Flat Rate for Wireless: Is this the way of nature for all telecom services?
Flat Rate for Wireless: Is this the way of nature for all telecom services?
In the last couple of days, the major carriers have announced competing flat-rate wireless deals. No more counting minutes. These new plans might be as significant as the original AT&T one-rate plan that revolutionized wireless pricing. I say “might” because the price is still rather high and the plans all but eliminate the family plan users. For the heaviest of wireless users, this plan can save money and eliminate hassle, and follows on the heels of similar flat-rate plans for wireless messaging and data usage.
A side benefit for the carriers is the eventual reduction in billing complications.
Do all telecommunication services eventually migrate to a flat-rate pricing structure when they mature?
I say Yes. With excess capacity and variable demand, flat-rate pricing is a good option.
Cable and satellite television are flat rate, most home wire line services (circuit and VOIP) are flat rate, Internet services are flat rate. As a communication service matures, the variable rate of the next bit approaches zero. As the variable cost of a new subscriber is virtually eliminated, the flat-rate pricing schemes emerge.
The value-added services that are upsells on these flat-rate services, tend to be themselves flat-rate services. Examples are HBO for $15/month, Navigator services for $9.99/month, Internet Virus protection at $5/month, etc.
With variable delivery costs plummeting, the biggest expense becomes attracting a new subscriber and retention once a subscriber signs up for the service.
The exceptions to this trend are royalty and license fees for media and content. The creators of content expect to be paid for the distribution of their intellectual property. This is a very logical assumption.
The technology that distributes their content is training the public to expect monthly subscription prices. It is inevitable that most media will also be purchased as a flat-rate subscription. The key will be the manner in which the content creators are paid for their product, since you cannot generate good music, video, games, ringtones, books, etc., at zero variable cost.
Wireless advertising is coming of age
The use of advertising on a mobile device is poised for the big take-off. There are several factors that are contributing to the rightness of the model, right now.
The easiest model to understand is the willingness of large content providers to spend advertising investment to attract subscribers to their premium-SMS services. Today, much of that investment is directed at the Web. There is evidence to suggest that the effectiveness and conversion rates for ads on a handset, for services that are targeted for the handset, is superior to the Web.
This conclusion is almost completely intuitive. If you are sitting in a stadium and you see a beer commercial, you are more likely to purchase a beer, immediately. If you are instead in an environment that does not have that immediate purchase opportunity (like watching the game on TV), the effectiveness of that ad to drive immediate sales is reduced.
So, ads for handset-targeted services seem like a complete no-brainer for the industry.
These ads can come in various forms. Carriers are opening their Wireless Web (WAP) portals to advertising through both agencies and direct contract. With this model, the carriers can get a cut of the ad revenue. The real estate bears limited space, so ads are required to be as condensed as possible to be effective. Other models include The next wave of ads is also being brought in through the Trojan Horse that is a combination of Smartphones and Google services.
These latest models have the potential to remove the carrier from the advertising value chain.
I am sure there are significant discussions throughout the carrier community on trying to derive value from this emerging and potentially huge revenue stream. Anyone care to weigh in? I welcome your comments! 
With Internet-compatible browsing on iPhones and others, the traditional Web advertising model is being dragged on handsets. Based on browser type, ads will be targeted on Smartphones for services that are applicable for the phone itself and for the mobile consumer.
Mouse No Longer Roars
What should we as an industry learn from these two expensive attempts?
6th grade. The trend is clearly getting younger. I would ask them who would want a Disney phone? The looks of horror I received was uniform. A Disney phone? “That’s for kids!" echoed one 9-year-old, “I want a Krazr!” If this crowd was rejecting the Disney, then who was left? 6-year-olds? The purchasers of these phones were parents. Parents do respond to constant badgering from their kids. (Gee, I hope my kids are not reading this!) Preteens want what teens have – the mainline phones from the big carriers. Not a Mickey Mouse phone.
Reason Number 5Here comes Google!
Its resources seem almost limitless as it sets its sights on a bigger slice of the mobile market. Will it just be a handset? A bid on spectrum, an outright purchase of a wireless carrier? If I were sitting at Google I would proceed with great caution.
is a marketing powerhouse. Their mobile content was on every carrier, with application innovation in sports being pushed and pushed. With these assets as a base, ESPN took the leap of faith to launch an MVNO and become a retail wireless carrier. 
Virgin Mobile has been successful because they actually ran other wireless MVNO services (in the U.K.) before they launched in the U.S. They had the necessary corporate skill set and have been successful.
Cell site on cruise ship saves the day!
Disney Cruise Line Goes Mobile
What a difference three years has made on the Disney “Magic” cruise ship. In the summer of 2004, I was on a family vacation on the Disney “Magic” cruise ship. The Magic is a large luxury liner with all the bells and whistles (and Belles!), large mice (Mickey and Minnie), chipmunks (Chip and Dale), ducks, pirates, large 7-foot dogs, and princesses. My favorite was “Belle.”
We could have called from our staterooms but the charge ($10/minute) seemed like piracy on the high seas. You can only wake up to “Good morning to another magical day at sea on the happiest place on earth!” so many times before you want to jump overboard. We managed to rearrange our flights and arrived home none the worse for wear. This past July (2007), my family once again braved the high seas with the Disney Magic. This time we were enjoying the sites of the
We needed to contact a surgical supply house in We needed frequent contact with various people stateside, while in the middle of the sea and many miles from land. All of this communication was done on our mobile phones. We used Verizon and AT&T phones, no problem. The cruise ship had its own cell site (GSM and CDMA) with satellite connection. The ship was also covered stem to stern with Wifi. We had constant mobile voice, text and e-mail connectivity throughout the cruise. While using this connectivity during a vacation is normally counterproductive to relaxing from the stresses of the work environment, it made our management of a medical emergency less stressful because of the ease of mobile communication.
Picture taken with AT&T BlackJack and transmitted via MMS from the ship
Another blog with a shout out to Carnival Cruise Lines and their wireless service:
http://solokay.blogspot.com/2006/07/carnival-cruise-fun-ships-offer.html
iPhone Part Three Power
As I stated in my previous installment, the big (really big) element of the iPhone is the screen.
The large screen signifies the triumph of software design over hardware. Gone will be the days of just programming a couple of softkeys.
The iPhone subjugates the traditional phone functions to software display. This design methodology requires more memory, a fast processor and lots of pixels to light on that display. These elements all equal power consumption! When combined with music, video, wifi and the occasional phone call, the stated power reserves seem aggressive.
Similar to Rocket scientists who debate the use of weight capacity on a launch vehicle, the engineers at Apple must have had long debates on the allocation of power reserves to the various functions.
Prediction: If the iPhone cannot last at least 24 hours with normal use – it will fail. Expect extra-capacity batteries to be part of the iPhone, very soon.
The exciting and long-anticipated:
iPhone – the final episode
Coming next week
iPhone Part Deux
The best part of the iPhone will be the most controversial. Where is the keyboard? Other devices have tried the soft-keyboard approach. For those of us old enough to remember, the first one of note was the Apple Newton.
Same hype, same paradigm shift. The
Next came the Palm. The first successful soft-keyboard device for data. This worked because the keyboard was still present – it was your PC. The Palm succeeds because it was a remote data representation of data normally stored on your PC.
When the Palm morphed into a wireless device – The Treo – it got a keyboard. Why? Because it now was a generator of data – not just “read-only.” The Treo sends and receives e-mail and text messages, and therefore needs a keyboard.
Now we are back to the Iphone. No keyboard, but packed with connectivity, GSM with GPRS and Wifi. As a phone, its owners will have a need to text and send e-mail. Will the soft keyboard work for them? I have serious doubts in this regard. For those of us with larger fingers, or for those who have trouble with a Treo-sized keyboard, the idea of using a touchscreen keyboard for texts and e-mails seems daunting.
Prediction: The next generation of iPhone will have a real keyboard.
Some more on the iPhone in my next iPhone installment.
iPhone Mania -- Boom or Bust?
Let's Start with Some Stats ...
The Nielsen report on Mobile Internet Services reveals the following data:
-Over 33 million people used their mobile phone to surf the Net during Q1 2007.
-Over 8 million watched a video on their mobile phone.
-At least 7% of users between the ages of 18 and 24 have watched a TV program on their mobile phone.
-Approximately 55% of mobile phone users with video functionality are from those with annual earnings of $75K or more.
Nielsen has chosen to specialize in mobile marketing with the announcement of the creation of a new service “Nielsen Wireless” which will analyze mobile phone users’ habits and how the use of the mobile phone will impact the traditional means of communications.
What do you think? Do you watch video on your phone? What do you watch? Please add your comments below.
Thanks!!!
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