mobile operators

Would the elimination of ETFs make customers any happier?

Lynnette Luna — Mon, 04 Aug 2008 05:46:13 -0400

What has become abundantly clear is that people hate early termination fees (ETFs). This, of course, is evidenced by the class-action lawsuits, loud complaints from consumer advocacy groups and the many complaints the FCC has received about fees. Just last week, a California judge ruled that Sprint Nextel must pay $73 million in refunds to its former customers in a lawsuit over early termination fees.

As such, the FCC is considering a nationwide ETF policy for carriers, and Verizon has advocated that the commission adopt rules that are similar to what the operator has in place. For example, carriers should offer opt-out or trial periods for new contracts; provide pro-rated ETFs; and offer no ETFs for contract renewals unless the consumer gets a new device as part of the deal.

Those sound like reasonable terms, but do they go far enough to please consumer advocates and Congress, which has also threatened to become involved? During an FCC hearing on the matter in June, consumer advocates and state regulatory officials said that even pro-rating fees is not enough. Anne Boyle, chair of the Nebraska Public Service Commission, said the fees should be ended altogether.

"The industry should do away with these contracts and let people purchase the products on their own and pay for service on a month-to-month basis," she was quoted as saying in a CNet article. "It's the most common method for providing products and services in this country." (By the way, there are contractless options that let people purchase products on their own and pay on a month-to-month basis. They're called prepaid plans, and they're more expensive because the customer is considered a bigger risk without a contract.)

If Boyle thinks these types of changes would make consumers any happier, she should think again. ETFs exist to recoup the subsidy that mobile operators pay to offer cheap phones. Just look at the iPhone 3G as an example. AT&T and Apple obviously came to the conclusion that this device should be subsidized to the $200 level in order to drive mass-market adoption of the service. Consumers clearly have preferred to pay less for a device, and they have been willing to sign a two-year agreement with cancellation fees to do it. They do the same to rent apartments, lease cars and join gyms.

What the FCC and other potential regulators need to think about is what the outcome of eliminating ETFs altogether would be. Would it truly create a more competitive marketplace since consumers in theory would have more freedom to shop around? Or would the price of service and handsets jump across the board from $50 to $500, making wireless less attainable for many? --Lynnette

Handset sales slowing in U.S. amid worsening economy

Lynnette Luna — Tue, 20 May 2008 11:13:50 -0400

Good and bad news for the U.S. mobile wireless industry when it comes to the worsening economy. The bad news: Consumers' purchases of new mobile devices declined in the first quarter for the first time in many years. The good news: The decline tended to concentrate around customers using prepaid and among the middle class. The higher end market that features higher ARPU customers that heavily use the more sophisticated devices continued to grow.

The Wall Street Journal cites two new studies that indicate falling handset sales in the first quarter. Strategy Analytics reported a 5 percent decline in the quarter compared with the previous year, while NPD Group reported a 22-percent drop in the purchase of new devices in the first quarter. Also, Bernstein Research estimates that U.S. mobile operators added 23 percent fewer subscribers in the first quarter compared with the first quarter in 2007. The firm is anticipating that growth will continue to slow and said that the segment experiencing the most slowdown is new subscriptions for children under 12 and for "deeply sub prime users, and it's reasonable to think that in a weak economy, that both of these populations would be strapped," said analyst Craig Moffett. Prepaid MVNO Virgin Mobile is being squeezed by the economy.

However, NPD estimates that high-end devices made up 17 percent of all mobile-phone sales in the first quarter, in increase of 10 percentage points since the first quarter 2007.

To read more about the economy's impact on the U.S. mobile-phone market:
- check out this article from The Wall Street Journal (sub. req.)

Related articles:
- Virgin Mobile's growing troubles Editorial on Virgin Mobile's slowing net additions
- Virgin Mobile USA: Poor earnings economy's fault

Virgin Mobile USA subs earn minutes from Facebook

Thu, 15 May 2008 11:30:14 -0400

Virgin Mobile USA announced the Fund My Phone application, which extends the operator's Sugar Mama marketing program to the Facebook social networking platform and enables consumers to earn wireless airtime for their fellow Virgin Mobile subscribers. Over 700,000 Virgin Mobile USA customers have joined the Sugar Mama initiative since its 2006 launch, viewing ad spots, responding to branded text messages and completing surveys to earn free airtime--with Fund My Phone, consumers download the app to their Facebook profile page and share up to five different spots with Facebook friends, scoring free minutes as the ads are viewed.

For more on Fund My Phone:
-read this release

Related articles:
Virgin Mobile USA teams with Limbo
Virgin Mobile USA: Ringbacks on the rise
Facebook for Mobile Operators debuts on Vodafone
Frengo flirts with Facebook for mobile dating

Guardian solves network 'blind spot'

Mike Dolan — Mon, 10 Mar 2008 11:26:07 -0400

Alcatel-Lucent believes it has developed a solution to what it calls a 'blind spot' in how mobile operators manage data traffic on their networks. The company today unveiled its 9900 Wireless Network Guardian (pic), which promises to help carriers get visibility into how packet data and IP applications are transmitted over the network. Specifically, the Guardian will look at how applications such as VPN, e-mail, Web-surfing and peer-to-peer potentially create network congestion because of the resources in the network that they use.

Canadian operator Bell Mobility has already signed on to trial the Guardian in its commercial network. Alcatel-Lucent will be demonstrating the product at the upcoming CTIA Wireless 2008 conference in April.

According to Mike Schabel, general manager of the 9900 Wireless Network Guardian at Alcatel-Lucent Ventures, the 9900 differs from other network monitoring products because it looks specifically at wireless network resources, which are different than wired networks. Most operators today use the same tools to monitor wireless networks that they use to track wireline networks. Tools used to monitor wireline networks tend to measure bandwidth only and do not track the impact of different types of traffic on wireless radio access network resources. That is key, Schabel says, because without visibility into the radio access network, carriers may experience network outages. Ã¢â‚¬â€œSue

Important Events at Mobile World Congress

Wed, 06 Feb 2008 13:40:31 -0500

Datebook

Feb. 11-12.
The Mobile Innovation Marketplace. Hall 5 of The Fira. Designed to help small and medium size companies reach mobile operators, this program lets 25 companies present their innovations to operators and potential investors. www.mobileinnovation.org

Feb. 12 at 9:15 a.m.
The Fira. Keynote address: Battleground for a Brighter Future with John Chambers of Cisco, Rob Conway of the GSM Association, John Hoffman of GSMC Ltd., Wang Jianzhou of China Mobile, Olli-Pekka Kallasvuo of Nokia and Arun Sarin of Vodafone.

Feb. 12 at 7:30 p.m.
The National Palace. Global Mobile Awards Dinner featuring comedian Graham Norton.

Feb. 13 at 9:00 a.m.
Robert Redford keynotes Mobile Backstage at the National Palace.

Ericsson: Revenue from China to rise 10%

Wed, 14 Nov 2007 06:59:55 -0500

Ericsson expects to generate at least 10 percent more revenue in China this year and next because of strong growth in mobile users in the country and investment by service operators. Ericsson's operations in greater China contributed about 7 percent of the company's total revenue of about $20.9 billion for the January-September period.

"As mobile traffic continues to grow in China, the mobile operators will continue to expand network capacity; this will also boost the revenue for equipment vendors," Ericsson Greater China President Mats Olsson said.

For more on China's growth and its effect on Ericsson:
- read this WSJ article (sub. req.)

; ; GSMA Mobile Innovation Global Awards 2008 Open for Entry

Mon, 12 Nov 2007 06:59:48 -0500

GSMA Mobile Innovation Global Awards 2008 Open for Entry

*Promotional content from GSM Association*

The prestigious GSMA Mobile Innovation Global Awards 2008 are now open for entry. The Awards are designed to help small and medium-sized companies who are developing innovative mobile products and services reach mobile operators.

The 'Top 50 Innovators' will be invited to pitch at the Mobile World Congress in Barcelona in February 2008 where ten category winners will be selected, and one overall Mobile Innovation winner will be announced.

The Award categories for 2008 are:

Most Innovative Device Centric Technology
Most Innovative Carrier Infrastructure or Platforms
Most Innovative Mobile Application in a Vertical Market
Most Innovative Consumer Application or Service
Most Innovative True Mobile Start-Up

The Awards have proven to be a huge catalyst for success for previous winners

"Winning the Award has given us credibility with carriers, from a technical, operational, commercial and business case perspective," says Christina Domecq, CEO of 2006 winner SpinVox. "It opened up the opportunity for us to launch our Web Messaging products - Blog, Memo, Broadcast - and help carriers see our potential as providers of voice messaging into web services, rather than depend on ever complex and expensive handsets and physical input technologies."

Deadline for Entries 30th November 2007

Want your product or service incuded? Email jason@fiercemarkets.com

; ; GSMA Mobile Innovation Global ; Awards 2008 Open for Entry

Mon, 29 Oct 2007 07:59:48 -0400

GSMA Mobile Innovation Global Awards 2008 Open for Entry

*Promotional content from GSM Association*

The Award categories for 2008 are:

Most Innovative Device Centric Technology
Most Innovative Carrier Infrastructure or Platforms
Most Innovative Mobile Application in a Vertical Market
Most Innovative Consumer Application or Service
Most Innovative True Mobile Start-Up

The Awards have proven to be a huge catalyst for success for previous winners

Deadline for Entries 30th November 2007

Want your product or service incuded? Email jason@fiercemarkets.com

Is IMS Necessary?

Fri, 07 Sep 2007 06:59:59 -0400

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Is IMS Necessary?Ã‚Â Ã‚Â
IMS, or IP Multimedia Subsystem, is often touted as a must-have network evolution for mobile operators that want to derive value from future applications. The goal of IMS is to replace the operator's current back-end network architecture with an all IP-based system making it easier to deploy applications. (For more the IMS standard, see Andy Seybold's commentary below).

Now that operators are starting to deploy IMS there has been a slight change in its perception. For example, not every advanced application needs IMS to be a success. Ken Rehbehn, analyst with Rehbehn Associates, says that some applications (particularly those that carriers don't want to have visibility into the network) don't need IMS. "I think there is a decreased expectation that if there's an application, it will be IMS," Rehbehn says. "Operators will still have applications that are not on IMS."

When I first started hearing about IMS, it was usually talked about in conjunction with push-to-talk and video sharing. Those applications, Rehbehn says, will definitely benefit from IMS as will any secure payment application. "Operators have very sophisticated billing systems in place," Rehbehn says. "IMS provides a wonderful framework for micropayments."

IMS is also critical for quality of service. Rehbehn says that IMS will allow service providers to juggle different levels of service quality. For example, certain streams of content (multimedia) may be designated a higher priority, other streams that don't require as much quality control will have a lower designation.Ã‚Â

Of course, some of the most compelling IMS applications-such as video sharing, push to video, etc. are big bandwidth hogs. According to iGR Research, IMS application usage will likely result in an increase in bandwidth consumption beginning in 2008. In fact, iGR is forecasting that total bandwidth used by mobile subscribers in the U.S. will double by 2011 with "light" subscribers increasing their usage from 6.3 Mb per month in 2007 to 22 Mb per month in 2011.

So while IMS may not be a necessity for all applications, it seems certain that mobile operators will benefit from the efficiencies IMS offers. Wireless carriers have long been looking for a streamlined way to deliver compelling applications and the IMS framework seems like a natural progression.

We'll be delving into all the various angles on IMS deployments at our IMS 2007 conference in Washington, D.C. Sept. 19-20.Ã‚Â Join me and my colleague Dan O'Shea of FierceTelecom as we chair the two-day event which will feature key speakers from Verizon, AT&T, Sprint, U.S. Cellular, Cox Communications and more. Here's a link to the agenda. -SueÃ‚Â Ã‚Â

SPOTLIGHT: ABI predicts mobile content goldrush

Thu, 15 Feb 2007 19:01:32 -0500

. ABI Research has a new report that claims that the growth in W-CDMA subscribers will provide a much-needed shot in the arm for mobile operators because they deliver average revenue per user that is 5 percent to 20 percent greater than average. ABI says that the number of W-CDMA subscribers has topped 100 million worldwide. Release

Intuitive navigation is the name of the game

Mon, 01 Jan 2007 19:01:35 -0500

Mobile operators have the content, the high-speed networks and data-capable devices, but where are the droves of customers using data services? 2007 will see a greater emphasis on helping customers better interact with devices and content. Easy discovery is the name of the game. If a customer can't find what they are looking for, they simply won't use a service. We know of at least one major announcement coming down the pipe in this area. Look for a host of players in the wireless data ecosystem work to make devices and user interfaces more intuitive.

SPOTLIGHT: Iraq mobile networks thrive despite violence

Wed, 29 Nov 2006 19:01:32 -0500

Here's a great human-interest story about how Iraq's mobile operators have built a strong subscriber bases in a violent environment with no reliable electricity supply and where no vendor wants to offer on-site training. Article

SPOTLIGHT: Operators attack EU's roaming reform

Thu, 04 May 2006 20:01:25 -0400

Europe's mobile operators argued that surcharges for international calls are already falling and creating difficult market conditions, and they don't need the European Union to cut roaming fees for them. Europe is set to enact legislation that would force roaming cuts by the summer of next year, and the European Commission plans to adopt a proposal for the new legislation before this summer. Operators are looking to shake up that timeline. Article (telecoms.com sub. req.)

U.K.'s The Cloud launches wVoIP assault

Mon, 01 May 2006 20:01:37 -0400

Mobile operators in the U.K. now have to deal with competition from WiFi operator The Cloud. The company launched an "all-you-can-eat" pricing scheme that also includes wireless VoIP calls. The $15 per month plan includes 7,000 WiFi hotspots around the U.K. and in all major U.K. cities. Users of The Cloud's hotspots will be able to make VoIP calls from their laptops or WiFi phones. This is probably the first test of how alternative wireless VoIP providers will impact the mobile market. It will be interesting to see what sort of competitive moves mobile operators will take.

For more about The Cloud's all-you-can-eat pricing:
- check out this article from telecoms.com (sub. req.)

ALSO NOTED: Amazon partners with InPhonic to sell more handsets, wireless plans; FCC proposes $750K fine of Dobson for not depl

Wed, 19 Apr 2006 20:00:41 -0400

> Amazon will partner with InPhonic a deal that will bolster the e-commerce giant's ability to sell handsets and service plans. Article (Wall Street Journal sub. req.)

> FCC proposes fining Dobson $750,000 for failing to deploy enhanced 911. Article

> Mobile operators in Japan and South Korea have already reached 40 percent penetration of 3G services, and they provide valuable lessons for mobile operators in other regions, according to a new report from Analysys. Article

> Cingular Wireless said it expects the majority of its cost savings to be realized during the second half of 2006 and early 2007. Article

> U.S. scientists say they've created a wireless device chip that uses 1/10th as much battery power as current designs. Article

> The global mobile-phone market grew 26 percent in the first quarter of 2006 compared to the first quarter of 2005, according to a report from IDC. Article

And Finally... Did Hedy Lamarr, a beautiful Hollywood film star of the 1930s and 1940s, really invent spread spectrum? Article

SPOTLIGHT: Deadbeat customers

Tue, 21 Feb 2006 19:01:25 -0500

Deadbeat customers are costing mobile operators about $26 billion every year, according to a report from Analysys and Talgentra, which surveyed operators around the world. As a result, 5 percent of total billings are written off annually. One of the main problems associated with the high write-off figures is that collections often fall between the responsibilities of various departments in a company. In other words, there is no clear strategy for collecting. Article

FEATURE: M-Commerce Requires Collaborative Marketing & Revenue Sharing

Thu, 15 Sep 2005 20:01:32 -0400

M-Commerce Requires Collaborative Marketing & Revenue Sharing
Valista's Craig McDonald argues that new models will be necessary for m-commerce to become a commercial success.

In order for m-commerce to go mainstream, content providers, carriers, and service providers must collaborate to provide consumers with an easy solution for purchasing a variety of digital content and services through any mobile device. This approach, called collaborative commerce, enables new marketing opportunities and allows consumers to access more interesting content which meets their buying patterns and accelerates premium services in the mobile environment. There are two main components of collaborative commerce 1.) collaborative marketing and 2.) revenue sharing.

Collaborative Marketing

Content providers and mobile operators need to create awareness, and to present and price products for sale both on and off portal. However, in order to accelerate sales within the commerce ecosystem, enhanced product offerings such as subscriptions and product bundles, which cater to the way in which consumers wish to buy, need to be supported. In addition, incentive programs such as discount and loyalty promotions are required to spur consumption. By joining forces, content providers and operators form a "content value chain" based on various collaborative marketing efforts.

There is an increasing demand for an operator to flexibly configure relationships with content providers quickly, in order to develop and sell digital content. In some cases, an operator may wish to act as the retailer. In other instances, parties who own strong brands want to own the customer experience, for example, Disney or Madonna want to control their own marketing. Operators need to define the terms of collaboration, the business rules and contracts that go along with each relationship, in a flexible way, on a case-by-case basis. This can be a very complex process. For example, in the Apple and Bose scenarios, they are the only players who can discount items in the offline retail environment, but in other scenarios, retail outlets will discount the goods. The online situation is much different. For digital goods, collaboration between suppliers and intermediaries is vital. The parties must cooperate on promotions and marketing initiatives to successfully reach a large customer base and close the sale. In the creation of heterogeneous multi-vendor bundles, operators need to define the settlement rules that describe how the funds are apportioned to the participating suppliers.

Revenue Sharing

Support for business processes such as payment processing, customer care, fulfillment, exception-handling, and settlement are vital for this value chain to flourish. As the operator creates more highly innovative marketing offers, these programs have a direct impact on the revenue-sharing contracts it holds with its content providers. This creates the need for operators to have a system capable of interpreting these impacts, ensuring revenue assurance and proper settlement to all parties involved in the transaction.

If a new Spiderman movie comes out, a game, wallpaper, ringtone, and other ancillary products may be added to create a bundled offer. A mobile operator can bundle these products and promote them to a customer base of aficionados. If there is discounting in the bundle, who bears the cost in a revenue-sharing relationship? If the operator offers a 20 percent discount on the bundle of a wallpaper, ringtone and game because it will drive more purchasing and make everyone more money, it is important to highlight which suppliers are willing to sponsor a portion of the discount or if sponsorship of the discount will fall solely to the operator. Currently, operators are at different stages in establishing relationships with content providers, and they are beginning to work together on joint discounts and loyalty programs.

For a successful revenue sharing model, mobile operators and content providers need the freedom to define their contracts according to what makes sense from a business perspective, without being constrained by a technology's ability to support these contracts. Revenue Sharing technologies will enable service providers and merchants to guarantee accurate and timely transaction settlement covering terms such as payments, payment schedules, discount sponsorships, and liability for exceptions, refunds, non-payments, cancellation fees, and fraud. This ensures that the revenues and costs are appropriated to the correct parties per the contractual arrangements.

Conclusion

Collaborative commerce based on collaborative marketing and revenue sharing, opens up numerous distribution channels to content and services providers, enabling content innovation and offering new opportunities for promotional programs, joint discounts, and loyalty programs. Similar to an e-commerce platform, mobile operators need to link the offering with the generation of accounts receivable, accounts payable and settlement for multiple parties. Collaborative Marketing and Revenue Sharing solve a difficult problem that operators and content providers are faced with today. With this new approach, consumers will be able to access more interesting content allowing content providers and operators to increase their revenues, creating a win-win-win situation for all players in the mobile content ecosystem.

Craig McDonald is vice president, North America for Valista.