Pioneering technologist Alan Kay once said that: “The best way to predict the future is to invent it.” Reflecting on another year gone by, this comment rings especially true.
For mobile, 2009 marks a year of outstanding innovation and growth; communication in 140 characters became all the rage as Twitter reached mainstream consciousness; Apple delivered its one billionth application download from the App Store; Orange and T-Mobile announced plans to merge their UK business to become the UK’s largest network provider, and O2 overtook BT in UK revenues.
After so much development in 2009, where will 2010 take us?
Revenues rising, profit margins tightening
Driven in no small part by the iPhone and other smartphone devices, increasingly available mobile bandwidth and higher network speeds, mobile data services will break the $200 billion mark in 2010. But from an operator perspective the continuation of this model is not a sustainable one. As more users subscribe to unlimited data price plans, traffic on downloads is rising at a rate that operator revenue cannot keep pace with. The challenge for operators in the coming 12 months will be to begin to prepare customers to pay premiums for high usage or optimal quality of service.
SMS revenues will break $100B in revenue
The humble SMS, one of the original mobile communication tools, remains key to facilitating today’s enhanced, feature-rich mobile services, which will in turn drive mobile data revenues. According to analysts, SMS revenues will continue to grow rapidly, breaking the $100 billion mark next year.
Location-based services will find a home
Informa predicts that location based services (LBS) will surpass the $2B revenue mark in 2010, with growth anticipated to reach $6.5 billion by 2013. The industry is realising that location alone is not a revenue generating service in its own right, but is recognising that it can provide valuable enhancements to existing services that will greatly stimulate services like mobile search, mobile advertising and social networking, making these services more relevant, actionable and personal. As an increasing number of mobile devices (like smartphones) offer built-in GPS, and because operators can now expose location APIs even for non-GPS phones, the addressable market for LBS will continue to greatly increase.
Mobile payments will find their way into developed markets
Until now mobile payment services have been successful predominantly in countries where mobile penetration outstrips traditional banking services. In developed markets, the challenge had been about building consumer trust. Now, issues such as security, regulation and quality of service are dominating peoples’ minds. Once these issues are effectively addressed (using SMS as the most reliable and ubiquitous foundation) and consumer trust is won, the ease of use of mobile financial services will drive its uptake. Informa expects that this market will grow from $0.4 billion in 2009 to $5.9 billion in 2013.
Mobile social networking will come of age
In 2010, operators and social networking sites will find a way to jointly monetise mobile social networking. Today, implementations of mobile social networking are fragmented; mostly using browsers and dedicated handset apps. However this only addresses a subset of the smartphone market, as the only viable and accessible user experience they present is on the iPhone. Until now, the flood of unbillable Mobile Terminated messages from social networks were an issue for using SMS and MMS to address the mass market, but now enhancements such as MT charging, antispam, location, ad insertion and hash-tagging will enable the operator to engage in new business models for two-way social networking traffic.
Android - iPhone fight will increase in intensity
We will see more and more Android-based phones entering the market in 2010, so it will be interesting to see if the semi-monopolistic iPhone hype will be reduced to normal proportions as the open model for Android provides a good alternative to the relatively closed iPhone. Will Android-based phones also generate a higher data ARPU than average phones? Given the possible greater penetration of Android phones, this could give an enormous boost to data revenues.
Operator app stores vs. handset app stores: raising the stakes
As handset vendors like Apple, BlackBerry and Nokia are tightening their bond with end users, operators like Vodafone, Orange, AT&T and China Mobile have announced comparable app stores, with a mix of handset apps, widgets and networked applications based on Network APIs. While handset-based app stores are great from a user experience point of view as they are designed specifically for the handset, they are limited to subscribers who own Apple, BlackBerry or Nokia smartphones, which is currently less than 10 per cent of the market. Operator app stores have the ability to reach the mass market and can be enhanced with a range of capabilities, like messaging, security, location, charging, user profiling, and many more. The stakes will only get higher in 2010 as the battle rages on!
Proliferation of mobile security issues
According to a survey conducted by Harris Interactive, 65% of mobile users are concerned about safety, with 44% of users having reportedly been victims of mobile spam. The increased opening of networks and handsets release myriad new threats, which will not only lead to increased customer care, increased infrastructure costs, increased churn and brand damage, but will also hinder the uptake of services like mobile financial services and mobile advertising.
For example, according to Harris, more than 70% of users would be prevented from using mobile financial services. Already in recent weeks we have witnessed the emergence of the first iPhone worm proving that no technology or service is immune from cybercriminals. The industry must work together to tackle security threats in order to enable the continued evolution of enriched features and services.
RCS and IMS: wait and see, but be prepared
Operators, infrastructure vendors and messaging vendors are joining forces to push technologies like IMS (IP Multimedia Systems) and RCS (Rich Content Suites) in order to introduce sticky, converged communications services to fend off ‘over-the-top’ providers like Skype, Facebook and Google.
However, the cards have not been dealt yet on whether or not this is the Holy Grail for which the industry has been waiting. The adoption of IMS is growing, but for mobile messaging, does it solve any of the actual problems that the end user has today?
Until all-IP LTE creates a critical penetration on phones (not laptops), is it still a solution looking for a problem? There are still questions to be answered; however in the meantime it is important to start preparing with friendly user trials focused on a better converged messaging experience and interworking with SMS and MMS. As we did with SMS and MMS, we need to focus on how we can use IMS and RCS to add value to enhance third party applications and services.
Network sharing and more flexible modules for service innovation
As we have witnessed with the merger between Orange and T-Mobile in the UK, from a telco perspective, sharing networks is becoming increasingly more important. The sharing of radio networks is the most obvious cost saving opportunity, but for service delivery infrastructures it is also important to be as flexible as possible.
It is difficult to predict initially which services will be successful, so modules for service innovation should have the capacity for regional deployment (for local services) as well as centrally (for larger apps like social networking with Twitter, for example). It should be possible to have a balanced mix of fully centralized and local modules for traffic delivery optimisation, depending on transmission cost, location of expertise, regulation, and more.