A week has passed without massive carrier consolidation, mergers and world war. Where’s the big news this week? There was a fascinating story on the music on George W. Bush’s iPod. (OK, not really so fascinating. He doesn’t even choose his own songs. An adviser does.)
It’s just the calm before the storm. The paper is peppered with announcements of carriers trying new angles for ringtones, a few contracts in Asia, a new MVNO, some more entrants into the mobile-gaming space, etc., etc. It feels very nice and manageable. But underneath those seemingly calm waters, several storms are brewing.
- Virtual network operators are just beginning to get their feet wet. Verizon announced its second MVNO contract in less than a month. Indeed, this week’s announcement seems tame enough. CloseCall America is targeting teens, pre-teens and the credit-challenged with a prepaid service billed as offering “no surprises” on customers’ bills. Verizon also inked a deal with Amp’d in March. CloseCall America will be at least the fourth virtual operator trying to attack the youth market. Who are these kids, and will they be an even bigger force in the industry? Will a larger market of MVNOs affect family plans from large carriers or second-tier players like Cricket? Do carrier network operators earn more money if that teen is on its network via an MVNO or by being the fourth line on the carrier’s family plan?
- Digital rights management. As with most looming issues in industry, the technical solution probably is not as complicated as the business solution, i.e., who is going to pay for what and how much. DRM has the potential to stall data uptake so it’s in the interest of each part of the value chain to fix the problem. This week one group lowered its proposed royalty rate to 65 cents per handset, which still seems high to me.
- An even bigger problem for carriers: How smart should the handsets be? Rumors abound that Motorola Inc. has not launched its iTunes phone because carriers don’t want it on the market. Whether that is true or not, it makes sense that carriers would rather sell devices that will give them incremental revenue rather than devices that don’t. I can’t download a ringtone to my handset from my carrier’s site. But I can download a few hundred ringtones for $10 from an Internet site. While the ringtone market may not be the best example because its business model is crumbling, the same could be true for all types of data, whether it’s a game or TV show.
Enjoy the calm; the storm is brewing.
