Mobile World Congress 2012: Impressions From A Telco Perspective

Around 60,000 global movers and shakers of all things mobile once again descended upon Barcelona to attend the leading annual mobility event, the Mobile World Congress (MWC). This year’s main themes centered on metadata analytics, the customer experience, and over-the top business models:

  • The big data opportunity fueled the fantasies of almost all MWC attendees. In the case of telcos, data analytics is seen as the driver for improving the customer experience and developing new markets. Telcos talked a lot about the opportunities of analysing user behavior and turning user data into the new operator currency. The context- and location-aware nature of mobile solutions makes the big data opportunity particularly attractive. However, despite the talk, there were practically no case studies of operators that have succeeded in monetizing data on a large scale. Progress regarding data monetization is slowed down by a lack of clear business models, but also by an OSS/BSS infrastructure that does not support real-time or near real-time analytics. Moreover, privacy concerns also act as a drag on the uptake of data analytics. Equipment vendors such as Nokia Siemens Networks, meanwhile, showcased their customer experience management and analytics solutions for telcos. The solution combines analytics and the actions that operators must take to correct or improve the end user experience, such as a level one call handler pushing the correct settings to a phone or a marketing manager setting up a marketing campaign.
  • Telcos are developing solutions for over-the-top players (OTTPs). As telcos gradually realize that OTTPs will not pay them to use their networks — with very few exceptions, such as video on demand if the regulator allows it — telcos are working on offerings that are attractive for OTTPs as customers. Operator billing solutions by providers like amdocs are key tools for telcos to turn OTTPs into customers by providing value-added services to them. Telcos could, for instance, handle the billing for buyers of mobile apps via the phone bill. At MWC, Nokia announced that it has signed deals with 140 telcos for operator billing for the Lumia Windows Phone 7 Marketplace. And Vodafone’s CEO stated that operator billing translates into a propensity to buy that is five times higher than that for credit card-based sales. The model could be particularly interesting in markets where credit cards are less widespread and where prepaid mobile charging prevails, thereby offering new revenue opportunities for telcos.
  • Telcos are trying to reconquer rich communications. Telcos have ramped up their efforts to deal with the damage that social networking solutions  like WhatsApp, Facebook, Skype, and Viber are inflicting on their SMS and video business. At MWC, GSMA launched the end user brand Joyn, replacing what had been known as rich communication services (RCS). Signatories to Joyn — nine device manufacturers and a dozen telcos, including the leading global telco — are committing themselves to a set of common standards. The aim is to provide a platform that allows users to send IMs, have presence information, use video, etc. irrespective of the handset they have (any brand, both feature phones and smartphones) or the telco they use — similar to SMS and voice today. In effect, Joyn is therefore also a test to see whether telcos can develop offerings that allow them to compete effectively with OTTPs.
  • There was less hype around cloud than in previous years. But rather than having diminished in importance, cloud models have simply become standard practice. Telefónica showed an interesting approach for cloud provisioning by combining network service provisioning with self-service cloud-based solutions. Customers can choose their connectivity, such as MPLS, in a drag-and-drop self-provisioning portal when they acquire cloud storage or server capacities. This process should facilitate the procurement process for SMBs and also enable lines of business to shop for ad hoc cloud-based solutions more easily. Telcos themselves are also increasingly turning to cloud-based solutions for their internal IT solutions. For instance, French telco free relies on OpenCloud to provide its voice and messaging platform.

The implications of these trends are far-reaching for practically all major exhibitors at the show. They point towards the need to change business models and rethink relationships with other players in the larger value chain. But MWC of course also focused on other issues, not least devices and emerging markets:

  • MWC did not turn into a gadget show. Pure handset device pitches did not excite the crowds this time, unlike last year, where tablet hype reached a fever pitch. Hence, it was noticeably quieter around HTC compared with last year’s HTC Flyer splash. But Samsung also attracted much less attention, despite a range of slick devices in the Galaxy family. Huawei, meanwhile, showed off its new range of smartphones and tablets that the firm is aiming at the European market. Huawei’s entry underlines the need for hardware-focused manufacturers like Samsung to come up with a concrete plan to wrap a value-added story around its hardware. Nokia’s CEO, for instance, announced progress of its “comes with Nokia” device-embedded service range for the Lumia. Nokia has added services like Nokia Transport, a real-time public transport scheduling solution for 500 cities. And to be sure, interest in tablets has not diminished since last year. Rather than being marvelled at, as was the case last year, tablets — and their smaller cousins, smartphones — are now the standard MWC attendee device. It was nearly impossible to locate laptop users.
  • Feature phone-based innovation is having a particular impact in emerging markets. It is here that mobility offers has a truly life-changing impact, as it brings healthcare, banking, education, etc. to rural communities. Emerging markets underline the potential for feature phone-based solutions. This point is not trivial, as there are only 1 billion people in the world with smartphones, but 6 billion mobile users. These people have never used GPS-based applications or the mobile Web. One example would be Vodafone’s SMS-based medicine inventory and delivery solution in Tanzania that it developed together with Novartis. As a result, 25% more people in the region have gained access to medicine. Bharti’s CEO highlighted a mobile banking solution in India that builds on the fact that there are 20 times more mobile phone sales outlets than official bank branches. These mobile phone sales outlets also act as mini-“bank branches,” thus spreading banking services into unbanked areas and communities. Also, SAP showcased a 2G-based mobile scanner solution for very small shops in India that allows shopkeepers to scan products upon delivery and at the point of sale. The solution allows suppliers like Procter & Gamble to have more transparency about demand and delivery to tens of thousands of mom-and-pop stores across India and ensure that the shopkeepers have a reliable supply of goods. Ultimately, such solutions can be linked to mobile banking solutions, thus providing additional value-add to the shopkeeper. Moreover, as Google’s Eric Schmidt pointed out at MWC, not all mobile devices have to be connected to be useful. Mesh networks that connect phones to each other in a peer-to-peer fashion rather than to the Internet can still add significant value to communities.

As during the economic turmoil in 2009, MWC once again highlighted the relative resistance of the mobile sector to macroeconomic downturns. Despite mobile penetration levels reaching saturation points in many markets, the potential for cheaper and faster devices and networks as well as M2M solutions opens up an entirely new dimension. We expect MWC 2013 to focus even more on mobile solutions and services.