Research Notes

Mobile Operators have all the good cards in the competition with WiFi and Wimax providers

Mobile operators have for some time in reality had monopoly in offering wireless mobile telephony, as the operators have been the only ones with a broad nationwide network with the possibility for international roaming.
 But this is changing, as WiFi and Wimax are quickly being rolled out, and with these newer wireless technologies, end-users in larger cities have for the first time the possibilities to use other networks than the mobile. This development can influence the mobile market and especially the mobile operators dramatically.
 The possibility of delivering telephony via WiFi facilitated by the future broad deployment of WiFi hotspots will make it possible for end-users in larger cities to have constant connection to a WiFi network. Some people believe that by this, WiFi can replace the mobile networks! But in our opinion this is very unlikely, as there are both technical and market obstacles!
 WiFi networks lack the roaming and identification possibilities of the mobile networks. It has reduced coverage and limited spectrum, which makes it impossible to shift between networks without loosing the connection.
 WiFi networks will consequently not replace mobile networks; they will become a supplement to these. In the future is very likely that many mobile terminals will use more networks types, and will use the network that in the given situation has the best access. If i.e. the user is in a place with WiFi coverage this will be used instead of the slower mobile network.
 This development could be seen as a threat to the mobile operators, but as described in the new report ”Successful strategies in the future mobile VAS market”, this is not a real threat for the operators, as the key to the user is the SIM card, which is established in the market today as the identity of the user, and holds the possibility for payment of services via the phone bill or prepaid account.
 ISP and other WiFi suppliers do not today possess a similar way of identifying and charging for the usage of telephony or services. The mobile operator hence have a unique possibility to keep the entire customer relationship, as the alternative for suppliers of WiFi is to make agreements with mobile operators regarding payment from their costumers.
 The most likely future scenario is that the operators’ SIM card will be the entry point for purchases of services and mobile telephony on multiple networks, not just the mobile network…
 But the mobile network in itself is a great asset, besides the direct customer relation and the charging of the customer. Certain types of services are dependant on special functionality in the network, and this puts the operators in a very strong situation compared to other players. Location Based Services (LBS) will be a network centric service in the future, as the location of the terminal can be used to make the services much more interesting and adaptive to the user, which could spark usage of these kind services.
 Another active is Quality of Service (QoS) which is implemented in 3G networks. QoS which prioritizes data packets in the networks is a necessity for certain types of services, which the operators can use to increase their share of the revenue from these services. The operators furthermore have the possibility to offer individual customers QoS for ordinary data traffic, which is a good way of price differentiation. Customers, who need a guarantied maximum transfer time for data packets, will be ready to pay for this service. Those content providers who develop services will likewise be able to make their services more effective with the implementation of QoS.
 As concluded in the report  ”Successful strategies in the future mobile VAS market”, the operators posses all the opportunities to keep being the center of the mobile market, even with the emergence of WiFi networks. It only requires they realize the value of the SIM cards of their customers.

Successful strategies on the future VAS market

Contact us to get a copy of the report

Request the report