Mobile Internet: Horizontal Platforms Needed (Guest Post, Qualcomm)

This guest post by Qualcomm describes what consumers, developers, OEMs, and MNOs want from the evolving 'mobile internet', and key factors for empowering 'users'. It argues that 'horizontal' telco business models are increasingly necessary for telcos to capture value.

The article was written by Colm Healy, VP & GM EMEA Services & Xiam at Qualcomm, who was also a stimulus presenter at the 9th Telco 2.0 Executive Brainstorm.

Introduction

One of the goals of Telco 2.0 is to discuss and formulate ways in which the telcos might address the challenges of a world where voice and SMS are no longer the main revenue streams, and how they might coexist with the increasingly powerful webcos entering the mobile space. One of the practical tenets of Telco 2.0 is that it is not just about creating new revenue opportunities from 'upstream' players, but also about maximising the opportunities that already exists downstream with the billions of customers that operators already serve.

The pace of change in the industry has been fast and mobile internet usage growth curves are steep, as is the proliferation of app stores launches (see below). But there are huge untapped opportunities in the mobile internet. All the indications are that people want the internet on their phones, and all the players want to be involved. In short, where the mobile internet is concerned, everyone wants in - and not just those people who currently own smartphones.

New app store launches; source - Media tracking

Value Creation

What Consumers Want

Consumers are the basis of any future business model, so let's start with them. There is clearly a market need and demand among consumers who are largely ignorant of distinctions between smart and feature phones, whose technical knowledge of devices and OSs is limited to non-existent, and whose elasticity of demand will necessitate a great experience across a wide range of handsets.

They are familiar with the internet and they have heard a lot about apps and app stores They want internet services on mobile. But that experience must absolutely and seamlessly work, add some real value to their lives, and be offered at price points with which they are comfortable.

A few indisputable facts

  • Consumers don't care about definitions of smartphone and feature phones.
  • They increasingly expect advanced featuresets across various device price points.
  • They don't care if applications are native, cloud based or are run by a mouse on a wheel inside their phone.
  • They do want convenience, fairness, transparency and a seamless experience.
  • They are willing to pay for that if it works, and the price is reasonable.
  • They don't care who the vendor is if they know the transaction and channel is secure.

What Developers Want

  • Developers, Content and Service Providers want to distribute their content/services.
  • They want to do that at an economically viable price point.
  • Device and OS fragmentation are unlikely to disappear soon, so developers need to be able to identify where the opportunities are and respond to them quickly (irrespective of OS's, Platforms, D2C, Freemium, Advertising supported etc).

What OEMs Want

  • Device manufacturers want to offer a differentiated device portfolio.
  • They don't want to just end up with a commoditized one-size-fits-all offering.

What MNOs Want

  • MNOs want to monetize their investments in their networks.
  • They need the flexibility to offer services across various platforms.
  • Differentiation will come about for MNOs through providing compelling data experiences to their customers at a range of price points.
  • How successful they are in executing on these approaches will govern their competitive position in the marketplace and their long term value.
  • A key measure will be achieving penetration of services across tiered pricing plans based on different consumer needs, rather than a single all you can eat data tariff.

Value Capture

Business models are developing around mobile services anyway, with or without MNOs making an advanced services platform play. If MNOs do nothing, the likely landscape over a 3 year horizon will look as follows:

  • Limited upside to the MNOs beyond transport, and even that is not certain (competing technologies, net neutrality);
  • Continued migration to OEM/webco delivered services from both existing and new
    customers (this point is important in that in this scenario new customers will have no experience or expectation of getting services from telcos - they will in the true sense be internet natives);
  • Innovation will continue to be driven by handset, software, internet services companies;
  • Many fragmented, confusing offerings will emerge, of variable quality and trustworthiness (taking the fixed internet as a reference point, we have seen various concerns ranging from data privacy to sharp practices such as the so-called scamville frauds);
  • Frustrations around discovery, portability across different channels and devices;
  • A missed chance to give users control of their experience through the unique aspects of mobile - Privacy may not be dead as Mark Zuckerberg claims, but we are increasingly seeing that users are just as concerned about transparency and control of their data, as keeping it private;
  • An opportunity will be lost - Internet on mobile won't deliver on the true potential of the medium and won't be capable of fully delivering on the promise outlined above.

If MNOs do make a play in delivering intelligent services now, the potential upsides are great:

  • They will strategically position themselves as a valued service provider to their subscribers - getting the retail experience right on mobile will be critical to capturing value;
  • They can act as an honest broker - trusted, secure, in their interests to protect and cater to their users' needs;
  • They stand to gain from the uptick in usage as well as providing services using their billing platforms and the knowledge of their subscribers;
  • The potential of data analytics to turn digital footprints into value for consumers, MNOs and other players that have been cited in the two sided business model begins to emerge.

Vertical models may have created the marketplace, but Qualcomm believes a retailing experience that is not tied to any one operating system or technology is necessary for the industry to scale.

Whoever empowers the user the most will win

It's imperative that MNOs now implement intelligent mobile retailing and (micro) transactional platforms necessary to make projects like WAC a reality. Moreover, they will be instrumental in establishing the MNOs competitive advantage. But let's return again to first principles and look at this through the prism of user experience.

Key elements that service providers need to start to put in place to ensure they retain value in the short term:

  • Discovery - interaction through the web on all platforms is moving from search to discovery;
  • Portability - ubiquitous connectivity across devices and places should be enabled;
  • Engagement - with the brands, content, people and places that are important to them.

Discovery

Consumers are already using more mobile content than ever before, however current modes of discovery and usage - such as search and static stores and portals - are limiting the mobile content experience from meeting consumer expectations.

Recent research commissioned by Qualcomm in the UK and US revealed that 80 percent of users noted they had difficulty obtaining content on their mobile handsets, meaning they spent more time searching and less time accessing content. Discovery needs to evolve from search engines to a more dynamic, real-time experience.

8 out of 10 users reports experiencing discovery problems

In the mobile world we need to deal with the case of a user who doesn't know what they are looking for by anticipating requirements and interests. Discovery offers the chance to introduce relevant new experiences, rather than reinforcing existing behaviours. Rather than responding to one specific query at a time, we can blend discovery of multiple services and products. In effect we can move from demand fulfilment to demand creation. Consumers shouldn't struggle to find the one app or piece of content among thousands that they care about. Consumers want limitless choice available to them, but in a way that makes sense.

Clearly, discoverability has also become a major issue for content providers with stores containing literally millions of items. Few developers consistently have truly groundbreaking content or sufficient negotiating power to get featured in a national ad campaign or placement at the top of the store. A strong discovery and personalization layer is a critical element in fostering discoverability to deliver relevant and contextual content and services.

Portability

User expectations for mobile are trending towards more control, more flexibility and greater freedom of access irrespective of channel. It is imperative that MNOs add value by giving consumers control. Control of their content across different locations and networks, and control of their data, which in the current social networking paradigm often is their content. Features that enable cross-device content portability, and statefulness so that I can access and engage the content that I want irrespective of where I am, and what peripheral I'm using.

Engagement

The MNO can play an invaluable role in the fostering of relationships between consumers and the content and brands they care about, across all channels and devices that their customers might use. Over time, MNOs will be able to offer suppliers the tools that allow them to experiment in creating ongoing engagement with their consumers within a retail infrastructure that lets them make informed business choices. They will be able to facilitate an ecosystem of free and ad-supported content and services through integration with ad networks, supporting free premium (freemium) business models through micro-billing, and creating models that enable paid premium markets to flourish. They will support the broadest possible range of business models and allow other entities to optimize their channel and pricing mix for profitability.

There will be no specific business model that will work for all opportunities. The key will be flexibility - for potential partners and consumers. But in the first instance the role and opportunity of the operator is to get the mobile internet experience right for all their customers.

About Qualcomm - a diversified mobile player

Qualcomm has had a long and fruitful history across various areas of the mobile industry since its inception in 1985. We've emerged from being a niche CDMA player to one that focuses on enabling mobility in all forms. In a phrase - any content, any network, any device. So not only do we design and build integrated chipsets and develop IP, we are a services company too. And we're focused on enabling our customers to bring great services to their end users. We've had and continue to have great success with the Brew ecosystem with over $3billion paid to developers to date. That has given us valuable insights into how to go about building mobile content ecosystem that deliver value to all members in the value chain. We have relationships with all the key players in the industry including MNOs, OEMs, Developers, Industry Groups and Government. So we are looking at the issues of the day from multiple view points.

For more information contact Martin Clancy, Qualcomm [mclancy@qualcomm.com].