By Tony Hallett, 16 February 2005 08:40
NEWS The boss of one of the world's largest network operators has called for a radical, far-reaching rethink of how the industry works.
T-Mobile CEO René Obermann, speaking at the 3GSM World Congress, took aim at what many consider givens - churn of customers among operators, subsidies, confusing or inconsistent tariffs, complexity and low usage of advanced services.
He argued that the mobile market is not yet mature. It may be that in some European markets there is over 100 per cent penetration - multiple devices carried by end users - and there are mobile-only homes.
But he pointed out that his business, for one, is keeping on acquiring customers. In the US, T-Mobile is now bigger than it is in Germany, growing 32 per cent, which he said is "not surprising, because [that market] is less penetrated".
However, he said that "the current subsidy model induces churn", which is not healthy. At the same time, "bill shock is not an option".
His argument is that subsidies may drive people buying their first phone but beyond that they help low-cost competitors - many of whom don't own or run their own network but serve niches with online stores and so on - and also mean tariffs are kept too high.
He also slammed roaming rates, even though last week T-Mobile parent Deutsche Telekom and Vodafone became the subject of an EU probe regarding the way they treat roaming for Germans.
The thesis is backed up by John Strand, CEO of Strand Consult, who believes that pre-pay customers will gravitate to cheap, no-frills providers, just as economy class passengers have in air travel.
Obermann also admitted that while T-Mobile has launched 3G in several markets there is still only a "modest range of compelling devices". The keyboard-based, swivel-screen T-Mobile MDA IV is part of an effort, in that case using a Microsoft OS, to change that, as are two services branded Internet in your Pocket and Office in your Pocket.
The mobile business data market will be worth 10bn per year by 2010 according to figures from market researcher Analysys.
T-Mobile has also embarked on a programme it calls Save for Growth, whereby it hopes to lop off 1bn in costs each year and spend half that amount on capital investment.
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1. Simon
Ahh, so there are a few brain cells in the mobile business !
OK, so it's only taken a couple of decades for them to figure out that customer realise that they are paying for the subsidised phone through the tariff - and then paying for it over and over again as long as they don't switch.
Until the industry wakes up to the fact that customers know this, and stop double charging once the 'subsidy' is paid back, then they are going to continue to have a serious churn rate. At the end of a contract, I for one will either switch and have a new phone for the same money, or switch and use the same phone for less.