Thursday, February 15, 2007

Please remember that it is first and foremost a phone

Catching up on my RSS feed and Andreas latest post strikes loud with me after my week in Barcelona.

On Tuesday I took part in a roundtable discussion on Fixed Mobile Conversion. The point I was hoping to make in my presentation was that it is not the network on which you make the call that is converging, it is the place in which you make it that is. Most of us use our mobile phones along a defined route, at home, on the way to work, at work, in our local pub/club etc. over 90% of the calls we make are in a place that we know rather than somewhere new. So whilst most people call the mobile first it is not because they do not know where we are.

That being so how can an Operator maximise there take on the defined spend on Mobile? I argue that it is the quality of the voice call rather than the content of a call that limits its duration. How many times do we still say "I will have to call you back because the line is bad"?

Before we get caried away with Data on our phone here are a few facts that should mean that the focus is on Voice:

1/ Mobile voice

- worth over $1 trillion globally today

- volume equal (roughly) to fixed voice

- by 2015, mobile voice will likely be 2x greater than fixed voice

- 8-9 trillion mobile voice minutes per annum (2015)

- VoIP a small percentage (10-15%) of total volume, and probably less than 5% of total value

- massive growth potential - but not focused on by operators

- not a single EVP for Voice anywhere in European industry

- value being lost due to lack of strategic focus and minimal investment

- also value erosion through over-use of bundles

- termination cuts have had an impact (operators could be more proactive and take the surprise out of term rate cuts)

- LRIAC termination rate is a known quantity - and all operators can plan tariffs around it

- Elasticity exists - but operators own actions damping its potential

- tele.ring strategy versus T-Mobile Austria

2/ Mobile data

- at least 95% of mobile data revenues come from SMS

- interestingly, global SMS business is worth 3x the total, global music industry (including CD sales, DVDs, licensing, publishing, etc)

- yet operators think music downloads will transform their businesses!

- getting the basics right is still a valid objective - email, instant messaging, photo messaging, internet access/browsing, presence, location-sensitive search)

- not a single operator has managed to address these areas successfully yet (though cite Vodafone Spain with Real Mail as example of progress)

- Instead, most are focused on contrived nonsense - mobile TV being the best example

- simple, sequential service development

- use all of the real-estate on the device - 10 number keys equal ten shortcuts to ten simple data services

- the devices themselves remain a problem to data uptake - they are phones, with incidental data capabilities

- screen size stretches the resolving capacity of the human eye to its limits!

- new experience, and devices required

- what parts of the internet need to be available on mobile? - not all of it - and not in its current form

- intelligence, context-sensitivity, location-sensitivity, voice-driven etc .... very different look and feel, and functionalilty

3/ Convergence

- is, when it boils down to it, something of a myth

- convergence is a term dreamt up by consultants

- it is lazy short hand for collection of trends

- customers have exactly zero interest in convergence as a concept

- it is therefore a distraction

- it is just one of a number of potential means by which companies can choose to address customers

- it may be right for some customers in some circumstances - but that doesn't make it into the magic bullet that many in the industry believe it to be

- divergence has had a far more impressive track record thus far, in terms of value creation (iTunes, iPod etc are divergent; digital TV's many standards are divergent; digital radio standards are divergent etc)

- convergence has become a dangerous obsession for many players

- FT, DT, BT etc all have a "Convergence Strategy"

- Triple and quad plays are the most common manifestations

- Forrester reckons that on average, a European triple play customer will represent a cumulative loss of €3000-€4000 by 2010

- Their latest work calls triple play "financial suicide"

- IPTV is certainly a weak, immature technology competing against very efficient, well established technologies and highly effective and slick media companies

- Today, there are only 285 million broadband connections ON THE PLANET

- Of them, only 20 million or so are capable of 2mbps or faster ... and this is the total addressable market for IPTV

- In many respects, convergence therefore is another disaster waiting to happen

- strategic herding and lack of imagination threatens the long term prospects of a number of players

I am working on more detailed analysis of the above points and might publish it here on my blog as well as somewhere else. If you have any questions leave a comment and I will attempt to reply!

1 comment:

Brand Portrait said...

Thanks for the info. I am really surprised that there aren't more people reading your blog.

I came here through a post from '' The small snippet from your post was intriguing and I am amazed at the amount you have packed in to one post. I normally have to wade through tons of drivel to get to some facts.

You've just got yourself a fan from Chennai, India