Feature Story

Mobile Consumers Look for Basics as Innovation Accelerates

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

Look around and try to imagine the world without mobile applications.  Read the newspaper, make a dinner reservation, update your Facebook (News - Alert) page, play games – chances are if you can think of it, there is an app for that.  Smartphone technology is influencing how we interact, learn, and entertain ourselves.   And wireless companies are competing to win the hearts and minds of consumers with the next great technological breakthrough.

But as communications service providers compete to deliver hot new devices and innovative apps, are they taking the time to stop and listen to their customers? What do customers wish they could use their phone for?  What are their privacy concerns? What do customers really want from their service providers?

These questions may sound simple but service providers must address them if they are to win and retain customers.  Oracle (News - Alert) recently completed a study entitled “Opportunity Calling: The Future of Mobile Communications,” which surveyed more than 3,000 mobile subscribers around the world to assess their perceptions of mobile devices, interest in new technologies, and expectations for the next generation of mobile communication. What they had to say was in some cases surprising. Contrary to popular belief, it’s not all about the coolest phone or latest apps. Customers love to download fun, exciting content, but overwhelmingly the brass tacks – price, service, reliability – still remain their primary concerns when choosing and sticking with  a wireless service provider.

The survey found that 82 percent of mobile consumers are happy with their current service provider. The boardrooms of major wireless carriers should be jumping for joy over such a staggering number. But the number comes with a catch – 77 percent of customers would consider switching to another carrier for a better price. When it comes to choosing a wireless service provider, customers are only concerned with what companies have done for them lately.

And what do customers want right now? High-quality service and reliability at a low price.  When asked to rate the most important qualities they look for in a mobile phone service provider, 85 percent of respondents rated reliability as highly important, with price coming a close second with 81 percent of respondents. State-of-art technology – such as apps and smartphones – lagged well behind, with only 45 percent of respondents identifying it as very important. In addition, customers are willing to look almost anywhere to find the right blend of reliability and cost.  Eighty-three percent of respondents are even willing to look beyond the traditional major service providers – such as Verizon, Sprint (News - Alert), and AT&T – and select non-traditional telecommunications providers such as Sony or Facebook if they decide to enter the market and as long as they provide similar pricing and service quality.

While consumers put price and reliability above the latest technology, it certainly does not mean that the proliferation of apps and smartphones will slow. If anything, the survey demonstrates that technology’s importance will continue to appreciate over time. Mobile users aged 18-33 are nearly three times as likely to use their phones as entertainment devices and twice as likely to use their phones as personal computers, compared to their counterparts aged 46-64. Younger generations see their phones as more than a means to communicate by voice – relying on them to listen to music, watch videos, read work documents, send e-mails, and manage finances. As younger generations garner a greater share of the mobile market place, voice’s significance will continue to degrade as consumers purchase more books, movies, news, and games on their smartphones. 

And mobile consumers harbor grand ideas about the potential of mobile technology. Over the next five years, consumers expect to use their mobile phones as credit cards, to scan barcodes while shopping to access relevant online information about a product, and monitor home electricity usage. In the minds of consumers, there are no limits as to where mobile technology can take us. And the revenue potential for communications service providers is just as endless.

One area of future revenue growth is in mobile advertising. Customers expressed a true willingness to accept mobile advertising, with 64 percent saying they are willing to receive ads on their mobile phones in exchange for more data, more talk time, or credits on their monthly bills. But consumers have limits to their comfort zones. Sixty-seven percent of consumers expressed apprehension regarding location-based services, such as targeted advertising. 

That said, there are definitely opportunities for service providers to develop new revenue streams with location-based services. When asked about the possibility of mobile phone service providers determining their location and sending relevant content – such as information on a new restaurant opening or a coupon to a store in the area – 40 percent of users aged 18-33 expressed interest in that feature. By educating consumers on location-based features and allowing them to opt-in to the service, wireless providers can build trust with their customers and generate additional revenue.

Communications service providers are always looking for the next great technological breakthrough to give them a competitive edge. They have endless opportunities to expand their offerings – and subsequently revenue – but cannot lose sight of both their customer base and what brought them to this point. Staying on the cutting edge by providing innovative new content and applications is critical – but service activation, delivery, and billing are still the pillars that maintain consumer confidence. Service providers that develop new innovations around this foundation will be the ones to succeed as mobile communication advances.