Reader Forum: The data deluge – how do carriers benefit?

Editor’s Note: Welcome to our weekly Reader Forum section. In an attempt to broaden our interaction with our readers we have created this forum for those with something meaningful to say to the wireless industry. We want to keep this as open as possible, but maintain some editorial control so as to keep it free of commercials or attacks. Please send along submissions for this section to our editors at: [email protected] or [email protected].
140,000 is a big number.
Specifically, it’s the number of applications that have been developed thus far for the iPhone, and now that Google and Microsoft have entered the mobile market whole-hog with the Android and Windows Mobile 7, respectively, there’s no telling how much higher the number will jump.
One of the most heated debates at this year’s Mobile World Congress in Barcelona was around the role of the wireless carrier in an app store world, and it’s a conversation that isn’t likely to go away soon. Gartner earlier in January forecasted that consumers across the globe will download approximately 4.51 billion mobile apps in the coming year, up approximately 2 billion from last year’s figure. The firm also predicts that app store revenues will grow to $6.8 billion this year, but that free apps will represent 82% of downloads this year and approach 87% by 2013.
If indeed the app landscape is going to grow at this rate as more platforms are introduced to the market, carriers need to adopt an approach that takes into account the fact that data will be the primary driver of revenue in this market for the foreseeable future.
Sharing the wealth and empowering the consumer
The app data deluge has made network bandwidth a very real problem for carriers, forcing operators to cut all-you-can-eat data plans and even incentivize their customers to use less data. But rest assured that operators will solve the bandwidth problem, as they have in the past. And once they’ve done so, the next step will be to develop revenue models that enable them to leverage the burgeoning data market in the way that makes them the most essential to their subscribers.
It’s still unclear how the app store revenue model will ultimately shake out between the major platform players, OEMs and carriers, but one thing is clear: carriers will never be comfortable with merely being the pipeline for the data, and they shouldn’t be. The major players are going to have a difficult time accepting this, as Google, Apple and Microsoft will all want to be considered the primary enabler of applications on their respective platforms and design their own revenue models as such. But with the carriers providing a vital means for consumers to receive these applications (the network), ultimately there will have to be a revenue-sharing model that enables all these parties to benefit.
And while carriers are working toward hammering out this revenue-share model, they can also be focusing on providing services and data options that allow consumers to view them – not the platform makers – as the gateway to app nirvana.
You can put me firmly in the camp that believes enabling cross-platform application sharing is a service the carriers can provide and something that needs to happen sooner rather than later. Some feel that this should be implemented at the handset level, but in my opinion, it’s one way that carriers can make themselves essential to their subscribers in a way that keeps them relevant in the app store world.
There are those that believe this kind of cross-platform app enablement is a ways off, and may never even materialize. But there’s no reason to think this should be the case. Google, Apple and Microsoft will enable and encourage platform-specific applications, and even if they don’t, they’ll still look for ways to own more of the customers’ data. While they’re doing this, though, carriers can be offering services to their subscribers – whether it be through development of standard APIs or another route – that offer the kind of flexibility and control to make app ownership a reality no matter which device or network consumers choose.
This issue of customer app control will be a hot-button topic for the foreseeable future. What happens when a consumer, having purchased or licensed an app for the iPhone, Nexus One, or some other smartphone, has a change of heart at the end of their service agreement and wants to try out a competitor’s device? How do they become empowered to keep control of their purchases and build their app collection when upgrading to a new device?
The key concepts here are control and ownership. If carriers can offer subscribers the ability to achieve true ownership over content, then no matter which platform or device maker ends up ruling the roost, subscribers will rely on the carrier – not the device maker – for control over the data they’re consuming on a daily basis. The operator will foster customer loyalty not through strong-arm tactics, but rather through offering it as a value-added service. They’ll be the good guy.
Staying not only relevant, but essential
As we’ve seen time and again, the way to the consumer’s heart is to offer them the kind of control and flexibility over their purchases that they can’t find anywhere else, at speeds that can keep up with their desire to consume them. This ultimately empowers the consumer with a feeling of ownership and facilitates the joy of building an app library that is truly and uniquely their own.
The beauty of the app store landscape now is that no one quite knows how things will shake out. Carriers, in trying to keep themselves essential with giants like Apple, Google and Microsoft vying for mindshare in the platform and app store markets, have a golden opportunity to stake out their claim in a data-driven future. They should always be investing in making networks faster to support the growing demand for apps, but should also insist on a revenue share model with the platform providers that enables them to derive revenue from the data as well.
And doesn’t mean the carrier can’t also offer the kinds of value-added services that platform providers, handset makers and app developers are unable to – the kind that make them essential to subscribers in a way that Apple, Google or Microsoft can’t. If carriers can achieve this unique combination of service and speed, they’ll solidify relationships with their subscribers in becoming a crucial part of how they consume, collect and enjoy their apps.