Cellcos search for better business model

05 Mar 2007
00:00

Are European mobile operators seeking to build their own search engine‾ At the time of writing it is still not clear. Reportedly, Deutsch Telekom, France Telecom, Hutchison, Telecom Italia, Telefonica, Vodafone and Cingular Wireless planned an announcement during the 3GSM event.
3GSM has come and gone without any of those companies breaking their silence.

If true, it not only shows cellcos are finally embracing search, but it is yet another sign of a significant shift in thinking by operators about their business in the past 12 months.

That shift is in part a result of the arrival of speedy 3.5G networks, but driven much more by the mediocre performance of 3G.

Of the nearly three billion people who have a mobile phone, just 100 million use W-CDMA. Vodafone has just clocked up 200 million customers, of whom just 7% are 3G.

Hutchison's sale of its stake in Hutchison Essar in India last month was driven by the dismal performance of 3G. Effectively it sold off its emerging market position to save its 3G business.
Now it seems the European operators (plus Cingular) have finally got realistic. They might like to argue that over the last few years they've been obliged to extract whatever rents they could out of their control over the infrastructure bottleneck.

It's a model that has never looked like it was going to work.

The cellular business has been all about second-guessing, if not actually dictating to, the consumer. Instead of trying to leverage existing consumer behavior, like online search, operators have tried to manufacture fresh ones, like picture-messaging.

By contrast the success of the Web obviously comes from its open platform and the relentless search to engage and monetize users' attention.

Search in particular has enabled Google and Yahoo to build two of the world's biggest media companies.

By acknowledging the importance of search, operators are effectively junking their old business model. You don't need to search a walled garden.

I know a good many operator CEOs would quietly agree. But they would also point out that tearing down the garden wall doesn't of itself point the way to a viable new business model.

It's true there isn't a one-shot answer. But hiding behind the walled garden and charging premium fees for data streams isn't going anywhere.

These are familiar themes in 21st century cellular and certainly they were aired quite freely at the mobile industry showcase, 3GSM, last month.

Deutsche Telekom CEO Hamid Akhavan said the best option might well be a mix of models - a combination of pure access, service delivery, even a bit of operator-owned content.

Beyond acquisition

A good starting point might just be a stronger focus on customers.

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