Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
Keep an eye on your bid on eBay (EBAY), hold a table at the hot new restaurant in your neighborhood, pay for car parking via SMS, figure out where you parked your car, tune your guitar – all things you can do via smart-phone applications. Heck, if the lights go out while you’re working on these things, there’s even an app to turn your phone into a flashlight.
As Apple Inc. (AAPL), Google Inc.(GOOG), and Research In Motion Ltd. (RIMM) continue to battle it out for market share, applications are a key selling point for mobile consumers – particularly among younger generations. An Oracle study (set to be released this October) that surveyed more than 3,000 mobile phone consumers worldwide finds that 50% of Generation Text consumers use their mobile phone as an entertainment device and 36% use it as a “mini-computer.” Voice is almost an afterthought, and the apps we see today are only the tip of the iceberg of what will emerge in the next five to 10 years. When asked about other features they would like to control from their phone, 87% of Oracle’s (ORCL) survey respondents mentioned turning lights and appliances on and off in their homes; 73% would like to start their car remotely with their phone; and 59% would like to scan barcodes to access relevant product information online.
With the global proliferation of mobile devices combined with relatively easy and affordable access to broadband Internet and next-generation wireless, wireless network operators face a business climate where voice revenues continue to decline while converged data/Web/media/entertainment revenues are skyrocketing. And the stakes are increasing as newer, more nimble, non-traditional telecom service providers enter the game and are in it to win it.
Wireless network operators must introduce innovative applications and content in order to maintain a competitive edge and generate revenue in the current mobile industry. In order to thrive in the app war with device app stores and Internet service providers like Google and Facebook, network operators must monetize their networks to foster innovation from third-party application developers.
A complicated Web: Barriers to effective network monetization
When it comes to developing apps, wireless network operators have inherent advantages over online service providers and handset manufacturers. First, network operators are endowed with detailed subscriber data including customer service preferences. This data is extremely valuable to Web developers as they can use the information to engage directly with end users, test out and eventually adopt new services, and ultimately maximize revenue on the applications they develop. Second, network operators can incorporate their existing telecommunications features – such as short message service (SMS), location, or charging, or presence capabilities – into applications, maximizing their functionality and pushing further innovation.
But, wireless network operators can’t go it alone. They must work with third-party developers to keep the innovation churning – and their customers engaged and wanting more. That’s where it gets tricky. Traditionally, implementing an effective and profitable network monetization strategy through services exposure has been rife with numerous business and technical challenges. The legacy standard delivery platforms (SDP) many network operators currently use hinder their ability to quickly introduce new apps. It can often take four to 12 weeks to on-board a third party’s applications into the network. And that’s just for one partner. Wireless network operators often work with hundreds of third parties – and each one may require the development of numerous custom interfaces to the operator’s SDP and BSS/OSS systems for successful integration into the network. In addition, as partners add their applications to an operator’s legacy SDP using these custom interfaces, the operator faces an increased risk of service outages, which decrease reliability and harm customer relationships. The need for manual management – to on-board, administer, and enforce complex service level agreements (SLA) for each partner – is staggering, resulting in the operator becoming slow, unattractive to third parties, risky and unreliable, and unprofitable to scale.
Art of possible with the science of delivery: Open, unified services exposure
It’s not a pretty picture, but these challenges are surmountable. And wireless network operators must address them to stay in the apps game. The best approach is for operators to implement an open, unified services exposure platform based on both IT and telecommunications industry standards to replace customized, proprietary service exposure implementations. By “opening up,” operators can entice and retain developer partners that are generating innovative new content and applications.
A single, centralized service exposure platform provides operators with the following attributes:
Speed: Out of the box programming interfaces help minimize customizations and greatly accelerate the on-boarding process for new partners
Attractiveness: Providing choice between different application interfaces – like native telecommunications interfaces or Web services-based interfaces – caters to developers that are comfortable with different kinds of development tools
Control: Centralized control of network access and usage minimizes service outages, ensures service quality, and automatically enforces SLAs and policies in real time
Profitable Scalability: Integration with partner management portals enables the automation of administration for a large number of third parties, and out of the box communication services can be reused across many different types of partners and applications – enabling operators to easily and quickly add new partners without having to reinvent the wheel each time
For example, Wind Mobile, a subsidiary of Globallive that provides voice, text and data services to Canadians on a next-generation wireless network, recently opened up its network, giving developers the opportunity to develop applications without expertise in specific network protocols. This provided Wind Mobile with the scalability to offer hundreds, if not thousands, of applications in a cost-effective manner. Further, Wind Mobile can better protect its SDP by controlling which third-party developers use its network, helping manage capacity, handle volume spikes, and reduce outages, therefore ensuring they can provide reliable service.
Open the door to new revenue opportunities
Far more than just communications tools, today’s mobile phones play a significant role in how we manage our careers and homes, maintain personal relationships, and find entertainment. In short, they infiltrate every area of day-to-day life and our culture. Demand for mobile content is increasing at an alarming rate and network operators must ensure they have the infrastructure in place to deliver innovative apps and content in a fast, scalable, and cost-efficient manner. With app revenues expected to exceed $30 billion by 2015 according to Juniper research, significant revenue opportunities exist for operators who have the capability to securely and easily open up their networks to third party developers. The rest will be left behind.
Ty Wang is senior director of product marketing at Oracle Communications.
