Every mobile network operator I’ve ever worked with has been preoccupied with the corporate paranoia that they might one day become “just a bit-pipe”. It’s spoken about in hushed tones like it will be the end of the world if data is the main service they end up delivering to their customers.
To counter the bit-pipe fear, some operators have desperately attempted to expand beyond their core business. They seek to exploit their brands and diversify into other service industries.
O2 has been the greatest exponent of this strategy, as described in this Marketing Week article from March 2012:
O2 is to implement a new business approach designed to champion innovation and which includes a brand campaign that will convey its “Fresh thinking, new possibilities” mindset to consumers.
The new mantra, created by O2’s marketing department, will be underpinned by a refreshed brand strategy, which will move the focus of O2’s marketing away from handsets and tariffs to other areas of its business, such as money, ticketing and charity initiatives.
Sally Cowdry, O2’s marketing and consumer director, says the new way of thinking has been endorsed by the board, so every division must now ensure every business process has “Fresh thinking, new possibilities” at its core.
Presumably this new way of thinking hasn’t gone down all that well since Sally Cowdry has subsequently announced her departure from the O2 business.
With the current obsession for cloud-based services, social networking and on-demand entertainment, being a ‘bit-pipe’ has actually become very important indeed.
When Google invented the Chromebook, they recognised that most people need a laptop computer for web browsing – and that requires Internet connectivity. The same is also true of most smart phones. If you don’t have good network coverage, be it cellular data or WiFi, then there’s not much fun to be had with your shiny device.
So what has become the fuel for all our connected devices? Mobile data connectivity.
Consumers want a reliable mobile network, with bandwidth on tap and good coverage. Provide all of these for a reasonable price and consumers will stay with you. Yes voice and text revenues are on the decline, but those conventional cash-cow revenue streams are simply being substituted by data consumption.
While some mobile operators diverted investment away from their core network and bet the family silver on non-telecomms service strategies, 3 Mobile bravely took the opposite approach and heavily promoted their ‘big-boned’ Internet credentials. Not long after Orange & T-Mobile got together and re-invented themselves as the superfast connectivity provider EE.
This unashamed focus on data connectivity is unsurprisingly a hit with data hungry consumers, with recent commercial success going to those who embrace the bit-pipe philosophy!
Time will tell which strategy has proven most sustainable, but with the unpopular O2 Wallet service already due to be obsoleted by the Payments Council’s mobile payments, I know where my money is.
The last paragraph was quite prophetic since Telefonica have announced the closure of their O2 Wallet service: “When we launched the O2 Wallet 18 months ago we were one of the first mobile wallets around. Since then lots has changed for us, the market and our customers. So, we’ve decided to close the O2 Wallet to give us time to look into new and better ways to help people manage their money on the move, both in the UK and abroad.”