Research Notes

3G Business Intelligence

Learning to mix apples and pears.
GPRS and UMTS mobile services require new technologies and huge investments. They also require new ways of thinking if operators are to ensure a return on these investments. Operators must learn to mix apples and pears.

Imagine a Norwegian mobile operator who is looking to gain a foothold in the Danish market. How should the operator achieve this? What would be the obvious strategy? Naturally, it would be to buy into a mobile operator already present in the Danish market, or would it?

This strategy is only so obvious and only chosen, because of a certain way of thinking. Fact is it could make more sense for the Norwegian mobile operator to buy a Danish bank or a Danish media company instead.

Why could this make more sense? Because, of the nature of GPRS and UMTS mobile services.

Ensuring a return of, operators will require a large customer base, and most of all: a loyal customer base. A bank would be in a much better position to provide this than a mobile operator suffering under a churn rate of 25%. As such, it could make much more sense to convert a bank into also being a mobile phone operator, instead of taking the obvious path and having to compete for increasingly disloyal customers.

It could also make more sense to buy a media company, rather than an existing mobile operator. Ensuring a return on the GPRS and UMTS investments will very much depend on the operators’ ability to ensure high-quality content and services for its customers. And again, converting a media company could make more sense than taking the more obvious path.

In order to ensure a return of the GPRS and UMTS investments, operators will have to become more than that. They will need to become a mix of different businesses that were previously distinct from each other. They will need to become part of a network of partnerships.

Only this way will they be able to create business and revenue models able to ensure a return on the GPRS and UMTS investments. Only this way will they be able to make it sufficiently attractive to content providers to develop and market mobile services.

GRPS and UMTS services are still in the making. However, this shift in thinking is already in demand. This shift in thinking is also needed in relations to developing successful premium SMS services – the kind of services that are to pave the way for 3G services.

In a report just published, we describe this development in detail and give examples on how new ways of thinking have led to new and successful business and revenue sharing models. In the report, we analyse 28 different operators’ revenue sharing models, both from the point of view of the operators themselves and from the point of view of content providers.

The report analyses the importance of different technologies for both operators, terminal producers and content providers, and for the development of revenue models.
More information on the report

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