Web 3.0 Will be Mobile, Commerce Driven

Our ways of describing "eras" of computing, or software, or communications, sometimes are too much affected by hype. But sometimes there is a huge kernel of truth to a taxonomy.

So one might say Web 1.0 was about web connectivity. Web 2.0 might be characterized as  "social," says Jay Jamison, BlueRun Ventures partner. 

Web 3.0 will be "mobile," says Jamison. Aside from the obvious notion of an era characterized by use of smart phones and other "smaller screens," the notion is that apps and services will be real-time, ubiquitous (always connected, always with you), location aware, able to integrate sensors and using high quality cameras and audios. 

For some of us, that means the mobile web will b e highly organized around commerce, including advertising and promotion that drive commerce.

Your current location, weather, traffic, local merchants other friends nearby, how often you’ve been to this specific store or location will enable a new level of commerce opportunities for potential advertisers and merchants. 

That's why some of us think mobile commerce, including mobile payments, mobile wallet, location-based advertising and promotion, will be so important.  

"Mobile Payments" Increasingly is About Other Things

Ever since the mobile payments business began its ascent of the  "hype" meter, there has been volumes of debate about where the value of "mobile payments" actually lies. For many suppliers, the value remains in the transaction fees purchases drive.

For many others, including perhaps most other potential interests in the ecosystem, the value lies elsewhere. Advertising, promotions or loyalty are some of the ways mobile commerce, in a broad sense, can be realized. 

Some would argue the value lies squarely in the ability of mobile commerce tools to allow merchants to find customers, have customers find them engage customers and enhance the shopping experience. 

Merchants care about knowing as much as they can about a customer that has walked through the front door of the shop. Retailers care about allowing customers to find exactly what they want, as fast as possible, perhaps find products they didn't know they needed, then buy quickly and efficiently, without standing in long lines. 

Retailers care about maintaining relationships with those shoppers after they leave the store. 
At the end of the day, most of the potential value of mobile commerce will involve all sorts of things besides the actual way a customer makes a purchase. 

Experience might be the reason Starbucks essentially decided to outsource its payments operations to Square, instead of any other supplier you might name. Apparently, Starbucks thinks Square's interface and app make for the best end user experience, as a "payment app."

What European LTE has Changed

The most significant change in European wireless markets as a result of Long Term Evolution is the  phase out of unlimited data plans, the second most important consequence being a drop in prices. 

More than 90 percent of the LTE operators surveyed in Europe were found to use a speed-based element in their LTE tariffs, even though this type of pricing is rarely seen elsewhere in the world.

Typical advertised maximum speeds are 7.2 Mbps, 14.4 Mbps (HSPA), 42.2 Mbps (HSPA+) and 100 Mbps (LTE).

Tariffs are then priced in line with the advertised speeds. At 7.2 Mbps, a 10 GB monthly allowance costs $23 on average, rising to $44 for an 80 Mbps service (the highest speed at which a 10 GB plan is available). At the other end of the scale, an unlimited plan costs $35 at 7.2 Mb/s rising to $70 at 80 Mbps.

Conversely, at a per GByte level, the average price of data decreases as network speeds increase. The average cost per GByte at 7.2 Mbps in Europe is calculated at $6.20, dropping to around $1.15 per GB at 80 Mbps (LTE).

Wireless Intelligence says 4G LTE data costs $2.50 per GByte on average in Europe, around half the global average of $4.86.

The first commercial cellular LTE networks were switched on in Europe in December 2009 and there are now 38 live operators across 18 European markets, accounting for almost half of the global total. There were 88 live cellular LTE operators worldwide by the end of Q2 2012, according to Wireless Intelligence.

The most competitive LTE market in Europe is Sweden, where all four of the country’s mobile operators have launched the next-generation technology. The Swedish market-leader TeliaSonera had an estimated 170,000 LTE connections in the second quarter of 2012, accounting for almost three percent of its total subscriber base, while rivals 3 Sweden, Telenor and Tele2 have also launched LTE services.

As a result, a Swedish 4G data contract can cost as little as $0.63 per GByte per month (at both Tele2 and 3 Sweden). By comparison, the best value 4G data tariff at the world’s largest LTE operator, US market-leader Verizon Wireless, works out at $7.50 per GByte, Wireless Intelligence says.

Over the Top Voice, Texting now Affecting Revenue for 75% of Mobile Service Providers

Over the top mobile voice and texting apps now affect traffic for almost 75 percent of mobile service providers operating in 68 countries surveyed by mobileSquared as part of a project sponsored by Tyntec.

About 52.1 percent of respondents estimate over the top mobile apps have displaced about one percent to 20 percent of traffic in 2012. That’s a clear issue since traffic lost means lost revenue as well.

Almost 33 percent of respondents expect one percent to 10 percent of their customers will
be using OTT services by the end of 2012, with 57 percent of respondents believe 11 percent to 40 percent of their customers will be using OTT services in 2012.

But 10.5 percent of service providers anticipate more than 40 percent of the user base will be using OTT services by the end of 2012.




In 2016, 100 percent of respondents believe at least 11 percent of their customers will  be using OTT services. In fact, 42 percent of operators believe that over 40 percent of their customer base will be using OTT services in 2016.

The issue is what to do about the threat. In some countries, it might be legal for mobile operators to block use of OTT apps, as some carriers blocked use of VoIP. You can make your own judgment about whether that is a long-term possibility.

There are direct and indirect ways to respond, though. It is at least conceivable that some mobile service providers can legally create separate fees for consumer use of over the top voice and messaging apps. In other cases service providers will have to recapture some of the lost revenue by increasing mobile data charges in some way.

Verizon Wireless protects its voice and texting revenue streams by essentially changing voice and texting services into the equivalent of a connection fee to use the network. Verizon charges a flat monthly fee for unlimited domestic voice and texting.

The harder questions revolve around whether any service provider should create its own OTT voice and messaging apps, even if those apps compete with carrier services. Aside from potentially cannibalizing carrier voice and data services, this approach arguably does take some share from rival OTT providers.

On the other hand, it is a defensive approach that essentially concedes declining revenue, with some amount of ability to capture revenue in the “OTT voice and messaging” space.

Some larger service providers might find they are able to consider a partnering strategy with leading OTT players. To some extent, this also is a defensive move aimed at recouping some lost voice and messaging revenues. In other words, if a customer is determined to switch to OTT voice and data, the revenue from such usage ought to flow to the mobile service provider, if possible.

But there is a notable difference to the branded carrier OTT app approach. In principle, such OTT apps can be a way of extending a brand’s service footprint outside its historic licensed areas, into countries where it is not currently licensed.

Instead of functioning as a defensive tactic that recoups some share of OTT revenue in territory, OTT voice and messaging can be viewed as an offensive way of providing voice and messaging services out of region, says Thorsten Trapp, Tyntec CTO.

Over the longer term, it might also be possible for mobile service providers to replicate the network effect that makes today’s voice and messaging so appealing, namely the ability to contact anybody with a phone, anywhere, without having to worry about whether the contacted party is “on the network” or “in the community” or not.
The RCS-e/Joyn effort is an example of that approach.

Likewise, mobile service providers might be able to create a mediating role that bridges a closed OTT community by enabling third party access to some other third party community using the mobile phone number.

A Different Take on "3 Screens"

A decade ago, the phrase "three screens" normally referred to movie theater screens, TVs and PCs, and was an attempt to capture the importance of the PC as a display device for entertainment video. 

That is not untrue, but these days the notion of three screens has other implications. Looking only at the way people consume Internet news, "three screens" now refers to the process whereby tablets, PCs and smart phones all are widely used access methods. 

Perhaps the biggest behavioral change is the shift to tablet-based consumption, which not tracks phone consumption quite closely. Sample data from the U.K. market for July 2012 suggests that tablets and phones are the most-used devices during "non-working" hours, while PC access is the most used method during workday periods. 

Yahoo CEO Marissa Mayer Wants Focus on "Users"

At some level, you wonder whether it could really be so simple that Yahoo has to focus on its products, and what users want to do with those products, as the way out of the mess Yahoo seems to be in. At another level it seems blindingly obvious 

"I want you thinking about users," Yahoo CEO Marissa Mayer repeatedly has told Yahoo workers. That tells you something about all the other strategies Yahoo has seemed to cycle through in recent years. None, apparently, focused simply on products people want to use. 

Mayer's "near-singular emphasis on products and users" is a departure, many would argue. That's probably as good a critique of the immediate past strategies as anything. Trying to better "monetize" products that don't provide clear value and a compelling reason for using those products is bound to be challenging in the extreme. 

In the end, fixing Yahoo won't be as simple as "focusing on products and users." Revenue models  still will matter. But it is refreshing to hear a simple and fundamental call to focus on user experience first. 

Over the Top Messaging is Becoming a Problem in Western Europe

Text messaging services offered by carriers face growing challenges in Western Europe, with less robust growth even in Eastern and Central European markets that had been growing faster. Virtually all observers might agree that high charges for cross-border messages are the problem that over the top messaging solves for end users.