Skip to content

Connect-World: the leading Telecom magazine, ICT magazine, Telecom magazine, ICT and Telecom Industry Press Releases and Blog.



Welcome to Connect-World, the information and communication technology (ICT) decision makers' magazine.

Increase font size  Decrease font size  Default font size 
You are here:     Home Article Latin America II 2001 Is Wireless Technology the Path to Consolidate the ICT Revolution?

To join our mailing list click here


Is Wireless Technology the Path to Consolidate the ICT Revolution?

Written by  Raul Bauer
Rate this item
(0 votes)
Raul BauerIssue:Latin America II 2001
Article no.:5
Topic:Is Wireless Technology the Path to Consolidate the ICT Revolution?
Author:Raul Bauer
Title:Director and Country Manager
Organisation:IDC Argentina
PDF size:24KB

About author

Not available


Article abstract

The deployment of information and communication technology (ICT) is causing profound changes in business and consumer habits. Wireless technology seems to be the next step of the ICT revolution. Wireless pioneers need to know how wireless will benefit their company, what factors count when developing wireless services for clients and to what extent can wireless become a driver for their business. Are worldwide trends applicable for building business plans for the local market?


Full Article

Unlike other countries, wireless did not evolve in Argentina as part of a technological development designed to enable the offer of new services, but rather as a way to overcome the deficiencies of fixed telephone service. We can all remember the bulky cellular phones Information Technology (IT) mobility was also driven by the need to work in unconventional environments (aircraft, board-rooms and out on the farm). The falling price and size of notebooks, combined with an increase in their capacity and autonomy, as well as the development of handhelds, helped extend mobility until it seemed that the furthest limits had been reached. At this point, the paths of mobile technology and wireless converged creating a highway providing continuous, unwired, accessability and availability. Connectivity at all times, from any point, to gain access to, update and consult all available information has become the basic model for new ITC systems. When the market detects a new technology, vendor pressure and media interest tend to run ahead of business benefits and customer satisfaction. When contemplating the rollout of wireless services, a business should ask itself: Can wireless access enhance significantly the value of my company's products and services to the customer? If so, then the challenge for businesses becomes when and how to undertake the wireless rollout. Mobile Internet is still in a very early stage of adoption. This has more to do with existing business models and market targets than with wireless access. What are the prospects for new services that make wireless and mobile Internet an interesting proposition? According to IDC analysts, the 399.7 million Internet users that existed at the end of 2000 will have grown to 877.2 million over the next 4 years. Many of them will be mobile Internet users. Over the next 12 months the number of cell phones with access to Internet will exceed the number of PCs connected to the network and will continue to grow at a faster rate. Where Cellular/PCS (Personal Communications Systems) subscribers equal the total of all cell/PCS subscribers worldwide, including analogue and digital, illustrates this growt, it should be understood that: Wireless-capable equals digital cellular/ PCS subscribers that have the capability of accessing the Internet. Note that they may or may not use it, but they have the capability. Wired means all subscribers who access the Internet through PCs and network computers via wired connections -Local Area Networks (LAN) , dial-up, cable modem, Digital Subscriber Line (DSL), etc. By definition, this also includes set top boxes and other digital devices. In Argentina it is expected that the number of mobile phones will exceed the number of fixed telephone lines this year. IDC considers that in four more years, 18 per cent of Internet users in Argentina will use their cell phones to gain access to the network. This outlook represents a significant increase in the base of potential consumers of wireless Internet. What kind of business opportunities will be generated? It has been forecast that cellular ARPU (average revenue per user) in Argentina will fall 10 per cent this year. This is not just an Argentine phenomenon. Even as total cellular/PCS service revenues in the US are on the rise, ARPUs are falling. Revenues will increase from US$33.4 billion in 1998 to US$57.3 billion by 2003, while ARPU will fall from US$47.40 to US$42.25. Although consumers spend less than business users, the revenues produced by the consumer segment are much larger than those produced by the business segments, because there are simply many more consumer users in the market. Cellular ARPU is expected to fall 11.6 per cent over the next four years in USA and 19.2 per cent in Europe. Applications that will benefit from wireless Internet include: e-Care, e-Billing, Location-smart applications (not just location determin-ation) and m-Commerce, opening up prospects of a new business model for operators by generating new potential sources of income. This is vital in a market where competition is severely impacting the results of service providers. No doubt the drop in revenue to which we have referred in previous paragraphs will be less acute thanks to the additional income to be generated by new wireless Internet services. IDC analysts estimate that total cellular ARPU in the USA, instead of falling 11.6 per cent in four years will grow, thanks to this new income, by 2.3 per cent over the same period. In Europe the overall fall will not be offset entirely, but it will be considerably moderated. Business Vs. Consumer As always, there is a risk of exaggerating the expectations for new technologies. In this instance, there is also a risk of over-estimating the reality and potential of both B2B and B2C business volumes. In 2004, the US$20.8 billion in m-Commerce revenue will only be a small fraction of total Internet commerce. IDC analysts, although conservative in their appraisal of the situation, are really optimistic as regards the future. Wireless services for Enterprise applications or for Consumers? The reality of the market shows that, up to now, companies that provide wireless access to their Web sites appeal more to business customers than to individual consumers. Wireless access to enterprise applications can produce measurable efficiency improvements-and a return on investment. In these projects, companies are able to manage variables with a greater level of certainty, as success of the projects depends on the behaviour of their own employees and their business partners (other suppliers and/or customers). Consumer wireless applications, however, are harder to monetise. There is less certainty as to their success; they depend upon the behaviour of end-consumers and are not easy to forecast or manage. As a result, they are less appealing for businesses to deploy. However, there is considerable value in providing wireless access, as a means of improving customer retention, especially in industries such as brokerage and travel, where access to updated information from a mobile device can be potentially very useful. From the Consumer Standpoint In the beginning, we expect that most consumer wireless Internet use will be for information queries rather than transactions. Small displays, slow transmission speeds, and cumbersome data-entry methods will limit mobile Internet use to functions that are dependent on timing, location, and experience (e-Mail, stock quotes, weather, travel delays and itineraries and point-to-point directions). Albeit not direct commerce opportunities, these services can be leveraged by e-Businesses to build customer relation-ships and initiate indirect commerce. New applications with opportunities for players Mobile Internet opens up interesting possibilities for players in the market. Based on the possibility of determining where a user is located when an order is made, it is possible to imagine the user requesting information about special offers and discounts in the areas where he or she is located. Discounts/coupons /offers could be passed back to the user with location sensitive ads. When a subscriber uses a coupon the store that receives it benefits by completing a sale-a real rather than potential event. This could provide the basis for calculating the fee that the shop participating in the system would pay the carrier/collector. A model based on actual income, not potential income: the shop will pay because it made a sale, making the business model viable. A true win-win situation. Obstacles How much is just an expression of desire, and how much involves real potential? Do not imagine that mobile Internet will grow dramatically from one day to the next. Growth will be active and continuous, but it will take time. We do not envisage a reasonable level of development, with adequate functionality and speed, until the end of 2003. We have not yet been able to identify any 'killer applications'. This means that the industry must invite and educate users, not just expect them to turn up at the party. The ROI Question Recent stock market doom and gloom has created a business climate far more cautious than it was in 1999 and the beginning of 2000. The capital glut having disappeared, e-Businesses can no longer count on IPOs (initial public stock offerings) and deep-pocketed venture capitalists to finance operations that are years from profitability. The market has discovered that putting an 'e' in front of a business doesn't excuse it from profitability or the policies that create profitability. Given this change in climate, it is not surprising that belts have tightened. A business plan for wireless Internet development must consider key functional and technical aspects if it is to achieve adequate development and revenue. "The first shall be first." Unlike the biblical quote, those who succeed in positioning their site at the top of the menu offered on cellular phones will have an advantage: - The wireless interface on cell phones and most Personal Digital Assistants (PDAs) is usually menu based and not conducive to the 'surfing' navigation of a PC. An e-Business, therefore, has an advantage over its competition if it can become one of the first menu options listed on user devices. - On the e-Business side, this issue adds cost and confusion to the mobile rollout. Wireless ISPs (Internet service providers), or WISPs, recognise the competitive advantage of this positioning and charge fees for placement, creating a walled garden out of their subscriber base and charging e-Businesses a fee for accessing that garden. What seems free can turn out to be expensive Although free access and free services always help in the deployment of new services, they can lead to customer dissatisfaction if the terms of the service are not made absolutely clear. What's mine is mine, but what's yours will be ours. To achieve valuable 'anywhere, anytime' access on a national (even international) scale, partnerships with carriers must happen early and often. For service providers it will be essential to build a network and maintain appropriate service offerings. Many corporate clients, however, already have global agreements with a carrier. Consequently, they will not be eager to swap services with other carriers. As a result, a broad array of carrier partnerships will be essential to creating a mobile offering that enhances relationships with customers on a national level. How to put a TV inside a cellphone For Internet users with usability expectations that are defined by their experience with Web-based, not FTP or text-based, Internet sites, the screen size and the cumbersome nature of data entry are key limitations to wireless offerings. These limitations have a direct impact on the functionality that a wireless service can offer. Standards, again Multiple standards for devices and networks are also a near-term issue. In attempting to remain device and network independent, brokerages face the problem of making sure their services offer full, consistent, and reliable functionality to the range of PDAs, wireless phones and two-way pagers. Being able to deal with the alphabet soup of standards, protocols and languages will be essential to a successful mobile presence. And as usual: customer first The most important aspect is the service that the customer expects... not the means of delivery. For most e-Businesses, the benefits of wireless access are likely to be improved customer relationships and better services. So, as companies build out their wireless offerings, it is imperative for them to remember that the customer they are building this service for has a relationship with the e-Business, not the channel. It is therefore imperative that, from a customer perspective, the mobile offering fits seamlessly with the other channels that acustomer uses (call centre or PC-based Web). Conclusion In the mid to long term, companies that can't provide anywhere / anytime service offerings will be at a competitive disadvantage. They simply won't be able to match the consistency and level of service offered by companies that have taken an integrated approach to their e-Business. On the other hand, those that offer these services at an early stage will harvest the 'cream of the market' and all the benefits that accrue. In this 'new economy' business strategy hinges on the client. A variety of service offerings and adequate network capacity will be essential to exploit fully the potential of this market. In this scenario, in a manner similar to the offering of banking services through ATMs starting in the 80s, we foresee the creation of wireless services networks (brokers). The focus of these networks will be to broker diversified, quality services aimed at customer needs. These networks will be independent from those providing access and the related technologies. The installed base, existing infrastructure and the socio-economic and global characteristics indicate that Argentina is the best-placed country in Latin America to access and absorb information technology. In the 'wireless match' this will be the opportunity and the challenge.

Read 2421 times
Login to post comments