Why Carriers need to listen to Application Developers

As much as I am annoyed by the business practices of many wireless carriers in the world - the fact is, that, they are the gatekeepers to the customers. I believe that constant and total collaboration between application developers and strategy types at the Carriers is absolutely necessary to help move the entire industry towards greater profit margins. Let me explain why I think this is the case:

Pricing of existing services
Current trends that many carriers have shown with regards to data pricing is an indicator of a lack of thought on the Carriers part. Consider a 40USD all you can eat plan for data usage on Verizon - many potential customers who could have been brought into the mobile data experience on their existing smartphones have stayed away due to the fact that they have been priced out of the service. As an application developer I would have devised strategies that bring existing qualified subscribers in by:

• providing a month of service at no charge to allow customers to gain from the service and see if it fits their lifestyle
• have a more accessible all-you-can-eat plan that does not price out the majority of interested subscribers
• focusing on add-on services based on the data plan

Carriers have been very successful in the US by using bundled pricing for voice services and they have been extremely successful in generating a high volume of voice usage and increasing their ARPU. The same strategy however cannot be applied cookie cutter to data services and that is precisely what most carriers end up doing. Bundled pricing can be used to increase voice and data adoption and hence revenue in the short term as is the case currently. However, in my opinion current pricing across the board is way too high to allow them to see any real profits from bundling data and voice. In the long term, a good pricing strategy on bundled data and voice will bring carriers closer to their customers than ever before. Being a key part of a users mobile web experience provides the carriers with an opportunity to add data driven features and services which will help strengthen the ARPU to record levels - This is where a strong relationship between carriers and application developers will really help.

Mobile Applications - who creates them? | WiFi Meshes - a serious threat!
Carriers are good at many things - setting up and maintaining mind numbing amounts of infrastructure, customer support (well most of the times anyways), scaling services across millions of subscribers etc. They are not very adept at bringing new ideas and applications to their subscriber base. Application development companies that focus on only mobile applications for consumers or the enterprise are the only real providers of mobile applications. Carriers have tie-ups and strategic partnerships with many such companies to provide the service as an offering to their subscribers. With the proliferation of WiFi across most urban settings carrier run the risk of being relegated completely out of the application space.

If they (carriers) do not act soon there is a serious risk of most subscribers using a city wide WiFi mesh to access content and use services created by mobile application dev shops. This is already happening around us today - look at Loki and the way they have structured their service offering - it is only WiFi driven and can run on any WiFi supported smartphone (WinMob currently…). WiFi meshes around urban landscapes are a reality and the percentage coverage is growing in leaps and bounds every year. WiFi is a serious risk to data services offered by carriers and pricing out a large chunk of customers with high bundling options is not helping.

Content and Applications
Services like Pandora and last.fm are going mobile. RSS aggregators like bloglines, google reader are already seeing high adoption amongst handheld users and smartphone users. IM clients and VoIP services such as Skype and Fring are becoming very popular. None of these have seen any distribution through carriers since there doesn’t seem to be any logical place where carriers can capture any of the revenue. This can change if carriers work with Application Developers to see how these services can be offered to millions of subscribers in a cost effective way or preferably free through advertisements driven by the carriers. Google already plans to provide a WiFi service in the SanFrancisco metro driven primarily by advertisements - the end cost to the user is 0.

But for any real solution to emerge there must be constant dialog between the men in their ivory towers and the junta. Mobile Monday seems like the adequate meeting grounds to have such discussions.