|Issue:||Europe II 2013|
|Topic:||Going to the web – the transformation service delivery|
Jorgen Nilsson is the Chief Executive Officer at Acision; he has more than 30 years’ experience in Senior Executive roles at leading blue chip companies including Ericsson and Compaq. Prior to joining Acision as COO, Mr Nilsson worked at Ericsson where his most recent position was Executive Vice President and General Manager of Vodafone’s Global Customer Unit. Mr Nilsson was also part of Ericsson Group’s Extended Executive Team. Other roles at Ericsson included, Head of Sales & Marketing for North America. Before Ericsson, Mr Nilsson worked at Compaq, where he held various global sales, marketing and operational roles and at Telia, part of the TeliaSonera Group.
Jorgen Nilsson holds a diploma in Economics from Celsius College. More recently Nilsson completed the Corporate Executive program for Science of Strategy & Execution at Columbia University Business School.
Mobile operator messaging is running into stiff competition from a variety of over-the-top (OTT) services. OTT services delivered over the Internet are generally free; traditional SMS and MMS services delivered over mobile networks and are paid for. Internet service providers, device manufacturers and a world of messaging application developers now offer messaging services. Among the players are Skype, BlackBerry, Apple, WhatsApp, Google and Samsung. Mobile operators are finding that it might be better to collaborate with the newcomers than fight.
In recent years, the mobile landscape has evolved at a remarkable pace. We have witnessed the adoption of a new breed of services and applications; all powered by smart devices and ever-faster IP networks. As part of this mobile evolution, driven by disruptive, innovative technology, we are also experiencing a transformation of mobile messaging – hitting an inflection point where more and more over-the-top (OTT) messaging apps are inundating the market fuelled by ever more sophisticated digital advances and devices.
Internet players, device manufacturers and a world of messaging application developers now infiltrate a space once predominantly led by mobile operators with messaging services such as SMS and MMS. Players including Skype, BlackBerry, Apple, WhatsApp, Google and Samsung have all succeeded in developing their own mobile-orientated applications; they capitalised on the smartphone’s capabilities as a personal Internet access device and triggered a messaging revolution.
While SMS is still the most popular messaging service today, generating huge amounts of revenue, these new breeds of messaging services are taking the world by storm. The enriched user experience and the user’s perception that these services are free, is driving rapid market uptake; this has put increased pressure on operators’ messaging revenue as users opt for these ‘free’ solutions when online, over other methods of communication.
It is interesting to note that in this new realm of Internet messaging, the very notion of how the mobile user perceives a message is no longer the same as it once was. Whether text, multimedia or video, a message is a message – there is no difference in the content. After all, in today’s world when using the Internet to deliver a message, which is largely perceived as free, why would the consumer care about the message content as long as it is delivered? Unlike traditional platforms, you don’t need to pick a service based on the type of content sent; this and its no cost price tag increases the service’s uptake.
One should also understand that while OTT services grow in popularity, they are all reliant on a broadband connection and this creates something of a paradox. The more rich features included in the messaging service, the more Internet bandwidth they require to function. With all other OTT app providers competing for the same bandwidth, it is highly probable that when using the service on a mobile broadband network, users might experience diminished service reliability and, potentially, diminished quality of service resulting from network congestion. If a service is seemingly cost-free or costs very little, then loyalty normally reflects this as consumers are more likely to constantly try new services/apps as long as they are free. As a result, and with so many services to choose from, it is inevitable that only a few will gain wide commercial usage.
However, while OTT messaging services have many advantages, we see a great opportunity to evolve the SMS customer experience by incorporating the stickiness of the OTT apps. Operators can sell their reliable service credibility; SMS and MMS works across any phone, network, or operating system – so mobile operators have a clear advantage to build on.
Today, it is important for operators to evolve by combining the services they already have, such as SMS and MMS, while exploiting the new potential of their IP/LTE networks and the smart device, to deliver something truly different that resonates with the user the style of an OTT offering – a messaging service that offers enhanced value which can be monetised.
We are already seeing a few operators launching their own IP, rich messaging services, such as RCS (rich communication services), based on the GSMA’s standards and branded as ‘joyn™’, but this is only a start, an introduction, for the richer services to come. As the true owners of the entire mobile lifecycle, the operator can tailor, deliver and drive the sort of quality of experience that meets consumer’s expectations. They have control over the IP/LTE network infrastructure with key insight into traffic analytics and network performance and hence can build a service with better reach and capabilities than OTT players can. This, underpinned by SMS, will allow them to provide an optimum service that can interwork across all messaging platforms, and works anywhere, at any time and across any network. All this gives them the competitive edge and creates a new mobile ecosystem that in addition, can serve as an excellent mechanism to reduce retention costs and drive incremental revenue.
In addition, operators might also collaborate with relevant OTT players with which they share commercial interests, to build new value propositions. In the past we have seen collaborations between operators and music providers, including the likes of Spotify, to offer consumers the option to select a payment bundle with unlimited music streaming. Such innovative collaborations are not unheard of; they not only enhance an operator’s offering, but most importantly, they instantly transform the OTT service from a competitive threat into a valued business associate. In such collaborations both players increase their revenues. It is clear that OTT services are here to stay, so we expect to see operators, in some cases, seek such relationships to package new services that help maintain subscriber loyalty, improve retention and build new business models.
The mobile world is currently going through a time of unprecedented change, yet one thing is certain, mobile messaging, as we once knew it, has been revolutionised. The opportunity that the OTT players have created by turning the consumer’s appetite towards something interesting and new is, at the same time, a challenge for the operators. A mobile messaging and service ecosystem will unfold over the coming years, but how it will look remains to be seen. Staying relevant and at the forefront of tomorrow’s messaging services in today’s fast paced, services-orientated world is all about providing value to the consumer. To survive means to carve out a niche role in rich messaging by providing a service that is a step ahead of the rest and that attracts market and mind share by constantly evolving and never resting. Service providers that listen to their customers and provide high levels of service reliability, user experience and innovation will become the service delivery winners by creating a workable commercial model in a mobile Internet world.