Mobile Operators & Social Networking
In my earlier post on mobile social networking, I had discussed the potential of mobile social networking and how mobile phone adds to the experience of social networking. In this post, the focus would be on carriers and how can they benefit from adopting social networking.
Social networking has a reach of 66% on internet and has a great potential on mobile as well. This is good news for the various ecosystem players in the mobile space, particularly operators. Operators have a lot to gain from the adoption of mobile social networking and some of those benefits are listed below:
Benefits to Mobile Operators
- Access Charges – Mobile Social Networking would use the carrier’s network to communicate using the internet or SMS or MMS. I have no doubt that the usage on mobile would eventually exceed that on PC but even if the usage on mobile phone equals that on PC, the access charges could be huge. SMS based sites like Twitter require an international SMS to be sent out which in many countries is at a higher price
- Increased Mobile Internet Adoption – If the mobile social networking becomes a norm, there would be many more users who would want to use mobile phones for connecting with their communities. This would give a reason to many users to subscribe to mobile internet leading to higher revenues for the operator
- Differentiation – Adopting mobile social networking would differentiate one mobile operator from another giving it a peppy and technology leader image. Operators can claim to be Youth focused as social networking is generally associated with Youth
- Increased Retention – Great social networking experience with current carrier could just be another reason for the subscribers not to churn. At the same time, it may attract new subscribers to the operator fold
- Advertising Revenues – By adopting social networking, operators can hope to get a pie of the lucrative advertising revenues. As per Visiongain, the revenues from mobile social networking are expected to top $ 60 billion by 2012 and a bulk of this is likely to be advertisement revenues. Even a 30% share would mean that carriers can get up to $15-20 billion in advertisement revenues itself
Create or Partner?
The benefits of adopting social networking are very clear but the key question in front of carriers would be whether they should create their own social networking platform or partner with an existing one. I would recommend that the carriers should partner rather than building their own social networking platform and the reasons for the same are:
- Risk – The risk involved in building something from scratch is way too high in terms of costs and consumer acceptability. The consumers have already experienced the existing networks and if they find the experience on the new platform inferior, they are unlikely to adopt. Moreover, the consumers are already using the existing platforms and hence would need a reason to switch to a new platform
- Speed to Market – Building own platform would take a lot of time and there is a risk of losing the space to a competitor if competitor manages to launch its offering first
- Brand – The carrier may have a great brand but it may not easily be associated with social networking. With an established brand, there is a potential of attracting the existing as well as new users to the platform
- Skill set – The skill sets required to run a social networking platform are entirely different from those of running a mobile network. Even the mindset required to be successful in this business is very different. This means that the operator would either need to retrain its existing people or recruit new employees. This may lead to a situation where there is a conflict and a culture mismatch resulting in higher attrition
There are already a few examples of partnership that can be seen around the world like Virgin Mobile has tied up with Facebook, Myspace, Xanga, Vox and GLEE (Gay Lesbian and Everyone Else). Sprint has tied up with Bebo
What kind of offering?
There are two kind of social networking platforms: Online internet platforms (e.g. Facebook, Orkut & MySpace) and mobile based networking platforms (e.g. AirG and Jumbuck Island). The internet platforms are essentially looking at mobile as an additional access point whereas the mobile based platforms have been formed around the functionalities of a mobile phone and hence are more suited for the carriers. However, the online players have higher traction and larger user base. Also, the online players have the resources needed to invest in the mobile space to be successful. The consumers also would like to get a similar experience across all access points whether it is PC or a mobile. Thus the choice is hugely tilted towards the existing online internet platforms but still the carriers should also look at the following before deciding:
- Consumer behaviour with respect to adoption of new technology
- Online communities size
- Carrier’s brand preference
- Inclination of social networking players to partner
- Potential of mobile social networking in their region
There are various reports that put the potential of mobile social networking at different levels. I have already quoted Visiongain. There is another report from Juniper Research that provides region-wise breakup of the potential (figure above).
Branded vs. White Label
Another important decision for a carrier is whether it should partner with a branded or a white label partner. Clearly, the effort required for marketing the services in white label product is much higher for a carrier than that for a branded platform and hence it makes sense for large carriers like Vodafone, Telefonica, etc. to try white label platform but the smaller carriers should partner with a branded platform. There are a large number of white label platforms available to choose from but they do not bring any subscriber with them.
Steps carriers can take to enhance mobile social networking adoption
- Introduce Flat Rate – Consumers do not understand megabytes (MB) or Kilobytes (KB) and want certainty on the access charges. Sometimes, the consumers get a bill shock after they use the internet services without realizing the quantity of download. To bring to rest the problems of usage based charging, the carriers should shift to a flat fee regime for mobile internet with a cap on usage to avoid misuse. The introduction of flat fee would help the carriers in better communication with the consumers as it would be easy to explain the charges. Initially, the flat fee could be a revenue depleter but in the medium to short term, the total revenue is likely to be higher in flat fee based tariff than that in the usage based tariff plans as the higher mobile internet adoption would compensate for it
- Easy Access – Carriers should provide easy access to the mobile social networking site through use of its own portal or Widget or an application
- Share location with location based applications and networking sites – Presence or location is the most important aspect of mobile phones that cannot be provided by the online media. Hence it is important for the operators to fully exploit this by opening sharing the location and APIs with other applications. However, care should be taken in maintaining privacy of the user and location should not be shared without his consent
- Smooth Integration of MMS and SMS with the social networking sites
- Flexibility in Revenue Share – Carriers should be open to share part of access revenues with the partners as it is because of the social networking that they would be generating extra access revenues. In return, the carriers can expect a pie of the advertisement revenues
- Directory Integration – This would ensure that the users get the most of both mobile and online directories and are able to synchronize the two directories
- Open to provide access to any site – The carriers would do well if they are open to providing unrestricted access to any social networking site so that the consumers get enough choice. The operator may partner with a few on the revenue sharing deal but would still benefit on access charges from other sites if the consumers are free to access any site
Social Networking is a phenomenon that is here to stay and mobile social networking is on the rise. Carriers are likely to gain in terms of additional internet access charges or SMS/MMS revenues from the adoption of mobile social networking but in case they do not actively participate, they are likely to become dumb pipe. Carriers should provide unrestricted access to all the social networking sites and should partner with an online social networking site to provide better experience to its subscriber. The partnership should be based on a fair revenue sharing deal (both access as well as advertisement revenues) and the aim of the partnership should be to exploit the features of mobile phones to the advantage of social networking and ensure better experience to its users on mobile social networking.