2016, says Analysys Mason.

“New devices (like tablet PCs) or new services (such as video streaming service Netflix) will be the key disruptions in a consumer's use of TMT services, not new networks,” said Tom Rebbeck, research director at Analysys Mason and co-author of the report. “Operators should be wary of over-reliance on new networks to drive revenue growth.” That is an important observation. 

As always, networks are important as they enable consumption of valuable applications and services. But what Analysys Mason seems to be pointing out is that, as always, people, businesses and organizations do not buy “network services” so much as the applications those network services enable. Put another way, “build it and they will come” remains a flawed assumption when service provides build new networks. The standard refrain, when the 3G networks were built, was that the new networks would enable new services. 

That ultimately proved to be correct, but only after a long, nearly-fatal period in some cases, where few consumers could be enticed to do much of anything new on the 3G networks. Only with the advent of mobile access to the Internet did a “killer app” emerge. Now similar claims are being made for 4G networks. It is said that 4G will enable the creation of new applications and services. One might argue that this ultimately will prove true, as happened for 3G, but that it might take quite some time for that to happen. 

Cloud-based services, machine-to-machine apps, video entertainment and personal Wi-Fi hotspot applications often are mentioned as examples of the new apps 4G will enable. Those are reasonable assumptions. What those expectations or hopes also suggest, as well as the Analysys Mason forecast, is that the mobile business, as well as the fixed-line business, are shifting revenue growth modes from voice and text messaging to other broadband-derived services. That is not a novel observation, but simply is emphasized by the new forecast. 

Buying a tablet PC or starting to use video streaming might not be as life-changing as moving house or having children, but it will still disrupt a consumer’s usage of telecoms, media and technology (TMT) services. The average number of minutes that an adult spends using TMT services per day will increase by almost 40 minutes in ‘Western’ countries between 2011 and 2016, according to Analysys Mason’s latest forecasts.

This presents an opportunity for stakeholders to reduce churn or generate additional revenue, by increasing engagement with their service, device or brand, Analysys Mason argues. In part, app consumption also is a zero-sum game. In other words, time spent on one device, or with one app, is nearly always at the expense of engagement with some other device or application. 

Discretionary time, in a real sense, is the ultimate gating factor for all consumer application consumption. 

The total number of hours that an average adult spends consuming video services has changed little in the past ten years. However, the range of devices that they use to communicate and consume media is changing, as is the impact that their behavior has on fixed and mobile networks, the firm says.

A “Western” consumer’s average daily consumption will continue to shift in the direction of PC, mobile and tablet-based services, the forecast shows. Time spent engaging with TV will fall, though. Radio usage also is projected to fall. 

Messaging, social networking and other text-based communication services will attract one of the most significant increases in usage during the next five years. This will largely be a result of service adoption among the late majority (mainly older people) and the increasing availability and take-up of intelligent connected devices. However, the increase in usage will amount to only a two percentage point shift (from 13 percent to 15 percent of consumers’ time) for the population as a whole.

Changes in individual consumer behavior obviously as affected by a change in circumstance (such as moving to a new home or the addition of a new family member). Such changes always mean a consumer is confronted with a possible opportunity to change service providers, if nothing else. But physical moves of residence also offer an opportunity to re-evaluate the value of each network service as well. 

Purchase of new devices (for example, an iPad) or service (such as Netflix) also can shift user perceptions of what services are more valuable than others. 

Beyond that, generational changes in values now are important.  The consumers who are likely to spend the most are also most likely to change the fastest. For example, users in the 25 to 34 year age bracket are the most likely to switch service providers and have arguably the least brand loyalty. There also seems to be a growing percentage of younger users who simply have never acquired the “habit” of buying cable TV service or fixed-line phone service, for example. 

All of that suggests a continued experimentation with retail packaging and pricing. Triple-play packages won't have nearly the appeal to a user who doesn't see a need to buy video entertainment service or fixed-line voice service, for example. On the other hand, new “family” plans that allow a single account to support multiple mobile devices, with a shared bucket of broadband usage, might have much more appeal. 

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2011, taking place Sept. 13-15, 2011, in Austin, Texas. ITEXPO (News - Alert) offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. To register, click here.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Jennifer Russell
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