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More Social Networking Action from Operators

The rush to embrace social networking by mobile operators continues with the news this week in The Times that MySpace is in discussions with the UK’s mobile operators about a tie-up. This is in addition to the expected announcement of a deal between MySpace and Cingular in the US.

2 Strategies - Organic vs Partnering

UK mobile operators appear to be pursuing a dual-strategy:
1. They are developing their own social networking sites, such as 3’s SeeMeTV and Kink Community (which has 50,000 paying subscribers and 350,000 postings a day) and O2’s LookAtMe where users pay 10p to download video clips created by other users.
2. The are exploring deals with established PC-oriented social networking brands such as Bebo, MySpace, YouTube and Second Life.

This approach makes sense. Even if the organic approach never develops, operators will learn valuable lessons about the drivers of value for the social networking phenomenon and, more importantly, pick up critical information about usage and behaviour in the high-value ‘Youth’ segment.

2 Business Models - User Charges vs Ad-Funded

It is interesting to see that in their own communities, operators continue to pursue their tried-and-tested business model of charging users. This approach is likely to severely limit the development of the community. The established brands have, with few exceptions, all gone for a free-usage model and are now seeking to monetise their millions of users via advertising. Brough Turner reveals some astonishing stats on a video download service that moved from paid to free on his Communications blog. Is this approach just a new version of the internet bubble of 2000-2002 where start-ups were valued on ‘eyeballs’ rather than revenue and profit? Although they have been over-hyped, it seems unlikely, given the successes of Google, Yahoo!, MySpace and others in generating advertising revenues, that the social networking business model is founded on sand.

So what should the operators do to make their relationships with these brands successful?

The most important thing is probably to make the interaction of their mobile subscribers with these sites as simple and friendly as possible. When working for Orange, I was always sceptical of the Group Customer Experience Director. I struggled to see what he actually did despite his claims that he “managed the end-to-end customer experience”. The problem he had, as far as I could see, was that there was always someone else in the operating company or in a group function who had responsibility for each section of the customer experience (sales, provisioning, customer service, billing etc), and his attempts to herd these cats were met with derision.

Well now is the time for the Customer Experience guys to earn their keep. Tomi Ahonen has explained in several James Joyce-style posts (and in the closing remarks at the Telco 2.0 October event) about the potential for mobile phones to be creators of user-generated content. If operators want people to use their mobile phones in this way, then the user-experience needs to be vastly improved.

To my mind the 3-click rule needs to apply. If I want to receive email on my phone it’s one click to get to the application and one more to tell my phone to pull mail from the server (no, I won’t pay for push email). For texting: one click to get to the application; one to click on the ‘To’ field; one to get to Contacts and one to select the recipient - this is just about ok.

So, if I want to properly interact with others in a social community using my mobile I need the following kinds of features and functions:
• Click to add a video to [insert name of social networking site]
• Click to send text/IM/email to community member(s)
• Click to vote on content by SMS
• Click to pay for …[avatar, video, music, etc.)
• And even, possibly, click to connect to customer service

Operators need to work hard to get these functions available ubiquitously. This is not practical by negotiating deals with social networking sites on a closed case-by-case basis. Open API’s are the only way that this can be developed widely. As we and James Enck have blogged several times, the open-API model is the best way of yielding real scale.

James uses Amazon as an example. On a personal level, a mate of mine set up Betfair a few years ago - a betting exchange based on the stock exchange where buyers and sellers agree the odds for bets. I asked him what enabled him to develop such scale so quickly and he told me that APIs were critical in enabling smaller bookies to upload their odds directly into the site. They provided the volume of cheap ‘lay’ bets which allowed Joe Public to back the outcome they wanted.

Clearly, operators can add (and extract) more value if the ‘open up’ more of their assets. Network APIs are the obvious starting point for voice and messaging. But equally important are APIs to interface with billing and payment mechanisms and customer service. Operators need to think long and hard about where and how they can add value and then develop a standard, open platform for the established social networking sites and apps developers to interface with.

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The winning strategy will be that mobile operator that completely opens up their GPRS/Internet service to consumers, allowing them to freely choose the services, and application that best suit their (the consumer's) needs. Doing otherwise follows the failed model pursued by Time Warner/AOL who tried to dictate content to internet users.

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