If not now, when?

Growth of the Mobile Web and Operator Bashing

This week saw another very well received Mobile Monday London, on 6 November. This time at Google’s London office where we were treated to splendid hospitality.

The topic this month, it being the first anniversary of MoMo London, was “Trends in Mobile” – aka what’s changed in the last year? Tireless Tom (Hume) who was a speaker at the event posted a synopis of the event so I won’t repeat it here. Other speakers were Helen Keegan from Beep Marketing, Ajit Jaokar from FutureText and Paul Goode from M:Metrics.

This could have turned into a serious operator bashing session. But I’m pleased to say it didn’t – perhaps the fun has gone out of that sport – it’s too much like taking candy from children (though if you’ve ever tried that you may wonder how the expression ever got to be invented). However, equally, nobody said “The Mobile Operators have come to their senses”.

The subject of charges did come up, of course, and indeed Paul from M:Metrics (who gave a truly excellent talk on the statistics that his organisation gathers) related an anecdote about how someone in his office returned from lunch and proceeded to show everyone how capable his new gadget was – only to be landed with a GBP 40 bill for data charges.

Ajit talked about his idea of the “un-Pipe” – which he also posted about the other day. Ajit says that the first part of the story is that the operators suffer from “revenue envy” (my paraphrase). They feel frustrated at always being the bridesmaid and never the bride compared with the content provider’s revenue producing relationship with what the operator thinks of as being its customer. He thinks that the operators should get back to their knitting, and do what they do well which is to haul bits around.

Baby not thriving

It is, of course, the consensus view among folks that attend MoMo that operators are strangling the mobile application industry at birth. They don’t understand, we say, that cost is stifling the growth of what we’d like to see as a growing market. As Ronan Cremin points out in his post – people have a very real and potentially well-founded fear based on horror stories like Paul’s.

Perhaps a more in-depth treatment of what is stifling the growth – following on from Tom’s well-made but ill-fated comment on WAP growth stagnating (because all the early adopters have already adopted) – would be that there is a vicious cycle of a lack of consumer pull coupled with a lack of supplier push. The lack of consumer pull relates to unpredictable or unrealistic cost, and dreadful user experience. From the application provider’s point of view, the lack of any realistic billing mechanism and the technical challenges involved in providing a reasonable user experience to a significant user base act as a strong demotivating factor.

Ajit’s un-Pipe

As far as I understand it, operators do not want to be bit pipes. They want to climb the value chain because hauling bits around the place is a difficult game to play profitably over a long period. Value Added Services, as they used to be known, are the operators’ way of climbing the value chain. “We own the customer’s communication path. Now what can they be up-sold on that path, both to generate traffic revenues and to generate incremental revenue?”, they say. “We own the customer, we suffer from content ‘revenue envy’, and given market pressures ARPU can only decline if we don’t do something about it.”

The walled garden is a great answer to this. Except for three points:

• Content providers need a slice or the pie, or else content won’t get provided – at least not by that delivery mechanism.
• Users usually have more than one access route to their choice of content provider.
• The competences required to be a good operator may not be the same as those required to be a good content provider.

Billing

The first of these points is obvious. Famously, DoCoMo’s i-mode infrastructure plays strongly to this – their control of handset standards also helps significantly to reduce production costs and provide an experience that – at least – does not put users off at first attempt.

Users’ Choice

The second point is that users usually have access to the Web from more than one place and from more than one device. They have a broadband connection at home. They may have a cable connection from another operator. Their employer may well use yet another access provider. WiFi hotspots, kiosks, and other casual access mechanisms are other access routes. And even if it so happens that they have the same operator for all their access needs, it’s unlikely that their friends and colleagues share the same ones – there was much talk at MoMo about Mobile 2.0 and user generated content, but even at the basic level of sharing bookmarks the essence of the Web (be it 1.0, 2.0 or whatever) is that hyperlinks and bookmarks work.

Operators are not unaware of this and the fashionable ‘convergence’ word applies to access networks as much as anything else. There were a number of excellent articles in The Economist a few weeks back (subscription only, unfortunately), on convergence and quadruple play which are very much worth reading on this subject.

Play to your strengths

On the third point, operator competences, I agree with Ajit that operators must be “communications Enablers”. To expand this theme, I think it was my former colleague Peter Bury who was the first to observe to me that the operators’ key competence is billing. They maintain the customer relationship and are very good at putting together small charges in a cost effective way. Indeed you might argue that that very competence, efficiency, which allows them to make sure that the cost of billing for a line item does not exceed the value of the line item – is the enemy of the competences required for the creation of compelling, interesting and useful content.

A slice of that Mobile 1.0 pie, please

I am not an operator of mobile data network, so it might be a bit presumptuous of me to tell them what to do. So rather than do that, perhaps it’s worth repeating a few things that from the point of view of the potential mobile content provider (yes, OK, that’s so Mobile 1.0) that would help them take a plunge into taking mobile more seriously. This in turn might help provide the more compelling experiences that would make users come back, rather than cancel their data account after the first month. It’s a virtuous cycle, geddit?

The following has all been said before, so take it as repetition for emphasis:

1. Firstly and probably most importantly, most of us Mobile Monday types would say: “Take an enlightened view of the market – do you want a large share of a very small pie, or would you be better off with a smaller share of a much larger pie? Do the math(s).” There is a mobile value chain, and for the value chain to work each of the players needs to derive some value.
2. Do what you do well, haul bits and provide tariffs that grow the market and do not inhibit it. By all means extend your operations into other areas such as billing. Help grow the market by providing cost-efficient billing and settlement solutions. [For avoidance of doubt, I don’t mean reverse charge SMS from which the content provider gets less than half the sticker price.] What else can you do to help grow the market – we are keen to use your expertise and experience and technical knowledge? We’re interested in other services you may choose to provide, and are willing to pay (reasonable prices) for them.
3. Equally use your unique market position to insist that the handsets that are available conform properly to the necessary standards to allow content providers to limit the number of variations of content they must create. There’s really no excuse at all for technical problems with browsers. Having to deal with deficient implementations is really a lot more than can be expected from most people who have in any case to deal with the natural variation in device formats and inherent capabilities.
4. Don’t try and intermediate the provision of content. “Disintermediation” is a slogan much older than “Web 2.0”, it’s happened, don’t swim against the tide.
5. Sure, go for economies of scale. Go for increasing your stickiness by providing and tariffing across multiple delivery channels [cf. the Economist references above]. In the same breath, please provide predictable and reasonable tariffs. Don’t scare potential users away with horror stories of running up GBP 40 bills over lunch time.
6. Finally, please don’t presume you ‘own’ the customer. We, the application providers, are happy to share them with you but only in return for reasonable services. Remember – it’s a value chain. Other players need to make reasonable returns too.
   
   [There’s a nice cartoon on this which I saw at Helen’s site.]

Conclusion

I don’t think that lack of flat tariff access and fair-slice-of-the-pie billing mechanisms are the only cause of Tom’s observation of Web growth stagnating. There’s other stuff that needs doing too to assist the growth that we all feel so strongly should be there. For example, we do need phone browsers that actually work. And not least, on a subject dear to my heart, content needs to be better focused for mobile needs and it certainly needs to be better formatted in a technical sense. The content provider community, tools vendors and other players in the value chain all needs to present easily understood and readily implementable tools that make production of mobile ready content easier than it is today.

Finally, it would wrong of me to write a piece for the mobiForge Web site that did not recognise that some operators’ views are changing [dotMobi shareholders include a number of major operators and handset manufacturers]. You may or may not believe that dotMobi is part of the path to nirvana, but my work with dotMobi has been to push forward on helping content providers to understand the needs of mobile users and to help them do something about those needs. That is a good start, I believe.

As Primo Levi said: “If not now, when?” As Paul of M:Metrics said on Monday: “Be patient.”

Jo Rabin