It’s no secret that wireless carriers are looking at data to help boost their revenues
as voice becomes more of a commodity service. How is the industry doing?
Clearly, data revenues continue to rise for the largest nationwide carriers. SMS may be the big cash cow, but other services are starting to gain fans.
The shift to phone-as-more-than-a-voice device was evident in a recent survey commissioned by Deloitte & Touche showing 36% of respondents view their cell phones as an entertainment device, an increase from 24% a year ago. Text messaging, cameras and games ranked highest in terms of the applications that consumers most often use. In a Forrester Research survey last year, 46% of early adopters were sending or receiving text messages, 27% were picture messaging, 23% were downloading ringtones and 19% were doing e-mail.
Verizon’s Top Web Destinations
|Verizon Wireless’ most popular Mobile Web activities among Mobile Web users included checking e-mail and staying up-to-date on their favorite sports teams. Top Mobile Web destinations for 2007 are as follows:|
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Still, with an estimated 10% to 15% of revenues coming from data, there’s a lot of room for growth. Analysts say data pricing, applications that target demographics other than youth and the presentation and positioning of data to consumers all are factors that can influence uptake.
THE RIGHT PRICE
What’s holding back more adoption? Some of the blame rests with hefty data subscriptions combined with spotty coverage and sub-par handsets, says Deepa Karthikeyan, analyst at Current Analysis. Some of those issues are expected to be resolved with the collapse of walled gardens, Qwerty handsets with large screens and the advent of mobile advertising.
Compete asked consumers if in the last two years it has gotten harder or easier to find
Last year, carriers began including data services with voice plans, a la Verizon’s America’s Choice Plans and Alltel’s Office Sync plans. By increasing á la carte messaging and data fees, carriers are pushing moderate data users to subscribe to their data bundles in the hopes of getting more subscribers for their data-intensive services, Karthikeyan says.
Other observers also surmise that some carriers over the last year or so increased the cost of individual text messages from 10 cents to 20 cents to encourage people to buy bundled plans.
But Daniel Longfield, industry analyst at Frost & Sullivan, doesn’t think increasing per-text rates is a good move. “They’ve got it wrong,” he says. “They’re trying to glorify text messaging as an enhanced data service, and to charge higher prices is slowing adoption of all types of data service.” Using the analogy of SMS as the “gateway drug,” he says increasing the price doesn’t make sense if carriers want users to graduate to more sophisticated data services.
YOUNG & OLD
Last year arguably was the year when user-generated content and LBS services gained momentum, Karthikeyan says. Mobile social networking experienced extensive growth, evident in the surge in social networking sites on the decks of carriers such as AT&T, T-Mobile USA and Verizon Wireless.
Given all of the attention of late on deals with social networking sites, it’s clear that a lot of applications are geared at Millennials, or 13- to 24-year-olds, and Xers, the 25- to 41-year-olds. But as more applications are developed with older generations in mind – think AARP and health-minded apps – the possibility of luring them as data customers increases, notes Phil Asmundson, vice chairman and national managing partner for Deloitte’s Technology, Media & Telecommunications group. Developments in cell screen technology may come into play as smaller screens can be a challenge for Boomers with aging eyesight.
TOO MUCH FOR SOME
But all of these applications and content can have its downside. In a survey designed in part to measure consumers’ awareness of the industry’s open access movements, Web analytics firm Compete found that not only were most participants unaware of a lot of the open access moves, they were generally overwhelmed by existing offerings. When asked about the number of products from which to choose, 46% of recent wireless shoppers found there were “too many” and 45% said there were “just enough.” Only 9% said there were “not enough.”
When asked about the importance of various things, 75% said the ability to get a phone for a reasonable price was very important, while 31% said the ability to access whatever content and applications they want was very important; only 23% said the ability to download any application was most important.
In fact, 59% felt their carrier offered enough selection of content and services to meet their needs. Of the 9% of consumers who said they wanted more, most of them pointed to applications, such as GPS and Internet connectivity, that already are available, says Adam Guy, general manager of telecom and media at Compete.
“If you look at the portfolio, all of the services and content … it’s overwhelming for the mass-market right now,” Guy says. Roaming is no longer an issue; overage isn’t a big deal and interoperability is in place. “It should be getting easier.”
The take-away is carriers should use the new move to open access to focus more energy on marketing and communicating about the services they already offer and less on making innovative products or applications, which third parties can supply, he says.
Compete also found that consumers don’t know much
about the market openness movement or other industry issues.
MORE & MORE
Of course, the relatively low uptake in data services thus far spells opportunity for a lot of startups. “We’re just in the infancy,” says Hal Steger, vice president of marketing at Funambol, a champion of open-source mobile e-mail for the mass-market. Steger recently studied the data plans offered by the largest carriers via their Websites, with the results pointing toward overall prices coming down. Verizon Wireless came out as the most expensive, with T-Mobile USA being the cheapest, and AT&T and Sprint falling in the middle.
But Craig Mathias of Farpoint Group says he doesn’t believe all the demands for wireless data will be met with traditional cellular networks. Consumers’ reliance on broadband is constantly increasing. To make it all work, service providers need to incorporate Wi-Fi with their licensed-spectrum offerings. “It’s very easy to watch a movie on Wi-Fi,” but not so much on a wide area cellular system.
“Access to the Web is just as important as access to voice telephony,” Mathias says, especially for younger generations, which, over time, will come to expect it. For now, “voice is a given.”
|Millennials||Xers||Boomers & Matures|
Millennials are the most likely to derive entertainment from multiple media sources.
• 82 hours vs. 78 hours average overall; almost 11.7 hours a day spent with media.
• They are the alphas when it comes to user-generated content.
• However, they are the least active as far as Internet surfing, visiting fewer Websites per week than any other generation.
Xers are strong drivers of media trends today
• The greatest increase in relation to cell phones and video games being sources of entertainment.
• They visit more websites per week than any other generation – number has grown since first edition of the survey.
• 14% of all commercials being viewed in fast-forward mode
Xers are just as likely to read newspapers online as in print… but they still prefer print.
Matures continue to be the “reading generation,” as they are most likely to say they prefer reading books, magazines and newspapers.
• Print is the preferred format for both Boomers and Matures.
Both continue to value landline communications over cell phones.
After television, print advertising is the way to reach them… especially newspapers for matures.