IDC Examines How the Australian Mobile Market Will Change After 25th September 2001
NORTH SYDNEY – SEPTEMBER 7, 2001 – On September 25th 2001, Australian mobile telephone customers will be able to change their service providers without losing their established numbers. Churn is already a major concern for telephone service providers, with cost of customer acquisition rising even as profit margins and average revenues per user (ARPU) decline. Mobile Number Portability (MNP) has already boosted churn rates in other markets, such as the UK, by reducing the frictional cost to consumers of changing service providers almost to zero.
Peter Lemon, IDC Senior Analyst, Internet Services & Communication said, In a small and highly competitive market like Australia, the service providers are casting a worried eye at the implications of this change. With three big players,Telstra, Optus, and Vodafone, and an aggressive challenger, Orange, contesting an almost saturated market, Australian mobile consumers will be able to enter into a Dutch auction for their patronage.
Differentiation of service will therefore be crucial for the operators, if they are to avoid erosion of their customer base by their competitors. All operators will be targetting their rivals high net worth, canny customers, and their differentiation will be therefore both a defensive and an offensive weapon, further added Lemon.
Voice services are hard to differentiate, the operators will be exposed to severe price pressure by MNP, and will be unable to charge for calls, plans or basic services above a broad industry standard rate.
Lemon added, value added voice services will come to be expected by customers, who will be increasingly unwilling to pay for them particularly as each of the operators will offer a broadly similar portfolio of services. In the absence of loss-leading price strategies, operators will be unable to differentiate on price and the carriers have the grim example of One.Tel in front of them to reinforce the importance of making a margin.
To induce a customer to change their service provider, even with the greatly reduced difficulty of doing so under MNP, either push or pull factors, or more likely, a combination of both, must be present. On the push side, most customers are most likely to change their provider if their service is unsatisfactory or costs above the competitive rate. IDC believes that operators will have to be on their toes to keep their basic services operating faultlessly and will rely on each other providers mistakes to attract new customers.
How then can the operators pull in new customers? It looks increasingly likely the main,pull factor, which can persuade a mobile subscriber to jump ship will be some aspect of data services and in particular, the operators mobile Internet offering.
Services based on SMS, and increasingly, on WAP, will enable operators to create distinctive, compelling, and strongly branded services, with deep potential for value add. Although GSM WAP access has to date only been for the tech hobbyist, the e-news fanatic, or the masochistic and operators are developing a better understanding of the ways in which they can lock in their customers through richer and more valuable content.
IDC anticipates that it will soon be far easier to create a sticky mobile data environment for their customers than a sticky voice service: the more subscribers use richer mobile Internet services offered by their operators, the harder they will find it to rebuild exactly that interface and portal on a rival carrier.
As mobile technologies improve GPRS and 3G make data throughput faster, WAP 2.0 creates a richer and more reliable application environment, and critically as handset ergonomics and capabilities are revolutionised the data offering of the mobile operator will become the crucial point of differentiation.
mCommerce, the ability to conduct transactions using the mobile Internet is coming, and it is coming fast. It will soon be possible to conduct many of the simple but vital transactions of city life, parking metering, travel ticketing, banking without opening a wallet or sitting at a desk. The mobile phone is a Trojan horse, using the familiar form factor of the handset to disguise the fact that it has the power as an always, anywhere, anytime access device to the networked world to become an integral part of the way we live. Service providers who can make this change easy, enjoyable, functional and valuable, will find that far from getting churned out, they will become a vital enabling partner for their customers in the new networked world.
In September 2001, IDC is partnering with Telstra and Ernst & Young to hold mCommerce 2001. This event will explain how to leverage off new mCommerce technologies and how to tap into a complex network of alliances and partnerships to create new opportunities.
11th September 2001, Sydney, The Westin 1 Martin Place, Sydney
7.30am 12.05pm Price: $175 incl GST
13th September 2001, Melbourne, The Sheraton Towers, 1 Southgate Avenue, Southgate
7.30am 12.05pm Price: $175 incl GST.
IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the worlds leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at http://www.idc.com.au