Editor’s Note: Welcome to our weekly Reality Check column where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.
In early August, President Barak Obama signed into law a bill known as the “Unlocking Consumer Choice and Wireless Competition Act” that gives consumers the right to unlock their cell phones and switch carriers without paying for a new device.
Prior to this legislation, consumers were legally forbidden from unlocking a mobile device for use on other networks without the carrier’s permission. Carriers reserved the right to lock a customer’s device if they attempted to switch carriers or connect to international carriers on a device while traveling abroad. Customers who unlocked their phone illegally could have faced fines of up to $500,000 and five years in jail for copyright infringement.
How the cell phone unlocking bill affects carriers
Although this bill offers consumers much more flexibility to switch carriers without incurring significant financial costs, it has several implications for carriers and contributes to increased competition in the telecommunications sector.
While the law will be re-examined by the Library of Congress in 2015 and once again every three years unless a new law is passed, it represents a fundamental shift in the wireless industry and consumer behavior. Now that a device will no longer constrain consumers to their particular carrier, if customers are unhappy with even one aspect of their current plan, they will be far more likely to take their device and switch carriers.
How carriers can adapt
Increased competition as a result of the Unlocking Consumer Choice and Wireless Competition Act will threaten carriers’ ability to maintain and grow average revenue per user if they don’t take action now to add value to the customer experience. There are several steps carriers can take to address these changes in legislation and stay competitive:
–Improve customer-facing features: It is a relatively level playing field when it comes to factors like call quality and mobile bandwidth, so carriers need to go beyond simple connectivity by offering compelling features that improve the mobile experience. This includes targeted content, rich communications services and other features that are prevalent in many of the most popular over-the-top messaging apps, such as WhatsApp.
In the future, we may see carriers build their own applications and functionality that are unique to their network but device agnostic, or acquire existing OTT providers to expand their capabilities immediately.
–Ensure security: As more consumers turn to their mobile phones as their primary communication tool for both personal and work functions, secure mobile communications is a top priority for consumers and carriers alike. By incorporating strong security protocols, such as near-instant customer communication, secure messaging, mobile-based user authentication and secure internal collaboration tools, carriers can prevent data loss and attract more customers.
–Implement robust mobile messaging capabilities: Until recently, most carriers have viewed their mobile messaging strategy as something that’s necessary only because the competition provides it. However, with the rising popularity of OTT messaging apps, carriers must extend their messaging capabilities and provide more value to end users. This could mean building an entirely new mobile app for customers or consolidating existing messaging platforms into a single app on their devices.
The future of the wireless industry will be characterized by improvements in mobile messaging capabilities and customer experience. Carriers must act now to build new value-added messaging services that will provide additional revenue opportunities and protect carriers from degrading ARPU as a result of increased competition and customer choice in the wireless industry.
