Free article: The top ten non-voice services point the way to non-voice service growth

Despite the availability of improved mobile handsets and 3G networks, most mobile operators are still finding it difficult to increase non-voice service revenue. However, the outlook is far from gloomy if mobile operators learn from the most successful services around the world. In order to be successful, operators must be prepared to invest sufficient time and money in high quality end-to-end service implementation, and to diversify beyond conventional non-voice cellular services. The analysis below is extracted from our new report, The World's Top Ten Non-voice Services for Mobile Operators.

The top ten non-voice services for mobile operators, shown in Figure 1, have been selected for their strong market potential, effective implementation and high suitability for reproduction in other markets. Each of the services will have enduring appeal to customers and revenue potential for operators.

Figure 1. The World’s Top Ten Non-Voice Services for Mobile Operators

Perhaps surprisingly, the Number 1 service – Vodafone Case FASTWEB – is a DSL fixed broadband service. While other services in the top ten suggest a variety of growth opportunities with cellular technology, mobile operators have to be realistic about how quickly these will achieve substantial revenue growth. Fixed broadband offers an immediate opportunity for mobile operators to generate significantly higher ARPU than today’s non-voice services. However, it also requires a bold strategic move into fixed services.

Despite growing interest in more ‘exciting’ services, such as mobile TV, messaging continues to be of critical importance, demonstrated by the fact that three of the top ten services are messaging-related. Messaging still represents the largest component of non-voice ARPU for the majority of operators worldwide. There are substantial growth opportunities with SMS, and also with email, instant messaging and ‘voice SMS’.

Non-voice services in developed markets will increasingly demand high-quality, near-ubiquitous 3G coverage. While it is relatively early days for 3G in most markets, it is a fundamental enabler to four of the top ten services: 3’s mobile TV and video streaming (in the UK), Sprint Nextel’s mobile broadband (in the USA), KDDI’s Chaku-uta Full music downloading (in Japan) and SK Telecom’s Cyworld Mobile online community (in South Korea). While it is easy to become focused on the details of such services, the importance of basic coverage should not be overlooked. Many 3G services were ruled out of the top ten because their networks are at an early stage of development, with poor geographical and in-building coverage. For some wireless services, 3G may not be enough on its own. For example, 3 in Italy has invested in a standalone DVB-H broadcasting network to deliver its range of mobile TV content to a mass-market audience.

For some services, such as mobile TV and music downloads, success is dependent on a strong content line-up, and operators such as 3 (in the UK and Italy) and KDDI (in Japan) have paid attention to attracting the best. There is strong revenue potential from NTT DoCoMo’s brave move into financial services, but this has involved substantial cost and planning, including investment in a bank, widespread deployment of compatible handsets and installation of point-of-sale terminals at a large number of retail locations.

Many of the top ten services have involved significant investment and risk, so mobile operators have difficult decisions to make. In most cases, mobile operators will not have the resources to offer all of these services, and they will need to take careful decisions, according to their individual resources and circumstances.