Services on the mobile broadband market
|– another area where mobile broadband providers also should move backwards in the value chain.|
When you examine the broadband market there is little doubt that the market is characterised by three things; increasing bandwidth, decreasing prices and a very limited selection of broadband services. Quite simply one could say that the operators on both the fixed line broadband market and mobile broadband market have been – and are continuing to – offer their customers increasingly higher bandwidth at increasingly lower prices.
We believe there is a large probability that the operators’ end user prices will reach their marginal costs of manufacturing their mobile broadband product.
When you examine the possibilities of stimulating revenue and profit that can compensate for part of the price reductions the market is currently experiencing,1 realises that there is an enormous need for the industry to find new sources of revenue that can be added to the basic broadband services. Through our ongoing dialogue with operators across the world, we can see that many operators are using large resources on finding various services that they can purchase, market and sell in addition to their basic mobile broadband products.
We believe that mobile broadband will be a product that customers primarily use on their portable PCs and that the mobile telephone will play a smaller role on this market. The majority of the Brazilian population and the rest of South America will use wireless technologies to access the Internet.
But all these products are traditional products that all operators soon will offer their customers and that customers in the near future will consider a hygiene factor – a natural part of a future mobile broadband product. If you try to view the mobile broadband market from a different angle than most operators currently are viewing it, it is important to contemplate how to tackle this market and consider whether there are lessons learnt in other areas in the mobile world that could be helpful.
The possibility of using the mobile broadband connection together with the billing system to invoice payments for various types of services is – in our opinion – the largest and best opportunity for operators to gain access to new sources of revenue that can partially compensate for the large price reductions on the mobile broadband market. If you look at how basic revenue sharing models has influenced the mobile industry across many countries, you will see that it has created a totally unique market for mobile services. It started with simple ring tones and logos and has since spread to a great many other types of services ranging from downloading music, video, TV voting etc. One could say that if there is a market for a mobile service, then it is possible to develop, market and invoice that mobile service – and the operator will make money every time a customer purchases that service without having created, marketed or sold the service themselves.
In the same way as operators have chosen to move backwards in the value chain on the mobile services market and have left the development, marketing and sales of services to others, we believe that they can take advantage of doing exactly the same on the mobile broadband market.