Technology | Media | Telecommunications

Tuesday, June 03, 2008

SIM-Only and Mobile Broadband Services

Mobile operators are starting to uncover new business models that help to address the problems posed by saturated mobile service markets and high handset subsidies, according to the latest market study by Informa Telecoms & Media.

European mobile operator Telefonica O2 announced that its SIM-only service, Simplicity, now has almost half a million customers and accounts for one third of its online sales.

The SIM-only concept was pioneered by discount MVNOs in northern Europe and is now being embraced enthusiastically by mobile operators. It holds two key attractions for mobile operators.

First, it allows them to accelerate the migration from prepaid to postpaid price plans. And secondly, it significantly reduces subscriber acquisition and retention costs (SACs). SIM-only customers keep their existing phones so operators do not need to resort to costly device subsidies.

The SIM-only business model is just one of the strategies analyzed in new research from Informa. Their report argues that operators in developed markets need to undertake a thorough review of their businesses and strategies if they are to retain their levels of profitability amidst the onslaught from lean, fast-moving Internet companies.

HSDPA dongles are among the top-selling devices for mobile operators in a number of European markets and made up more than 50 percent of the global total of 30 million HSDPA subscriptions at the end of 2007, according to Informa research. The number of 3.5G connected laptops will rise to 184 million by 2012.

At the heart of the debate about future mobile operator business models is the extent to which mobile operators risk being further relegated to the role of dumb pipes.

Informa analysis suggests that mobile operators need to think of Internet companies as their partners, or even as their customers, if they are to share in the success of mobile Internet related services.