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NEWSPEAK/Summer
European Communications presents its regular round-up of the latest developments in the world of telecommunications
Developing mobile advertising
The GSM Association (GSMA) and the Mobile Marketing Association (MMA) have agreed to co-operate to accelerate the development of mobile advertising worldwide. The two organisations will collaborate to deliver standardisation and transparency around current mobile advertising activity, and to develop new, innovative advertising techniques.
The MMA will lead the development of guidelines, formats and best practices for mobile advertising, while the GSMA will work with mobile operators globally to develop and prioritise consistent structures, such as inventory types, and commercial and measurement models that will allow advertisers to create valuable advertising propositions.
“This partnership will build on the MMA's work-to-date in the development of mobile advertising,” says Bill Gajda, chief commercial officer of the GSMA. “The MMA and GSMA will bring leading advertisers, agencies and operators together to ensure that this very promising, but nascent advertising medium realises its full potential for the benefit of all players in the ecosystem.”
The agreement follows the recent announcement of the GSMA's Mobile Media and Entertainment Group that will oversee its Mobile Advertising Programme, which is made up of representatives from leading mobile operators from around the globe.
“The value chain for mobile advertising is more complex than other media channels, with the mobile operator playing a key role, hence the driver for collaboration. The GSMA brings the global GSM mobile operator community to the table and we are pleased to be working with them to expand the reach of a sustainable mobile advertising ecosystem,” says Laura Marriott, president of the MMA. “We look forward to working jointly with the GSMA to deliver a consistent global industry standard for mobile advertising.”
Details: www.gsmworld.com / www.mmaglobal.com
MVNOs on the rise
MVNOs will continue to grow on a global basis – with worldwide subscriber numbers more than doubling for the period from 2007 to 2012, according to a recent report, The Future of the MVNO, from telecoms research and consultancy firm BroadGroup Tariff Service. However the report warns that business models and distribution will need to change.
The report examines over 300 MVNOs in 37 countries, and profiles the main players in each of the main mobile markets where access to the incumbent's network has been allowed. It also evaluates the role of the country regulator in enabling the MVNO to become established in key markets.
The research reveals a wide range of different approaches and market drivers. The global mobile market is becoming more fragmented with the power of brands and distribution – together with the emergence of new low-cost MVNE aggregators – favouring the development of emerging niche MVNOs based on a small social community. The report features case studies based on in-depth interviews with BT, Lebara, Virgin Mobile and Blyk, each using a different business model.
Retailers and non-telecoms companies with strong customer relationships are using the MVNO model as a marketing tool to broaden and improve their existing customer experience, and so improve customer retention for their core business.
The distinction between pure MVNO and pure MNO is likely to become increasingly difficult to sustain as the MNO is utilising the MVNO technique of sub-brands or multi-brands to retain loyal customers. As the larger MVNOs grow their subscriber base they also seek to develop a post-paid business stream and are adopting the characteristics of the MNO.
“The MVNO model is perceived as a perfect low cost entry vehicle to launch new mobile business models,” comments Margrit Sessions, Managing Director of BroadGroup Tariff Services. “MVNOs can help lower prices in a market, but purely competing on price can not be sustained as a long-term strategy. Developing new business models and distribution will be key to success”.
Details: margrit.sessions@broad-group.com
WiFi health scare
Health concerns surrounding WiFi have the potential to seriously undermine consumer confidence, and affect competition in the telecoms marketplace, according to telecoms consultancy Lorgan Orviss International
The scientific community appears polarised by heath concern reports – such as the 'test' that allegedly proved that WiFi radiation in the classroom was three times the level generated by mobile phone masts – a portion of the community believing caution is imperative, and the remainder believing it is all irresponsible scaremongering.
“If schools across the UK are starting to rethink implementing WiFi, as reports have suggested, confidence is already rattled,” says Hugh Roberts, senior strategist for Logan Orviss. “Consumer behaviour and purchasing decisions in the private sector will be impacted.”
Roberts continues: “It is important to consider what could happen in the communications value chain. Wi-Fi offers a form of 'mobility' for fixed line operators who want to offer their customers converged services that include 'out of home experiences' without incurring mobile roaming tariffs for voice and data services. Even a small erosion of consumer confidence – which is now almost inevitable – will change the competitive landscape and will undoubtedly influence the future re-structuring of the telecoms industry.”
Logan Orviss notes two other areas that might become affected if these scare stories continue. One - telcos are investing in convergent services targeted at family groups, where the bill payer (typically a parent) is responsible for the overall profile of the family's usage, although individuals are able to top-up or modify their accounts in defined ways. Home networks – typically WiFi – have been an important part of the development of this comprehensive offering. And two - apart from the potential decline in customer revenues from hardware and usage sales, teleco advertising revenues for certain types of convergent services that utilise WiFi may be hit. Even with the current level of concern, the advertiser profile will start to change.
Details: www.logan-orviss.com
Must have VoD
Video on demand (VoD) revenues will reach $12.7 billion worldwide in 2011, making it one of the fastest-growing digital content services over the forecast period, predicts analyst and consulting company Ovum. Starting from a base of $2.7 billion in 2007, Ovum expects to see more telcos across the globe launching their on-demand content propositions, moving themselves into content distribution.
"VoD is not a revenue generator at the moment but a 'must have' vision of the future in terms of both cash flow and telcos' content business survival," says Aleksandra Bosnjak, Content and Media Analyst at Ovum.
"From a content provider's perspective, telcos and ISPs will be the new contributors to content distribution and film finance, especially over the long term as the service improves and reaches a more significant scale and enhances its on-demand functionalities," explains Bosnjak.
Telcos are facing competition from all kinds of players - from old pay TV media to new digital distribution entrants - and the pressures of network convergence. This, coupled with challenges around content acquisition costs and finding the winning VoD business model formula, will mean that it is not a source of cash for the moment.
"We argue that over the next five years, 50 per cent of telcos' costs will come from content acquisition and marketing-related activities," says Bosnjak. "In their quest for an innovative content strategy, some telcos will experiment with various forms of content finance, such as financial backing via minimum guarantees, or go even deeper into the actual co-productions or co-ventures. In fact, we predicted this move back in February 2006 when we ran into telcos at the Berlin Film Festival. And we already see it happening with France Telecom and a baby IPTV operator Croatia Telekom Max TV service, which is producing its own short-format shows, and by using its own in-house production talent and facilities."
Ovum's view is that a careful content strategy and locally adapted VoD proposition will be a major driver of telco VoD service revenues, now estimated to comprise one third of the whole VoD revenue pie, depending on the country.
"Understanding the cash flow of traditional content distribution and collaboration with local content players will be the best approach for many operators in this tough VoD race - because the future of TV content, and especially European content distribution, is based on an on-demand business model," concludes Bosnjak.
Details: www.ovum.com
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