Page 50 - AIB | The Chanel | Issue 2 2011

50 | ISSUE 2 2011 | THE CHANNEL
“
”
Many
content
providers
view the
mobile
operators’
culture
and
processes
as
cumber-
some,
inflexible
and slow
The mobile data market is evolving rapidly as
mobile internet, content and apps gain rapid
adoption in the emerging markets, chiefly driven by
faster 3G networks and better yet cheaper devices.
Angel Dobardziev, Ovum analyst
and author of 'Monetising Mobile Content
in Emerging Markets', argues that
in the emerging economies mobile
content services are at an
inflection point
he mobile data
space in emerging
markets is on the
verge of a period
of significant
growth and
disruption, which
will change it beyond recognition.
It is still an immature market, with
less than one‑fifth of mobile users
venturing beyond SMS, ringtones
and wallpapers. Most of these users
do not have experience with fixed
internet to use as a complement
and benchmark, as is the case in
mature markets. Yet a number of
powerful drivers, including the
rapid acceleration of 3G, cheaper
yet more capable devices and the
availability of new distribution
channels beyond mobile operator
portals, are causing seismic shifts
that could abruptly alter the course
of market development.
Although smartphone
penetration is expanding rapidly in
emerging markets, it will be feature
phones that will dominate for the
next two years. While operator
mobile portals currently dominate
the content space, we expect proxy‑
browsing services from the likes of
Opera and Novarra (now part of
Nokia) to quickly gain momentum
and change the dynamics of the
market. This will boost data access
traffic and revenues for mobile
operators, and they are keen to
partner with such players, not least
to provide a better mobile content
experience for consumers –
something they have so far largely
failed to deliver.
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However, it is also clear that as
soon as users get used to mobile
browsing their content
consumption patterns rapidly shift
away from telco portals and
towards free or ad‑sponsored
content. Ad‑sponsored content will
grow to become the dominant
business model in the emerging
markets, as its affordability will
make users in these markets far
more receptive to it.
This will lead to the creation of
alternative content distribution
ecosystems, where mobile
operators are left with only the data
access – and billing – revenues (for
premium content). With other
platforms increasingly providing a
better deal and less hassle for
content providers, mobile operators
will face pressure to improve
revenue‑sharing schemes with
content providers, as well as the
sometimes below par levels of
service, process and experience that
they deliver.
We expect smartphones to
remain a niche market in the
emerging markets until 2013 at
least. Despite this, emerging market
mobile operators are right to get on
the front foot with their own app
store strategies and cross‑industry
initiatives such as the Wholesale
Application Community (WAC).
However, should WAC fail to
deliver as quickly as many –
including we at Ovum – expect, the
play by mobile operators to secure
dominance in the smartphone
content market will be threatened
by device vendors (e.g. Apple and
RIM) and platform vendors (e.g.
Google and Microsoft).
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Ultimately, all of these
developments press home the
choice that mobile operators in
emerging markets must make
between being a provider of pure
bandwidth and offering a full range
of services. A role focused solely on
T
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