France : VAT increase can turn to a free IPhone for consumers

In France, government has increased VAT rate on Internet access from 5.5% to 19.6%. Based on this increase, most of telecom operators (Orange, SFR, Bouygues) increase their price to more or less reflect the VAT increase.

However, according to this site (http://eco.rue89.com/2010/12/30/mobiles-internet-et-si-on-resiliait-tous-nos-abonnements-182755), this price increase is considered as a possible breach on contract. Consumers who contracted a package including a mobile phone with a subscription are now allowed to keep the phone, stop the contract and ... re-initiate a new contract possibly including a new phone. So the expensive I-Phone acquired a few weeks ago within the scope of a contract can become yours ... and you can get a new one, restarting a new contract.

That's where sponsoring (or bundling subscription and phones) of mobile phone for recruiting new subscribers of expensive subscriptions or membership can turn to become very expensive for operators.

In a world of expected continuous inflation during next years, telecom operators would be well inspired to better study their pricing, contracts and bundling strategy instead of applying linear changes. As consumers, we should probably be even more careful reading terms and conditions in the future.

All this clearly benefits to mobile phone manufacturers. Apple, Samsung, Nokia and the likes but also Google through Android could accelerate their sales in France beginning of this year if this trick turns to be applied by a lot of consumers.

Price increases are also announced in Belgium. Will the same apply ?

To be continued.

Benoit Quirynen

Telecom - why not simply deliver a better service ?

Blogs, articles, books, everywhere in the world strategists are discussing about the battle between internet boys and telecom elderly. Why are Internet boys so successful, in a kind of continuous hype curve, while telecom elderly are perceived as old-fashioned even if the second ones provide the necessary pipes for the first ones to operate ?

This interesting discussion was reenforced this week due to the Broadband forum.
There is certainly nothing wrong to raise the question and, even better, it's important for the whole society to find the right balance between the two sets of dinosaurs in order to support further evolutions.

But, before engaging in some hazardous strategies, telecom operators could perhaps simply deliver a better service. It's not about inventing yet another stuff. It's all about services around voice, messaging, data access and 3rd party premium services - all the services used by large panel of subscribers.

We can distinguish two aspects : provide a better user experience and solve all the numerous small inconsistencies which are very annoying for subscribers, eventually leading to a complete loss of trust.

Why the hell is the Skype user experience better than my phone experience ? I don't ask for a free service. It would nice but I understand it would not be sustainable. I just ask a mobile user experience as convenient as Skype.

The second improvement concerns the loss of trust that I still have in my telecom provider. Why the hell do I face a problem each time I activate a service ? It's true that I receive more alert messages than before, assumed to explain unusual situations. Receiving alerts when call center tells you that there is no problem creates frustration. Not receiving an alert when there is a problem is even more frustrating. And finally, each time spending 20+ minutes waiting in call center queue is certainly not my favorite activity.

Telecom systems have been built as mushrooms growing, on a yearly basis, a few month after annual Mobile World Congress. In order to face the other category of dinosaurs, it's time for telecom to debug all these minor frustrating error cases or even better, time to streamline the architectures.

Let's remove dangerous mushrooms and structure the telecom landscape for an open field based on latest technologies and concepts - supporting a new wave of innovation.
Fighting or partnering with the other side ? Future will say.
To be continued ...

Benoit Quirynen

Racer mobile phone - the name of the winners not written in the press release

Racer, the new Android phone sold below symbolic threshold of 100 UK Pounds, produced by ZTE and distributed by 3-UK, has been announced this week. This is probably an important milestone in the mobile phone history. Funny enough, the name of the true winners is not written in the press releases.

The announcement indicates an important smart complementary offer; 3UK granting a volume data bucket of 150MB for top-up on a prepaid account.

3UK and ZTE are obviously mentioned in the press release.

Through this launch, 3UK, desperately tries to attack its strong competitors with an appealing offer for youngsters. Vodafone, T-Mobile/Orange and O2 are able to follow when they decide. If the phone is a success, it's just a question of months to come back to a similar balance between telco players on the island.

On the other hand, ZTE makes a step towards a position in the top-5 mobile phone manufacturers but there is still a long long way to run.

Funny enough, the name of the big winners of this important milestone is not written.

Android is mentioned but Google is not. Through its "free licensing model", Google will win the scale battle with Apple. Google copies the Windows model used by Microsoft against Apple during last century. Google does not directly produce cash through this kind of offer. But advertising inventory (display and search) will indirectly grow at an higher pace and this growth is directly linked to G revenues.

The name of the other winner is Facebook, with the same logic of increased inventory, since target of this phone is most probably youngsters, heavy Facebook users. This can be extended to myriad of mobile phone application providers.

Names of losers are rarely written in press releases.

We can not say that Apple will loose with this kind of move but it defines the borders of a profitable corner.
Apple, luxuriantly trapped by the very high value of his brand and its vertical approach - mandatory to change the game at the beginning but limiting the scale during next phases of growth -, will loose against Android in terms of mobile OS market share. As a consequence, iAds, advertising initiative from Apple, will then probably be restricted to high-end brands while Google presents a universal inventory for any brand, any shop.

This announcement now materializes another level of danger for Nokia. Lost in Symbian, Meego, Linux mobile OS announcements, Nokia is still the number one but does not manage to tease interest of developers for applications - the next criterion for people to buy a phone.

Moreover, the whole telco market could start to see ARPU (average revenue per user) declining faster at this stage. Through this offer with such a pricing for device and data, number of data users could reach a tipping point where messaging traffic could start to significantly migrate from charged SMS to free instant messaging.

This only if the Racer phone is good and is a commercial success.

To be continued ...

Benoit Quirynen

HD voice as a start for better communication ?

This week, Orange has announced arrival of HD voice. Telecom world starts to remember that "telecommunication" naturally includes the word "communication".

During last 20 years, focus has been set on connections: direct voice or data connection , differed through messaging. Nokia was the king with its "connecting people". Nokia currently suffers because Apple, Google and the likes now offer much more than a "connected device". Alcatel-Lucent was shooting for "always-on". We'll come back on these tag lines in another article.

Of course, connection is the foundation. Telecom world now has the opportunity to embrace a larger scope around communication, building on top of this foundation.

Many dimensions of communication still need to be improved. It's the beginning of a new decade where we'll see evolutions from a "connected world" to "communicating world".

HD voice from Orange is perhaps just a "meeto" to counter attack position of "Skype like services" actually offering better voice quality. As a consultant, I often use Skype for long meetings with partners, not only because it's cheap but certainly also because it provides unequaled voice quality. When competition is "cheaper and better", a tough reaction is expected. With LTE, Skype could definitely take over "voice service" from traditional telecom players.


HD voice could also be a first step of a "provide better communication" strategy, voice quality being a prerequisite.


Telecom players have the choice between two mainstreams :  Telecom operator or Telecom service provider. Either they continue to be a "connection provider" and they will be rapidly joining other utilities as power, water, and gas or they become a "communication provider". That's a decision to be expected soon before next round of consolidation.

In this last case, this will involve drastic changes, moving from a global approach towards a "multi-local" approach with:

• more openess,
• broader scope, much beyond technical aspects,
• and much more "localisation" of the services because communication is naturally linked to culture

Telecom vendors must also take a position, make a choice. Either they structure their offering to serve utilities or they jump in the world of communication. If telecom vendors are willing to engage inside communication, this will require drastic changes. Are they ready for it ?

To be continued ...

Benoit Quirynen