Owning the Customer

I was taken aback during my early morning stroll recently, when my neighbor,

who runs a garment factory, told me that he does not even know the name of his

Internet service provider. But what he said very proudly was that he visits

Google about four times a day, and checks out ICICI Direct six times a day.

So, I am not sure in this dog eat dog world of telecom today, where billions

are being spent on building brands and capturing mind-share, who is likely to

finally own the customer. Is my neighbor a customer of the ISP or the content

and the applications player?

The bigger question could be if mobile telephone operators would also be

relegated to such a position? Mobile content and applications businesses for

most operators in the emerging markets in Asia, Africa, the Middle East, Eastern

Europe, South and Central America is still small, and therefore not particularly

high priority areas. For instance, in many of these countries mobile content is

nothing more than ring tones, logos, wallpapers, basic games and some news and

information services. And it would not account for more than 5—7% of most

operator's revenues. India is no exception.

There are obvious reasons why operators are not devoting organizational focus

and resources to this area. A large number of operators in the emerging markets

are still grappling with the opportunities and challenges on basic voice and SMS

services. Smartphone penetration is low, and there is hardly any 3G, the

technology that is ultimately going to really leverage mobile content and

applications.

One understands that it is the number race right now, but operators need to

get down to some long term thinking. Just acquiring more and more customers but

not taking them up on the value ladder could backfire. It is unlikely that

people will not even know the name of their mobile service provider, but

operators who offer experiences beyond such voice and basic content will surely

have a big edge.

If 3G happens in India, which looks like a 99% possibility every now and

then, and big operators get their networks in place, the entire mobile content

and applications market will most probably transform. Just the way the mobile

market has transformed. I think this new technology would give operators a big

opportunity to own the customer. New technologies that get users richer

experience must be brought in for rules of the 'service quality' game to be

taken to the next level.

Technologies like 3G will force operators to move up the value chain, and not

just run after numbers. And it will be great for users too. Obviously, the

entire ecosystem that revolves around mobile content and applications will also

get moving.

The good thing is that handset manufacturers have taken the initiative with

their foray into mobile content and applications. This will eventually lead to

serious and big time counter strategies from operators, because it will not be

just about a little share of the content and application revenue, but more about

who owns the customer.

Ibrahim Ahamad



ibrahima@cybermedia.co.in