The data wave

Every month, global acceptance of a third generation wireless standard draws closer. With it grows the certainty that we will soon witness a flood of wireless multimedia services and offerings and other radical changes in the mobile industry.

In five years, more people may access the Internet via mobile terminals than over fixed lines. Third generation services will support high-speed data communications, provide greater network capacity and enable customers to access multiple functional connections simultaneously. For example, a consumer will be able to use a hand-held device to hold a voice conversation while accessing a multimedia database and browsing the Internet.

Which technologies and appliances will dominate is not as important as which companies will successfully combine those technologies in products and services. Data and voice will be bundled for all segments. Any mobile operator that wants a major slice of the new value must offer data services and in a way that creates and preserves value.

Operators must adopt new strategies before the data wave crests or they will rapidly lose their relevance - and their revenue. In the current one-product mobile environment, operators have extracted much value from controlling the delivery system for mobile voice.

Licensed suppliers with standardized infrastructure and regulated pricing have competed on a me-too basis, with differences in branding and package/tariff details, not service or market segmentation. Operators usually have vertically integrated their downstream activities to secure value, selling through channels ranging from direct sales to supermarkets.

With the advent of high-speed mobile data services, life will become more complicated for mobile providers. Their markets will segment, competitors will proliferate, new business models will emerge and the systems they use to deliver services will change dramatically. These sweeping changes will require providers to be more willing to engage in joint ventures and alliances.

For mobile solutions service providers, the business case is finely balanced. They, too, have strong assets in their well-established corporate customer bases and distribution systems, which they can leverage in their dealings with bundled solutions providers. Mobile service providers will need such alliances but should realize that these partners may love them chiefly for their pipes.

Commoditization is a clear risk. Furthermore, when the data wave arrives, so will the corporate-focused fixed-access providers, who will rapidly exploit their solutions capabilities and their own customer bases to provide bundled services to the converged fixed and mobile market. Some will be competitors, some potential partners. Unless mobile operators can leverage their assets in their relationships with fixed network solutions providers, they, too, will run the risk of being relegated to the status of wholesalers.

Bundled solutions could be offered by mobile and fixed operators under long-term agreements, but the nature of such relationships remains unclear. Control of the service offering will be key to aligning service coverage with customer needs, so an equity relationship may be required to ensure that the strategies are fully aligned, too.

Clearly, mobile operators' chief asset is their experience with and knowledge of mobile customers. Their service delivery systems will change, and they will require different capabilities. In many instances, this may mean that they cannot address all the product and service markets they do today.

Operators will gravitate toward selected product markets, and these will be influenced by the strengths and specialities of the businesses with which they ally. They should anticipate losing customer segments they cannot serve and focus on cultivating relationships that help them win those they wish to serve. As 3G looms, carriers face fundamental decisions about their businesses, and they must begin to examine their options now. As mobile operators' strategies diverge, their focus will swing from products to customers. Third generation mobile presents tremendous opportunities, and the overwhelming priority now is to exploit them by providing targeted customers with tailored, mobility-specific services at prices they will pay.