Operators look to apps to prevent dumb-pipe syndrome - Mobile World Live

Operators look to apps to prevent dumb-pipe syndrome

01 SEP 2010

An overwhelming number of executives from mobile operators surveyed by the Economist Intelligence Unit say that they will be “better positioned to compete by opening their platforms to independent application developers” (80 percent of the 391 respondents), with almost half (45 percent) believing they should open their own app stores.

According to the survey of mobile industry executives, commissioned by law firm Freshfields Bruckhas Deringer, 37 percent of respondents anticipate that revenue from application downloads will overtake voice services in three years time – although 36 percent believe that voice will be the main earner, and 32 percent expect video to be the way forward.

The support for third-party applications and app stores comes as part of a wider drive toward expanding the variety of content and services available to customers. Natasha Good (pictured), co-head of Freshfields’ mobile group, notes: “There are clear signs of a shift in industry practice towards greater collaboration. To maintain profitability, avoid being categorised as just a ‘dumb pipe’ and make customers ‘sticky’, network operators will look to join forces with content providers and application developers.”

A number of issues were identified as “stalling mobile operators’ efforts to expand their service offering”, with almost half (47 percent) stating that data privacy concerns are hindering their ability to offer third-party applications to customers. 

Away from the mobile apps sector, the survey revealed that 48 percent of mobile industry executives consider the development of new pricing models a “critical challenge”, with a shift toward usage-based pricing models necessary to relieve network congestion and contain the costs of funding next-generation networks. More than half (55 percent) of respondents agreed that tiered pricing is the way forward, with 47 percent arguing that flat-rate, all-you-can-eat data plans are damaging their ability to increase revenue. 

Around 40 percent of respondents to the survey were from mobile operators and service providers, with the remainder coming from elsewhere in the mobile ecosystem.

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