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Telecom Service Providers Lack Mind-Share

While 2006 may be remembered by some U.S. telecom analysts as the year that mobile service providers continued to invest billions in network infrastructure to launch their third-generation (3G) wireless services, marketers will simply remember the low market adoption rate and disappointing ROI.

Regardless, 2007 is expected to be yet another banner year for new technology in search of a market, with the anticipated unveiling of initial fourth-generation (4G) services to consumers. 4G will offer new choices in the world of wireless services, including even higher speed mobile Internet access, video and TV on-the-go, and new options for networking and entertainment within the home.

Ultimately, 4G will allow consumers to select a single provider to deliver their entire home and mobile communication, plus entertainment services. However, as with any new technology, 4G presents a variety of questions and challenges. Will consumers buy it? How many will buy early and how many will wait? Given a choice, what companies will consumers prefer to buy from? What are the motivators and barriers for adoption of the new technology?

With this in mind, Harris Interactive explored these critical questions through an online survey of more than 1,200 U.S. adult consumers. You may be surprised by some of the results. As an example, consumers apparently don’t seem to care much about 'network providers' when considering 4G services. Yes, it's the meaningful applications, once again, that will attract subscribers.

In this survey, consumers were shown a description of 4G services and asked for their initial reactions. Early indications show that 4G could be a winner, with half of adults (49 percent) finding 4G "appealing" and about one-third (34 percent) saying they would likely subscribe to 4G service. Interestingly, about seven percent of likely subscribers say they would buy "at launch."

The survey also asked a few benchmarking questions concerning consumers' early adoption rate for ANY new technology. Nine percent (9 percent) of adults say they are willing to pay a premium for "new" technology and three percent purchase such products "at launch." This is a highly prized segment for technology companies to identify and lure with their products.

Initial review indicates that consumers will most likely have a big appetite for 4G services. So, who are their preferred 4G service providers? Perhaps this is the most convincing evidence that consumers were negatively influenced by prior 3G launches.

The survey results show 'Internet providers' to be in first place (20 percent). Surprisingly, second place could be held by 'any major technology company,' such as Google or Microsoft among others (16 percent), which illustrates how wide open this market is and how brand acceptant consumers are. Closely following are cable companies and traditional phone companies (15% percent) and wireless service providers (14 percent) -- which, in the end, could spell trouble for this group and leaves the door wide open for new players to take the lead.

Seventy-seven percent of likely subscribers made it clear that offering the service without a binding contract would accelerate their buying 4G services and 70 percent want a 'switch-back guarantee' without charge. Both most likely indicate consumers want a safety net to catch them in the event 4G does not deliver on the service as promised. Apparently even more proof that 3G set the wrong precedent.

Furthermore, I believe that there is good reason for U.S. telecom service providers, as a whole, to be concerned about their collective inability to attain positive mind-share for services that are supposed to backfill losses in their traditional sources of revenue. My point: the threat of over-the-top service bypass appears to be gaining momentum.

Therefore, is the 'net neutrality' issue really the broadband service provider's toughest challenge in 2007, or is there a much more fundamental corporate 'core competency' issue that will severely inhibit their essential market development?

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