WE‘VE ATTENDED A FEW, well, let’s call them briefings at the Mobile World Congress, all hosted by various industry leaders ranging from chip and device makers to service and content providers and some of what was said was very interesting while other parts were almost laughable. What became painstakingly clear though, mostly based on comments from the hardware makers, is the fact that the cost of wireless access isn’t where anyone but the network providers wants it to be.
One of the most interesting people speaking was Masayoshi Son, the CEO of SoftBank Mobile, Japan’s largest 3G mobile network operator. He started off by telling the audience that he was considered to be slightly crazy and then went on to tell everyone about how his company bought Vodafone Japan for $20 billion in cash back in 2006, just as the internet bubble has busted. This was anything but a popular move by investors at the time, but then again, Masayoshi Son is the kind of person that has what you could call a little bit of vision and these days SoftBank has the most 3G subscribers in Japan and zero percent 2G subscribers.
So why are we relaying this message? Well, because one of the things that was a frequent subject for discussion during the MWC was the cost of mobile internet access. Masayoshi Son has managed to build a successful business out of offering 3G data services to his customers and he believes that this is the only real growth market left in the mobile industry. Yet, if this is true, then why are the network providers abusing what really is a power that they hold over their users?
Although none of the US network operators were on site to answer questions, at least one of the large European network operators made something of an attempt at answering the question, but failed without even making any logical sense. The conclusion was something along the lines that they were looking over their data solutions and that we could expect announcements later in the year.
It’s actually quite interesting how the device market is leaping forward in leaps and bounds every six months, yet the network operators seems to be almost as hopelessly stuck in the past as the record and movie industry. Just as an example, when we arrived in Barcelona we tried to acquire a 3G data only SIM card, but were told that this would, one not work in our phone and two, we weren’t allowed to buy a SIM on its own without a 3G dongle. There is no logic to this, as at the end of the day, we’re moving towards a data centric world where all traffic is purely IP based, something event the backend providers are pushing as a key selling point, yet the network operators seems to try to hide at any cost.
The device and components manufacturers talked about how the smart devices we’re using today and will be using tomorrow will be more and more reliant on data connectivity for the services that will be on offer and how the app market is going to continue to grow at a phenomenal rate, yet as Robert Stephens the founder of the Geek Squad mentioned, it costs him $16 per MB to roam in Europe. Now that might be an extreme, but it’s still fairly expensive in most countries, least not the US to use mobile data.
It’s almost as if the network operators are trying to prevent its customers from taking advantage of the features on offer in the multi-hundred dollar handsets that they’re selling to their customers, yet expect the customers to tie themselves into two or even three year contract periods to get what is a fairly small discount on the device, especially compared to what they charge for bandwidth. Considering that there’s industry wide support from pretty much every single company that is involved in the making of a mobile device to make devices that are reliant on internet connectivity, even for simple things, it’s not as if you can get one of these devices without some form of a data service contract.
What we’re seeing, reading between the lines is that in the very near future the battle between the network providers isn’t going to be about who provides the best call quality any more, as it isn’t going to matter, but rather who provides the best data service for the lowest price. In as much as we understand that there’s a cost involved in building fast network with good coverage, it seems like many of the network operators aren’t willing to do this, especially outside of high population areas. Of course the downside in high population areas is that it tends to get congested quite quickly and once that occurs, the internet starts to crawl at a snail’s pace.
Another related point that also came up was that of how the network operators treat their customers and how they’re not exactly helping to make the life easier for consumers. As an example, many of us are using more than mobile device, yet we end up with different billing, different data rates and even different numbers on these devices, something many consumers don’t want or need. Yet there are very few network operators that offer solutions to these problems, something that could be done quite easily. Why does say a 3G dongle or a tablet device need to have a different incoming number than your handset? It’s not as if anyone is ever going to call a device that doesn’t support incoming calls and we’re sure this could be solved in a much smarter way.
There are no simple solutions to these things that we as consumers can offer, but people like Masayoshi Son might be the ones that can show his competitors that there is way forward and that there’s money to be made from 3G data connectivity without ripping your customers off or trying to tie them into services they don’t need or want. SoftBank might not be the cheapest or even best company in the world, but considering that in five years’ time they’ve gone from being the smallest to the largest 3G data provider in Japan speaks volume for an understanding of what their customers are willing to pay for the services they offer.
LTE was mentioned as the holy grail of wireless connectivity, although we’ve heard this story one time too many already and even with increased speeds, we can’t see this becoming a mainstream option for at least two to three years as yet and that’s not even going to outside of metropolitan areas by then in most countries. So for now, we’re going to have to continue to live with what’s on offer and hope that the network operators will stop and listen to the criticism from their customers at some point, or all the hopes of a new revenue stream from mobile data usage with all that it entails might just end up being a pipe dream and nothing else.S|A
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