Friday, July 16, 2004

The Good Life: Coming to Grips with GPRS

When GPRS was first seriously proposed by operators, way back in 1999, it was going to be the ‘killer technology’ - the speeds would be huge, the applications astounding, and the users ecstatic. It hasn’t worked out like that at all.

By Mark Mayne

Although almost all European operators are running or trialling GPRS services, the subscriber numbers are low. Analysys reckons that Western Europe will only have 864,695 users by the end of this year - certainly not enough to counterbalance the billions spent on network upgrades.
So what are the operators playing at? Have they missed the boat, or is this migrational user lag all part of their strategy?

Same old problem

Unlike the subscribers the operators are instinctively reliving their futile past. Instead of focusing on selling the actual benefits of GPRS, they are once again pushing out technology rather than services. As Stephen Griffiths, founder of Wonderwerx, a 2.5 - 3G technology start-up points out, “The trouble is that GPRS was originally, like WAP, sold as a technology. Business users were told it was new, and always on, but not what they could do with it.”
The consumer market - obviously having learned an important lesson - is sending out the right message to the operators, device manufactures, et.al. Subscribers are getting the basic information that they need and find useful with existing (limited) service offering. Ultimately it’s the service that drives the market forward not the technology or the devices.
However, the enterprise market is more apt to use GPRS services - giving operators some hope. “Business users will be the big market here, with the usual email, calendaring and backend workflow system access, but again this market has not been fully addressed so far. It may be cheaper to use GPRS to do all these things compared to GSM, but these services are not being fully used now - there is a lot of user education to be done,” comments Analysys analyst Katrina Bond.
“Another central issue at the moment is the pricing of services across Europe - they vary by a factor of 20, mainly because operators are striving to recoup as much revenue from early adopters as possible. A mass market launch just isn’t possible at the moment because of this revenue shortfall and the lack of handsets,” adds Bond.

How long should we wait?

Peter Bellew, Wapprofit.com CEO says, “Some of the GPRS apps we sold to operators six months ago still haven’t been deployed - across Europe the operators seem to be concentrating on stabilising the networks before getting more users on board. There is also a retailer education job to be done, which will cost a lot, and in the current economic climate this won’t happen for a while - Q1-2 next year at best. I think we’ll see a big push next year, around Q2, with some really sticky apps, such as gaming, etc, but not before - people still don’t use HSCSD, which has been around for ages!”
Orange (France Telecom) claims 15-20,000 data customers for Europe, all of which are HSCSD - again, the figures are not impressive. The company has also recently announced that it’s UK GPRS launch will be delayed until Q4 this year.
“We are taking things slowly with GPRS - other operators have rushed in, and it doesn’t seem to have done them a lot of good. We’re making sure the network will be robust, and that revenue models and billing problems are ironed out,” a spokesperson comments.
The aforementioned factors are critical. The issue now is how will it take before those business cases are in place. Time is ticking away for many of these operators and the justification they have given will not be a solid excuse for long - when the going gets rough.

WLAN technology to the rescue?

However, salvation for GPRS may be at hand from a highly unlikely source. The recent furore over WLANs and their possible uses in ‘hotspots’ has triggered a strong reaction from the operators.
“I know that two out of four European operators are seriously looking at integrating GPRS and 802.11b - BT even has a demo car rigged up with the two technologies. The two ethernet-based technologies are similar at a network level, so billing won’t be a problem, and the combination offers a good user route into 3G,” verifies Bellew.
Ericsson and Telenor have been testing a similar service in Norway, using WLAN technology and packet networks. Although Telenor was unwilling to comment, pending full interoperability reports, HyperLAN2 forum Chairman and Ericsson product manager, Martin Johnsson discloses, “We are currently evaluating what can be done, both with current packet networks and future (3G) technologies. The integration of WLANs and cellular networks is certainly something that most operators are seriously looking at - we have seen a huge amount of interest!”
Analysys analyst Monica Paolini, points to slow GPRS uptake as a driver. “European operators are definitely looking at this new opportunity - the only question is whether they’ll be on time to market with this one. Users are interested in higher bandwidth services, it’s simply a case of servicing this need competently. Telefonica and Iobox are running a GPRS/WLAN trial in Spain, which should come online soon.”
So, while WLAN technology may provide a side-show to prop up GPRS, surely more of the same problems apply? Bond thinks this may be the case - “It’s a great idea, and I’m sure we’ll see it coming through soon, but it will certainly add in extra delay as operators integrate the two technologies, and handsets are produced. “
“This said, I think the window of opportunity for GPRS has widened considerably. 3G will not be fully operational for some time - commercially viable services will make an impact around 2006, and even when this happens there will be enough room for both cellular technologies to co-exist.”

In the meantime…

But in the interim, what are operators doing to attract more users? Sonera is due to launch a streaming media portal this month, providing football clips ahead of the World Cup, which is solely for the use of GPRS customers. Although Sonera launched GPRS back in November 2000, uptake has been slow, and the company is clearly keen to exploit any ‘niche’ content that may drive subscriptions.
Telia has recently launched a new style of GPRS offering, dubbed Telia Mobile OnLine. The service does not require a new subscription, but is a supplementary service which Telia’s GSM customers can activate. Users can send and receive e-mail and use a range of Internet-based services from their phones. Telia has been conducting a wide-ranging market research to analyse what users are looking for.
“The tests we have carried out over the year have been very successful. Above all, they have given us valuable information on what our customers want to do with GPRS and how they want to use the new technology,” says Anders Bruse, Head of Telia Mobile Sweden. “
“Over the first six months of this year, SMS traffic increased by almost 200 per cent compared with the same period last year, and we can clearly see a new pattern of usage developing. Our customers want to use their mobiles for more than just talking,” he continues.

Aim for simple tariffing models

The use of a different style of billing, opt-in, like Orange’s current HSCSD service, may well hold the key to migrating more users. “To really get GPRS out there in volume, operators need to instigate very simple pricing models - Mannesmann, T-Mobile and Mobilkom are good examples of making the pricing structure too complex, “ states Bond.
“In the UK billing by Mb is clunky, but in Austria and Germany there is a charge of time as well. This makes the actual charges very hard to calculate.”
“For operators to make top revenue from call charges, they will need to remove the current bars for users. If you know that downloading something or viewing email will cost x pence, then you tend to make a calculation about whether you are willing to pay. Operators need to ensure that this thought process doesn’t occur,” adds Griffiths.
It seems that there is still time for operators to save themselves. Although GPRS so far has been a damp squib, the chances of it being superseded in the near future are low. As more handsets come through (Sagem and Nokia especially) users will be encouraged to migrate, and the more unconscious this process can be made, the more users will make the leap.
Whether other technologies will be integrated to give a richer user experience is yet to be seen, but it seems likely that simplicity in billing, handsets and roaming will win the day. After all, GSM technology didn’t get where it is today by being impenetrably complex…

NEWS ANALYSIS: Euro operators FOMAing at mouth

by Mark Mayne on 03 October 2001 17:05:00 GMT

Finally, this week has seen Japanese telco NTT DoCoMo launching its FOMA 3G service. Although the service has been delayed several times, the company stuck to its last deadline, and now claims that it shifted a fifth of all of its 3G handsets, 4000 units, on launch day. Originally scheduled for May 30, but delayed to Oct 1 because of software problems, FOMA seems to have made something of a splash, both locally and internationally.

The UK’s similar effort, BT’s Manx Telecom project, had already prepared the world for delays, as it was supposed to launch back in May 2001. Stephen Griffiths, Wonderwerx founder, said: “NTT DoCoMo has been very careful here – they have scaled back expectations to keep the network usage low. It must also be remembered that NTT owns the whole proposition, from handset distribution to network level – this is not the case elsewhere. Although European operators are looking at this as a test case, the only thing really being tested from our perspective is the technology – the revenue models and markets are completely different.”

He continued: “A huge issue is the migration of users away from I-mode to FOMA – NTT needs compelling new applications, and the video element is not enough on it’s own – it simply augments the other messaging (instant, email, text) available. Also, for NTT to gain a foothold elsewhere, it will need to be so early to market that it can recreate the same market conditions – this is why some are saying that NTT has jumped the gun. Maybe they have, but there’s not really any other option for them!” One of 3Gs greatest attractions was supposed to be the relay of video clips and music downloads – FOMA currently has neither, users have been told to wait until next spring.

Also this week, Vivendi Universal refused to make its last 3G payment, and then subsequently climbed down, finally coughing up. Although the problem is still with 3G, this represents a very different market segment, and once again shows the problems Europe faces. Griffiths: “This is a very intriguing situation – it could be said that Vivendi is in a good bargaining position, as it represents half of France’s 3G operators, but then the government knows that any reduction in price will bring the other two bidders running back. It must be remembered that France Telecom (Orange) has paid for two European licences, but is part owned by the French state, so can hardly complain!”

Several months ago there were rumours in the UK, as BT disclosed the full size of its debt, that the UK government would step in to help. This was categorically denied at the time, but many industry observers pointed out that tax incentives were no doubt being offered backstage. Griffiths agreed: “There must be tax breaks around the corner, if not right now – none of the European governments can accept one of their major telecoms providers going bankrupt! That said, nobody held a gun to the operators heads – they had business cases that would have allowed them to spend more on getting the licences if necessary, and would have gone higher.”

Again, to draw parallels, it seems odd that ‘market leading’ Europe is so far behind Japan here. As we bicker and attempt to extricate our operators from the mire, Japan is up and running. Even the Manx 3G flagship (ironically to be found at http://www.worldsfirst3g.com) has run aground – launch is now scheduled for “later this year” according to a spokesperson. It seems Europe has lost its teeth, or at least its taste, for 3G at the moment.

Wonderwerx Pinchmee wakes up users

8:31 Saturday 29th September 2001 - Chris Lee, IT Week

Pinchmee is a messaging tool - like ICQ or IM - that can be tailored to suit the needs of specific companies. It should be available in 2002

Communications software firm Wonderwerx has demonstrated a prototype of its enterprise communication tool, Pinchmee. Last week Stephen Griffiths, founder of Wonderwerx, showed IT Week the new messaging tool that he expects will go into production next year.
Pinchmee is designed to be a communications tool like ICQ or Instant Messenger that can be tailored to suit the needs of individual firms. Griffiths added that while typical real-time chat and communications tools have a wide variety of features, Pinchmee is stripped down to ensure that what Griffiths referred to as “bloated applications” are absent.

Pinchmee can communicate with users on other instant messaging systems, such as those of AOL and Yahoo!, and it can be set up to recognise whether users are online using a desktop, laptop, PDA or smartphone. This will make it easier for remote teams of mobile workers to communicate regardless of where they are, and will enable them to see what devices people are using. Griffiths demonstrated the system using a Sony Vaio laptop and new Motorola Accompli 008 smartphone

Wonderwerx to launch mobile Java products

by Mark Mayne on 26 September 2001 15:19:00 GMT

Wireless startup Wonderwerx is to launch its first product, PinchMee, in two weeks time. The Java-based product is an instant messaging application for GPRS and 3G handsets.

Although Java on handsets (based on the 3GPP MExE standard) has been an industry talking point for some time, only recently has it begun to hit the streets. The Nokia 9210 supports Java downloads, and more phones are due out in the coming months – Nokia has apparently committed to providing 50m Java handsets next year. Instant messaging has also been touted as a killer app for next generation phones.

Stephen Griffiths, Wonderwerx founder, said: “PinchMee is Java-based so it is platform independent, and runs in a very restricted space. Another advantage is that the front-end skin can be changed easily, allowing far more potent branding opportunities for companies, either B2B or B2C.”

PinchMee also apparently offers a central inbox, and transparently works across all messaging mediums, (SMS, ICQ, email) depending on what device the user is online with. Promotional campaigns could eventually be directed across such mediums, although the logistical problems involved have not yet been convincingly solved.

According to Griffiths, the product will probably be live by Q3 next year, and is to be aimed at customers such as middleware companies, like Logica and Comverse. He conceded that the current market for such applications is limited, but pointed to the migration of users from GSM to GPRS as being a likely catalyst.

“Although there are few GPRS users at the moment,” he said, “the operators desperately need to begin migrating early adopters onto the new GPRS networks – a process that will begin in earnest this Christmas. It will be interesting to see how services and packages are pitched in these difficult times.”

Magazine: Marketing

September 2001

Article for Publication: Back-2-Butchers

Author: Stephen Griffiths, September 2001
Could a brand target me effectively, when the service has a million users?

“Hi Steve – haven’t seen you in 2 days – try the new Steps single – it compliments the 911 album you purchased”.

I like them informing me of my name, especially forename, as it’s less formal, but there’s no chance of me forgetting it. However, if it’s my banking service – that charge for breathing – I demand formality in tone of voice and assurance in operations. They acknowledge they haven’t seen me in 2 days, but who’s counting or cares. I like the offer of listening to new music, but I’ve grown-up a lot in the last 12 months, I mean, at age 16, 911 was cool, but now it’s sooo passé. And as for reminding me of a previous – and now embarrassing – purchase, how crass! They could have offered me a new Minidisk instead of an obvious CD – cross versus up-sell.

Building a screen-based relationship is tenuous and needs considerable thought. What sort of brand do we have? What are our values and strengths? How do we currently connect with people and extend/stretch this? How is this achievable across multiple touchpoints? Fundamentally, customer sensitivities must be respected and guarded, vis-à-vis personal data, transactional assumptions and tone of voice.

My local butcher has a limited number of regular customers, allowing him to remember their names, welcome warmly and appropriate to the situation. My definition of situation is a combination of environment, time of day, customer’s role, etc. This allows the butcher to understand the customers mood state, and whether it would be a good idea to offer related products and/or cooking advice. This is a controlled environment in which spontaneous, customer-centric decisions can be made.

The online world contrasts this, invariably being a volume game. The online mantra to get closer to the customer has been a spurious one involving jargon such as 1-2-1. But, 1-2-1 marketing could be viewed as a Pythonesque absurdist plot, an ideal rigid in objective and patently unattainable. To manage both brand and user expectations, it would be better labelled 1-2-Fewer-with-caveats. Reality dictates marketers get a deeper understanding of content/ad/transactional systems and the inherent complexities and limitations.

As the Internet population increases, so too does the number of user/brand touchpoints. And, inline with this increase, the Internet is braking down into ever-smaller micro groups, demographics continually devising.

Services need to track-and-match a greater number of smaller groups with their offerings. Greater resources are required to match users with transactions – manually and/or with agents. Matching complexity and filtering of higher data output escalates, and times, costs expand. As a volume user base spreads outwards and divides, 1-2-1 effectiveness decreases. Costs are passed to users and retention plans abate.

In defining a marketing/transactional system, asking the appropriate questions – instead of referring to marketer’s case studies and ideals – may prematurely deduce an unprofitable exercise. Capital may be better invested in re-architecting a service interface, provisioning finely tuned content for micro-groups, and delivering service excellence with an uncomplicated system and a more pragmatic strategy.

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