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EDN Europe's Editor Graham Prophet posts a selection of comments and insights prompted by the many items of industry news and rumour that cross the editorial desk or are gathered on his frequent travels to interviews, press conferences and events around Europe - and further afield - and somehow never find their way to the magazine or the web site, recovering some of the information otherwise lost in the noise level...

Monday, August 17, 2009

Who pays?

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I’ve said here, and in the editorial space in EDN Europe, that I have misgivings about the economic viability of the “totally-connected” – broadband everywhere – vision of the future. I’ve observed, for example, the less-than-sparkling track record of the mobile operators in extracting revenue from their customers for advanced services. Often, they seem to end up discounting – in some cases, to zero – anything other than voice as an incentive to retain customers. I don’t mean the business market, with 3G modems or Blackberries (for which there is some sort of viable business model); that’s not generating the sort of traffic that puts networks under strain and leads to demand for infrastructure upgrades. It’s Youtube and Facebook that really shifts the Gigabytes.
Today, a newsletter from the IEC contains an editorial along similar lines; IEC Content Director Dr. Barry Sullivan asks, “Who Pays for All This?”, from which I quote the couple of paragraphs below; you can read the whole opinion piece here.
“Network operators have taken up the refrain of who will pay. The growing popularity of smart phones and netbooks promises a steady increase in data traffic over wireless networks. At the same time, market drivers are pushing operators toward flat-rate data plans that challenge network capacity as more customers take advantage of them.
“They say you get what you pay for. For the producer, that formulation works well when there is a large enough market to support development of the basic model, creating the opportunity to up sell the few willing to pay for one with all the extras. Satisfying the customer willing to pay more presupposes some larger number of customers for the basic model.
“The simple answer to the "who pays" question is the customer. Whether you are a newsroom manager or a network planner, the not-so-simple questions that follow include "who is my customer?" "how many customers do I have?" and most importantly "how much will they pay?"

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