Monday, July 9, 2012

South Korean Telcos Will Charge for Mobile VOIP

In an illustration of the ways regulatory frameworks affect business models, the Korea Communications Commission has decided to allow mobile operators, SK Telecom, KT and LG U to charge users to use mobile VoIP.


That practice, which levies an additional fee to use a lawful application, is prohibited in the United States, not so much by network neutrality rules, but by the Federal Communications Commission's "Internet Freedoms" principles, which stipulate that users have the right to use any lawful applications after having paid for a broadband subscription giving users Internet access.


But different regulations can, and do exist, in other markets. 


The new rules appear a direct response to mobile service provider concern about over the top VoIP provider KakaoTalk, which has 36 million Korean users. There are about 50 million Korean mobile phone users.


Another issue is whether such rules will apply to other services, such as Apple's FaceTime, when those services use mobile broadband bandwidth. 

OTT Video Could Help ISPs

In some ways, growing viewership of online video by the likes of Netflix, YouTube, Hulu, iTunes and other video streaming applications and services represent both a threat and an opportunity for broadband access providers who also sell subscription video services. 


The threat obviously is the danger that consumers might shift viewing from video subscription services to over the top alternatives. Over time, that could mean fewer subscribers, and less revenue for one of the three anchor services for a triple-play services provider.


On the other hand, video represents the application with highest bandwidth requirements, so demand for bigger broadband access buckets should grow over time, and perhaps dramatically- if significant percentages of households shift a large part of their video viewing to online sources.


For pure-play broadband access providers, who do not sell video services, video provides upside, mostly, increasing demand for faster services and more consumption. 

"Project Oscar" U.K. Mobile Wallet, Mobile Payments Effort Could be Approved Soon

Vodafone, Telefonica (O2) and Everything Everywhere (Deutsche Telekom and France Télécom have been waiting for approval from the European Commission to launch a mobile wallet and mobile payments business in the United Kingdom, and approval is expected 2012, but most likely not in time for the London Olympics.


Project Oscar would provide a single platform that could be used by retailers, banks and other financial services groups, allowing mobile devices to store cash in the form of linked accounts to credit and debit card accounts, for example. 


Project Oscar also would support mobile payments using near field communications. The difference between a mobile wallet and mobile payments sometimes is subtle, but generally, a mobile wallet stores credentials, which might include loyalty program details.


A mobile payment service allows those credentials to be used at retail point of sale terminals or for online purchases. Business models also can differ. Some mobile wallet systems intend to make money supporting advertising, promotion or other marketing and loyalty programs, but not actual payment transactions, which will be handled by business partners.


Mobile payment systems generally involve a provider in the actual process of transactions, with the revenue earned from that role as a transaction provider. 


Both Isis and Google Wallet have opted for the mobile wallet approach, neither intending to be a direct payment brand, but only supporting transactions cleared by card issuers. 

Sunday, July 8, 2012

One More Reason Why Phone Calls are Dropping: Companies Discourage Them

Customer service practices and attitudes might be changing in ways that actually encourage some enterprises to discourage customers or users from "calling" those enterprises. 


In fact, some might argue, when customers or users want to communicate with an enterprise, they often are discouraged from "calling," since there now is a preference for text-based messages, use of help sites or other methods that are viewed as more efficient because common questions can be handled in an automated, self service manner.


That might especially be the case for application providers. It isn't so much that phone systems cost money; it is that they are not seen as being as efficient as other forms of providing answers.  


An answer to a truly "frequently asked question" only has to be "answered" once. All subsequent "answers" are simply instances where a user reads or hears the original answer, so there are clear workforce implications. So long as nearly all questions can be answered using some "one to many" mechanism, the need for one-to-one mechanisms is reduced. 


Also, since it is easier to turn a one-to-one session into a one-to-many FAQ, phone communications do not scale, many might argue.


Of course, there are some salient reasons why such attitudes would persist, aside from the age demographics of the firms. Enterprises that try and deflect calls have indirect revenue models. 


There are, in other words, few incentives to deal with "users" who actually are not revenue producers. Advertisers are the revenue producers, and you can be sure those partners do have voice access. 


To the extent that use of indirect revenue models is growing, you can assume that the number of enterprises discouraging voice communications will grow. 

Saturday, July 7, 2012

Net Subscriber Growth Falls 36% at Major U.S. Service Providers in First Quarter 2012

The largest U.S. mobile service providers experienced a 36 percent year-over-year fall-off of wireless net additions, causing a 32 percent decline in revenue-generating unit (RGU) additions during the first quarter of 2012, according to Fitch Ratings.

Some would argue that points to the maturation or saturation of the U.S. mobile market. 


The largest telecommunication service providers added approximately 2.7 million RGUs during
the first quarter of 2012, led by approximately 2.5 million wireless subscriber additions, according to Fitch Ratings.


Fitch estimates the largest wireless service providers activated approximately 6.8 million smart phones during the first quarter of 2012, reflecting a 19 percent decline relative to the smart phone activation activity during the year earlier period.



1Q 12 Subscriber AnalysisContractNo contractWholesale and Connected DevicesTotal
AT&T187,000
-530,000
125,000
-34,000
414,000
-1,207,000
726,000
-1,771,000
Sprint(192,000)
-353,000
489,000
-18,000
785,000
-169,000
1,082,000
T-Mobile(510,000)
+196,000
249,000
+29,000
448,000
+487,000
187,000
+713,000
Verizon Wireless501,000
-706,000
223,000
-29,000
*724,000*
Leap Wireless258,000
+79,000
258,000
+79,000
Metro PCS131,000
-66,000
131,000
-66,000
US Cellular(38,000)
-18,000
4,000
-3,000
(34,000)
-21,000
Clearwire *49,000
+18,000
537,000
-367,000
586,000
-287,000
Tracfone *
(MVNO)
369,000
-124,000
369,000
-124,000
Total(52,000)
-1,711,000
1,897,000
-86,000
1,815,000
-266,000
4,029,000
-1,694,000

source

Apple Hasn't Yet Chosen its Mobile Payments Strategy

[image]Apple hasn't made a move yet, in mobile payments, though its Passbook mobile app does provide the "wallet" or "credentials storing" function of a mobile wallet service. Whether mobile payments will be a feature or the foundation for a new category of devices is a reasonable question. 


Apple historically has done best when it creates a new device category, or at least transforms an existing category. So far, it does not appear Apple is satisfied it can do either of those things in the mobile payments space, yet. But expect Apple to move, sooner or later. 


But only after it has figured out the value proposition, revenue model and business approach.

Friday, July 6, 2012

Prepaid Business is Shifting

According to NPD's Mobile Phone Track, 33 percent of phones bought are for no contract plans. And though much of that demand is driven by cost-conscious consumers, a new segment seems to be growing, namely purchases by consumers who simply do not want service contracts, though they otherwise could afford a post-paid plan. 


You might argue there now is a growing "pay as you go" segment, in addition to the traditional prepaid customers. 


Most larger mobile service providers are not especially fond of prepaid retail plans, for the simple reason that postpaid average revenue per user is higher. On the other hand, many mobile service providers who have targeted cost-conscious customers, and most mobile virtual network operators, tend to rely on prepaid packaging.


The latest wrinkle is a growing willingness on the part of service providers to consider ways of reducing handset subsidies. One way to accomplish that objective is to sell phones at full retail, without contract. 

And if that sounds like the "prepaid" model, it is. In fact, some believe a growing number of consumers are going to opt for "bringing their own phones" and buying service without need of a contract. 

But it is complicated. Carriers might not like paying handset subsidies, but they do like the churn-reducing contracts. Carriers might prefer the higher operating income from lower subsidies, but they also like the greater predictability of contract revenue.

In fact, AT&T Mobility and Consumer Markets President CEO Ralph de la Vega has said the growth opportunity in this country is in postpaid data, not in prepaid voice. AT&T's revenue growth of over $1.2 billion in 2010 for example, was more than twice the revenue growth for the entire U.S. prepaid industry. 

But consumer demand for prepaid continues to grow. In the U.S. wireless market, mobile service providers appear to have lost subscribers from contract-based plans for the first time in the first quarter of 2012.

That doesn't mean demand for mobile service is declining, only that demand is shifting towards prepaid plans.

The seven largest U.S. phone companies, representing more than 95 percent of the market, lost a combined 52,000 subscribers from contract-based plans in the January to March period, according to a tally by the Associated Press.

According to The NPD Group, prepaid now is a major reason even smart phones are gaining traction.



Top U.S. Smartphone ManufacturersQ1'12
Apple29%
Samsung24%
HTC15%
Motorola10%
LG7%
RIM Blackberry5%

The rise of the pre-paid market contributed to Samsung’s growth in the first quarter of 2012. Android devices accounted for 79 percent of the prepaid smartphone market in the first quarter of 2012, for example.



NPD analysts have compared the end user cost of a a Virgin Mobile prepaid account and a similar contract-based offering from parent Sprint. The no contract solution shows a consumer cost saving starting in the 11th month, NPD argues



NPD data also shows a steady growth in prepaid plan purchases, with a drop in indivisual postpaid plans. 




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