Lower costs needed to drive mobile services

13 Nov 2006

TNS study finds uncertainty and resistance among customers over the capabilities of mobile TV and audio on cellphones

Costs need to drop and customer interest must somehow be expanded if new wireless technologies and services such as 3G, Wi-Fi, mobile TV and mobile audio are to catch on throughout Asia, according to a recent research report.

The annual Global Technology Insight (GTI) study conducted by market information company TNS found a surprising amount of resistance to new mobile technology adoption, caused mainly by frustration over costs and uncertainty about the capability of the mobile technologies.

For example, according to the survey, nearly one-quarter of global respondents cited cost as the main obstacle to using 3G, while 21% refuse to download songs to their mobile devices because of the expense and 23% don't use their mobile phone to surf the Net because they say it costs too much to do so.

Furthermore, the survey found little difference in the level of interest in the wireless technologies between countries that had high levels and low levels of adoption. The survey notes that even though Asia 'is home to both countries with some of the world's highest levels of 3G usage and countries where 3G is either only just or not yet available, user sentiment remains the same.'
In fact, the study also found that interest in using some of the wireless technologies actually dropped this year compared to last year. For example, 4% of survey respondents this year identified 3G as a 'priority feature' on mobile phones, down from 7% in 2005.

Asia presents a special problem for vendors and carriers because interest in the new technologies - and the services they enable - appears to be weakening, according to the survey. It found that more than half of the respondents who currently don't use their mobile telephones to surf the Web or download data or music have little or no interest in doing so during the next 12 months, indicating it will be an uphill struggle to create strong consumer demand for such services. 'It would appear that significant change to either content or pricing is needed if 3G is ever going to achieve widespread usage,' a report on the study concluded.

One large problem, especially in emerging Asian markets, is that customers are still paying for key applications such as Web surfing according to kilobytes used or in time increments when the service is used. One solution to this would be to introduce fixed-price plans for unlimited use, the survey suggests.

'Given that cost is such a key obstacle to the adoption of more advanced mobile services, mobile operators must provide pricing regimes which are fixed for unlimited use, transparent and affordable,' said James Fergusson, regional director of TNS Technology. 'The introduction of well-priced unlimited use packages would certainly see fast usage uplift.'

The study found that the payment plan that most respondents around the Asia-Pacific region prefer for 3G services is either a fixed monthly fee for unlimited use or having the service bundled as part of their overall contract.

The 2006 survey involved 16,000 consumers in 26 countries and was conducted in August.

3G and Wi-Fi resistance
The study found that consumers associate 3G with high and uncertain costs, especially in Asia.

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