O2 Offers 600 Free Tweets

The UK's second-largest largest mobile phone network, O2, will allow customers to use Twitter for free, up to 600 total messages, starting in August.

The move says something about the cost of sending and receiving text messages in the U.K. market, the new role social networking is playing in driving mobile data usage and suggesting the growth of a new niche within the mobility space.

As Blackberry devices catered to email centric users, and iPhones catered to mobile Web users, we should now see the emergence of service plans, and perhaps devices, optimzied for social networking or texting.

"We believe that mobile will soon become the most popular way of accessing social networking sites, giving real-time access to tweets and status updates wherever you are," says Antony Douglas, the head of content at O2.

O2's move follows Vodafone's earlier move to allow free Twitter status updates, though Vodafone's offer is billed as a "limited time" offer.

The move by O2 is a result of a deal between Twitter and the UK's mobile phone networks struck earlier this year. That deal followed Twitter's decision to stop its text message update service in 2008 as a result of the high cost of sending texts over the UK's networks.

Orange and T-Mobile are expected to produce their own Twitter services soon.

http://www.guardian.co.uk/business/2009/jul/13/o2-free-twitter-service

U.S. Online Advertising Grows One Percent a Year

The Internet’s share of total media ad spending is rising by at least one percentage point every year, partly because marketers are spending more on Internet ads, and less on ads in traditional media.

As often is the case for businesses with a key technology component, productivity improvements are not captured accurately by retail prices or spending.

Online advertising works better than offline media, so campaigns sometimes, perhaps most of the time, can be run for less money than has been the case in the past. As the shift to online media continues, overall advertising spending by brands can decline even as effectiveness increases.

In the United States, eMarketer projects that the online share of ad dollars will grow from nearly 10 percent this year to slightly more than 15 percemt in 2013.

16,000 More Cell Sites Needed for Ubiquitous Mobile Broadband

About 23.2 million U.S. residents live in areas where 3G wireless broadband service has not yet been deployed and that about 43 percent of roads lack such coverage, says CTIA.

It will require an additional investment of about $22 billion to reach those areas with a dual-mode network.

The study says about 16,000 new cell sites, including towers, will need to be constructed and 55,000 existing sites will need to be upgraded to create a ubiquitousnational mobile broadband network.

Mobile Broadband: New Business Models Needed?

The good news is that mobile broadband--using PC dongles or cards or mobile handsets--is growing fast. The bad news is that all that new data traffic is straining mobile networks.

Irish regulator ComReg, for example, notes that there were 1.27 million broadband subscribers at the end of March, up 28 percent from a year earlier and up six percent from the previous quarter.

But this has been driven mainly by mobile broadband subscriptions, which have almost doubled over a year with 90.6 percent growth.

And Ericsson predicts that mobile broadband connections will surpass fixed broadband connections as soon as 2010 (click image for a larger view).

Originally "dimensioned" to cope with small-screen devices used occasionally, 3G networks are having to cope with laptop-sized video downloads, hours-long social networking sessions and rich Web 2.0 sites which download content "in the background".

In some cases, says researchers at Telco 2.0, the revenues from mobile broadband services are not even covering the costs of delivering data to the users.

That suggests mobile operators may have to revisit their pricing and packaging plans.

Today, most mobile broadband subscribers buy traditional monthly contracts, typically over 12 to 24 month periods. The problem is the perceived value versus price, if an increasing number of mobile broadband devices are put into service and most of those devices use little data.

Broadband connectivity costs are evaluated one way when a single connection at home can be shared among many users, and when usage is fairly frequent. Broadband costs will be looked at quite differently when each user must buy multiple connections on a device-by-device basis.

That suggests an eventual need for pricing mechanisms of all sorts, most based on ways to better match usage to cost. Session-based access, similar to the familiar WiFi hotspot model, is one option. Temporary access is yet another possibility.

Bundling of mobile broadband with other services such as fixed broadband or mobile voice services, or creation of broadband family plans, are other options.

Ad-supported access is conceivable, though the model has not worked all that well for communications services, at least so far.

Prepaid and casual use models also likely will be needed. Perhaps most users will be comfortable paying for a home fixed broadband connection and then mobile broadband for their smart phones.

But as game players, music players, cameras or other devices start to benefit from broadband connectivity, episodic use plans at relatively low prices seem inevitable.

Sprint Drops Bombshell

Sprint has decided to outsource all of its network operations to Ericsson as part of a seven-year deal that indicates Sprint no longer considers network operations a core function, or something that allows it to create customer-facing value.

Network operators have been outsourcing some operations and functions for years. But no tier-one carrier has gone this far. Sprint will continue to own its network and make investment and equipment purchase decisions.

Sprint personnel will maintain first-line, customer-facing operations. But Sprint no longer considers the day-to-day management of its network a core source of market differentiation.

The move does not indicate any change in the perceived value of network ownership. But the devaluation of routine network management is shocking for an industry where most employees once worked in network operations.

Apple iPhone Proves Disruptive

Apple and Nokia are on radically different trajectories, at least where it comes to smart phone market share, say analysts at Generator Research. The firm believes Nokia will tumble from about 40 percent share today to just 20 percent in 2013.

Apple's share, meanwhile, should accelerate and hit 33 percent of the market at the same point.

Apple would match Nokia's share sometime in 2011 and ship as many as 77 million phones that year.

Observers rightly point out that the mobile handset is a complicated business with lots of subtle angles. It also appears to be a business where new attackers can dislodge global incumbents.

Will New Unlimited Plans Tap New Market for Bill "Predictability"?

Ready Wireless, a provider of prepaid wireless services. Based in Hiawatha, Iowa, has launched two unlimited usage prepaid plans. The first provides three days of calling and a bundle of text messages for $10. The other plan provides seven days worth of calling for $15.

The plans are aimed at casual users who prefer unlimited calling, but have only sporadic use, or want to manage cash outlays closely. That's one potential new market segment for prepaid or postpaid.

The other market is any consumer that simply wants payment predictability.

Recently there have been new offers launched in the industry by prepaid wireless providers offering monthly plans costing $45 to $50. And amidst a bit of a shift from postpaid to prepaid plans, some speculate that another shift from traditional prepaid products to "unlimited" plans could occur.

John Hodulik, UBS analyst says 12 million of 50 million total U.S. prepaid subscribers are on an unlimited plan. But those numbers could grow very fast if a price war breaks out, and resets pric ing expectations.

Unlimited plans might be creating a new value proposition: "pay to avoid limits and overage charges" that might challenge the "pay only for what you use" value proposition.

In principle, those value propositions should hold either for prepay or postpaid plans.

Most customers still remain in the middle, paying for a bucket of minutes on a "use it or lose it" basis. But there always is an element of bill unpredictability with such plans.

You might think heavy talkers are the prime candidates for an unlimited plan, but I'd be willing to bet that the bigger market, ultimately, will be the typical consumer that simply values predictability.

As the prices of unlimited plans fall, they reach a level that appeals not only to heavy callers, but virtually any consumer that simply wants payment predictability, with no surprises. That's going to be the bigger market.

Shift to Online, Mobile, Social Marketing Will Slam Traditional Media

Forrester Research predicts that interactive marketing in the United States will near $55 billion and represent 21 percent of all marketing spend by 2014 (click on image for larger view).

Search marketing, display advertising, email marketing, social media, and mobile marketing are the categories that will benefit.

More significantly however, overall advertising in traditional media will continue to decline in favor of less expensive, more effective interactive tools and services. With dollars moving out of traditional media toward less expensive and more efficient interactive tools, marketers will actually need less money to accomplish their current advertising goals.

The majority of current online budgets appear to be earmarked for search marketing, even though the search landscape is rapidly evolving to include real-time updates and also social, community and micro networks.

Mobile marketing spending will grow at a 27 percent rate over the next five years, reaching $1,274 million in 2014.

Social media marketing will increase to $3,113 million in 2014 from $716 million in 2009, with a 34 percent growth rate.

Owned social media assets (like internal blogs, community sites) are really the only emerging media getting traction in today's economic climate, Forrester says.

If You Had to Cut a Communications or Entertianment Service, Which Would it Be?

It appears most users would reduce spending elsewhere to hang on to their broadband connection, while most would consider cutting back on a mobile broadband connection, if forced to make a cut in the monthly service budget, a recent survey by Strategy Analytics suggests.

TV service seems the next most resilient service.

Some of us might be surprised that propensity to keep either a fixed or mobile voice service is similar.

71% of Marketing Budgets Have Been Cut

About 71 percent of chief marketing officers say they have seen marketing budgets reduced,

and 51 percent have seen cuts of at least 20 percent, say respondents to a recent Forrester

Research survey.

TV, print, radio and magazine spending has taken the biggest hit, with budget decreases of 67

percent. Branding and advertising budgets have been cut 64 percent, respondents say.

About 52 percent have reduced spending on direct mail. In fact, virtually every category studied by Forrester Research has declined this year.

But a significant percentage of respondents also report they plan to increase nspending in a few

categories. About 47 percent of marketers say they will increase spending on social media,

Web site development, online advertising, and email marketing.

That marketing budgets have been cut should come as no surprise. That happens whenever there is an economic or industry downturn. Nor should the shift of spending towards online, mobile or social media provide much of a surprise. That simply is where users are spending more of their time.

Over the long term, marketing effort always follows audiences.

Sprint Sells 99-Cent Netbook

Sprint is offering new customers Compaq’s 1040DX netbook for 99 cents when bought at Best Buy with a two-year mobile broadband contract costing $60 a month.

The same netbook with service bought from Verizon Wireless or AT&T is $199.99, while a non-contract price is $389.99.

In principle, the tactic is the same used by mobile providers to bundle handsets with service. .

Sprint is fully subsidizing the hardware price in order to gain a two-year service agreement. At $60 a month, the 3G service costs the consumer $1,440, for a gross revenue for Sprint of around $1,050 over two years. So the netbook represents marketing cost.

But some consumer advocates want an end to such bundling practices, arguing that the practice ties customers to a carrier. Up to this point, most consumers might conclude that the significant discounts on handsets are worth the trade off.

In fact, some economists argue that subsidized handsets actually lead to more innovation, as users have incentives to upgrade to new devices frequently. If the general rule is that consumers buy less of products that are more expensive, severing the tie between service and subsidized handsets should reduce the frequency with which most consumers buy new devices.

To the extent that new devices drive new applications, application-based innovation could suffer.

That said, sales of unlocked devices would allow some greater degree of switching behavior. Users of CDMA handsets would have a choice of Verizon and Sprint, while GSM users would have a choice between AT&T and T-Mobile USA.

A new regime of unlocked phones should in principle also spur development of phones operating on both GSM and CDMA, though at the price of higher handset cost. To the extent that rapid mobile handset innovation and adoption lead to higher consumer welfare, regulators might want to weigh the costs and benefits of handset subsidies very carefully.

Children Do Not Like Being on the Same Social Networks as Their Parents

Apparently, children do not especially like belonging to the same social networks as their parents. Or so it would seem, based on 2009 Facebook demographics.

Though Facebook users grew 513 percent in the 55 and older demographic, usage by college and high school age users dropped 20 percent, says iStrategyLabs.

If you have, or have had, teenagers, you are not surprised by this finding.

Click the image for a larger view.

Execs Don't See Network Driving Value

If a recent survey of European telecom ecosystem executives proves accurate, business model changes in the mobile broadband space increasingly will find content providers paying money to access providers for a variety of services, while infrastructure itself becomes a less-crucial driver of network value.

About 81 percent of respondents indicated that traffic shaping and deep packet inspection can help network operators boost their revenues.

Also, some 91 percent said network infrastructure sharing will become the norm as mobile data costs climb.

Both of those findings confirm a belief that at least in the mobile space, revenue and cost sharing mechanisms are likely to change, and relatively soon.

What is a telecom operator’s unique selling point? Overwhelmingly, European telecom executives identified a telco’s service management platform as its core USP with 37 percent of the vote, the Yankee Group says.

Poll respondents also were evenly split on which ecosystem participants would have most profit potential over the next three to five years. Some 32.1 percent thought service providers would, while an identical 32.1 percent thought content owners would have the brightest prospects.

Brand came second with a quarter of the vote. Ownership of network assets—both access and core network—came in lower with 13.2 percent and 11.3 percent of the vote, respectively.

The survey was conducted in April 2009. Some 60 percent of survey respondents work for telecom operators, and the remainder for software and IT services, application providers and media-related firms working with telecom operators.

Prepaid Wireless Site Visits: Who is Up? Who is Down?

If changes in traffic to mobile prepaid sites are a reflection of the amount of consumer interest, MetroPCS, Boost Mobile and Leap Wireless are getting more interest, while Virgin Mobile and Tracfone, historically the leaders, are getting slightly less interest, according to a traffic analysis by Compete.com.

How Much Data Do People Really Use?

At least some people do worry about usage caps, whether for fixed broadband or mobile. Some data from iPass concerning Wi-Fi usage might help shed some light on the matter (click on the image for a bigger view of the chart).

The data show that a typical user consumes less than 211 megabytes a month. Experienced users use less: about 201 Mbytes a month.

Those stats are from the second quarter of 2008, and the iPass data shows moderate per-user growth since early 2007, but nothing exponential.

Mobile broadband as it pertains to smart phones will show a different pattern, in all likelihood. But the point is that the typical user does not consume as much data as one might think.