Orange bigs up network as the iPhone looms

Orange is gearing up for their launch of the iPhone in the UK with a very sensible campaign based on network coverage (see right hand side of the graphic above). They have correctly identified that their big differentiator from O2's iPhone will be network coverage where they outstrip the former exclusive rights holder.

I doubt that O2 will be too badly burnt by the end of exclusivity. The difference between iPhone and no iPhone is substantially more than iPhone vs iPhone with slightly better coverage. There is very high inertia in the UK market and there probably won't be much impact on O2, other than the fact that they'll have to start sharing new converts to the iPhone with Orange, and soon Vodafone. That said high ARPU subscribers generally have a higher churn rate than average, so iPhone users will probably be less inert than the average. Nevertheless I think the risk to O2's existing iPhone base is modest.

I've been looking at the issues of retention and churn in some detail in a report that is soon to be published called Mobile customer retention and churn management.

Comes With Music sees very limited adoption

Music Ally recently published on its blog figures for Nokia Comes With Music adoption. A grand total of 107,000 users worldwide. In the UK after 12 months the total figure was a disappointing 33,000. Hardly tearing up trees but spectacular success compare with Italy where after 6 months in service there were only 691 users.

Mind you, given my experience of using CWM (yes, I am/was a user), I am not terrifically surprised. If the word of mouth reflects the user-friendliness (or lack of it) of the service then it's hardly surprising that people aren't signing up in their droves. Sounds too good to be true? With that clunky DRM, it is.

Ericsson estimates 1GB = €1

Apologies for the radio silence over the last 2 weeks. I've been on vacation in Jordan, which was spectacular. No mobile broadband-related anecdotes I'm afraid as I didn't go anywhere near any broadband connections for the whole time I was there. Clearly the mobile phone is absolutely critical to businesses there though. It was quite surreal sitting in the desert at Wadi Rum listening to the Bedouin guides taking calls from people wanting to book themselves onto tours. Anyway, I disgress.

The interesting thing that I missed during my absence was this report from Ericsson on the cost of deploying mobile broadband. The long and short of it is that they reckon that it costs less than €1 to provide 1GB of data. Obviously there's a whole host of assumptions in there. If you're interested, take a look at the original document. This clearly has implications for pricing of mobile broadband. My assumption was that MNOs were getting pretty close to marginal cost as it is. Looks like they have quite some way to go yet.

Gym babes: the iPhone killer app

Couldn't help but laugh when I saw this. Gym babes! It's the killer app for the iPhone.

Ranking countries by Broadband Leadership

Fascinating report put out by the Said Business School and Cisco looking at which countries are ready for the broadband future and which...ahem...aren't. South Korea beat last year's leader Japan into second place. Sweden, Switzerland and Netherlands are Europe's leaders. Yokohama, Nagoya and (curiously) Vilnius, Lithuania were the top 3 cities. Check out the report. Makes for interesting reading.

Still thinking handset-as-a-modem will be big? Think again.

I keep hearing arguments in favour of handset-as-a-modem as a major device form factor of choice but I remain sceptical, for six main reasons:

1. Laptops will increasingly come with HSPA module as standard. So, where's the market for a peripheral device of any sort?
2. Handset manufacturers are hardly likely to start pushing their device as a dumb modem. Sure, if you're committed enough to finding a way to use it as a modem, you will, but it's not mass market.
3. It won't provide as good an experience. Handsets will lag modems in terms of transmission speed. Probably not a critical issue for most people, but relevant.
4. It's in the interests of the MNO to sell 2 devices. Why sell an add-on when you can sell a whole new 18m contract or dedicated prepay device which has its own credit?
5. People mostly don't go for devices that can do everything. Who needs a phone, blackberry, MP3 player AND camera when your phone can do it all? No-one. Who has actually gone the whole hog and dumped all those separates? No-one, pretty much.
6. You can't share your phone. You can share your modem. There's no way I'd leave my phone at home for my other half to use when she's working from home, but I'm happy to do that with the broadband. OK, so you also can't share an embedded modem, but that's another issue entirely.

If you want to know more, see the following report I wrote a few months ago - Mobile broadband devices: from USB modems to where?

Thoughts from Informa's Mobile Pricing, Retention and Loyalty Conference

I'm co-chairing a breakfast briefing at the Informa Mobile Pricing, Retention and Loyalty Conference in Oxford tomorrow, so I came up for the second day today. A few interesting issues cropped up:

• Dynamic tariffing - The idea of charging according to network loading is a logical one, particularly in price sensitive markets. It allows for a great segmentation of subscribers into those who are willing to pay (e.g. business users) who will make the call regardless of price, and those who aren't, who will wait for cheap prices when the network is less heavily loaded. This is also applicable to mobile broadband, allowing that differentiation of business and consumer users which is critical.
• Bundling of fixed and mobile broadband is vital even in low DSL penetration markets. We heard from an operator in Turkey, where DSL penetration is relatively low and even there the focus of MBB is on bundling it with DSL and public WiFi, provided by partner networks.
• If you're going ot indulge in a price war, do it via a secondary brand. This allows some differentiation, even if it's artificial and the service is broadly the same.
• Attract the customers you want to retain. Most people have low utilisation. Those P2P file sharers who generate all the traffic have very high utilisation and compromise the potential profitability of mobile broadband. Therefore MNOs should avoid acquiring these customers. Try to get the peer-to-peer file sharer to go elsewhere. So don't be the cheapest.

Interesting stuff.