Orange Partners With Total for Africa Mobile Money Retail Distribution Network

It is some measure of the new services revenue challenge now facing communications service providers in the developed regions that mobile payment and mobile banking are serious initiatives.

By way of comparison, machine to machine services--using the mobile network as the communications link for sensors--is a no-brainer. Selling access and capacity to firms that need to monitor processes is quite closely related to selling access and capacity to humans who want to talk, text or surf the Internet.

But mobile services providers are pursuing a number of initiatives simultaneously, looking for the home runs among a variety of proposed new ventures. Mobile payments and mobile banking and mobile financial services are among those key efforts.

A new partnership between Orange and Total will provide “Orange Money” services to the operator’s customers at all Total service stations in all African and Middle-Eastern countries where the two groups are present and Orange Money is available.

That includes Botswana, Cameroon, Côte d'Ivoire, Guinea, Jordan, Kenya, Madagascar, Mali, Mauritius, Morocco, Niger, Senegal and Uganda.

Orange Money is Orange’s payment and money transfer service for Africa and the Middle-East. It enables Orange customers to transfer money from mobile to mobile, to pay bills and withdraw and deposit money through a network of certified distributors.

The deal illustrates the key role played by retail infrastructure in supporting mobile banking operations. As consumers need a place to recharge their usage balances, they also need a place to convert cash to mobile payment credit, or redeem such credit for actual cash.

And that’s where the network of Total gas stations plays a key role. Total  service stations are open for extended hours seven days a week and become, in effect, branch bank sites, where people can open an Orange Money account and perform withdrawals and deposits.

This first stage of the partnership is already operational in Senegal and Cameroon, and will go live in over 1300 service stations in the 11 other countries where both groups are present in the second half of 2013.

A second stage will follow, which should enable Orange Money customers to pay for purchases made in TOTAL service stations using their mobile account.

Mobile service providers already have discovered the strategic value of retail distribution for success of any mobile money initiative in Africa.

75% Mobile Voice Adoption in 5 Years, Where Just 13% Have Electricity?

Telenor Mobile Communications of Norway and Ooredoo of Qatar, the two new mobile service providers in Myanmar, face the challenge of getting 75 percent adoption of mobile voice in five years, in a country where just 13 percent of homes have electricity. 

The challenges of getting to a high level of mobile use therefore will require more than the  building of the mobile networks. An infrastructure of retail sales and support has to be created as well.

That will include places people conveniently can recharge their devices and pay for additional usage, assuming a prepaid model is common.

Less than 10 percent of the country currently buy voice services using a mobile or fixed network.

2 New LTE Licenses Awarded in Peru

Telefonica Moviles and Americatel Peru have won their bids for 4G spectrum licenses  in Peru, in auctions that raised US$257 million.

Peru’s Ministry of Transport and Communication (MTC) sold two 20-year, 40 MHz (2×20MHz) spectrum licences in the 1700MHz and 2100MHz paired bands (Advanced Wireless Services spectrum) for 4G services.

Movistar was awarded the ‘A’ block of 1700MHz/2100MHz frequencies.

Americatel Peru, the Peruvian arm of Chile’s Entel, won the ‘B’ block of AWS spectrum.

The two operators have been given six years to build out their networks across 234 districts in the country, with three years to provide coverage in Peru’s major cities.

Another smaller provider, VelaTel Global Communications, on the other hand, decided it could not obtain 4G assets in Lima, its core market, and earlier in 2013 made preparations to sell its assets.

VelaTel Peru historically offered fixed telephony services including interconnections, national and international long distance, and voice over internet protocol (VoIP) solutions. VelaTel Peru also was awarded radio frequency licenses to use 2.5 GHz spectrum to offer wireless broadband access services in eight of Peru’s largest cities (excluding the capital city of Lima and its suburbs). In 2010, VelaTel launched a network in the Peru market under the brand name GO MOVIL.

The Chinese company that owns VetaTel also has other communications assets in China, Europe and other parts of Asia.

Few Say They are Happy with Mobile Service, But Few Leave

If consumer dissatisfaction with mobile services is as significant as some studies suggest, T-Mobile US and Sprint have reason to believe they can disrupt the U.S. mobile market. 

On the other hand, both T-Mobile US and Sprint confront relative stability of consumer behavior, which works against the odds of major change.

Unhappy customers should suggest there is room for an attack. 

But there is lots of evidence that even unhappy customers do not abandon those products. That, for example, was true for decades in the U.S. cable TV business, where almost every survey found significant levels of dissatisfaction, and yet rather low churn rates. 

Even unhappy customers do not change service providers all that often, one might conclude from low churn rates that now seem to characterize the U.S. mobile market.

Of the roughly 326 million U.S. mobile accounts, about one percent a month of AT&T or Verizon Wireless seem to choose another service provider. 

About two percent of T-Mobile US or Sprint customers choose another service provider in a given month. 

That's low for a consumer service. In past decades, it would not have been unusual for more than three percent of a cable company's customers to stop buying service in any given month. 

Even churn among small business customers of most competitive local exchange carriers has run in the three percent a month range. 

To make matters harder for T-Mobile US and Sprint, churn performance has gotten better, for all four service providers. 

It might seem that unhappy customers do not leave, or that happy customers will desert a service provider, but both types of behavior seem rather common.

You might agree that even satisfied or very satisfied customers will leave their current supplier for a better alternative, even if they were happy with their original supplier. "Same features, lower price" typically is a reason for doing so. 

Perhaps the harder behavior to explain is an unhappy customer that does not leave. There could be a number of quite rational explanations for such behavior, though.

Experienced consumers might already have tried the other mobile service providers, and discovered that virtually every network, and every service,  has some strong points and weak points. 

Consumers might perceive one service to be superior, but also resist the higher price such a service carries. 

In other words, some experienced consumers might simply have learned from experience that no service provider does a consistently better job, provides the lowest price and best features. 

Think about the experience most people have with traveling by airline. In most cases, no matter the supplier, most travelers might rate the experience as troublesome on some dimensions. 

On the other hand, travelers might also say they prefer lower prices, and troublesome experiences therefore are caused by the very fact of the ability to obtain lower prices. 

One suspects something of that process is at work for mobile services. One way of putting matters: nobody is happy, but nobody expects any of the other alternatives to be consistently better. 

That is the challenge Sprint and T-Mobile US will face in attempting to disrupt the U.S. mobile market. Something rather more profound than what T-Mobile US, Sprint, AT&T and Verizon have been doing so far will likely be required to make a significant breakthrough. 

Price Anchoring and Gigabit Internet Access

You can assume many Internet service provider executives would argue that Google Fiber is priced too low. That would be a logical response by an incumbent to a disruptive price and value attack by a new competitor.

Google wanted to make a point by offering symmetrical gigabit Internet access for just $70 a month. In part, it wanted to prove that a brand new fiber to home network could be built to provide such connections, at unheard of prices, and still be a profitable venture, partly as a way of creating incentives for other ISPs to do so as well.

But some pricing specialists might argue Google Fiber's pricing was too low, and that other ISPs wishing to offer much faster Internet access should create their own much-faster services, but price a gigabit connection at higher levels, as much as $300, as many other ISPs have done.

The reason is price anchoring, the tendency buyers have to evaluate offers based in part on other information they have. For example, if a potential buyer learns that a “suggested” or “standard” price is $1,000, that buyer might be quite happy if the same product can be bought “on sale” for $500.

In similar fashion, buyers might conclude that a better immediate value proposition is a 300 Mbps access service, costing $150 a month, than a gigabit connection costing $300 a month.

Others might likewise conclude that a 150-Mbps service costing $75 also is something worth buying, especially if what they currently buy is a  20 Mbps connection for $50.

Whether it is too late for most ISPs to adjust is a reasonable question. Any ISP competing against Google Fiber is stuck: the market rate for symmetrical gigabit connections is $70 a month.

But in most markets, Google Fiber is not yet a product that can be purchased. So it might be possible, for some time, to offer a gigabit connection at prices high enough that most consumers wouldn’t buy them. But the anchoring effect will happen.

All of a sudden, a 500-Mbps service, at half the price of the gigabit connection, will seem more reasonable. Likewise, a 250-Mbps connection at a quarter of the price of the gigabit connection, will seem even more reasonable.

If the objective is to get customers to upgrade to 100 Mbps to 250 Mbps, setting a high price for a gigabit connection, and then essentially establishing a new mental image of what the value and price relationship is for services an order of magnitude faster than what most people buy, is possible.

That isn’t to argue for higher prices or lower prices, as a matter of course, but simply to point out that high posted prices sometimes can lead to higher perceived value, and higher purchasing, of other products whose value is anchored by the high value, high price of an anchor product.

Network Interconnection Explained

Jon Brokkin does a nice job of explaining peering and interconnection agreements between Internet service providers can interfere with user experience. 

There are business issues of several types, some related to revenue models, others related to the more-prosaic details of how carriers historically have compensated each other for exchanging traffic.

Disputes between ISPs over settlement-free interconnection sometimes directly resemble the disputes between cable companies and programming networks over new contract terms, and generally for the same reason: money earned by one of the parties, and money paid by one of the parties. 



Read it here. Often, one of the parties to such a dispute tries to position a dispute as an attack on network neutrality. It isn't. The disputes are about interconnection of networks. But that does not mean there are no business issues. Those issues can be genuine. 

Do Smart Phone Users Want Bigger Screens?

Do users want bigger smart phone screens? It looks like Android users do. 

Look at trends in the phablet category. It appears to be the same preference emerging.