The Mobile Entertainment Forum (MEF) used last week's Mobile World Congress to kick off a new initiative that it hopes will put beleaguered mobile operators back on track.
The Smart Pipe Enablers initiative, steered by Vodafone, mBlox and the BBC, is almost identical to an operator-positioning strategy championed by Ovum, and one that we think can provide mobile operators with a framework on which to build a more robust business.
Mobile operators are riding a growth wave based on mobile broadband access, but this will not continue indefinitely, and operators need to make some fundamental decisions now about the nature of their businesses and what kind of service providers they want to be. HSPA has been widely deployed around the globe, and is delivering on the promise of 3G by taking mobile data to an inflection point.
The next step, which we are taking now, is the drive to what we call a mobile access dividend. This is similar to developments we saw in fixed broadband, in which the access revenues compensated for declining voice and slow growth in premium content services. But it will not continue, and mobile access will become commoditized, just as it did online.
At the same time, mobile operators are facing growing competition from online, and D2C players are threatening their role in the content and applications value chain. The slew of application store-related announcements from the likes of Microsoft, Google and Nokia are a case in point, but there are many others in the frame.
In this context, operators are in danger of being relegated to the dreaded dump pipes of the mobile market. But they do not have to be, and this is exactly what the MEF's new initiative is all about.
Rethinking the business
We have identified three core positioning scenarios that have an impact on the types of services offered and revenue streams. The scenarios do, of course, overlap, but in our experience they have helped operators in how they think about their businesses. At opposite ends of the spectrum sit the telco ISP and telco entertainer.
We will not go into the detail here, except to say that both are tough positions to sustain: the former is about aggressively driving mobile broadband access, while the latter is about carving a dominant position in the content value chain, which is a costly and high-risk strategy. The more balanced strategy is what MEF is calling the Smart Pipe Enabler and what we have called the Intelligent Facilitator.
The idea is not altogether new but, in both the MEF and Ovum's definitions, goes a lot further than providing bulk SMS and billing services. Our vision encompasses a richer scenario that sees operators drawing on core technology and know-how, not to mention customer data, to better enable third-party services and, in the process, command higher revenue shares than simple wholesale.
Operators have the kind of assets at their disposal that fixed broadband ISPs of their day never had. The MEF highlights a string of enabling services that mobile operators could leverage for third parties, including the more obvious ones such as presence and location, but also age verification, payments, customer data/demographic, identity management and handset application control.
And this is, of course, all smart stuff that operators can use to make their own services more appealing. Many mobile operators are aware of this, but are simply not moving fast enough or are approaching the task in a piecemeal, almost experimental way.
We hope the MEF Smart Pipe Enabler initiative can help change this and, along with other players in the industry like Ovum, give operators the framework and support they need to build a better business.
Eden Zoller, Principal Analyst, Consumer Practice