How much will data users actually pay? It’s personal…

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How much will data users actually pay? It’s personal…

Yesterday was the third day of Mobile World Congress 2013.  It is really amazing to see the action around the Allot booth.  Everyone is really working hard and we’ve had hundreds of meetings with customers, suppliers, financial analysts, trade analysts, technology partners, solution partners, and just friends we know from the industry.  Every day at 5pm we host a happy hour and lots of people come to have a drink and something to eat.  The booth is working out very well for us and the meeting rooms are booked every minute of the day.

I’d like to share what I think is one of the big topics being discussed here in the past few days.  Yesterday, I participated in a seminar about “learning from consumer behavior.” It focused on trends that can be identified in the mobile communications world.  The general agreement was that the trends pose an opportunity and a threat at the same time.  Mobile networks are dealing daily with the explosion of smartphones and tablet users on their network.  In the mature markets, the biggest trend is the growing adoption of data services via the smartphone and their ease-of-use. All the services converge on the smartphone, including personal content, social networking, location-based services, multimedia messaging, as well as business groupware, converged communications and mobile productivity.

There are two groups of customers that have a strong effect on the trends.  The ones that are making the biggest money contribution today are enterprise and household owners.  Enterprises are mobilizing their business and have become much more than business users with roaming issues. They have entire operations systems on the cloud that require continuous connectivity for both fixed and mobile users. Enterprise mobility is growing and becoming a critical part of an organization’s life stream. The household group drives a big community of lower income customers (young people, preteens, teens)  who turn into higher ARPU subscribers when they grow up. For example, most of the early twenties crowd never even touch a feature-phone. They start their digital lifestyle with a smartphone.

One of the biggest challenges for operators is consumers who buy only the smartphone and its content services.  Consumers are willing to spend money on phone and its apps because the see value there. However, when it comes to Internet connectivity, they don’t “see” what they’re getting and therefore they value it less and are not willing to pay a high price for it.  Operators thought they could charge for the premium services smartphones consume – but consumers don’t want to pay. Consumers still see the primary value of the service provider as access to the Internet and content and not much more.

New services like HD video are driving greater infrastructure investments to handle the sheer volume of traffic (and the QoS). There is tremendous pressure to do so profitably, but to date, that profitability has been elusive.  The great opportunity that service providers must seize is to make their customers aware of the value that is being delivered to them by the network. In my opinion this can be achieved by personalizing the network service, by addressing each customer with services that are important to his or her digital lifestyle, and by charging according to the role that the network plays in delivering those services.  The network operator must be part of the value chain of the smartphone ecosystem.

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