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Breaking Down The Walled Garden

New bundling strategies are not the only way Service Providers are re-inventing their business models. For mobile operators, a number of recent events and trends are conspiring to change forever the landscape of their “œwalled gardens” and causing them to dramatically expand their horizons in search of new sources of revenue.The 700Mhz spectrum auction earlier this year and the imminent release of the T-Mobile G1 Android-enabled phone signal a dramatic shift toward more open platforms and more choice for consumers. The trend is towards uncoupling the device from the provider’s network, which on one hand reduces costs for the provider in terms of handset subsidies and device support costs, but also has the potential to increase subscriber churn as users chase the latest”coolest” gadget and no longer have to lock themselves into a long contract with a specific carrier to do so.The rapid growth in capacity and capability of mobile data networks has itself sparked a huge explosion of new industry players and applications. Search vendors see the small screen as the next frontier for targeted advertising. Broadcasters and gaming companies see wireless as a growing and promising channel for their content (primarily video) and applications, and increasingly have the ability to go direct to the consumer to market their wares. Handsets are being used for more and increasingly diverse purposes, such as buying event or commuter train tickets, using vending machines, getting directions, locating stores, or downloading concert and theatre schedules.The iPhone, because of its highly functional and streamlined user interface, has created a sea change of its own by causing an exponential leap in the amount of mobile data that is consumed by consumers from a mobile device. According to Nielsen Online, 37% of iPhone users watch video on their phone (10x the average mobile consumer), 82% access the Internet over their phone (5x the average mobile consumer), 17% stream music over their phone (7x the average mobile consumer), and 20% play online games on their phones (9x the average mobile consumer).”œOpen” networks, the growing supply of unlocked and highly functional mobile devices, and a wealth of freely available content and applications all lead to a big question mark for mobile operators -- how will they make money in this new world?One huge area of opportunity is exploring and forming new and innovative partnerships and pricing models. More than just”bundling”, new partnerships may mean segmenting the market in new ways, packaging content or applications with different pricing models to address more varied demographics within the operator’s footprint. Or it can mean creative new wholesaling arrangements, where the operator’s service offerings are the”SP Inside” ingredient that powers an offer from other content, application, or retail partners -- GM’s OnStar service and the Amazon Kindle e-book are pioneering, and highly successful, example here.image Or a whole new area of promise is in machine-to-machine communications. As mobile operators are approaching the upper limit in numbers of subscribers, changing the lens from measuring subscriber penetration to device penetration increases their total addressable market exponentially. Verizon’s new”open access” network is a great example of a low-cost, low-touch approach to offering the platform required to enable many of the futuristic services many of us have read or heard about for years -- remote health monitoring, industrial materials monitoring, in-home sensors of all kinds, and even such obscure applications as prisoner-tracking electronic ankle bracelets. The vast majority of devices coming to Verizon for certification on their open network are for machine-to-machine applications -- you never know, the “œself-stocking refrigerator” could finally be right around the corner!The possibilities are endless, but also a little daunting -- success will hinge on flexibility and willingness to innovate, both in the go-to-market approach and the underlying systems and processes operators use to run their businesses. However, the status quo is becoming less of an option every day.It’s hard to expand your garden if you don’t throw out a few new seeds.

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