Can You Hear Me Know? Does it Really Matter?

Convergence Corner

Can You Hear Me Know? Does it Really Matter?

By Erik Linask, Group Editorial Director  |  October 01, 2010

This article originally appeared in the October 2010 issue of INTERNET TELEPHONY

Sprint already has launched 4G services, with Verizon and AT&T (News - Alert) set to follow, meaning the current growth curve of the mobile broadband market is only going to intensify. In fact, not only is the number of mobile subscriptions set to grow to more than five billion before the end of the year, according to data from the ITU, but Morgan Stanley Technology Research suggests that within five years, Internet connectivity will be more prevalent on mobile devices than desktop PCs.

A recent survey of more than 3,000 mobile users by Oracle, “Opportunity Calling: The Future of Mobile Communications,” shows clearly that voice is being overtaken by other communications features and capabilities – most obviously text messaging and email, but also for entertainment applications, like taking photos, listening to music, watching video, social networking, and even financial transactions.

This supports the standing theory that the future for mobile operators really lies in applications and services for which providers have finally started to understand they need to open up their networks to provide third-party developers and content providers access to user data, allowing them to deliver more compelling services.

The trend has been coming for some time, but was certainly accelerated by the success of Apple’s App Store and the volume of apps available to iPhone (News - Alert), iPod Touch, and iPad users.

Oracle’s survey shows that the younger generations of users, in particular, are driving the demand for these applications. Ninety-six percent of all respondents say they use their phone as a communications device, but half of the Gen Y respondents say they use their phones as entertainment devices, and about one-third of respondents between the ages of 18 and 45 say their phones serve as mini-computers.

In addition, nearly six of ten respondents indicated a desire to for purchasing capabilities via their mobile devices, as an alternative to cash or credit cards. Currently, only 22 percent are very comfortable with mobile purchasing, while 39 percent indicated a lack of comfort, providing a clear opportunity for mobile providers.

In addition to turning phones into electronic wallets, users expect that, within five years, their mobile devices will act replace any number of other devices they use and carry on a regular basis. These include the usual suspects, like GPS devices, music players, and cameras (camera manufacturers beware), but also video recorders, e-readers, car keys, and televisions.

Again, there is an opportunity here for operators, but only if they are able to retain their customers, who are becoming less loyal to individual brands by the day. Countless pages have already been filled by prognostications of subscriber defection from AT&T should Verizon ever get the iPhone. In fact, 85 percent of respondents say reliability of call and data services is the most important criterion for defining satisfaction level (cost is a close second, at 81 percent).

Only about 50 percent say state of the art technology is among the key determinants, which may seem counterintuitive initially, but considering the differences between user groups and, specifically the fact that more than half of Gen Y respondents have downloaded a free app, and more than a quarter have paid for at least one, that number is likely to grow rapidly.

What it all means is that if operators are not able to meet subscriber demands for service quality and price – both of which will be required for high retention rates, particularly as 4G access grows and users will have access to similar data speeds and devices on multiple carriers – they will be opening the door for competitive providers.

Traditional carriers, in particular, could be in danger of losing market share, as 83 percent of respondents indicate a willingness to buy mobile services from non-telecom providers (Google (News - Alert), Sony, Apple, Facebook, and American Express top the list of choices).

Who will win the battle for the mobile consumer? Who knows. What is certain is the subscriber should be the big winner as non-traditional providers seek to become competitive and the big carriers look to retain market share.

As much success as Apple and AT&T have enjoyed since the launch of the iPhone, their success may ultimately be their downfall, as they have delivered a gift-wrapped model for success for the rest of the communications community, and conventional wisdom says its network is not able to compete with its largest competitor (and Sprint already has an edge in the 4G space, making it even more interesting to follow potential merger rumors with T-Mobile (News - Alert)).

The winner will ultimately be the operator that is able to combine end user technology with the networks to deliver the applications and services that leverage the full capabilities of the latest generation of devices – a constantly moving target, but one which Oracle says its combination of software, hardware, and systems is uniquely designed to hit. 

Erik Linask (News - Alert) is Group Editorial Director of TMC, which brings news and compelling feature articles, podcasts, and videos to 2,000,000 visitors each month. To see more of his articles, please visit his columnist page.

Edited by Jaclyn Allard