Agent Network is Key to Peer-to-Peer Mobile Money Services

Managing the agent network is the most critical post-launch success factor for a telco-sponsored mobile money service, analysts at McKinsey and Company say. 


Agents conduct the cash-in and cash-out functions, enabling customers to convert cash into electronic money and back again in convenient locations; in the eyes of the customer, the agent is the face of the company.


Many providers focus on building their agent networks as fast as possible, but that is a mistake,  McKinsey says. Getting the agent network rollout right is one of the most complicated aspects of launching mobile money.


If a provider enlists too few agents, customers perceive the system as difficult to use, or even useless. On the other hand, if there are too many agents, many of them cannot generate enough business to cover the cost of managing liquidity.


As an example, one of the keys to Safaricom’s continued success has been its decision to match network growth to customer-base growth, ensuring a steady 1,000 transactions per agent per month.


The initial network will likely number in the hundreds, not thousands, and it does not have to cover the entire country. Safaricom launched M-Pesa with just 400 agents in a country of almost 37 million people. For larger countries, some experts urge a regional launch, accompanied by later rollouts.

Success Metrics for the Telco Mobile Money Business

Although there are relatively few success stories in mobile money to date, there is an emerging consensus among experts about some of the critical metrics for a successful business model, McKinsey and Company researchers say. 

Four of the key indicators are the percentage of active mobile-money users in the telco’s subscriber base (more relevant for a telco but could be adapted for use by banks in the future), the number of customers each mobile-money agent serves, the average number of transactions each agent conducts each day, and the average number of transactions each customer conducts per month. 

Indicator	Success is
% of active mobile-money users among total telco subscriber base	>10%
Number of customers per agent (across growth trajectory)	400–600
Average number of transactions per agent/day	30–50
Average number of transactions per customer/month	>2.5

Source: McKinsey and company

Facebook is Introducing Subscriptions and Ending "Credits"

Facebook is adding subscription capability for Facebook applications and ending its use of "Facebook Credits," its virtual currency.  Instead, Facebook will switch to payments denominated in local currencies. 


Some might argue the move is designed to make it easier for Facebook applications to integrate with other apps for purposes of shopping and commerce. "Real" currency is the coin of the realm for e-commerce, not virtual currencies, generally speaking. 

RIM Weighs Sale of Hardware Business

BlackBerry maker Research in Motion is considering splitting its business in two, separating its struggling handset manufacturing division from its messaging network, The Sunday Times reports. 


Keep in mind that in its most recent quarterly report, RIM said it earns 68 percent of its revenue from selling hardware. RIM earned about 27 percent of revenue from services. 

RIM could spin off the handset operations as a separate company or sell it, a move that would be inconceivable for a firm such as Apple, for example. The difference is that RIM makes significant revenue providing messaging services.

Who Uses Mobile Over the Top Apps, and Why?

About 11 percent of smar tphone owners use mobile VoIP applications regularly, compared with only 5% of mobile users as a whole, according to Analysys Mason Group. 


About 29 percent of smartphone owners use over the top messaging, compared with 17 percent for all mobile users. So the issue is why there is a difference and what it might mean for service provider efforts to compete with their own OTT apps, or sustain their own bundled offerings. 


The adoption of mobile OTT services may indicate that some users are willing to sacrifice certain features, such as extensive customer care capabilities, in favor of others, such as group chat messaging, Analysys Mason says. 


By focusing on features that are valued by particular users, OTT service providers can apply an alternative business model, often at no additional cost to the user. To compete, service providers must identify market segments and then create services that appeal to those specific segments, Analysys Mason suggests. 

Consumers are Rational about 4G

Adoption of 4G mobile phones has nearly quadrupled since early 2011, going from 1.4 percent in the first quarter of 2011 to 7.6 percent in the first quarter of 2012,  Nielsen Online says.  

Consumers under 34 are most likely to have already adopted 4G and 63 percent of teens are likely to consider switching to 4G within the next year (of course, that will require parental approval, so you might approach that particular finding with circumspection). 

Also, 55 percent of respondents are unable to identify any forms of 4G technology, so it is not as though most people actually understand the value proposition. 

Also, as you would expect, consumers who value "speed" are early adopters. The research also found that 4G capability is considerably more important for those purchasing a data card or mobile hotspot than either a smartphone or tablet. 

That makes sense. Smart phones don't show the obvious benefits of "faster" connections as much as PC or notebook experiences tend to do. 

But there is another interesting finding: current 4G users are five times more likely to consider 4G as a replacement for their home broadband connection, compared to users who have only 3G connections. 

How Much Does Remote Work Suffer From "Lack of Tools?"

According to new data released by harmon.ie, 77 percent of mobile workers finish documents, proposals or presentations while on the road, with more than half literally finalizing materials in the 11th hour.


Some 84 percent of traveling executives and managers report that they cannot work effectively on collaborative projects while on-the-go despite increased enterprise adoption of iPads and smartphones. 


Of course, some might argue, blaming tools is sometimes an excuse. Another study by harmon.ie found that people get distracted while working, losing at least an hour a day of potential work time from various distractions specifically caused by collaboration and social tools intended to increase the value of collaboration. 


The study found that 53% of IT users waste at least one hour a day dealing with all types of distractions. The point is that too much sometimes is made of "lack of tools." The tools themselves cause lost productivity.


Some people just whine. 

Just a Reminder About Where AT&T Makes its Money

Wireless drives fully half of all revenue. More than a quarter comes from data services of various types. Fixed network voice is 19 percent. 

Apple Doesn't Compete With Anybody Else, Really

In some genuine sense, Apple doesn't really compete with other suppliers. It competes against itself. That is one reason Apple, as a matter of business practice, destroys markets for existing products it already successfully sells, with new and "better" products. 


To be sure, "every" company claims to be an innovator. "Every" company claims to have products that are substitutes for Apple products. There is truth to some of those claims. But no firm of Apple's size and influence actually behaves the way it does, even if other firms claim they do the same.


Apple does not build products its surveys, and other market research, indicates people want. I can't think of another large firm that really operates that way, with a possible exception of 3M. Apple dreams up what it thinks people need, and never asks people whether they "need it."


Most other firms identify markets and then create products to serve those markets. Apple creates markets. 


Sure, Apple sells smart phones, tablets and MP3 players. A research firm tracking market share has to include Apple and other competitors in such studies. In that sense, Apple has competitors. 


But Apple really is different. I buy smart phones. I prefer Android, HTC and Samsung. My children buy iPhones, not smart phones. 


But I own three iPods, zero MP3 players. I wouldn't buy any brand other than Apple, if that was the product I was buying. In that sense, Apple is different. 

Gnashing Teeth Numbers

If you run a business, work for a business, or want to work for a business, these are tooth-gnashing numbers. The blue is actual economic growth. The red line is our debt burden. You know what it means. 


Consumption, spending and therefore growth will be choked for decades as debt repayments pinch back spending on every level. To get that red line back to where it needs to be, the blue line will continue to struggle, as we "spend" our money on debt service and principal reduction, instead of "buying stuff" that suppliers can sell. 


Getting the blue line growing faster than the red line is the key to generating enough surplus to pay off the debt. But paying off the debt will slow growth. That isn't to say every type of spending by businesses and consumers "has" to decline equally.


You can make the argument that some segments, such as consumer appliances, could do better than other segments. We do love our gadgets. But even then, there must be trade-offs made elsewhere. 


Gnash, gnash, gnash. 




If you subtract the added debt from GDP, this is what really is happening:

Microsoft Branded Smart Phone on the Way?

Though Microsoft naturally insists the release of its own line of branded tablets does not pose any risk of channel conflict with its traditional partners, that might not be the case. Nomura analyst Rick Sherlund says he has learned that Pegatron is also working on a handset for Microsoft. 


The project isn’t likely to be completed until 2013, but will contradict Microsoft's assertions that it is not competing with its customers. Google has faced the same issue with its ownership of Motorola Mobility.


The Microsoft move would emphasize for all third party device manufacturers that the mobile phone world is changing. Microsoft now will supply operating systems for third parties, but also will compete with its own branded devices, as Microsoft has signaled it will do in tablets.


Given Apple's highly-developed content ecosystem, the Android application community and now Microsoft's own move into tablets and, presumably, smart phones, third party suppliers who do not own their own operating system and content communities will find themselves at a serious disadvantage. 

Tablets Will Drive Personal Hotspot Adoption

Mobile modem sales will see a 16 percent compound annual growth rate to 2017, says Strategy Analytics.


Where 150 million units will be sold globally in 2012, 312 million will be sold in 2017, according to Strategy Analytics. 


By 2017, over 35 percent of stand-alone modems will be mobile hotspot routers, driven by growth in consumer electronics devices such as eBook readers, tablets and ultrabooks. 


In 2012, cellular modem sales will grow fastest in North America, at 69 percent year on year growth, followed by Asia Pacific at 34 percent;


The mobile broadband device installed base of USB modems, PC cards and embedded notebooks and netbooks will grow from 266 million units in 2012 to 688 million by 2017 and LTE will comprise 48 percent of all cellular modem shipments by 2017, Strategy Analytics says. 

Spanish Mobile Churn Hits Record Levels

Spanish mobile phone operators lost a record number of clients in April 2012, with some 70 percent of defections occurring at Telefonica and Vodafone, as they stopped subsiding smartphones for cash-strapped customers, CNBC reports. 


Observers will quickly speculate on why the historically-high rate of churn is happening. Some obvious explanations include the economic crisis, or perhaps the end of device subsidies, which might reduce demand for new phones. 


Around 380,000 customers ditched their mobile phone lines in April, marking the third straight month of decline in the overall customer base in austerity-crippled Spain, where one in four people is unemployed, the Spanish regulatory body says. 


"This crash for mobile phone operators has been especially notable in the prepay sector, which lost 297,984 clients," regulator Comision del Mercado de Telecomunicaciones says. 

Will U.S. Fixed Network Voice Connections Continue to Drop?

The latest report on U.S. fixed network voice connections by the Federal Communications Commission suggests that voice connections declined three percent between June 2010 and June 2011. That raises an obvious question: will number of fixed voice connections continue to drop, without end, to zero?


Some of us would argue that there is some stable number of connections, a non-zero number, that ultimately will be reached. How to encourage people to buy fixed network voice connections is the issue. "Value" is part of the equation. But some of us might argue that retail packaging is more important. 


Verizon Wireless "Share Everything" plans provide a key answer. Voice and text messaging are purchased as a basic part of the access service. No voice, no smart phone service. When you buy an automobile, you don't buy parts, you buy a car. Share Everything is the same sort of idea. 

How Much Better Can Telcos Do in IPTV Business?

For anybody who has followed the U.S. video entertainment market for some decades, that U.S. cable operator video penetration is as low as 44 percent of TV homes is a shocking statistic. There was a time when penetration was as high as 70 to 80 percent of homes in some areas.


Competition from satellite and telco competitors is the reason for the sharp reversal. So the question is how much more upside might exist in the IPTV business for telcos.  It isn't so easy to answer. 


In saturated markets with strong contenders, new accounts mostly come from defecting customers. And strong contenders don't give up customers very easily.