Changing consumer behavior with mobile broadband?

2008 October 3
by Ismail Dhorat
Telstra mobile phone Base station - Wireless H...

Image via Wikipedia

Mybroadband reports on how the ratio of mobile broadband in the UK has exceeded that of even Wifi:

“Point Topic’s recent survey of mobile broadband users shows that the UK mobile phone companies have managed to grow their market share to 47% of users accessing the internet away from home or work. This compares to 42% who prefer WiFi hotspots. A year earlier the ratio was 40:30 in favour of WiFi.”

The advantages of mobile broadband are simple: It can used anywhere, the access is always the same no matter where you are and there is no need to worry about things like keys, different forms of billing and different rates. Point being, that users are willing to pay a a slight premium for ease of use.

Even though bandwidth prices are Higher here in South Africa then in other parts of the world, the cost of mobile data is by far some of the cheapest i have seen world wide.

Comparison of Mobile Broad Band Pricing (South Africa vs UAE)

South Africa(Vodacom/MTN):

A 2gb Bundle costs R389 which works out +-19c per MB

UAE(du):

The highest bundle is a 200mb data bundle at a cost of R543 (245 AED) which works out to +-R2.71, which is more then double that of the out of bundle rate in South Africa.

Now this clearly has changed the way people access the internet when mobile. For some people, using the mobile broad band connection is the primary means of access to the internet and they have no fixed broadband connection. The price point in South Africa making it somewhat competitive to the fixed broad band offerings.

Interestingly, we see MTN launching a mobile broadband wireless gateway as reported by ITWeb

MTN is preparing to launch its HSDPA/HSUPA wireless gateway, aimed at the home business, or home entertainment markets.

The company’s new wireless router is its first foray into providing data services that are not mobile. “While the device is nomadic, the router is really meant to be a static routing and Internet service,” says MTN senior manager for data, roaming and reseller solutions Brian Seligmann.”

It seems MTN is moving to compete head on with Telkom & Neotel in the broadband market. Are they aiming to be a bit-pipe operator?

At the beginning of July 2008, i spoke at a Mobile Revenue Assurance conference in Dubai (My Twitter Coverage) on emerging threats to mobile operator revenues. The key points being that traditional operators (Mobile included) business models would come under pressure from new technology and lowering prices. Traditionally operators respond by keeping the walled gardens up and trying to control the customer and we all know this is not the best response. They also treat it as a threat rather then an opportunity. Operators should start thinking strategically about the changing value chain.

There was heated debate amongst operators in attendance and a separate panel was setup to discuss the issue.

With the value chain changing a shift in strategy may be required by operators. They could try and control more touch points with the customer and build competencies in other areas. examples would be

  • providing mobile search
  • Build their own social networks (which are closed Silo’s)
  • Build their own Mobile Instant Messaging (Closed / Silo’s)
  • Providing advertising services
  • Provide aggregation services
  • Provide content

Or, they could forget all of that and concentrate on being the bit-pipe while diversifying with non controlling investments in other companies such as Vodacom’s investment in Social Media. The mobile operator just becomes the carrier of the data traffic and let other companies worry about the services, customer relationships, support and innovation. The problem with the first option it is more often then not the solutions are closed silo’s / walled gardens, innovation is slow and ugly and it also leads to stifling of innovation.

What are your thoughts?

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