Who's Best Prepared for the Mobile Services War?

Guest speakers at the Highdeal round table and networking event held during 3GSM World Congress in Barcelona, discussed how the days of telecoms trench warfare are now over and how the battle’s gone truly mobile. They examined the new forces, technologies, tactics and strategies, and discussed who will be the most successful players, whether it will be incumbent network owners, MVNOs, content owners, aggregators - or even new ‘left-field’ entrants like Google, Yahoo! or Skype

Roundtable speakers:

Jerome Birba, Director: NRJ Mobile.		Fergus O’Reilly, VP Product Strategy: Highdeal.		Brian Kassa, Senior Marketing Manager: Nokia Networks.		Gary Miles, CEO: jNetX.		Alun Lewis, Independent telecommunications writer and consultant: Moderator.

Alun - Moderator: Can service providers still “take the high ground” and defend themselves against current uncertainties and competitive threats? What parts would competition - or cooperation - play in deciding the future landscape of our industry?

Gary - jNetX: US cable operators like Comcast are offering ‘all you can eat’ fixed services for twenty or thirty dollars a month. They are clearly going to target the MVNO space but the question is who’s going to give them access to this wireless mobility? Mobile carriers need to hang on to the ownership of the “last mile”, clearly a valuable asset and protect their brand to avoid becoming a bit-pipe. Threats exist such as Yahoo who recently launched their mobile portal and Wi-fi, now coming to the handset. Our industry is still about voice calls and we should be concentrating on simplifying things for the end user. That’s where the fixed line providers find their business models are now starting to look fairly attractive.

Brian - Nokia: It’s about customer ownership and who controls access to the network. Knowing who the customer is, what that customer does, where they like to go – and maintaining that relationship, helping them to manage their spend. In Europe, operators are looking to enhance their relationships with existing customers, to increase their spend whereas in places such as in India, if the operators had the capacity and the customers the money, they could add as many new customers each month as desired. The key issue is that the customer is king and we have to be able to do everything possible to create extreme "customer delight."

Alun - Moderator: What’s the specific role of supporting technologies in creating that customer delight?

Fergus - Highdeal: The industry’s now moving from customer acquisition mode into building loyalty amongst them. Part of that involves moving customers together into logical groups, such as a family. It makes it difficult for a member of that family or community to churn away as they’d lose the special offers and services that have been built around them. Mobile operators need to get far savvier about consumer marketing, moving away from their usual simplistic approaches when segmenting their customer base - such as pre versus post-paid, or domestic versus enterprise offers. This approach is pretty pathetic compared to the consumer goods and retail sectors – even though this is the commercial space that operators are increasingly occupying.

As more services are heading down the pipe, there’s a danger that consumers are going to just end up getting more and more confused. To be successful is going to require a huge change in the systems involved and the tools required for data mining, customer analytics etc. It’s also essential that service providers have the right internal skills - that involves having people with a consumer retailing background, who understand how to identify and target ever smaller demographic groupings.

Alun - Moderator: Jerome, as the first 3G MVNO in Europe and with a major music and entertainment brand to promote to the youth market, how do you see this evolution of a greater focus on the end customer?

Jerome - NRJ: Having a knowledge and clear understanding of our customers is essential if we’re to put together attractive packages of services. With our offering focused heavily on music, mobile services fit perfectly into the wider portfolio of TV, radio and web-based media. Mobile is a very important channel for music distribution, giving customers the ability to easily download thousands of music tracks when and where they want. We can create original synergies with our playlists and use one part of our distribution ecosystem to feed into another part of the overall business model.

Alun - Moderator: One of the key aspects of the change underway in telecommunications these days is the requirement for ‘real’ real time services, being able to support more complex signalling and more complex customer transactions for an audience with what seems like ever shorter attention spans. How well are we responding to these challenges?

Fergus - Highdeal: Operators are increasingly seeing systems as a source of information that has to be handled and managed in real time. For example, if you can detect that a customer has just sent their hundredth SMS that month, it should be possible for the service provider to realise that and automatically send them an offer for a larger subscription bundle, or an offer for a free trial of MMS services.

Gary - jNetX: Real time abilities are an important part of the IMS hype, the focus of our whole platform lies around helping operators do things in real time when they need to. Real time concepts apply as equally to service creation and delivery as they do to billing and charging and authorisation. With one of the key facets of IMS being the ability to decouple services from the network to enable fast and more open service creation - with third parties becoming involved in the application layer - one emerging question is what exactly these services will be and how they’re to be effectively managed and marketed.

Alun - Moderator: We’re watching the transformation of the industry from a simple village shop selling a few basic commodities, to a department store model where lifestyle, fashion and entertainment goods and services are now being sold. Can we manage this transformation successfully?

Brian - Nokia: One great recent example of this sort of problem and how it confronts operators has been the Crazy Frog ring-tone and screen saver. If you’re offering services that only have a six to eight week lifecycle, by the time you’ve got a dedicated platform into an operator, figured out how to integrate it with your own systems and sorted out the rating, billing and charging mechanisms – and set up the business relationship with the original content or application provider – the rest of the world will have moved on to the next craze.

If I look at IMS and the ways that the various layers of IMS can be connected to the network, then it is becoming easier to integrate new applications and bring them to market far more quickly. If I already have the necessary charging infrastructure in place, and the interactive platforms that can let me change prices in minute, then I can start hitting ‘real time’ targets and bring services to market in only two or three days and not the few months that is often current practice. We are finally starting to get to the kinds of plug and play performance that we’ve come to expect from other areas of our lives – such as domestic appliances!

Alun - Moderator: One aspect of the billing environment that seems to be increasingly pushed these days is its potential role in helping customers manage their own finances, especially in their roles as perhaps heads of families or businesses, as services get more complex and transactions rise in value. What’s the panel’s take on this?

Jerome - NRJ: A lot of this activity is around convergent charging and offering customers flexibility in how they want to pay for things, as well as wider issues of transparency. We have a very demanding audience, mainly in the 12 to 25 year group, and they won’t hesitate in challenging a bill if there’s a problem with a download, and checking if they have been billed correctly. For companies like ours, with a number of different delivery routes for content, we can also protect ourselves against some of the vulnerabilities that might affect other mobile operators who will rely on customers downloading music over theoretically more expensive cellular connections as opposed to DSL. This flexibility is particularly important as young people visit music shops less and less - yet we need to build on and support the legal download model. An evolution is certainly underway in this area, but the integration is not yet complete.

Fergus - Highdeal: There’s a major change underway in both the music and entertainment businesses. In the old days, there were a small number of headlining acts and films that got the main share of the promotional budget and generated the maximum returns. Content owners and producers are now realising that this model is no longer supportable or desirable and ultimately doesn’t make economic sense. For many sorts of offerings, having a web presence that can also be pushed to reach niche markets is a very effective form of marketing that doesn’t involve the usual high budgets. There might still be a ‘corner shop’ of sorts, but it’s your own, highly personalised store that reflects your particular interests and community.

Gary - jNetX: IMS will allow open the market up to niche MVNOs. It’s vital that we don’t forget that it’s also about making relatively simple voice and messaging services more available, affordable and reliable because that’s what pays most of the bills. I’m sure there is money out there for content-related services, but we could be doing a great deal more to drive revenues from core services and cut their operating costs. There are still significant problems with the Quality of Service for even basic voice and messaging and the user experience for many mobile customers is still pretty poor compared with broadband at home. Some operators I know might have invested in a GPRS network but they don’t really know what to do with it-just because you can do something, doesn’t mean that you should rush out and do it.

Alun - Moderator: I remember talking to one Service Quality Management system vendor a couple of years ago who spoke of many mobile service providers as being in a ‘state of denial’ about these problems.

Fergus - Highdeal: There is lot of denial around when it comes to wider issues– such as the recent proposal by some US service providers to charge Google and others for prioritised access to their content or VoIP services. This seems to me like a classic case of the industry potentially shooting itself in the foot through an inability to understand a wider business model. The industry does not have service/software mentality in its genes, as other parts of the convergence sector obviously do, and they also don’t yet have the same speed and agility. Consider the speed of adoption of Google Earth, for example, when compared with the traditional industry approach to location-based services.

Findings from an online survey we conducted identified that individuals in the telco industry have little knowledge of next generation services emerging in the Internet space, the so-called Web 2.0 applications such as Digg, YouTube, Flickr and others catching on like wildfire. They ignore such services at their peril because the pure-play Internet space is driving service innovation with user-generated content and service combination that is so natural for the youth of today-exactly the type of services that would be a good fit for the open IMS and SDP architectures.

Alun - Moderator: What about the possibilities of targeting other communities, such as enterprise customers - or even senior citizens?

Fergus - Highdeal: If service providers can develop necessarily powerful product and service catalogues and marry these with ever finer market segmentations, then we will start to see better targeting. The B2B/SME market has not been particularly well served by our industry and there are already signs that this is now being finally addressed, with some US MVNOs aiming at business users.

Gary - jNetX: I think the jury’s still out on how successful these offerings will be, particularly as people go after ever smaller market niches or the big operators start to consider how their own brands are going to be affected by these developments.

Brian - Nokia: There’s a lot of hype – and the reality reinforces the need to keep focused on ‘bread and butter’ voice and messaging services. I might have taught my mother in the US to use SMS to stay in touch with us while we’re in Europe, but that doesn’t mean she’s going to be surfing the web on her handset. The role of communications within the family is going to important to understand and this is equally true for business managers if they’ve equipped their staff with mobiles. This is where network-originated data can be very useful in terms of better understanding customer behaviours and helping users to manage it for themselves and their community members. Unfortunately, a lot of operators seem to have missed the ball on this.

Alun - Moderator: We often speak in this industry as if there was a bottomless bucket from which we can draw revenues from? Do any of you have a feel about the limits to customer spend?

Jerome - NRJ: Generally speaking, we expect an average user spend of around 20 to 30 Euros a month – and the main point from the parent’s perspective is that they are able to control both the spend of their children as well as the types of service that they can access. In fact the latter aspect is more important in some ways than the actual expenditure. That said, the mobile device is rapidly becoming the mobile wallet for many young people and you can certainly see the attraction of offering an ‘all you can eat’ service of some kind at, say, 100 Euros a month.

Brian - Nokia: There’s a lot of creativity appearing in the payment space such as in developing countries. In return for a cash payment, a street vendor can top up a user’s prepaid mobile account by a tiny amount such as fifty cents. No one’s really happy giving their credit card details to an unknown website, but if they could use their prepaid balance to make purchases – with a telco such as NRJ as trusted intermediary – then everyone can benefit.