Thursday, March 12, 2009

Telcos vs Internet providers

What a big break, isn't it? I did not give up ;) I was just busy at work to help tuning the performance of a product which is going to be “GA” this month. I mostly focused on the browser-side code, trying to mitigate effects of flawed designs. Anyway, I'll try to use some of the collected materials in a future post.

From jopemoro, with CC-ByND.
Telecommunication operators (telcos) used to have a captive market:
  • Land lines subscribers do not switch very often from one provider to its competitor, even for long distance call plans. There is some inertia that helps securing their investments in other technologies.
  • Cellular phone subscribers are more susceptible to change, especially now that they can keep their number when subscribing to another operator. But 3-years plans are efficient tools used by operators to keep their subscribers under control.
  • Usage of the communication bandwidth is very much predictable. Companies have sized the minutes allocated to each plan so they can get the most from users who do not consume their quotas.
In this industry, the rule of “segment the market to maximize your revenues” is well applied.

Late last year, few operators [1, 2] started offering month-to-month plans, without term contract. Why? Because subscribers want more than just voice communication, they want more flexibility at a reasonable price.

With services like Twitter [3] or Google Calendar [4], any cellphone users can get notifications by SMS. When incoming SMS are billed, the incentive to look for an alternative is big!

Nowadays, a growing number of people have (or will to have) smart phones with multiple communications capabilities: to send pictures, to get live information, to access a map and benefit from their embedded GPS, to use VOIP services, etc. [5]

If local communication plans have usually a fair price (not the long distance plans or the fees when on roaming), prices of the “data” plans are usually crazy. With a smartphone equipped with a 8 MegaPixel digital camera, sending quite a few images over the telco networks is prohibitive...

From mag3737, with CC-BA-NC-SA
So people tend to use more and more direct Internet accesses, in the offices, at home, in cafes, libraries, etc. It so demanded, that non-profit organizations offers networks of Internet hotspots [6].

Thanks to direct Internet accesses which provide better bandwidth than broadband ones, smartphone users can use long distance calls (with Skype [7]), get their voicemail (GrandCentral [8]), stream videos (Qik [9]).

If I can see the month-to-month plan offering as a tentative to keep their customers, telcos should also revisit the data plan offering to avoid more customer base erosion! Because carrying data means carrying almost anything, I think should transform themselves from pure telecommunication operators to Internet providers.

A+, Dom

  1. No Contract Required — New Month-To-Month Agreement Gives Verizon Wireless Customers Even More Freedom, on Verizon website.
  2. Fido removing system access fees, by on CBCNews website.
  3. Twitter is a free social software where people post updates (limited to 140 characters, same limitation with SMS) and that followers can get automatically.
  4. Google Calendar is time management platform where people can manage their agendas and invite other people. Event reminders can be sent by e-mail and by SMS for free.
  5. For a better description of possible services, see my post: Hand held devices and sensors.
  6. Free Wifi initiatives: Île Sans Fil of Momtréal, Wireless Toronto, etc. More in this directory.
  7. Skype is a service allowing users to make phone calls over Internet. This popular service belongs to eBay (acquired in Sept. 2005).
  8. GrandCentral: see the recent update posted on TechCrunch, about GrandCentral which is going to reborn as Google Voice.

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