Home EuropeEurope II 2008 Mobile broadband – the future of broadband?

Mobile broadband – the future of broadband?

by david.nunes
Victor Donselaar Issue: Europe II 2008
Article no.: 11
Topic: Mobile broadband – the future of broadband?
Author: Victor Donselaar
Title: President
Organisation: Movial Applications Inc
PDF size: 268KB

About author

Victor Donselaar is the President of Movial Applications Inc. Before assuming his current position, Mr Donselaar was in charge of global sales at Movial. Prior to joining Movial, Mr Donselaar held business development, sales, communications, and team management positions in global technology services and consumer electronics companies. Mr Donselaar holds a M.S. degree in business administration from RSM Erasmus University, the international business school of Erasmus University Rotterdam, and studied Telecommunications and Business at the Helsinki School of Economics in Finland and at Prague University in the Czech Republic.

Article abstract

Mobile broadband is growing rapidly in all parts of the world, not only for mobile phones, but for PCs as well. Many operators expect wireless broadband revenue to exceed those for fixed broadband as early as this year. Unfortunately, when mobile broadband is offered without bundling additional value-added services, it becomes simply a high capacity low-priced commodity. One way to escape this fate is to offer value-added bundles with Internet services, real time messaging, voice or even video.

Full Article

Affordable mobile broadband for PCs will be the next big service wave to catch on. It should grow rapidly – even in the saturated markets of Western Europe. From an end-user perspective, mobile broadband PC service is easy to buy and use and from a mobile operator perspective, it is easy to market and sell. If you have been to the MWC, CeBIT, CTIA or any other of the countless shows this year, then you will surely have heard a recurring theme that is both a warning and an opportunity for carrier Chief Marketing Officers to heed. Their role in the carrier organisation has just become critical to the emerging success and promise of mobile broadband – because the issues are not technical, they are marketing related. The CEO of DNA Oy, the Finnish competitive operator, Riitta Tiuraniemi recently said that DNA expects ten per cent service growth in its customer base of 1.3 million subscribers by the end of 2008. And Finland isn’t the only market where mobile broadband is picking up steam. Telecom Italia Mobile’s CEO, Marco De Benedetti stated in his keynote at Mobile World Congress (MWC), that he expects wireless broadband revenue to exceed fixed broadband in three years – equipment vendors applauded wildly at this point. Ericsson’s Chief Marketing Officer, Johan Bergendahl in a keynote at the European Computer Audit, Control and Security Conference in Stockholm said that, in Austria, mobile broadband usage will overtake fixed broadband this year. It is already growing faster than fixed broadband, and in Sweden, the most popular phone is a USB modem. Mobile Broadband presents a unique opportunity for carrier Chief Marketing Officers who are listening. Flat prices for fat pipes The emergence of the PC as an end-user device for mobile data services is the main driver of this new traffic growth. Hamid Akhavan, CEO of T-Mobile, expressed concern over decoupling the cost per bit from revenue per bit at CeBIT NGMN (Next Generation Mobile Networks). He said it was only going to be a matter of time before mobile data is no longer profitable for operators. In the past, user experience was driven by the average traffic on a cell site. If we look at Korea’s saturated fixed broadband market with its heavy competition and traffic explosion, we can see how the CAPEX/OPEX burden is difficult to offset with flat prices. After a few years of mobile broadband growth, ARPU (Average Revenue per User) will flatten out completely and the increased cost per Kbps (Kilobits [or thousands of bits] per second) will send operators into a tailspin desperate for new revenue sources. In fact, many mobile broadband services today are offered without any additional associated revenue-generating service. Once the market is saturated, this model will lead customers to seek the flattest price with the fattest broadband pipe. Who is leading the herd to deliver mobile broadband at a flat rate? The answer lies within the operator communities’ business minds – with those who have been blinded by the short-term success they have seen with mobile broadband. The shining growth, though, is not so luminous up close. At this point in mobile broadband’s emerging state, it is absolutely critical for the CMO to consider the future implications of the flat rate business model to mobile voice and messaging revenues. A customer is likely to keep using their IP Communications services from Skype and MSN on mobile broadband, just as they do in fixed broadband. Such blind reliance on Skype and MSN bodes badly for operator leverage – it effectively hands the keys to the kingdom to the newcomers like Skype, MSN and other Internet players. Selling communications and mobile broadband The first challenge for the CMO is to effectively convey the benefits that Internet services represent to the responsible P&L unit managers and their own marketing people. Three key market forces must set the context for further discussion: • The Internet paradigm is unstoppable; • Communications and Internet-originated media are merging. The fruits of this merger will fall into the hands of the operators or Internet players. Controlling just one or the other will lead to commoditization of the offering. The players who successfully provide a combined offering win; and • Operators will have a fighting chance if they work with technology and business partners that understand the Internet paradigm from a communications perspective. Understanding these market forces is critical to an effective mobile broadband communications strategy. The resulting service offering – a skilful bundling of communications and media content – must be simple to use end-to-end and offer real value to end-users. A case study Combining broadband content with the sale of IP Communications services and devices drives additional revenue. This model is already used successfully today and sets a new mobile broadband and IP communications service standard. Far EasTone (FET)’s Big Broadband not only addresses mobile broadband access, but provides an elegant array of value added services that are created by the combined offering. The FET service combines mobile broadband, a mobile router, and a converged set of IP communications services for both PC and mobile devices. Unlike Skype’s offering, FET’s service has benefits like one phone number for all devices, voicemail, and ring back tones. The service offers the inexpensive call rates that have made Internet competitors successful, but now FET can offer the same services over different devices with the exact same user and brand experience. In addition, FET services come with post-pay billing and tech support that customers love – and that Internet competitors have never understood. FET’s Big Broadband is an example of a successful launch – where new subscriptions to their mobile broadband service have grown significantly and the FET bundle generates additional revenue with their IP communications subscription. FET’s smart marketing campaigns consist of large-scale TV advertisements, print materials together with an altogether compelling website. A rich, fully branded user experience, compelling pricing, ease of purchase and a successful marketing launch now positions FET as a market leader in the mobile broadband IP communications business – something that didn’t seem possible a year ago. The key to FET’s success was spending upon marketing to build a critical mass of consumers to drive big returns. The opportunity Today, operators have an enormous opportunity to expand the use of their existing assets by combining them into rich offerings. Success is predicated on the ability to focus on end-user needs and the ability to think beyond the initial success of mobile broadband. Operators that continue to promote service silos – single services tied to a single subscription – will fail. Services that only function on a mobile device, but not on a PC, will fail. CMOs have to market services that are easy to use and well integrated. How can you leverage existing communication and Internet media offerings into new, value-added bundles? One way, is by enabling consumers to communicate their Internet experiences in real time, via messaging, voice or even video. Sharing Internet content via email is an old paradigm, a solution that is both asynchronous – and often of limited use if the receiver gets it hours later. The new paradigm enables instantaneous content sharing, so the sender can read, hear or see reactions in real-time. When the operator does this in a seamless and easy-to-use fashion the world becomes a lot more interactive and revenue producing. Social communications will further differentiate IP communications offerings and push demand for mobile broadband. It is simply a matter of placing the end-user first. CMOs have to focus on making mobile broadband easy to sell by providing consumers with the best possible user experience and by collaborating with partners who are successful in other markets. The warning is loud and clear, don’t wait another quarter or you’ll be handing the reigns over to the Internet providers, but the opportunity is even louder and clearer, the player with an effective mobile broadband communications strategy and service offering wins.

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