Another round of price-cutting in the US wireless phone market may not be the answer to generating additional revenues: consumers globally are as willing to pay for new services as for additional minutes. Even in markets where 3G technologies are some time away, services such as speech recognition could prove lucrative.
A new survey reveals consumers globally are as willing to pay for more minutes as for new services.
Datamonitor’s Wireless Consumer Survey 2002 has found that the number of mobile minutes used is increasing, even though service providers are struggling from high costs and debt. Globally, 31% of consumers expect their mobile phone usage to increase going forward. In the less penetrated US market, the figure is 49%.
US telcos have recently cut prices, reflecting the belief that further tying consumers to their mobile phones will eventually yield revenues, even if the price-per-minute-used continues to drop. The cuts are also a tacit admission that 2.5G mobile phones and services are not selling as strongly as expected, exacerbating short-term revenue concerns.
Datamonitor’s research reveals 20% of consumers globally are willing to pay more for additional minutes, though this is likely to decrease over time. However, a similar number, 19%, are willing to pay for new services – and this percentage is likely to climb as useful services reach the market.
Not surprisingly, men and women aged 16-24 are much more likely to pay more for new services than older respondents. Customers of AT&T Wireless in the US and Orange in the UK are also more likely to pay; this could bode well both for AT&T’s high-speed GPRS offering and Orange’s MMS picture messaging service, both of which launched this summer.
However, service providers’ marketing and offerings must reflect that these services are still a cool technology whose value to business users remains unproven. Consumers in the US are most interested in paying for new services (24% say they would), but it will take a long time for operators to recoup 3G investments.
A better short-term opportunity could lie in speech recognition services. Currently offered by Sprint PCS among others, these have the potential to increase revenue with less required investment by service providers, and most utilize existing consumer handsets.
Related research: Datamonitor, Wireless Consumer Survey 2002
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