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