Rocky Time for Network Operators
Another challenging year in 2006 for Network Operators, according to the latest research from the Strategy Analytics Wireless Network Strategies service. In 2005, subscriber churn (turnover) increased while the average revenue per active subscription decreased.
David Kerr, Vice President, Global Wireless Practice, adds, "If there is a silver lining, it is in the 3G market. W-CDMA subscriber numbers quadrupled in 2005 in Western Europe to reach 25 million and they will more than double in 2006."
Why is this? If 3G is gaining traction, why isn’t it being used to retain customers and maximise the income from such subscribers? Well, I think it’s because network operators "don’t get it". They are experienced and very good at providing network coverage, voice services and corresponding billing. However, when it comes to value added services they have no experience and are out of their depth. Furthermore, they have been greedy and sought to retain as much of 3rd party revenue share as is possible. For example, look at premium SMS for which they typically charge up to 40% of the cost of the SMS. In fact, premium SMS is so good for them, there’s little motivation for them to evolve newer and better payment mechanisms which people obviously want. Meanwhile, 3rd party content and developers find it hard to talk to network operators unless there’s a huge revenue slice available.
So what will happen? Well, the answer may (or may not!) come from the likes of Google and Yahoo. Companies that can "provide stuff for free" and attract a critical mass away from the network operator portals will be well placed to make a difference. If Google, Yahoo or some other company can involve smaller 3rd party developers and content providers in mobile initiatives and provide easy payment mechanisms then they may take over where the network operator has failed.