IT-Review

3G -- Feel the Pain

European 3G operators realize that consumer loyalty in the wireless market is at an all-time low.

New consumer 3G launches seek to lock consumers into long-term contracts in exchange for cheap handsets, driving customer acquisition costs to new heights

In her new report entitled 'Loyalty versus Lock-in', Emma McClune warns operators of the dangers of attempting to fetter the whimsical consumer market without a renewed focus on service innovation. "Lock-in could be the dog that returns to bite the wireless industry."

"The focus must return to services. Operators must treat their longer term subscribers as VIPs, giving them 'gold' status privileges and treatment. Longer term subscribers deserve a better class of customer support, priority provision of new services and promotions and incentives to re-subscribe. All this won’t be cheap, but then the prospect of mass 3G churn in the mid- term is a sobering thought."

Addressing operators’ market strategies, McClune affirms "Having locked the customer in, operators should look to remove other barriers which limit consumer freedom of choice. Operators should open up their walled gardens of content to outside provider, since the real threat of extraneous content to operators’ existing content revenues is, in fact, quite minimal. In terms of data revenues, content is still struggling to make its mark, and at this stage in the market it is more important to drive usage of mobile content — any mobile content – than to monopolize, and potentially stunt, users’ tiny mobile content spend. Users may accept a longer contract in exchange for a cheap handset deal, but a limited walled garden of content comes with no redeeming benefits."

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