The M-Business Evolution, Page 5
One of the major trends in the telecom industry is that the wireline and wireless carriers are seeking to leverage data services as a new value-added service offering, a new revenue stream, and a differentiator from the competition. With data services, these companies have the potential to increase average revenue per user (ARPU) and reduce customer churn. With voice service becoming increasingly competitive and commoditized, these companies are moving into data services with the same zeal as enterprises that have adopted E-Business over the last several years. In effect, they are transitioning themselves into a totally new class of service provider—often termed the next generation communications service provider or CSP.
The following figure from the ARC Group shows how large the problem of declining voice revenues is becoming. The next year or two will be critical for the communications companies to transition their business model and their products and services in order to capture the market for data services before it is lost to the competition.
Value-added data services can help communications companies not only increase ARPU but also to reduce customer churn and to increase customer loyalty. Consumers, small businesses, and enterprise customers are far more likely to stay with a given service provider if they depend upon them for not just their "pipe" (the connection) but also productivity increasing communications services. Such services include unified messaging and e-mail, content services that are personalized to their needs, and applications such as personal information management, Internet and intranet access, time and expense reporting, dispatch/scheduling, equipment monitoring, sales force automation, and field force automation.
Figure 2-5 Predictions for Increase in Value-Added Data Services in Order to Raise Carrier ARPU. Source: ARC Group.
Today's communications companies could end up becoming the M-Business providers of tomorrow. Owning the network, they are in a powerful position to become the ultimate owner of the customer— financial services providers, retailers, content companies, and software companies need to pay close attention to the strategies and movements of some of the leaders in this industry.
In fact, we appear to be moving into an era of vertical integration. Wireless companies are attempting to become full service providers within the industry. They are beginning to do this by providing the network, the applications, and the integration services for their enterprise customers. An example that comes to mind is the merger of Motient Corporation, a provider of two-way mobile and Internet communications services, with Rare Medium, an Internet professional services firm. This vertical integration model is reminiscent of the early decades of the computer industry, wherein companies such as IBM, HP, and Digital provided complete solutions from hardware to software.
Wireless Data Services
One of the first data services, after two-way interactive paging, provided by the wireless carriers was the well-known "wireless Web." This service provided access to Internet sites over a cell phone equipped with a micro-browser via the Wireless Application Protocol or WAP. The WAP standard defines a set of technical specifications for delivering Internet communications and advanced telephony services on digital mobile phones, pagers, personal digital assistants, and other wireless terminals. The initial work on WAP started back in June 1997; this was done by a consortium that included Ericsson, Motorola, Nokia, and Unwired Planet. (Since that time Unwired Planet changed its name to Phone.com and later merged with Software.com in order to form Openwave.)
Thus, the first generation of wireless Internet data services provided by the carriers was focused on consumers and provided access to Internet Web sites via the Wireless Application Protocol. Carriers formed partnerships with multiple content providers in order to build closed-content portals often known as a "walled garden." Users were confined to the content providers listed within the portal and had little or no way of getting out to any other sites on the Internet. Given the "walled garden" situation, it has made a lot of sense for content providers to form relationships with the wireless carriers in order to get placement on their WAP portals and better visibility for their wireless services.
The story of how wireless carriers came to focus on horizontal wireless data applications for enterprise customers is an interesting one. According to Paul Reddick, VP of Business Development, Sprint PCS, the company was already looking at enterprise applications for wireless data as early as 1998. They initially talked to enterprise customers to understand the killer applications for various vertical markets such as the insurance and real estate industries. Their discussions with customers revealed that, although vertical market applications did not warrant heavy investment at that time, there appeared to be a universal need for more horizontal applications on the mobile phone such as e-mail, and personal information management (PIM) such as contacts, calendars, schedules, as well as customer relationship management, corporate directories, and sales automation. Sprint PCS adjusted their strategy and delivered these horizontal applications with a set of industry partners as part of a suite of products known as the Wireless Web for Business in September 2000. They are now moving into the vertical applications space as described in the next section on wireless application service providers. According to Reddick, part of mission of the Sprint PCS Clear Wireless Workplace is to make people more productive. The natural extension to this is to allow their customers to access information in addition to people. This is true whether one is dealing with consumers or with enterprise customers. Thus, the migration from voice to data services has been a natural evolution, as well as a fundamental part of their mission statement.