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The mobile market in the UK is possibly the most competitive of all global telecoms markets. With Orange and T-Mobile merging into Everything Everywhere it is further compressing such a competitive market and one might be forgiven for believing there is now only a small selection of providers from which to choose.
You’d be wrong.
Apart from the well known brands of Vodafone, Everything Everywhere, O2 and 3 there are a range of MVNOs (mobile virtual network operators) including Virgin Mobile, Tesco Mobile, BT Mobile and the rapidly growing Lebara to name but a few.
They offer relatively similar services at a range of competitive prices but there is a new trend of abolishing unlimited data packages due to network constraints. This comes at a time when roaming charges are being capped. Another trend is for operators to pair with their fixed line brethren to offer a converged service to enterprise accounts. This is a profitable model if it’s done properly and I’m sure we’ll see more of these alliances in the coming months.
I am interested in hearing from those with a view on how operators will charge for data usage, what the corresponding business models might look like and whether the networks are creaking under the weight of extra demand for data? Is this likely to be a major capex issue for the already heavily indebted operators?
Please feel free to contribute.
Steve Blake is Head of Technology, Media & Telecommunications at Interim Partners.
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July 7th, 2010 at 11:55 am
The mobile industry in the UK has never followed a “traditional” business model. Since the introduction of real competition when Orange and One 2 One entered the market in ‘93/’94, the entire market has been driven largely by customer acquisition and future customer values.
The charging models for voice minutes and text messaging have followed a familiar path, with prices reducing over time until eventually settling at a virtually “all you can eat” fixed monthly charge.
Despite various efforts to create alternative models, market competition and more affordable network capacity have led the industry to this point.
With no obvious change in Mobile Operator and MVNO behaviour, I can’t help but feel that charging for data usage has already travelled a long way down that same familiar path – a path that is set as a defacto expectation with business and consumer customers alike.
“Service” however remains a powerful differentiator, and the ability to deliver real, customer specific business solutions underpinned by “mobile data” will provide Operators and MVNO’s with an opportunity to increase margins and secure long term business.
September 15th, 2010 at 11:58 am
I tend to agree that the mobile insustry is facing the problem of newer technology making more bandwidth avaialable and fierce competition which pushes them towards continuing with a bundled commodity pricing mechanism of “all the data you can eat” at the same time.
The mobile industry is also struggling with the fact that more and more value is being delivered over the top. Examples such as Apple and Nokia’s Ovi simply leave the mobile operator as a commodity provider.
With the market now mature in all Western and many other countries they have tried many initiatives to expand their old media portal based approaches. For example joining in on payments with Payforit in the UK and soon Near Field Communications (NFC) which has been very successful in Japan for NTT Docomo. However I have not yet seen any evidence from any UK operators that shows that they have learned from the mistakes of the past. They clearly need to go for a smaller value add across billions of transactions in markets such as NFC where they could add useful value such as security, profiling etc in a meaningful way.
Unfortunately I fear that they will continue to overvalue their contribution in this area and miss this potentially lucrative market which means them looking at shares in the 2-3% rather than their traditional 45-50% enjoyed in their rapidly shrinking portal market.
Service does continue to be a powerful differentiator and the business market in particular is open to this. However it will be difficult for them to increase margins significantly but I believe that they could certainly increase market share with a good focus here.