Editor’s Note: With 2013 now upon us, RCR Wireless News has gathered predictions from leading industry analysts and executives on what they expect to see in the new year.
Two types of handset-based solutions will emerge to combat mobile network congestion.
Network congestion will continue to be one of carriers’ biggest headaches in 2013. Monthly data usage across all age groups has increased more than 100% year-over-year since 2010. End-users feel the strain, too. Of those who go online via mobile phones, 77% experience slower download speeds than they’d like. Carriers are trying to change customer behavior by moving from unlimited to metered, throttled and shared plans. These kinds of network-based solutions will continue to work, but they aren’t enough.
The real breakthrough this year? Handset-based solutions to mitigate wireless network congestion, in two forms. The first, handset-based policy management, automates intelligent data traffic management. Applications range from the simple, like Wi-Fi offload, to the complex, like instituting measures to combat P2P file sharing, illegal tethering and apps that use network resources inefficiently.
The second handset-based solution is the emerging area of mobile device management. Enterprise has taken advantage of this capability for years, and consumers will start to get in on the game, too. Wireless carriers and consumers will benefit when end-users have more control over what phones can do, when and how often.
For instance, customers with shared data plans will need easy-to-use ways to mitigate overage costs by using Wi-Fi instead of the carrier network. Parents will want to limit the time kids spend streaming videos or music from their phones, when they should be focused on school or homework. Parents’ concerns aren’t unfounded, either. Data use by 13-17-year-old kids increased at twice the rate of adults’ from 2010 to 2011 and will only keep rising.
Carriers will launch the “right” value-added services
In an effort to stay relevant to customers and rise above “dumb pipe” status, carriers in recent years have cast themselves as Hollywood studios. They’ve put tons of effort into selecting and marketing the “next big things” in apps, games and entertainment.
But this hasn’t quite worked out. Because carriers’ toughest competitors are no longer other carriers. They’re Apple, Google and other OTT app companies. Which makes for a fight that’s not fair or smart. Apple and Google control the marketplaces and have the app and customer data, and OTT app developers are numerous and nimble.
Carriers who really “see the light” will realize they can stand out if they focus on core strengths and quit trying to beat the market-makers and the app-makers at their own game. They can do this by delivering the right value-added services that resonate with carrier brand perception and address the most profitable customer segments: families and SMBs.
For years, perception of carriers has been based on their size, stability and security. Think Ma Bell (mammoth!) and the Sprint pin drop. This characterization is core to carriers’ brands, because when people place calls they expect them to go through every time.
Carriers’ edge in the app economy is nothing new. They touch tens of millions of customers daily, via multiple channels. And they have a big influence over what’s pre-loaded on phones. This distribution power is pervasive in virtual and actual channels—web, mobile, retail and phone support.
By using this advantage and focusing on markets that matter most, carriers will create stickier offerings with high attachment rates that are consistent with brand perception. And that Apple, Google and OTT developers can’t easily replicate. Examples include advanced electronic on-board recorder (EOBR) technology for the trucking industry, or bundled family safety services like Sprint Guardian. These both leverage carriers’ unique knowledge of account structure to facilitate provisioning, billing and functionality of these value-added services.
Carriers will pass a greater share of device costs—maybe even all of it—to customers
Everyone knows customer approval of carriers is mediocre, at best. Carriers are working hard to recast themselves as more in tune with users’ needs, but there’s no getting around their sheer size—which can make them seem “too big to care.”
What they can do is deliver what more customers demand today: transparency, more personal control and excellent core service. And the more real choices carriers offer, the more consumer preference data they have access to. T-Mobile has already begun doing this, by cutting device subsidies.
Q4 2012 was hard on carriers’ margins, due mainly to exorbitant subsidies for iPhone 5. T-Mobile’s approach simultaneously addresses this financial problem and the “bad reputation” problem, and other carriers will be watching and following suit.
What would happen if consumers had to pay $649 for the newest iPhone instead of $199? Or $449 for the last generation iPhone instead of nothing? Carriers might just be able to shift some “disapproval” toward OEMs like Apple. And relieve themselves of billions of dollars in device subsidies in the process.
Rather than luring customers with free or reduced-cost devices, then scrambling to recoup costs during a two-year contract, carriers will start to reposition themselves as the best providers of the best network and data services. Period. This will alleviate financial pressure and dispel customers’ perception of being nickel-and-dimed with charges for services they don’t need or want, just to “enjoy” device savings.
This will put more control in customers’ hands, by letting them speak with their wallets. Then carriers will be able to focus on supplying the best possible network. Which, with more resources freed from the device subsidy cycle, they’ll be better equipped to improve and expand.
