The Hindu Business Line : Tuning in to the customer

Marketing and technology are two different functions. Mobile operators have realised this. They are also teaming up with other sectors, such as music, TV, and broadcast, to succeed.

Graham Brown

Wireless World Forum (www.w2forum.com) is positioned as a business development and knowledge-sharing network for senior decision makers in the telecom, media and technology sectors. W2Forum currently has over 5,000 members representing over 3,000 companies in 100 countries, who can network, partner and share opinions using this platform. This Forum also conducts its own research for the wireless industry through a dedicated team operating out of its London headquarters and its branch at Chennai. Graham Brown, CEO, Wireless World Forum, who was at the Chennai office to interact with his team here, spoke to eWorld about the key trends reshaping the mobile industry since the telecom meltdown in 2000.

What are the key trends likely to dominate the mobile landscape over the next year or so?

What we are starting to see now is that telecom is moving from an engineering base to other sectors. Say in the UK, Vodafone, the largest operator, they came from a company called Racal, which is an engineering company.

Their mindset is very much engineering, heavily focussed on processes and quality of technology.

Vodafone today is slowly moving towards the idea of the customer. The key trends are that some of the major operators, who are proactive, are moving quickly into new sectors.

They want to know: Which sectors are going to make the mobile work for us? They are looking at FMCG or healthcare or the broadcast sector.

What role does mobile have within that? For example, broadcast TV/video is looking at mobile as the new channel, a new way of distribution or interaction with its customer.

TV station has a lot of subscribers or viewers and so far, they could not interact with them. But, mobile is now emerging as a way for these media agencies to interact with them.

Imagine the potential for advertising, if you get them to interact, you can learn more about them and then you can advertise specifically to them. This media segment started the texting (or SMS, as it is called here) boom in America. The other key trend is MVNO (mobile virtual network operators).

This will become a trend, over the next year, in India, which, like the US, has geographic, language and racial differences.

MVNO is a growing market, because some operators have realised that they are not as good at marketing to customers and `maybe we should get another company to do it.' This is most valuable in big markets, where there is a lot of segmentation of customers.

India is yet to hit the inflexion point, but when it does, it will open the door for MVNOs.

Can Indian operators give the same level of service when it runs into several million subscribers and provide the service that will appeal to 15-75 year-olds, across men and women, and with different economic backgrounds?

Here, MVNOs will basically take over the front end and provide services for executives, older people or younger people.

The operators can provide the infrastructure, handsets and minutes, basically the backend.

This has happened in the UK with energy companies, where the devolution has taken place between the front and back end. It may not be a key trend for India this year.

But next year, once the country goes beyond being merely an urban phenomenon, it can achieve certain levels of penetration.

Another key trend that will be big in India and probably be the biggest market in the world is young people (or youth market).

We have young people starting to use mobile phones for the first time, students mainly, and some with their first job. This is a market that is crucial for operators long term, since they can grow with this market.

This is like the banking market, where you hold them and keep them for life. There is a statistic in the UK that you are more likely to get divorced than you are to change your bank accounts.

Operators know this and they are spending a lot of money on these young subscribers. The biggest telecom market for this segment will be India and China.

More so, India, as it has a higher percentage of young people than China. It will not happen yet, as investments are still taking place, but once the markets really explode next year...

The FIFA Soccer World Cup in 2006 at Germany is said to be the next big opportunity... .

Yes, the other big trend will be the World Cup in 2006. Our estimates show that it could be a $10-billion opportunity. It will give a lot of smaller companies an opportunity to take part in the profits of the mobile industry, because it will have a global audience.

But is this opportunity an extrapolation of the World Cup in Korea in 2002...

It is actually in between (2002 and 2006). 2002 was still early days in the development of the mobile industry.

In four years, we have come a long way in terms of technologies and new markets that have developed.

The companies have realised that it is not about selling technologies, since 2006 is a huge social event. So, they need tools to interact socially.

There are going to be two approaches to the World Cup.

One approach that says that World Cup is a showcase for technology. It is about 3G (third generation mobile), Wi-Fi and all the latest acronyms.

The other approach is that it is a social event offering a huge opportunity to supply social tools.

I think that the industry that follows the social event approach is the one that is going to make the real profits, because not many companies are doing that.

It is going to be a lot about the psychology and sociology of the mobile phone user.

Why do young people spend so much on mobile phones?

Why is it that in the UK, young people spend more on ring tones than on CD-singles? What are the dynamics here?

Since the 3G debacle and the bursting of the dotcom bubble in 2000, the telecom landscape has changed dramatically.

What do you think has changed and why will these trends work this time around compared to the past?

A couple of things have changed. First, there is less money in terms of investment going into the market.

Private equity has been particularly squeezed. What that has done is that it has taken out a lot of the technology companies from the market.

The consolidation in the market has happened. There is less pressure to deliver than in the past.

Second, the operators are much more cautious and much less receptive to companies saying this or that new technology is required.

We have had a bad history in terms of new technology such as WAP, MMS and all that, but that is over.

Virgin Mobile now claims that it will be able to launch 3G-like services using spare bandwidth and airwaves (at aggressive rates).

They are sitting pretty, as they did not participate in bandwidth auctions as the rest of the industry.

Operators have realised where their weaknesses are and that they are not the best people to market services and are letting others do it.

Now, they know that they need to work with partners, with the music, TV and broadcast industry to succeed.

It is a slow change. Music and mobiles is a perfect match. Mobile industry needs ring tones.

Music industry needs mobiles as they do not have a channel to market any more and its slice of the pie is being eaten up by the mobile industry.

These industries are coming together.

Or take for example, Boost Mobile, that is part of the Nextel network in the US.

It has made a success with extreme sports such as skating, surfing and snowboarding that 18-20 year-olds aspire to do in the US.

maverick@thehindu.co.in

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