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Getting their (Unfair) Share

Category: Andy Marken's blog Published on Tuesday, 22 February 2011

“If I had the ability to foretell the future, perhaps I would have bet on a painted horse.”Sheik Riyadh, Hidalgo, Cornerstone Pictures (2004)

Sharing the Cost of Mobile Speed, Content

It’s hard to believe it, but we amazed our son the other day with our smartphone doing something he’d only heard about … we made a phone call.

Of course:
-          He has a non-phone smartphone – iPhone
-          He and his peers think data, video are more important, more valuable than calls
-          He has 60 apps on his device (has downloaded, played with once, discarded more than 300), can locate them, knows how to use them

He/his friends aren’t jumping ship just because Verizon is going to have the iPhone.

They figure with all the Kool-Aid drinkers moving over, they’ll be able to stream more data on AT&T and maybe – just maybe – make phone calls!

Is AT&T really that bad?

Oh sure, Consumer Reports doesn’t like them; but they’re not hot for the iPhone either.

It sure hasn’t soured the love affair.

Hate is So Ugly
ComScore asked folks to rate their mobile carrier satisfaction:
-          In the U.S., on a scale of 1-10 (10 being super) 11 percent rated five or below
-          In the EU, 16 percent rated them five or lower

-          Don’t have the two-year contract to live with. In fact, they have no contract
-          Pay full boat for their devices
-          Don’t have flat service plans

As Frank Hopkins said, “I'd take a warm gin over ice any day, General.”

Of course, 4G isn’t techie performance, it’s a great marketing tool that everyone say’s they’ve “got!”

Mobile Customer’s Knowledge

Real Understanding – The way the providers and device manufacturers throw around technology terms and phrases, you’d think everyone understands what they’re talking about.  Most people have only a vague idea of the service they receive, the service they’re paying for.  One thing everyone understands though are dropped calls, slow downloads.
Source - Nielsen

No one really knows what 10GB downstream means … and don’t care!

What you care about is how your data service delivers to you.
-          What’s the average time it takes to load Facebook ,upload photos
-          How long does a YouTube video take to load, stream
-          How fast can you send your email or video
-          How fast does it take to load websites on the go
-          How frustrating is it for you to do your “fave” things on the device
With the Apple app store having served up over 10 billion apps -- a lot more profitable than a McDonald’s franchise, it’s no wonder iPhone people didn’t worry about making phone calls.

The little Apple app store has more than 400,000 apps to choose from; more than one thousand are developed and offered up to Apple every month.

Android apps aren’t far behind.  

Not surprisingly, almost every smartphone user has “the basics.”

Facebook, weather, Google maps, music service such as Pandora, Flickr are the first download choices of nearly every new smartphone user.

But the challenge for iPhone and Android users is to find the right or best app for their needs.

Help Me
According to Nielsen, 40 percent of those surveyed used programs that were pre-installed (computer users call this bloatware).  Thirty-six percent found new apps with the assistance of friends, family.

Applications Used
All Those Apps – Mention smartphone apps to a developer or venture capitalist and visions of overstuffed bank accounts appear before their eyes.  Techies paint beautiful images of people working all the time with their smartphone, doing really important stuff.   Most of the apps people download are the free things and they use them once or twice and discard them.  Source - Nielsen

So much valuable information/assistance is now stored on/available with the smartphone that people simply don’t leave home without it.

It’s the device of choice to:
-          Play a quick game while sitting in or between classes/meetings
-          Check the weather
-          Pinpoint where they want to go, following GPS directions
-          Check/update social media sites
-          Download/enjoy music, shows, videos

The mobile community is showing a dramatic increase in global mobile subscribers:
-          Estimated 3 billion last year
-          Projected 5 billion by 2013

We are rapidly approaching 50 billion connections – personal, mobile, interoperable, subscriber devices and cost/bit optimization.

The challenge for carriers is to not only optimize existing bandwidth but develop maximum revenues for data being transmitted.

That isn’t easy.

Mobile traffic is projected to grow from about .25 million Terabytes/month last year to an estimated 2.25 million Terabytes/month by 2013.  Texting requires very little bandwidth while voice is a modest and relatively flat service consumer.

The Pipe Pressure – Voice services place very little pressure on today’s wireless networks around the globe.  Even texting added very little to the load; but when we started adding email, photo and video content that was being shared by nearly everyone service, demands increased dramatically.  Newer high-speed networks can take up the load but at an added cost.  Source - IDC

By 2015, industry analysts expect the wireless infrastructure will be carrying 40x more data than voice.

By 2020, data will outpace voice by 1,000x.

Folks like the idea of mobile TV, video downloads and entertainment on-the-go.

Cisco projects that by 2015, 90 percent of the bandwidth usage will be video!

Sucking Noise
The problem is, it is a huge drain on bandwidth.

Bandwidth someone has to pay for!
With this volume facing them, carriers are struggling with how to expand capacity/speed, more reliable service and do it profitably.
Flat-rate service charges are a losing proposition.
Verizon backed off that just before delivering the iPhone!
Every carrier has floated trial balloons on tiered and volume-based billing.
An executive at Ericsson (infrastructure provider) pointed out that people already pay electric bills based on KW/hr.  Why the heck not pay based on GB/month mobile usage?
When Frank Hopkins heard the idea, he turned to the guy next to him and said, “You can tell him pound sand for all I care.”
Consumers and even governmental regulatory agencies agree, it’s a bum idea:
-          Who knows how many KW their home uses (do you really know you’re paying for what you’re getting?)
-           Even a storage engineer has no idea how many GB stream across a wire (or through the air) in an hour

To meet everyone’s goals – consumers, regulators, carriers, stockholders – everyone is looking for answers.

Why not monetize it with ads, coupons, billboards, shelf hangers, voice/video spots?

With the acceptance of mobile outreach, coupons and opt-in activates over the holidays, Informa Telecoms & Media says mobile advertising will have reached $3.5 billion last year.

Personal Ads
By 2015, they estimate that mobile advertising will be worth $24.1 billion and most of the growth will occur in developing countries, including China and India.

They attribute this growth largely to the willingness of mobile device users to welcome on-unit ads to offset their service charges.

The key is, the ads have to be:
-          Informative
-          Entertaining
-          Useful
-          Tailored to their specific wants, needs, areas of interest

Traditional mass marketing techniques won’t hack it!  So they’ve been busy figuring out how to engage you with mobile ads.

The Sheik heard the statement of success and commented, “Boldly spoken... for a man with no wives.”

The new wave of specialized mobile ad firms means that Google and Apple won’t have a lock on the emerging market.

Agencies, consumer product firms and carriers have “most” of the program worked out:
-          Mobile ads have to be eye-catching, targeting the ideal or opt-in consumer, including a time-sensitive call-to-action.
-          Near Field Communications you already use variations for electronic toll/bridge payments.  All of the credit/debit card firms are working with the device manufactures to design-in NFC chips and applications you’ll use as a part of the electronic wallet solution.
-          Mobile integrated into marketing campaigns such as using your mobile to vote for favorites in Dancing with the Stars, American Idol.  Companies incorporate codes in print/TV ads for mobile responses, print, online barcodes you can take a picture of with your smartphone and use them to redeem discounts at retail.
-          Mobile coupons, loyalty programs – a number of manufacturers, retailers used mobile coupons and friends offers over the holidays with excellent results.  Groupon has shown excellent results for firms when digital coupons were found, saved, used at retail.  Marketers are also tying in loyalty messages to consumers.
-          Time-sensitive call-to-action has proven to be very successful.   Executives at digital signage leader BrightSign report consumer manufacturers/retailers have been running limited time specials/offers tied to in-store signage promotion.  The tests/trials are fast, easy to develop/initiate, immediately deliver results in the form of direct store traffic/sales.

Selling Machine – This past year, agencies and marketers have found new opportunities to reach customers and prospects in a very targeted manner.  The new services can provide welcome financial relief for service providers and possibly give smartphone users relief from high monthly service bills.  Source – Gerry Purdy

While a few service providers will attempt to nurse their existing infrastructure along as long as possible, major carriers will upgrade to the global mobile broadband standard, LTE.

By 2014, infrastructure investments will reach $100B and LTE will be capable of delivering overall capacity of the 3GPP system to handle all of the increased data traffic volume (including your TV shows) for the next 10 years.

As Annie Oakley explained, “We're betting on the last American cowboy!”

Global LTE Service Revenues

High-Speed Build-Out – Service providers, their suppliers and governmental agencies in nearly every country are focusing on having 4G LTE broadband service in place to handle the rapidly growing service requirements.  To meet the demand without forests of cellular towers, Alcatel has developed a family of very compact cellular units that should meet the performance demands and minimize visual impact.  Source - Informa

Three regions – North America, Western Europe, and Far East/China – will account for 90 percent of the LTE market.  

All of that sounds super doesn’t it?

No Free Ride
It is, but we don’t want you to be surprised:
-          Flat rate rates will disappear  (not specifically because of LTE but you won’t see it in the 4G world
-          Smartphone wireless traffic will increase 700 percent in the next five years
-          By 2015, 4G subscriptions will hit 300M WW
-          By 2015, 3G WCDMA (Wideband Code Division Multiple Access) population will be 4.6 B also interested in data services

With everyone wanting speed for the long haul, upgraded infrastructure, operating efficiencies, advertising revenues will help each stay in the race.

To keep the services price competitive, eye-popping immersive ads will add to the carriers’ bottomline.

As long as they are tailored to the specific user (trust us, they will know how to manage who gets what ad), most consumers will welcome the support of their thirst for content, speed.

Staying Ahead – Service providers are riding hard to stay ahead of consumer demand as well as their competitors.  The combination of extensive infrastructure build-out and creative marketing makes it an exciting race.  Source – Cornerstone Pictures

Through it all, Hopkins will remind you, “But you won a friend.”

Hits: 2017

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