Carrier consolidation among the wireless industry’s top players has had a similar effect on smaller operators, which are being forced to cooperate more closely to provide advanced services that larger operators have taken for granted.
While voice services remain the industry’s main revenue source regardless of carrier size, larger operators are proving that data services can be meaningful contributors to customer revenue. Sprint Corp. reported nearly 10 percent of its wireless subscriber revenue was derived from data services during the first quarter, with the remaining nationwide operators posting between a 5-percent and 8-percent contribution from data services.
A report from Compete Inc. found that rural wireless customers are just as interested in high-speed wireless Internet services and messaging services as their urban counterparts.
“Historically, rural carriers have relied on incollect roaming revenues as a major source of revenue,” noted Compete analyst Andy deGaravilla. “Now, as Tier 1 wireless carriers build nationwide networks, the market for roaming revenue has declined and rural carriers are shifting their business to grow revenue through value-added services.”
Several rural operators have already launched high-speed wireless data initiatives, including Alltel Corp.’s launch of CDMA2000 1x EV-DO in a handful of markets and several GSM-based operators rolling out GPRS/EDGE capabilities.
Midwest Wireless, which has also begun rolling out EV-DO services in select markets, has taken the data initiative a step further. The carrier has announced nearly a dozen BREW-hosting partnerships with rural operators that allow Midwest to better use its BREW investments while enabling smaller operators to provide downloadable content to their customers.
The model allows Midwest to offer a single standard catalog of applications and content to every hosted operator and then add specific content to target each operator’s customer base. “We saw a need by small third-tier carriers wanting to offer more advanced services but that were lacking in the [information technology] staff and engineering staff to roll out services,” said Scott Bergs, Midwest chief operating officer. “We also learned a lot on the sophistication of marketing BREW content.”
Midwest noted the hosting provides it with a larger subscriber base that it can use to receive better pricing or applications from developers.
“We can go to those developers and instead of just presenting our own customer base, can provide a much larger pool of customers for the developers to present their applications,” Bergs said.
Midwest provides the hosting service to Appalachian Wireless, Alaska Communications Systems Group Inc., Bermuda Cellular, Cellcom, Eloqui Wireless, Golden State Cellular, Guamcell Communications, Illinois Valley Cellular, Pioneer/Enid Cellular and Rural Cellular Corp.
Bergs noted that Midwest understood the financial and staffing requirements needed to launch BREW services that could be problematic for many small operators because Midwest faced the same situation before finally deciding to move forward with its own deployment. “The [return on investment] was close, but we decided it would be worth it,” Bergs said.
Bergs said that while the hosting initiative is limited to BREW content, the carrier may expand the service to include more advanced network technologies. “We see an opportunity to do this with lots of services, not just BREW,” Bergs said. “We have the capabilities to do more, it just has not happened yet.”
Midwest is not the only company looking to pool the collective resources of smaller operators to garner increased cost efficiencies.
The Rural Telecommunications Group Inc. reported a cooperative buying group agreement with One Voice Technologies Inc. that provides lower pricing to RTG’s members for One Voice’s MobileVoice service. The platform includes voice dialing, group conference calling, reading and sending e-mail, voice-to-text messaging and voice-driven phone-book applications.
“The opportunity for our carrier members to acquire volume pricing is a great advantage for them,” said Jessica Bridges, chief executive officer of RTG. “It is certainly a great opportunity for all of our members.”
Cingular Wireless L.L.C. has a GSM Alliance initiative designed to allow smaller operators and roaming partners to procure next-generation infrastructure at the same cost Cingular is paying.
