Whose profile is rising? Over-the-top mobile services
While conventional mobile data services like SMS remain an integral component of operators' identities and revenue streams, CTIA Wireless 2012 underlined just how big a role over-the-top services promise to play in the industry's future. There's no better example than T-Mobile USA's free Bobsled IP communications services, which now boast more than a million users worldwide, the carrier announced last week.
Bobsled heralds a significant break with traditional premium data initiatives. Bobsled Calling, launched in April 2011, enables users to place free Internet calls over almost any data connection, across devices including iOS and Android smartphones and tablets. The cloud-based Bobsled Messaging application, released in January 2012 for Android devices, allows subscribers to share rich media messages with other Android users as well as iOS, Windows Phone and BlackBerry smartphones and even most feature phones. Most compelling of all, Bobsled services are available to consumers on any wireless operator network, and T-Mobile USA revealed that 95 percent of Bobsled Calling users are in fact not T-Mobile subscribers.
The Bobsled model is resonating with consumers both at home and abroad. T-Mobile USA reported that users have made more than 10 million calls since Bobsled Calling launched last year, with 80 percent of those calls originating from international numbers. Bobsled Messaging users are predominantly U.S.-based, on the other hand, and 90 percent of all messages are sent domestically. Brad Duea, T-Mobile USA's senior vice president of value-added services, said the carrier will continue to expand the Bobsled model and is currently mulling different approaches to monetizing its OTT services, including advertising.
Perhaps in response to Bobsled's success, Sprint Nextel (NYSE:S) will soon release a new Android app bringing the operator's Direct Connect push-to-talk service to all of its Android phones, instead of just devices with the technology built in. Sprint said its Direct Connect Now PTT Android app, which leverages Qualcomm QChat technology, would provide "calling performance similar to embedded devices" and will allow subscribers "to get all the benefits of PTT without having to use a device designed specifically for PTT" (e.g., a dedicated PTT button).
Interestingly, Qualcomm is getting into the game too. The company is extending the QChat platform to deliver IP communications services. According to Qualcomm, the new platform, called Yagatta, will deliver better-performing OTT communications services like messaging, video and voice over IP.
Mark Jacobstein, vice president of product management for Qualcomm iSkoot, said the Yagatta platform offers three components to help operators and others integrate over the top services into the network. The first component is a back-end server that connects to the network; the second element is an application developer kit for the client and the third element is the applications. Qualcomm has already developed its own Yagatta Talk app, which lets consumers talk, text and send video via one app. Although the main target for Yagatta is the mobile operator, Jacobstein said customers could also include the over-the-top companies or device makers that are looking to build more network-efficient IP services.
But operators continue to remain wary of OTT services, which in many cases undercut operator business models. Verizon Communications (NYSE: VZ) CTO Tony Melone said the OTT phenomena is one of the most important questions facing operators today. "What will the over the top model look like?" he asked during on CTIA panel, noting that Verizon is considering mechanisms that would allow content suppliers to pay for users' access fees.
Indeed, research firm Strand Consult recently forecast that Facebook messaging would cut into carriers' SMS revenues. "Many operators are seeing an increasing number of customers moving their SMS traffic over to Facebook, resulting in their SMS cash cow getting thinner and thinner," the firm wrote in a research note.
Whose profile is falling? Conventional mobile content services
Over-the-top services may be coming on fast, but a survey released during CTIA Wireless 2012 reveals that good ol' SMS remains a fixture of the consumer experience. Ninety-one percent of U.S. smartphone owners still actively use SMS according to the survey, which was conducted by Vanson Bourne on behalf of mobile messaging firm Acision--in addition, 65 percent of all smartphone users surveyed said they need SMS on their devices and 45 percent said they would be lost without the service despite easy access to OTT/IM rivals. By comparison, just 37 percent of U.S. smartphone owners use Facebook, the most popular OTT/IM app; Skype and Twitter are each used by 17 percent of respondents, followed by Apple's iMessage (11 percent) and BlackBerry Messenger (10 percent).
Even so, it's clear the landscape is changing, which may explain why traditional media partnerships and service launches were in such short supply at CTIA Wireless 2012, further underscoring the evolution now taking place. Spotify CEO Daniel Ek said the streaming music upstart is currently in discussions to offer its service through U.S. mobile operators, but didn't officially announce a deal or even hint which carrier(s) participated in the talks. That Ek's remarks even qualified as news suggests just how few meaningful mobile content headlines actually originated from the CTIA show floor.
Carriers instead left the heavy lifting to Nokia (NYSE:NOK), which trumpeted a series of new and exclusive Windows Phone content partnerships designed to differentiate its fledgling Lumia smartphone line. Highlights include an expanded partnership with sports media giant ESPN, which this fall will launch a Windows Phone-optimized version of its ESPN Fantasy Football app exclusively for Lumia devices. Social commerce platform Groupon will introduce an updated version of its Windows Phone app in June, promising augmented reality deal discovery capabilities that combine map and location data with the camera's viewfinder to allow users to see virtual Groupon deals within their immediate area in real time.
Nokia also will work with eBay-owned PayPal on a Windows Phone edition of its mobile payment app and will team with Rovio Mobile to bring the blockbuster Angry Birds Space to Windows Phone platform. Rovio is assembling a dedicated design and development team to create games for Nokia Lumia smartphones and other Windows Phone devices; Rovio and Nokia also will collaborate on new consumer products and content exclusively for Lumia phones. Therein lies one of the most significant takeaways of CTIA Wireless 2012: No matter what else may change in the mobile industry, the popularity of Angry Birds endures.