Turkish 3G Mobile Operators Move Quickly to Restore Service After Floods
I landed in Istanbul the night the rain began to fall. By the next morning, Istanbul had experienced its worst flooding in 80 years. Many parts of Istanbul were underwater, more than 20 people were dead, and several of the leading telecommunications providers had service interruptions, as floods destroyed equipment rooms. Dilithium was asked to quickly re-supply equipment as service providers are in the midst of 3G launches with attendant multimedia services.
Istanbul is steeped in history with the first settlements dating back to 6500 BC. However, today it is a modern city with a very well developed telecommunications infrastructure. Turkey is the 5th largest telecom market in Europe and one of the 15th largest markets in the world, with nearly 100% mobile penetration rate. It is a very competitive market and due to this fact and mobile saturation, service providers are racing to offer multimedia value added services as a way to differentiate their offerings and attract new customers and new revenue sources.
The major service providers are aggressively pricing multimedia services equivalent to voice pricing, as well as offering bundled voice, data, and video plans, with some premium options. The lead applications include Facebook mobile apps, portal access, mobile tv, video mail, and video conferencing. With relatively low internet and broadband penetration in Turkey, mobile phones will be the key to accessing content from the web.
Best Marketing Practices for Multimedia
One of the key areas for the take-up of multimedia services is Marketing and Promotion. In the past, service providers have focused on the technological aspects of 3G video (which is obviously important for many reasons), but the lack of integrated marketing has been an acknowledged issue in the industry.
We’ve seen in the past year a number of best practices for the marketing of combinational video services across broadband and mobile networks. It starts with the involvement from the marketing organization in the initial design and market launch decisions for video services. They are the group, and often with the support of their suppliers, that does the market segmentation, customer acquisition strategy, pricing, and promotion decisions.
Some of the best deployments that have the most subscriber take-up and usage have included campaigns which had elements of community, social networks and personalized services. They are always unique to the particular market, though they may take on the branding aspects of the parent company (Vodafone, Singtel e.g.).
What are some of the best marketing practices that you have seen? How has the bundling of smartphones helped in this process? What can be improved between the CTO and CMO office for video? Your comments are very welcome.
Good Morning Vietnam
As I rolled out of the airport on my way to downtown Hanoi, the rice paddies and lush green vegetation were familiar images from the past. Vietnam is peaceful and thriving these days, but as you get closer to downtown Hanoi, it is clear there is a new war going on – and the weapon of choice is mobile phones. Vietnam has a population of nearly 90 million, and while 75% still live in rural areas, the country has more than 80 million mobile phone subscribers, with many people holding multiple numbers. Eight service providers are battling for the hearts and wallets of the people of the Socialist Republic of Vietnam. The rural areas are largely untapped, which means that many city dwellers have multiple phones and subscriptions.
A throng of motorcycles and bicycles choke the bustling streets of Hanoi, and the drivers have one hand on the handlebar, and the other on a mobile phone pressed to their ears. While these drivers are making voice calls as they drive, Vietnam, like India and the Philippines is dominated by non- voice traffic, particularly SMS. This is why the next battleground in Vietnam revolves around the imminent launch of 3G Value Added Services, as it will be a natural for consumers to migrate from text to multimedia services.
Multimedia services such as live TV, portal access, video ringback tones, video blogging, and video surveillance will be rolled out over the next 6 months initially in Ho Chi Minh City, Hanoi, and Da Nang, and then nationwide. Smartphone and netbook vendors as well as VAS providers are elbowing for position, as Vietnam is one of the top 15 most populous countries in the world. While inflation has recently become a problem and slowed the high growth rates of the last few years, the outlook remains strong and growth is still projected at 5%+ this year.
In Vietnam, the government controls the service providers and has granted four 3G licenses: Mobifone (mostly state owned by Vietnam Posts and Telecommunications Corporation), Viettel (run by the military), Vinaphone (which will be the first to launch and is also state owned), and a joint venture between Hanoi Telecom and Electricity Vietnam Telecom. Expect fierce competition between these four operators as they compete to hold existing subscribers and capture new ones through the offering of a range of multimedia services at very competitive prices. Subscriber growth is booming, but ARPU continues to drop sharply. Vietnam is poised to become one of the largest mobile markets in Asia, as well as one of the most innovative.
Monetizing Mobile Video Services
The key discussions around multimedia services used to be all about technology – the meetings were with the CTO personnel and were very limited about how to actually make money. This has all changed in the last two years and very much so in the current economic environment. What is most important is how to get back the return on investment (ROI) in a quick timeframe and to demonstrate to senior management that all of the leg work has been done to segment, define and put forward a compelling value proposition for the provider’s customers.
Monetization has become a key buzzword and if we (as an industry) can really show in a clear and concise manner that video services can make money – or that technology can save capex or opex in real-time – management will sign off for the needed investment.
The elements of monetizing video services across mobile and broadband networks are vast and complex, but relatively simple in the end. We have advised operators on use cases and best practices in terms of marketing, service development and pricing models and they inevitably show a 6-9 month payback in worst case but require the commitment and involvement of the marketing organization to make this happen – it is just not a matter of “showing up” and hoping that people will use these services.
What do you think are the key elements of monetizing multimedia services? What do service providers want or need to do? What do subscribers really want or need?
China Market Update
I just returned from China and Taiwan. While Taiwan has been hit hard by a 50% drop in exports, China continues to hum along (excluding the Southern part which has been hit hard by a large drop in exports). China is currently rolling out the largest mobile broadband network in the world, and in record time. China Mobile, China Telecom, and China Unicom are also racing to roll out new 3G networks with next generation video services. For China Unicom, this will involve IVVR as well as ringback tones. It is interesting to note that IVVR is one of the first applications that CU will roll out. With such a large and dispersed population, CU plans to use multimedia services via its IVVR offering to bring services “from the few to the many.”
The Mobile Applications Boom
I was just on a “Mobile Applications Boom” panel at the Red Herring Conference in San Diego, and what was interesting was that 4 of the 5 panelists were from outside the US. Since our business derives 90% of its revenue outside the U.S., I felt right at home. The key themes that emerged were that the U.S. continues to lag the world in mobile innovation, with the exception of the IPhone and its related app store. Additionally, service providers outside the US are moving much faster on mobile video services and related non-voice applications.
The consensus was that the market would evolve around a number of vertical app stores, built around the leading smartphone/mobile phone vendors. Several forecast that the IPhone would have 100,000 applications by year end, but that it would become increasingly difficult for developers to make money given the clutter. Additionally, the applications will likely evolve from the silly and frivolous to more formal applications, similar to what has happened in the social networking market.
RIM in particular will focus on its customer base, and while it will have far less applications than the iPhone, it will be very skilled at monetizing them from its existing fanatical installed base of Blackberry customers. Service providers, such as Vodafone, are also launching their own app stores, but the feeling was that they will be less successful in competing with the app stores from the phone vendors.
Multimedia Market Trends
The world of mobile multimedia has been around largely since the launch of the first 3G networks ten years ago in Japan. During this time more, than 100 operators and service providers have sold video services to their subscribers and a number of trends are starting to emerge, especially during the past year.
While it is easy to throw out words such as personalization, social networks, and communities of interest – there is little consensus on what this means for multimedia services to mobile phones, PCs, and televisions (the three-screens). However, we are seeing massive take up currently in all kinds of new video services to both 2.5 and 3G handsets.
A number of factors contribute to this market increase including: easy-to-use, simple and great video quality smart phones (think iPhone e.g.), better pricing by service providers, and even a good degree of marketing to promote these services.
Multimedia market trends is a very broad topic and we will be writing much more about this in the coming weeks and months. For now, suffice it to say that we believe the market for multimedia across broadband and mobile is taking off now!
So what will the next 18 months bring for video services? Which kind of services will people be using? What macro economic and social trends are coming that will drive new services?