Analyst Angle: AT&T disrupting SiriusXM – monetizing wireless

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
As I was driving to daycare this morning, listening to CNBC on Sirius, a few thoughts crossed my mind; I was paying a $12 fee per month to Sirius and yet I could not listen to some of the Indian or South African radio programming available for free on the Internet via streaming. What made the situation worse was the fact that I had my iPhone in the car sitting idle with an unlimited data access potential. This got me thinking about how operators today are fighting net neutrality and also avoiding merely becoming a pipe (with high capital investments) for traffic while the content/application providers and aggregators reap the profits.
So why don’t the operators think horizontally and begin to leverage their key advantage and differentiator, wireless accessibility, and monetize this? This involves providing a complete solution that customers will value and be willing to pay a few extra dollars per months for, thereby increasing the operators ARPU and perhaps improving subscriber retention.
So why am I picking on SiriusXM? Here is a solution I would love to see implemented. AT&T (or any other operator for that matter) should disrupt the premium (satellite) radio subscription model by developing an Internet streaming audio system. This solution can be created with partners or outsourced and should be targeted at both the direct market via retail channels focused on automobiles and also directly to auto manufacturers to embed as standard OEM equipment. Now I would be able to purchase this piece of hardware which has wireless broadband connectivity (via 3G and 4G) embedded and AT&T should provide a Web site where I can configure which Internet streaming radio stations I wish to add to my device. I customize my own channel list of the best stations and my interests available globally, and that setup information is automatically updated over the air to my device. That definitely solves one of my problems of lack of flexibility by being able to access diverse radio content!
The real beauty, however, lies in the commercial value to both me and AT&T. I would be very willing to pay $5 per month for this type of solution, even with the advertizing on streaming radio. I have received more variety in my programming with greater programming control and have saved 58% off my monthly access fee, compared to SiriusXM! AT&T on the other hand can reap some upfront device revenue for the solution and also increase their ARPU by $5 per month which would typically represent an ARPU increase of 10%!
It is also easily conceivable that AT&T structures deals with radio stations streaming high-fidelity ad-free content to AT&T servers for a slice of the profits, which then makes the AT&T radio streaming solution that much more compelling to SiriusXM.
This is just one example, but my point is that the wireless operators need to re-evaluate their business strategy, take stock of the fact that they are exclusively positioned to be able to deliver mobile content, and then develop e2e solutions to consumers or enterprises that leverages this wireless access advantage. The three key goals are simple in this disruptive process: Value creation, simplification or reduction in cost of thinking and providing greater consumer control and flexibility. Instead of letting other companies develop solutions that merely “access” the operator’s wireless investments, the operator should be proactive directly with content creators to develop innovative solutions that create incremental value to end-users. A $40/month unlimited data plan is nice to have, but does not create value, change the way I behave or provide me more flexibility and control. Rather give me creative solutions that make my life easier, and I will be willing to happily pay. Similar to the way subscribers currently add new services like SMS, there should be a host of other solutions available that disrupt the way we receive information today, and disrupt by using the operators key benefit – wireless connectivity.
Sanjay Ambekar is the Co-founder and Partner at NGN Consulting LLC. (www.nextgnconsulting.com) and can be reached at [email protected].