Understanding WAP Wireless Applications, Devices, and Services phần 7 doc

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The result is that most markets are enjoying tremendous growth in an oligopolistic market structure.

Most GSM markets went through the same market development stages (see Figure 8.1). In the early stage of the

market introduction, coverage was the major discriminator, especially for the corporate market, which traditionally is less

price sensitive. In stage two, operators started to tap the residential market. They therefore concentrated more on pricing.

For the residential market, the decisive price factors are the initial cost of ownership with focus on the terminal/price

relationship and the monthly fixed charges. Usage cost is a lower consideration because the first drivers are ownership

and passive contactability. Through subsidizing mobile terminals, the initial cost of ownership has been reduced. Later in

the development, operators looked at tariffs to increase the usage per customer. In the next stage of the development,

where penetration is already very high (see markets in Scandinavia), services provide an increasingly important tool for

differentiation and revenue generation. Operators like Radiolinjia in Finland differentiated themselves through new

value -added services. Radiolinjia positioned itself as an innovator by marketing SMS messaging and content services.

These new applications serve two goals— first, they support the operator's aim for differentiation, and second, they

compensate for the slower revenue growth resulting from the continuous price cuts for traditional voice services.

Figure 8.1 GSM market development curve.

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The competitive situation has tremendously increased since there are now three to four competitors per country

depending on the size or development stage of the country. The competitive focus starts to move away from pricing

because the price level in some markets is so low that profit margins are very small. In Austria, for instance, prices for

internal mobile network calls were at 1 schilling per minute (ca. 7 Euro cents) [1]. The focus is now moving towards

services. First operators offered value-added services like voice mail, SMS, and operator services almost for free, and

now they enhance their offerings with content services like traffic, news, weather, sports or stock information. These

services have experienced strong growth despite the fact that the marketing focus has been on tariffs. SMS especially is

enjoying an almost phenomenal growth, particularly in the young-age market segments. Between 1997 and 1999, the

German GSM market experienced around eightfold growth in SMS mobile-originating traffic alone [2].

Operators also use new technologies to trial new services other than voice-based or SMS-based content services. Cell

broadcast has been in trials in many countries with limited success. The main hurdle for the mass-market development of

these new technologies is the limited usability. The SIM application toolkit (SAT) seems to be a more successful enabler

because it offers better usability for mass-market applications. Unfortunately, SAT-enabled handsets and new SIM cards

are required. The latter is, in terms of logistics, particularly problematic in mass markets. Even though WAP has been

initiated by handset manufacturers, it is the latest of these innovative enabler technologies with very high potential

because it leverages on existing technologies.

Although data services have not fulfilled the expectations of GSM operators, there is an overall understanding in the

GSM community that data networks like GPRS and UMTS will be the next major innovative phase in mobile markets.

To make these investments successful, operators have to introduce new services which take advantage of these new

network capabilities.

WAP could be the right tool for the current phase of development because it enables an IP type of services with current

network functionality. The value statement is along the lines of “more than voice” or “the mobile becomes your

infoterminal.” Data services require a learning curve for operators as well as for the market. Most likely, it will take more

time to develop the market to use a mobile phone for nonvoice services than for telephony services. The market

education with low-

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bandwidth mobile data services seems an ideal preparation for a successful introduction of high-bandwidth services.

The core question of this chapter is: Do operators benefit from WAP, and if so, how can they best take advantage of

this new technology to contribute to their business objectives? In order to answer this question, operators' needs have to

be identified first. Having done that, one has to look at the market situation in order to decide if, and how, WAP can be

used to fulfill operators' needs.

8.2 Operator needs

As described in the market overview, GSM operators are by and large confronted with a new market situation. The main

problems they face are:

l Strong competition on price;

l Falling margins on mobile telephony services;

l Low degree of differentiation with traditional means like coverage, terminal, and tariff pricing;

l Ongoing high churn rates of existing customer base.

Most operators are therefore trying to focus on new services and branding in this new market development phase. First

of all, they need to identify new means of differentiation to retain their existing customers and to win new customers.

Since price levels are quite low, it is difficult to achieve a market impact by minor incremental price decreases. In

addition, falling margins will hurt operators' profitability once subscriber growth starts to decrease.

Second, revenue growth will be difficult in the light of falling tariffs and decreasing subscriber growth. Although there

is some kind of price elasticity on usage, it cannot compensate for stagnating or even falling revenues per customer. It is

therefore important to offer new high-value services which can compensate for the decrease in telephony services.

From the introduction of data services, for instance, operators can benefit twofold: first, on the bearer level from the

increasing traffic in the network and therefore better profitability by gaining higher capacity utilization, and second, from

new revenue streams from the application