As wireless access to the Internet becomes an increasingly popular selling point for wireless carriers, a new concern arises over how carriers can offer valuable Internet-based content without becoming marginalized as a pipe.
With 1 billion wireless customers expected by 2003, it is no surprise Internet portals are eying the space with hungry eyes. At the same time, carriers see Internet content as a way to increase airtime usage and reduce churn.
But while Internet content provides huge opportunity for wireless carriers, it also may prove a Trojan Horse. Internet powerhouses like Yahoo! and others are well funded by Wall Street, which seems willing to turn a blind eye to their lack of profits. This gives them a large base of cash to spend without the need to worry about their bottom line. Wireless carriers are the opposite. To get any love on Wall Street, wireless carriers need to show a firm profit margin.
Many see Sprint PCS’ decision to offer Yahoo! content with its Wireless Web service as a fairly risky move. The Internet portal company’s Yahoo! Everywhere strategy speaks to its goal of getting Yahoo! content on any device so it can be accessed at any time, much like the AOL Everywhere initiative from America Online.
Some analysts see portals like Yahoo! and others as a potential threat, if not treated with care. Yahoo! services can hardly be a differentiator to help reduce churn if customers can access it from any carrier.
So carriers must aggregate their own content, say many in the industry. The consensus among industry analysts and carriers alike is to offer value-added services that differentiate the carrier’s brand and create customer loyalty.
To accomplish this, they say operators must make the customer an asset. By understanding what services the customer wants and needs, carriers then can create a set of value-added services for them.
According to those following the issue, carriers must create some kind of customized wireless portal service of their own, branded as their own, that is so valuable that customers will be less likely to churn. Then they can offer other portal services like Yahoo! without worry.
“Carriers need to create stickiness on their portals to avoid becoming a pipe,” said Richard Siber, associate partner and director of the wireless practice at Andersen Consulting.
To do so, Kendra Vandermuelen, senior vice president of product strategy and development at AT&T Wireless Services Inc., said carriers must form powerful alliances and aggregate content themselves. If carriers allow an Internet portal to aggregate for them, she said, the portal provider ultimately owns the customer.
While it is important for carriers to aggregate content themselves, they should be careful not to restrict Internet content too much, said Dave McMurtry, vice president of sales at Research In Motion Ltd.
“The Internet will find its own way to get to the user, without carrier input,” he said, likening Internet content to water on a slide that always takes the easiest path. If content from Yahoo! is restricted too much, Yahoo! will go around the carrier and offer wireless extensions on its own.
Darryl Sterling, senior analyst at the Yankee Group, said carriers’ goals should be to provide the biggest, fastest and most pervasive pipe, but also to know the customer. Find out what they like, their usage pattern, and tailor content to fit that desire, he said.
“It doesn’t matter who has the content,” Sterling said. “The only important thing is to focus on the customer relationship. Give the customer everything they want. In an Internet economy, the product becomes a commodity. The only way to differentiate is to provide a value-added service.
“The wireless industry is jaded if they think they are going to move into the Internet space and clean up,” he continued. “The Internet is too big, fast and powerful. We’re leveraging off of them.”
Yahoo! content is an amalgamation of information gained from several sites. Companies like Saraide Inc. and Infospace offer carriers the ability to aggregate that same content on their own, without the need to partner with Yahoo! to get it.
Saraide, for instance, is a wireless portal that sells its site and content to carriers, which then can choose what content to market and brand that content to end users as their own.
“Carriers can retain ownership by ensuring the services they offer are optimized to the wireless environment and not just an extension of hard-wired portal content,” said Jeff Hanson, vice president of corporate communications at Saraide.
Infospace is a well-known Internet aggregator. According to Steve Shivers, general manager of Infospace’s wireless and information appliances group, the company’s technology platform allows it to provide various directories, news content and other information on a private-label basis to various Web sites and carriers-such as MSN.com, Netscape, AOL and Lycos.
“We give them the tools to have the best of the Web at their disposal, the tools they need to differentiate content under their own brand,” Shivers said. “We provide the boards, nails and shingles. They can build the house. It’s very collaborative. We have ways to accelerate the time to market. We can get them 70 percent of the way there.”
Shivers said the best value-added service wireless carriers can provide, which Internet portals can’t, is location-based information.
“Where mobile carriers can differentiate vs. the Web is localization,” he said. “Nothing on the Web to date is optimized for local mobile units. Providing localized content that is easy to access and tailoring it to consumer behavior is a good way to retain customer control.”
