Why value is slipping away from the “mobile” operators

Most good news in telco land comes from their remaining vertical markets – like wireless. But this segment will eventually go horizontal & exhibit all the same problems as the wired internet. The slippery slope created by Yahoo, Google, & MSN mobile is already beginning. This post (from MEX) makes a fair assessment of how close “horizontal” in wireless is. — iain —

Why value is slipping away from the operators: “

I recently switched to a new handset, swapping my Sony Ericsson W900i for a Nokia N80. It was an instructive exercise which prompted me to think about several issues in the mobile telecoms industry: in particular, I was struck by how little added value my network operator (Vodafone) brought to the process. Almost all of the value in my user experience was associated with third party brands and the handset manufacturer.

My first priority with the new device was to configure it for email access. Vodafone UK’s web-site was able to send me a text message to configure the internet settings and it did this job very well. The interface was easy to navigate and the settings arrived in a few seconds. However, this marked the end of Vodafone’s involvement in the process.

I use Google Mail to manage my personal and work emails because its search technology allows me to access a vast archive of past emails wherever I am, on virtually any device with an internet connection.

To set it up on my N80, I simply opened the browser, bookmarked the Google Mail page and entered my username and password. The browser remembers me each time I access the page, so I will only need my logon details once. I also assigned a short-cut to the Nokia ‘multimedia’ key, so I can open my Google Mail account from anywhere within the phone’s menu system with two clicks.

Email access is a key feature for me and I was delighted to have it set-up so easily. All of my association of value for this was directed towards Google and, to a lesser extent, the Nokia software which allowed me to configure the short-cut. The result is a considerable improvement on my W900i, where I had to open the applications menu, navigate to open the Opera Mini browser and then scroll down to click my Google Mail bookmark.

At no point did I consider my network operator had added anything to the process.

It was at this stage I remembered the N80 supports Wi-Fi and since I was in the office, I simply searched for the company hotspot and switched to using that for my connection instead of Vodafone’s slower and more expensive cellular data network. The operator was now entirely out-of-the-loop.

My next task was to load the contacts from my previous handset. I use Mobical’s free SyncML-based PIM service, so all of my contacts were already synchronised to a remote server. To sync them to my new N80, I simply visited Mobical’s web-site, requested the SyncML settings to be delivered as a text message to the handset and hit the ‘Synchronise’ button. Within a few minutes, my new address book was populated with all of my existing contacts.

Again, the value was attached entirely to the third party brand – Mobical – not the operator. All of the data arrived over my Wi-Fi broadband connection.

With my contacts and email set-up, I could turn my attention to some of the additional features I use. I visited the Shozu web-site to request a download link for their media replication client. This application automatically syncs any photos I take to my Flickr account. Shozu’s sign-up processes is well integrated with Flickr, so I never need to enter any access details – I just know that whenever I take a photo it will appear on my Flickr page. I also set-up Shozu so it would only ever do this when I was within range of my Wi-Fi hotspot to avoid sending the large (approx. 1 Mb) photos at Vodafone’s exhorbitant data rates.

Added value? Yes, and all of it assigned in roughly equal parts Shozu and Flickr.

I repeated similar procedures to load Mobizines, an off-line magazine reader I like, and bookmarks for BBC news, my Google personalised homepage and even two web sites I use for accessing the company intranet and the content management system for our web-site.

By the end of the process, I was marvelling at how much the integration of web services with the mobile experience has improved in recent months. I now closely associate brands such as Google, the BBC, Shozu, Mobical and Mobizines with my mobile experience.

The only consideration I’d given to Vodafone, my network operator, was negative – because of its data tariff, I’d used Nokia’s inclusion of Wi-Fi technology to minimise my reliance on the Vodafone network. Obviously I will still need the cellular connection when I’m away from the office, but the Wi-Fi link has enabled a new group of high volume data services which I wouldn’t otherwise have considered. If I were to add a Voice-over-IP (VoIP) application to the handset, I would also cut my Vodafone voice usage by some considerable proportion by switching to the broadband hotspot for the hours of the day when I’m at my desk.

I need to qualify these opinions by acknowledging my situation is somewhat unusual. I had received the handset directly from Nokia, whereas most users would have purchased it through their network operator. The subsidy and tariff choice would have played a significant role in their user experience and value perception before they reached the set-up process.

However, my usage requirements are quite common: numerous people use services such as Google Mail and Flickr. Typically their loyalty to these services will be stronger than the link they feel to their network operator. Third party brands are taking pioneering positions in the mobile industry and starting to create a pull effect all of their own. They are finding ways to side-step the operator’s control of distribution and applying web technologies to create mobile applications which draw their power by leveraging existing user relationships.

The combination of this trend with more powerful devices from handset manufacturers is empowering users to take more control of their mobile experience. Users who take this approach are making a clear statement: they want the mobile environment to reflect their lifestyles and existing application relationships, not the operator’s corporate strategy objectives.

Operators which still harbour ambitions of creating their own media franchises would do well to heed this message.

The value in the mobile experience is being rapidly redistributed and operators will see acclerating commoditisation of their networks. Some change in the value perception is inevitable as it becomes easier for big media brands to make their presence felt in the mobile industry. However, there are steps operators can take to improve their strategic position while at the same time delighting users.

The most important change is to focus on becoming ‘enablers’ rather than ‘creators’ of the mobile experience. Operators must step back from trying to define experiences on behalf of their subscribers and start empowering them to make those choices for themselves. This means supplying easy-to-use tools for aggregating existing services into a mobile application framework and providing users with individual control over the appearance of their handset.

For instance, if Vodafone was structuring its partnerships correctly with companies like Google and Shozu, I should have been able to logon to a personalised Vodafone homepage and add services from those companies to my account. In fact, Google’s own personalised homepage application provides an excellent example of how a company can derive value from acting as an aggregator of third party information and services.

It is a simple vision: every mobile subscriber should have a centralised account management interface provided by their network operator which allows them to add new applications, customise the appearance of their handset, back-up their data and access basic carrier services such as online billing and customer care. This would keep the operator in the loop and benefit the user by providing a consistent interface for defining their mobile experience.

Through their control of retail distribution, handset subsidies and the billing relationship, operators are in an excellent position to build additional value in the mobile industry. A misunderstanding of their strategic position in the value chain and a culture of paranoia over the emergence of third party brands is damaging the user experience for their subscribers and, in the long term, their own prospects.

(Via MEX – the strategy forum for mobile user experience.)