Coming Soon: Looking Forward to 2006

It’s that time of year again – time for looking forward and trying to anticipate the changes that will affect how, where, when and why we’ll be doing business.

We have our own opinions about what might happen in the next twelve months: see the Editor’s View box. But we wanted to know what the industry’s notables see as the crucial factors for the business in the coming year. So we invited a broad cross-section of players in the mobile business to tell us how things are going to change. Now read on …

Networks
Hugh Griffiths, Head of Data Product Marketing, O3
2006 is set to be the year of the mobile moving image. Today 3G has less than 10% penetration; next year will see a surge in take-up with this more than doubling to 20%. Adding to this the number of GPRS (2.5G) enabled phones  with video capability, and more than a third of the devices in the UK will be capable of receiving and sending video clips.

This trend is then set to continue with the launch of HSDPA services in the UK. HSDPA will ultimately offer mobile users the possibility of downloading high quality video clips three times faster than traditional 3G technology. The initial deployment of this technology will be through data cards to power laptops bringing LAN-like speeds to devices on the move.

This surge in the 3G user base and the prospect of superfast services will alter significantly the potential market for moving images. Content providers will need to be quick off the mark to realise this potential; images on our mobiles will quickly start moving in more weird and wonderful ways as a result.

There has been much talk until now of the mobile phone being the fourth screen in our lives and the potential this holds for the mobile business and marketeers. 2006 will see the technology finally in enough people’s hands for this to be a reality.

Tim Miles, CEO,
Vodafone UK
2006 will see some significant developments in the mobile industry. 3G from Vodafone will get even better with faster mobile broadband services becoming available during the course of the year. As a result, mobile workers will be able to work faster and download larger documents, such as PowerPoint presentations and email attachments, more quickly. The increased speeds – initially up to four times current 3G speeds – will also help to enhance new services such as mobile TV.

As these improvements take hold, the idea of a truly mobile broadband experience will be something that people become more familiar and comfortable with. We are even going to see this new mobile broadband technology starting to become embedded in laptop PCs at the point of manufacture.

This is all exciting stuff, but ultimately the customer experience must remain the focus. The industry must ensure that it is not marketing technology at the expense of customer service.

This will be especially true in the business arena, where there could be some interesting developments in managed services offered by operators. This trend has already started with Vodafone UK’s own Managed Services for BlackBerry.

Manufacturers
Peter Marsden, MD, Sony Ericsson UK
2005 was undoubtedly the year that music went mobile. The Sony Ericsson W800i Walkman phone launched in July and lead to influx of dedicated music handsets
being launched.

Operators such as Orange, O2 and 3 have also made significant efforts to provide the consumer with a credible download service making the offering complete. There is still a long way to go in terms of converting the large part of the consumer audience but it is definitely a great start.

Last year also saw the mobile industry become far more consumer-centric in its everyday practices. This is fantastic, but there is still a long way to go …
Customers have still a great deal to teach us all about the way they want to use their handsets and the mobile services in development. I would like to see a more holistic concern for the consumer in 2006.

Distributors
Barry Nash, Director of Sales
& Marketing, Elite Mobile
More content than ever will be driven to mobile handsets in the coming year. As handsets inevitably take on greater numbers of functions they will increasingly be perceived as lifestyle solutions, becoming a crucial and integral part of people’s daily lives.
This in turn presents a growing variety of opportunities to open new channels to market. One example: server-based satnav solutions such as our Navig8, as against traditional media-based products.

These are great opportunities for the trade and I believe the operators will play a significant role in the coming year in developing and promoting satnav functionality to a wider audience.

I am delighted that 3G is coming into its own and will take over as the dominant technology during 2006. It is up to all of us in the industry to ensure we adapt to these new and integrated opportunities quickly and get behind the changes.

Andrew Boden, Managing Director, Mainline Digital Communications
An increasing number of operators, especially Orange and O2, are concentrating on retaining their existing customers by offering them deals that have previously been restricted to new customers.

Consequently, dealers are in a position to earn substantial commissions by gaining a fresh commitment from customers who are encouraged to stay with their current network, without the need to offer them new hardware. Churn has been reduced as a result, but dealers are still able to benefit from margin-making opportunities.

Secondly, more and more dealers are focusing on increasing their B2B connections. As local dealers excel in providing a local service to like-minded small and medium-sized businesses, the national chains are becoming less formidable competition for independents because they are unable to match the commitment to customer service.
Mainline has developed the Business Mobile programme, which combines the support of both Mainline and Orange, to assist independent dealers in growing their business connections. The national network of Business Mobile dealers are now benefiting from an increased number of customers as they are able to market themselves professionally and to offer expert advice as well as providing a quality local service to SMEs in their area.

Andy Chilton, marketing manager, Avenir Telecom
From a technological perspective, 2006 looks like it will be a very exciting year. On the consumer side I believe that the take-up of 3G content and services will start to increase in line with 3G handset penetration.

Many consumers who previously had 2.5G handsets will look to upgrade. And as the penetration levels of these phones increase, the networks will respond by developing a wide range of services and content that offer real value to the end user: IPTV is an example of a real cutting-edge technology that offers consumers so much more than they could ever expect to enjoy on a standard GPRS device.

Voice over IP could be a real double-edged sword for the networks. Sure, it’s a real opportunity; but voice tariffs are the networks’ cash cows. It will be interesting to see how they deal with VoIP, and whether they treat it as a threat or an opportunity.
On the B2B side, WiMAX looks like it will carry on where WiFi started, but it will work so much better. With potential transmission speeds of 8MB for data, WiMAX could offer real benefits for mobile business users.

Accessories
Kevin Carey, mobile segment manager, EMEA, Plantronics
The key challenge for the industry is the need to drive revenues in order to recoup 3G investments.

Businesses need to provide compelling content with seamless delivery mechanisms; and improving the consumer experience is critical in driving widespread acceptance of content.

High-quality audio playback is required in a variety of environments and it is unlikely that just one solution will suffice – stereo headsets are great for public places, for example, but powered speakers are necessary at home.

The operators must refine their message to ensure customers are offered targeted, selected content and services – the most valued offering for some will be no offers
at all!

Digital Rights Management is a sticking point for the content industry. The reality is that most people are happy to share their music and other content as a person to person transaction with no thought of copyright or DRM infringement. Using DRM to vilify the vast majority of the population is no way to get the message across.
Joined-up thinking from the content providers is key. DRM should be positioned as the facilitator, not the enforcer – the challenge is for technology to manage the interconnections and maintain the content libraries regardless of where the content
is sourced.

Services
Steve Procter, CEO, Mobycards
While mobile remains the poor relation to other marketing elements it will never be taken seriously as a promotional tool. The crucial factor for 2006 is for mobile to become fully integrated into the marketing mix. Bodies like the Mobile Marketing Association will be key to helping achieve this.

Mobile messaging has a 12% response medium as opposed to 2-3 % for direct mail and it generates spontaneous brand recall at 12% as opposed to 6% on radio and 7% for TV. When you consider this, it is not hard to see that mobile interaction with customers is worth so much more than the value of a basic SMS or MMS message.
It is shortsighted in the extreme for mobile marketing solutions to be sold on the revenue that can be made from the messaging alone. If we continue to hear the words revenue share into 2006 we will know the industry is seriously selling itself short.

Ramesh Kumar, ActiveMedia Technology
Content has undoubtedly been king in 2005, but the biggest mobile success story has yet to really make its mark.

Despite the passing of Simpay, mobile payment will come into its own in 2006. The success of the ringtone market is testimony to the fact people are comfortable paying for things via their mobile.

Operators are now keen to look at new opportunities where mobile is key to the payment process due to the EU directive allowing operators to participate in m-commerce. We will begin to see exciting m-payment and delivery opportunities, where goods like cinema tickets will be paid for and delivered on the phone.

ActiveMedia Technology is already doing work in this arena. For instance, our RAPOS (redemption at point-of-sale) technology powers the Orange Wednesday two-for-one cinema tickets offer; 10m Orange subscribers have access to this service, and while no mobile payment is currently involved it’s easy to envisage a situation where customers who feel comfortable participating in the promotion will also be happy to go to the next stage and buy their cinema tickets via their phones.

We live in a cash-rich time-poor age. Any company that can give consumers easier ways to pay for and receive goods and services is going to thrive – and what better, more convenient way is there than directly into your hand via your mobile phone?

Fran Heeran, Vice President, Product Management, Valista
I think we may see more consolidation among the traditional Tier 1 and 2 operators in the coming year as the fragmented European market comes together through acquisition and partnerships – the Telefonica purchase of O2 being a good example.
 
There should also be increased activity in the MVNO arena with media and other consumer brands entering the space as well as focus on the multi-channel offerings (triple and quad play) where mobile services are offered in conjunction with the other big three channels (Voice, Video and IP).

2006 should also be the year that tests the popularity of mobile video, in particular mobile TV (Vodafone’s TV offering is due shortly). The success of this and, where available, the holiday market should mark the broad adoption of 3G.

As for personal preferences: I would like to see improvements in mobile data tarriffing, which I believe is still too expensive and unclear to most consumers. This seems especially true for 3G data charging, where the majority of people are unfamiliar with the pricing structure and the others have discovered it through bill shock. These rates need to become clearer (and cheaper) to help accelerate the uptake of next-generation applications – especially those provided by off-portal content providers.

I would also welcome the elimination of Premium SMS as a charging mechanism, replacing it with a standard structured direct-to-bill model supported by the operators. The demise of Simpay has set this back somewhat; but I think the industry needs to present a consistent way for third-party service and content providers to charge consumers, in a manner that offers better consumer protection as well as more flexible tarriffing.

SMS still has a role to play in the discovery of services, especially for the off-net providers. However, technologies such as WAP Push are now widely available to allow operators to provide/require a more robust mechanism for charging their customers.

Next year will see competition on the payments aggregation market with traditional aggregators and new entrants competing in this space.

Observers
James Myring, associate director, Continental Research
What’s next for the mobile industry?
A greater recognition that not all consumers are interested in the latest technology.
Instead of being offered (expensive) new handsets as a sweetener to remain with a network, many mobile owners would rather have the cost saving passed on them directly in the form of cheaper calls.

New features are important for many, and for part of the market mobiles will become less a phone and more of a mobile communication and entertainment device. However many millions are not particularly interested in new technology, and for them a mobile phone remains exactly that – a mobile phone. New features are often rarely used, with the honourable exception of SMS.

For these consumers lower call charges are more beneficial than underutilised new features.
Editor’s View
Simpay’s successor. People want a quick and easy way to respond instantly to offers or inspirational ideas. We also need to handle micropayments from top-ups or on contract bills, for instance for parking meters the London congestion charge, PAYG top-ups, even domestic bills.

Real location-based services. Let’s have some practical offerings, from full-scale satnav down to a dial-up (server-based) streetmap-type address finder. And with find-me-the-nearest options for restaurants, hotels, public loos, speed cameras …

More battery life … More functions per phone are a good thing (probably) and so is better functionality (definitely) – crisper displays, purer sound, better reception. It all demands power, so let’s have some better (aka longer-lasting) battery technology.
 
…Better batteries. The more capable the phone the beefier the battery has to be. For maximum flexibility in design we need new ways of storing power that weigh less, take less space, and can be moulded into more interesting shapes.

Convergence. Seamless handover from cellular to landline is just about here, and should become more popular. For true ubiquity we need to include VoIP and WiMax in the mix. Let’s have a simple, cheap, ubiquitous adapter that lets the world use just one phone for all purposes and all locations.

Simplified charging. Most buyers don’t use all the minutes they purchase: as competition heats up, especially with consumer brands and other MVNOs appearing, we expect to see simpler pricing plans and more easy-to-grasp flat-rate pricing.

More and better mobile music. No-one is going to challenge the iPod while phones are restricted in capability (playback, sound quality, memory, in-phone management systems) – though none of that is unsolvable.

Better mobile photography. Decent cameras should be the norm – featuring not just lots of pixels but also good lenses and true colour reproduction – with easy-to-use tools and services for editing, printing, sharing photos … and sending them to news services and TV channels, perhaps with simple incentive payment schemes.

More retail activity from the networks. Sorry about ending on what many would regard as a downbeat, but we think the level of competition means the networks will have to do all they can to emphasise the brand. We expect to see more branded stores, more web-only deals, more exclusive promotions. The good news is that this should make some space for retailers who can sell more specialised or more complicated or longer-term deals, but for many in the trade that will mean a substantial change of direction.

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