Right on targIT
Wednesday 16. April 2003 kl. 11:15

Let the content providers provide the content - not the operators

I have a difficult time understanding why mobile phone operators think they can be more than movers of bits and bytes, ie. bandwidth providers. Today, they offer phones for discounts, get special phones made for them and bundle services together. Especially on the Japanese market this is the case; here one doesn't always know what manufacturer has made the phone, while it is very obvious what operator network it works on. Likewise, the Orange SPV is made by a company unknown to most people, but with the software from Microsoft and runs on Orange's network, both well-known companies.

Five years ago, wired ISPs did the same. They tried to make portals and get their users into participating in communities just for users of that ISP. Not many succeeded, in fact, these days, only AOL has had some succes in this. In my own little country, Denmark, I can point to TDC's Opasia concept that now is completely closed; the url forwards to tdconline.dk. Most ISPs have understood that users don't want to be in a community with other users of that ISP, when they can be in a community with users all over the country or even the world. Instead, they concentrate on providing bandwidth and compete on doing this with the highest quality, the cheapest way, with the best service, etc. None competes on having community services.

Let us now get back to the mobile phone operators, or mobile ISPs as I would prefer to call them. They have so far been somewhat succesfull in being able to offer community-like services. They have had an easier time than wired ISPs, since number portability that makes it easy to switch mobile ISP has only recently been introduced. For that reason, the tie-in to the mobile operator is stronger than it has been for wired ISPs. I don't accept the argument about being tied to an e-mail address, anyone these day can get their own private e-mail address and have it point to an e-mail address of the ISP they currently use.

There are however also areas where they haven't been able to offer the right services. WAP did not succeed at all, and this was partly because there was no interest for content providers to make content available for users. Since billing was not implemented beyond the airtime used, it was only the mobile ISPs that made money on providing WAP services. The mobile ISPs believed they could offer enough content. This turned out not to be the case.

My argument is that mobile ISPs for the future will turn more into movers of bit and bytes, ie. not trying to offer content or community-like services. Why do they think that they any better than wired ISPs can serve the users what they want? Why should five-ten operators decide what content users should access, when there are thousands of content providers out there?

With the advent of more webbased phone browsing (XHTML) and number portability, the tie-in between mobile ISPs and customers come down to the contract made between them. Beyond that, there is no reason except bandwidth ones for users to stay with a certain mobile ISP. Ie., the best quality of bandwidth with the highest quality to the best price will be the deciding factor for users, not content.

This will also put an end to the subsidies of phones. Although this has its advantages (newer and more modern phones on the market that generates more airtime for the operators), this makes it more expensive to make calls and ties the user to a mobile ISP for a certain amount of time, whether bandwidth is used or not. Even with the ties, the success of subsidized phones is questionable, users tend to use their subsidized phones less than average and still encounter a lot of churn (even though the user gets tied to the mobile ISP for a certain amount of time).

The only way subsidized phones can survive is as a reward from the operators to good customers. This reward will of course be reactive instead of proactive, the user is rewarded for the revenue he has generated, not for the revenue he is supposed to generate in the future.

I see movements in the marked that support my view. More and more low-price companies offer cheap good service without subsidizing phones. User can switch between them from one day to the other. These companies do what they are good at: offer bandwidth at a reasonable price and quality and serve their customers well. They don't try to sell a lot more than that.

So far this trend is not very strong. I do welcome comments on why the mobile ISP market is different from the wired ISP market, ie. why is my prediction wrong? Are customers lazy in switching (something that definitely holds true for the fixed phone market) operators? Are operators better to offer content? Do comment...


  1. by Blog author - Wednesday November 24, 2004 @ 11:24 am

    Nice to see that other people agree:


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