4G phones haven't been easy to sell but cell phone carriers are developing
new ways to make more money from these phones.
Cell phone carriers are trying to earn more revenue from offering 4G
networks.
Wireless networks can sell more data and sell data about consumers to
generate revenue.
Carriers are improving audio quality and selling it through "voice over
LTE".
Editor's note: Amy Gahran writes about mobile tech for CNN.com. She is a San
Francisco Bay Area writer and media consultant whose blog, Contentious.com,
explores how people communicate in the online age.
(CNN) -- How do U.S.
wireless carriers expect their investments in new 4G high-speed networks to pay
off? This shift is about more than simply providing mobile data -- and it could
even bring some long-overdue improvements to the humble telephone call.
At the Open Mobile Summit conference last week in San Francisco, a panel of carrier executives
and wireless industry experts discussed the revenue-generating opportunities of
offering 4G service.
This is a big concern for carriers, since their costly move to 3G networks a
few years ago appears to have financially benefited other players in the mobile
industry (such as Apple) more than the carriers themselves.
There are some obvious ways that carriers plan to make money from their 4G
networks. First, these networks will allow wireless carriers to sell more data
-- a key part of their business model as most U.S. carriers move away from
offering unlimited data plans.
Still, despite heavy marketing, 4G phones and services haven't been easy to
sell to the average mobile consumer. As Scott Devitt, a consumer Internet
analyst with Morgan Stanley, noted: "For most consumers, the value of 4G
is not really clear at this point -- except for watching mobile video."
Consequently U.S.
carriers are starting to look hard at less-obvious ways to demonstrate the
value of 4G to consumers
"The phone call hasn't been significantly improved or enhanced since
the introduction of touch tone dialing," observed Rob Glaser, a partner
with the venture capital firm Accel Partners." 4G is already allowing
people to do great things with their phones -- but most people still spend
about 47% of their time on their cell phones making regular phone calls."
Sprint CTO Stephen Bye said, "It is important to not lose sight of what
customers see as important. Despite how much carriers are focusing on 4G data
speed, most customers measure network success based on voice-call
quality."
Improving the audio quality and clarity of voice calls is one reason why
some U.S.
carriers are working to implement "voice over LTE" (VOLTE)
technology. Earlier this year Verizon announced plans to start selling VOLTE-enabled
phones in early 2012.
Earlier, Verizon director of ecosystem development Brian Higgins told CNN
that "high-definition audio fidelity will be a major selling point"
for Verizon -- implying that the carrier might be hoping to sell VOLTE as some
kind of premium service, at least initially. That's another way to make extra
money from a 4G network.
The discount carrier Metro PCS may be moving faster than Verizon toward deploying
VoLTE for its customers. Already, Metro PCS has begun migrating text and
multimedia messaging traffic to its LTE network. (Traditionally, SMS/MMS
messaging is handled over the same base carrier network as voice calls.)
But Connected Planet notes that Metro PCS has less wireless spectrum access
than Verizon. Also, Metro PCS never rolled out 3G technology as extensively as
the major carriers. So, since 4G and VOLTE could help Metro PCS squeeze more
mileage from its existing spectrum, this could mean that Metro PCS might offer
these as basic -- not premium -- services.
That would make for interesting competition in the consumer mobile market --
especially since MetroPCS focuses on the no-contract mobile market.
If VoLTE calling becomes commonplace, it could change how people pay for
cell phone service. If most mobile voice calls happen over data networks, then
carriers may stop selling "minutes" altogether and shift to charging
solely for data packages.
But initially, as carriers first start marketing "high definition
calling," they may face some consumer pushback due to perceived value.
Consumers who get VoLTE phones and service might not always experience
clearer phone calls, since only calls placed between VoLTE-enabled phones are
expected to sound better. Calls between a VoLTE-enabled phone and a regular
cell phone are expected to sound the same.
As the recent backpedaling by major banks on proposed debit card fees
indicates, right now corporations are wary of consumer revolts against mounting
bills.
Right now wireless carriers generally bill customers for service for each
mobile device they use (with the exception of cell phone "family
plans"). But these days, consumers also use tablets, gaming consoles and
other devices over carrier networks.
If consumers revolt against the cumulative sticker shock of multiple monthly
bills for connectivity, carriers may begin to move away from device-specific
billing -- which includes tethering
charges.
There is one more way that wireless carriers can make money from 4G: selling
data about consumers.
David Small, CTO for Verizon Wireless, raised the point that 4G will allow
users to do even more with their cell phones and other wireless devices --
which means carriers will be gathering more consumer data than ever before via
their networks.
"All that data, about all the facets of users' lives -- that's got
value," Small said. "And that's a revenue opportunity for us."
Sprint CTO Bye agreed, but cautiously: "We know there's a fine line
between monetization and trust for our customers. We think consumer data would
be more useful in the aggregate, for machine-to-machine interfaces, without
bringing it down to a particular person."
The opinions expressed in this post are solely those of Amy Gahran.
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