Don't We All Seek Great Bundles For a Great Price?

By Tatu Tahkokallio

With 4G mobile service just around the corner and unheard of high speeds and services for mobile and smartphone users on the horizon, mobile network operators are set to face soaring data traffic. A number of operators are currently making significant investment in network-capacity increases in the hope that data growth can offset the decline in mobile voice revenue and stabilize average revenue per user (ARPUs). When it comes to mobile commerce, it’s very much about necessity versus convenience, developing versus developed, but mobile commerce isn’t handset- or data-dependent, so how will it unfold around the world?

According to recent research by Informa Telecoms and Media, mobile data consumption is expected to increase tenfold by 2016. The company predicted in its Mobile Content and Applications Forecasts report that global mobile data traffic will grow from 3.89 trillion megabytes in 2011 to 39.75 trillion megabytes in 2016, amounting to a tenfold increase. By contrast, global mobile data revenues will grow from $325.8 billion in 2011 to $627.5 billion in 2016, amounting to a two-fold increase. But what does this all mean?

There is no denying the fact that the key driver behind the increase in mobile data consumption is very much driven by the rising usage of Internet-enabled mobile devices, but as we saw in Germany, a strong smartphone portfolio isn’t necessarily enough to instigate market growth. It wasn’t until data prices decreased that internet enabled mobile devices really took off.

Data consumption in the developing world is very much driven by the cost of Internet-enabled mobile devices. By the end of 2011, new figures from Deloitte’s Technology, Media and Telecommunications (TMT) practice put the number of sub-US$100 smartphones in the market at about 200 million, this figure is forecast to hit 500 million by the end of 2012.

Whilst data consumption is currently low in the developing world, there is growing demand for communication and information services and it’s only a matter of time before we see the sub-US$30 or maybe even sub-US$20. A larger smartphone adoption rate will mean people are able to access services that feature phones cannot handle. With data consumption still in its infancy in the developing world, the scope for app developers is massive; if businesses and financial institutions play their cards right and take note from the developed world there is huge potential to really penetrate the market in the developing world.

What’s clear is the success of mobile broadband is very much driven by price, be it handset or tariff. The same goes for bundled service packages where, according to research by mobileSQUARED, 42 percent of operators say that the primary reason behind customer demand is price, with only 6 percent of operators putting demand down to exclusivity. Developed or developing, it doesn’t matter what market you’re in, it all comes down to price. Unless you offer attractive pricing, data consumption will remain flat. The developed world may consume data in a different way, but at the end of the day we are all data hungry. It’s time for the operators to feed that hunger.

Tatu Tahkokallio is group marketing director, Tecnotree Corporation.