We have been looking at the benefits 3G technology will have for businesses. Part 1 indicated no direct benefits, but Part 2 illustrated how significant indirect benefits could be gained from this exponential growth, though it concluded that traditional business models won't work because the commodities of the connected world are different.
This can be illustrated by using mobile operators as a case study.
In today's traditional, mature "2G" business, the operator effectively has a "walled garden" value chain. Its made huge investments in networks, distribution and billing providing high quality, low-voice tariff service to customers. Partners or resellers who want to take advantage of that infrastructure have to work with the operator. Crucially, customers trust operators to protect their personal information and them.
But 3G is principally about data - a vastly different world. Customer focus has shifted fundamentally. Firstly to mostly free content such as applications, games, social networking, music or videos, and secondly to devices like iPhone, iPad and PCs. Much like the story behind "Avatar", it works as a mutually dependent ecosystem. Operators have struggled to understand their role in Pandora.
Meanwhile, content providers produce content requiring increasingly more bandwidth and device manufacturers are continually making it easier for that to be consumed. The 3G equivalent of the operators' "traditional" business model is to sell what is called "access". But as demand for bandwidth rises inexorably (representing significant capital investment for operators) and at even lower tariffs; what is the future of the access business? Whilst access still provides a lucrative business today, it will need to be supplemented and perhaps even be eventually replaced with a different model.
But what else can operators leverage to provide value to customers?
The answer is information and contact at a personal level. Google exemplifies this approach. They do not sell search, but sell advertising leveraging your personal information and search criteria, which allows them to provide value specific to you. They do this in a way that is trusted and non-obtrusive. The partner pays, the customer gets value for free and Google is paid for that facilitation. How great is that?
Operators have huge amounts of information, even in real-time, about its customers. And they are trusted. By adopting a business model that adds significant value to customers and partners leveraging those assets, new revenue streams are possible. As in Google, these revenues will flow not from customers but from partners, with value being realised by both. This is the unique benefit of this approach. However, fundamental to its success is maintaining customers' trust and balancing privacy with value.
Like evolving any business model it will not be easy. No operator has done this successfully yet, but some pilots do exist. The iPhone was successful in the data world because it did not come from a phone company. Operators are slowly appreciating this as they grapple with revenue challenges, and significant opportunities in this new connected world where revenues increasingly flow around a healthy flourishing symbiotic ecosystem. Information, trust, partnership and personalisation are the key to alchemy in this Pandora.
Andrew McBean is senior vice president of DTAC. Follow his article every third Monday of the month.