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Why Wireless Carriers Need A Clue -- Soon

An optimist might say that the jury is still out about cellular data. But a new survey has me almost convinced that clueless cellular operators could blow their multi-billion dollar investments in 3G.
An optimist might say that the jury is still out about cellular data. But a new survey has me almost convinced that clueless cellular operators could blow their multi-billion dollar investments in 3G.

I've ranted frequently about how cellular operators are making a huge strategic error by overpricing 3G service. But overpricing fast cellular data is a symptom, I believe, of how the cellular operators simply don't understand how to offer those services.

A Yankee Group survey released this week found that only about one-third of businesses in Europe and the U.S. are using or testing cellular data service and slightly more have absolutely no plans to do so. Using very rough reckoning, if you factor in those who are testing but who won't adopt, the survey indicates that the cellular carriers stand to get, maybe, 50 percent of the enterprise market.

Surely, charging $80 a month for slow but reasonably ubiquitous service is one big reason for indifference toward cellular data. But there are other, related factors.

First, as telecommunications competition increases, users are increasingly dissatisfied with even basic voice service. The survey found that, in Europe, a majority of consumers are dissatisfied with the value they receive from their cellular operators although similar surveys have found greater satisfaction levels in the U.S.

Even so, cellular voice service is not only much more is expensive than traditional landline and voice-over-IP service, but the service plans are arcane and complex and obviously favor the carriers. And, cellular service isn't as reliable as other types of telecommunications. While cellular operators got rich offering incredible convenience for mobile users, many now take that convenience for granted and expect prices and quality to equal other types of voice service, I believe.

On the data side, most U.S. and European users are accustomed to fixed Internet access that is faster, more reliable and far less expensive than 3G. Add to that fact the egregious overpricing for cellular data service and decreasing satisfaction levels for voice and it's no wonder that, after investing billions of dollars, 3G is on its way to becoming a niche product unless the carriers get a clue.

When cellular operators first built out their voice networks, they had no competition. With wireless broadband and VoIP looming on the horizon, they face serious competition for voice and potentially crippling competition for data.

The operators apparently think that their next generation of 3G will appeal broadly but, by the time that appears, mobile WiMAX will start to be available and it surely will cost less. In the meantime, hotspots are faster and cheaper than cellular data and, for many users, they are not that much less convenient.

For all these reasons, you have to wonder whether wireless operators, who were such successful pioneers in the mobility field, are becoming victims of their own success.

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