The recent mobile price wars have sparked a lively debate both on and offline with people aligning themselves along various schools of thought, trying to dissect the moves by the three underdogs – Zain, Orange and Yu. While most of the discussions are from a consumer perspective, where cheaper may be considered better, we need to look at the ecosystem that has become part of our daily lives more closely to appreciate the factors at play and perhaps project what the space will look like in another five years.
The mobile phone has become more than just a tool for voice and sms communication, which is unfortunately the only front on which the mobile operators are currently waging battle. The biggest transformation for mobile network operators will come when they open up their platforms – think billing, messaging, location and profiling, to allow for others to plug in and add value to their subscriber bases.
The one thing that the mobile operators should realize is that as subscriber with an active mobile phone number is not just their subscriber but the customer for a myriad of other businesses from which they would want to interact on a more personal level. This essentially creates a long tail of needs that the mobile operators could not in their best of times, fully service.
Such opportunities would only be fully realized if and when the operators open up. Not only do the operators need to open up, they must also change their business models around the content that will be generated. Currently the operators take a significant percentage of revenues generated by content providers, resulting in high costs of access and the resultant low uptake of the same services. This situation is disenchanting and has seen content players exit the market or attempt to bypass the operators. The first move can only come from the operator side as they are the current owners of the pipe that delivers the content.
If mobile network operators can look at the average return per user (ARPU) game differently, embrace and support their content partners and open up to alternative thinking, especially around business models, then they can make the shift to value propositions for their subscribers and their bottom-line will take care of itself quite easily without the need for pricing wars on the most basic of network services.
– this article appeared in the Business Daily: August 26 2010