8 thoughts on “Why Carriers Love Social Networks On Mobiles”

  1. I have an O2-Ireland data plan which lets me eat all I want for EUR30 a month. It actually redlines at 10 GB on a month and my normal usage stays below a gigabyte. If I stayed data-only, I’d save a minimum of EUR 70 a month in my normal usage.

    My personal cost figures suggest my network usage aren’t going to generate a cash pile for O2 and if I throttle back my voice, stay with socnets and use webtext, that I can keep O2 as a dump pipe merchant.

  2. Good post, Om. As you say, telcos are no good at picking winners. Having just worked for an incumbent telco and suffered through the service development process first hand (and been starved of capital for my projects by wireless projects that tried to pick winners), it is of some satisfaction to see telcos get it in the teeth. There is no small irony in seeing service providers flashing the logos of Facebook, MySpace and others in their advertising in recognition that they hit the wall.

    The fact that a wireless service provider does not want to be seen as a dumb pipe does not hide the fact that they are a dumb pipe. I as a consumer will gravitate to the provider that recognizes that reality and gets out of the way.

  3. I absolutely agree that telcos are lousy both at building and picking winners.

    However, I don’t necessarily agree that they have to be just dump pipes – they have lots of infrastructure and functionality which can increase the value of social networks and make them richer and more integrated with the mobile experience. They’re not necessarily very far down this road yet but I believe it’s an avenue they absolutely need to explore (wireline operators too). The future of telcos is exposing APIs etc. to their core functionality in order to allow developers to combine the best of web apps and network capabilities.

    And I think you’re wrongly conflating bandwidth, data and revenue growth. First, status updates are minimal in the grand scheme of things as far as bandwidth goes when video is growing so rapidly, so the idea that they will drive bandwidth growth is misleading. Second, growing bandwidth once you’ve got someone on an unlimited plan (which is the most common arrangement in many markets) is actually bad, because you squeeze your margins. Rather, you want people to communicate as efficiently as possible, and status updates and other social networking activity are ideal from a telco’s point of view because they’re sticky and highly desirable and therefore drive revenues but don’t take up too much bandwidth, so they keep costs low.

  4. @Kenneth Trueman

    You very much speak the truth. I agree that consumers always gravitate to what THEY want when supplied at a cost that THEY think is reasonable. Hutchinson did it originally with the Orange brand in the UK. Orange wiped the floor with competitors when they launched the Talk 30 plan – 30 minutes airtime for 30 pounds – in 1993. The innovation there was they simplified complex business oriented billing plans and utilized new GSM technology. The general public were offered small affordable handsets wth billing plans that made sense. Consumers buy things that they can understand. Hutchinson again through INQ looks like they are giving people what they want and can understand – The Facebook Phone, The Twitter Phone, the “My Favorite Web App Phone”. And no, I am not forgetting the iPhone. The iPhone simplified the ludicrously complex and contrived process for acquiring software and content, they also made affordable the unlimited data plan. Look what happened there…. 1 BILLION served.

    So back to the dumb pipe debate – I think people don’t care about the pipe. They care if the phone does what they want it to do and if they know they can afford it and be assured they don’t get ripped off. How many of us in the early days got indigestion when we saw our carriers roaming data charges? 🙂

    By the way Frank Meehan, CEO of INQ will be speaking at our Mobilize conference on Sep 10th. http://mobilizeconf.com/

  5. Interesting, but actually in this case no-one cares of being a bit pipe since both, the product and the operator belong to the same investor.

    Simone Cicero

  6. I have an INQ1 here in the UK, on the 3 network – I’m on a £15-a-month contract that give me unlimited texts and Internet. The built-in Facebook and Skype apps were what attracted me to this phone, plus the fact that 3 are actively encouraging use of Skype on their network. Oh, and did I mention the INQ1 came free with that contract? 😀 OK, it’s not an iPhone, but it’s doing all the stuff I need, and it’s not draining my wallet nearly so much!

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