Report Warns Carriers to Keep Focus on Voice and SMS Services

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Report Warns Carriers to Keep Focus on Voice and SMS Services

7:20 am on April 24, 2006 | Category: Business, Telecom Services, Wireless

With subscriber penetration of over 40%, the 3G mobile data markets of South Korea and Japan may appear on the surface to be thriving, but they have come at a severe cost of carriers in those countries.

In many cases, these providers have made the mistake of focusing too much on advanced services, and ultimately diluting their voice and SMS revenues. Overall revenue per user hasn’t grown, and in some cases has even shrunk, as 3G data services have become competition to good old fashioned voice and messaging features.

“In the race to offer new services and capabilities, operators in Japan and South Korea have sometimes failed to anticipate the full commercial implications of their actions,” says Alastair Brydon, an Analysys consultant. “Innovation has not always translated onto strong revenue growth.”

In a recent report, Brydon warns carriers in other countries to avoid blindly following the business models used in Japan and South Korea.

“It’s no use charging for services on the amount of data used if it cannibalizes existing services,” he says, noting that per megabyte data services are often under-priced in comparison with SMS and MMS messaging.

“In Korea, KTF has recently launched a mobile blogging service, which uses instant messaging,” explains Brydon as an example. “There is a danger that it cannibalizes its SMS service if not priced correctly.”