The 3G-survival game:

Copenhagen, December 2005

Many operators are 2-3 years behind schedule, and in danger of not making it to the finishing line.

Mobile operators are taking part in the greatest survival game the world has ever seen. Those who make it will make a killing. Those who don’t will die.

Today we must conclude that many operators taking part in this 3G-survival game are 2-3 year behind schedule and in danger of not making it to the finishing line.

The reason being that they are using old gameplans for a new game. They are using 1.generation strategies for 2, 2.5 and 3.generation markets.

The rules of the 3G-survival game are few. The challenges are many. Operators must successfully make it through its five stages:

1. SMS
2. Premium SMS
3. Premium MMS
4. UMTS

During each stage, they must successfully meet a number of challenges:

-They must implement the new technology

-They must design new revenue models

-They must establish partnerships with content providers and media businesses, and make it attractive for them to develop and market quality services

-The must educate their customers in using, buying and paying for mobile services

Most operators have succeeded in implementing the new technologies on time, but have failed to design revenue models, co-operate with content providers, and in educating their customers.

Many mobile operators are NOT ready. Many of them often act as if mobile phones were still purely for talking to each other, and this old mindset is keeping them from developing the new revenue models necessary to be successful in the market for content-based mobile services. It is because of this old mindset and its outdated strategies that many operators are 2-3 year behind schedule:

• Operators should have focused on SMS services between 1997 and 1998. Many did not do so until between 1998 and 2001.
• Operators should have focused on Premium SMS services between 1998 and 2000. Many operators delayed this focus until between 2001 and 2003.
• Operators were expected to focus on Premium MMS between 2000 and 2002. Many operators delayed this focus until 2003 and 2004.
• Operators expected to launch UMTS services in 2003. Many operators will not be UMTS ready until 2006.

To these operators the delays spell financial ruin. They cannot wait that long before beginning to make a real return on the huge UMTS investments. The revenue generated from Premium SMS services will simply not be enough to finance the debts incurred from buying UMTS licences.

Mobile services require new technologies and huge investments. They also require new ways of thinking if operators are to ensure a return on these investments. Operators must learn to mix apples and pears. The revenue generated from Premium SMS services will simply not be enough to finance the debts incurred from buying UMTS licences.

In order to ensure a return of the investments, operators will have to become more than that. They will need to become a mix of different businesses that were previously distinct from each other. They will need to become part of a network of partnerships.

Only this way will they be able to create business and revenue models able to ensure a return on the investments. Only this way will they be able to make it sufficiently attractive to content providers to develop and market mobile services.

What mobile operators must develop, and develop fast to make up time, are new game plans – new revenue models. Many operators need to formulate strategies that can better help them meet the challenges of the 3.generation mobile market.

Casper Lundgreen 
Wirelessscandinavia