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Friday, May 29, 2009

Mobile broadband - a lack of loyalty built-in?

Something to ponder on:

- With a mobile phone, you have two tie-ins to keep you in a subscription-type relationship with your operator: your number and the handset subsidy.

- With PSTN or ADSL connections, you also have the number, which necessitates a subscription-type relationship. In addition, the need for the copper line to be maintained and terminate on a switch port ensures that only continuous types of service are feasible.

- With public WiFi, you can have a subscription, or you can purchase adhoc connectivity when and where you want it.

So what about mobile broadband? As modems get cheaper, or included in PCs, subsidy becomes irrelevant. And there's no need for a permanent "number" - apart from the mechanistic requirement of using a SIM card. But there's no real reason for a customer to be a "subscriber" with an ongoing relationship, rather than buying connectivity on a transaction basis.

This is one of the reasons why operators are desparate to add value to PC-based mobile broadband through additional services like SMS or IM. Otherwise, there is no more need for a subscription than there is to subscribe to "cinema service", or get a season ticket for a transport system. It may be convenient, if you're a regular user and you get a discount and less hassle.

But in principle, there's no reason for mobile broadband connections to be ongoing relationships. This is likely to lead to:

a) Very high churn levels
b) The emergence of a plethora of business models other than "normal" contracts and prepay accounts. Ad-hoc and bundling approaches will become particularly important
c) The near-irrelevance of ARPU as a metric, as it becomes impossible to identify a significant proportion of connections as regular "users"


Zed said...

You missed an important reason: mobile "broadband" sucks rocks. Due to this users have a builting need to churn, if only in desperation to find some provider that actually works.

Anonymous said...

One other result will be that operators will do everything to have the best coverage and the highest speeds....

Richard said...

Do any US MNOs even offer a prepaid mobile data plan? I think over here we're stuck with "subscribe or nothing".