3G Time Comes (8) Who Are First Users of 3G?
Computer-based and handset-based internet surfers are not the same group of people.
ARPU (Average Revenue per User) is the simplest measure used by most telecom operators for performance assessment. A low ARPU means that the operator is earning little from each subscriber, or the subscribers don’t often make phone calls although they have their phone numbers. In this case, it does not help very much no matter how many subscribers there are, because such subscribers are of low-value.
Because of the efforts of telecom to raise their ARPU, new subscribers are being pulled in continuously, while the call minutes of each subscriber are increasing too. However, due to price wars and a number of other factors, the revenues of operators have been declining, which is eventually dragging down their ARPU. While the call minutes grow, phone bills are shrinking.
The mobile Internet has been regarded the hope for ARPU, because it has worked in Japan. The experience of i-mode of NTT DoCoMo shows encouraging results not only in the number of subscribers, but also in the actual revenue of the company.
NTT DoCoMo does have the same experience: growing call minutes accompanied by shrinking phone bills. Theoretically, this would lead to the decline in ARPU too. However, the success of the mobile Internet service has surprisingly pulled ARPU back from the downslide. In addition to making phone calls, subscribers access the Internet from time to time and that has resulted in more phone tolls.
We all believe that we could learn something from the experience of Japan. But I have to remind you of a defect in the Japan’s scenario. Japan is a country with low computer penetration rate. Among the Internet surfers, most do not use a computer. Many people have email addresses only because they have handsets.
That is different from the experience of many other countries, where computer-based Internet environment is well-established, and portal websites, which have evolved through rounds of market tides, and even dotcom bubbles, are now striving toward high-speed broadband services.
Why do I mention that difference? Because I find that the PC-based Internet mindset, which originated from the west has impeded the development of the handset-based mobile Internet service. The over-dependency on the former has restricted the imagination of most people towards the latter.
That is what I have been repeatedly stressing: do not treat handsets as computers. Both the demand and usage pattern of the handset-based internet are completely different from those of the computer-based internet. Also, do not take for granted that all those who use computers to access the Internet would also do that with handsets. The fact is the opposite of what most people have thought.
Is there any proof for the above opinions?
Yes, and that is the experience in South Korea, the only country in the world with high infiltration rates of both computer-based high-speed internet and handset-based broadband services. It is the one of the world leading countries in terms of the infiltration rate of both Internet models. Even in the field of the handset-based Internet access, South Korea is a rival of Japan.
"We don’t think that computer-based and handset-based Internet surfers are the same group of people", when I heard that from a mobile internet department VP of a leading telecom operator in Korea who said it very certainly, I felt greatly relieved, for I eventually got the proof from the business community for one of the opinions that I had kept in mind for a long time.
As many as 75% of the company’s subscribers use the mobile Internet service, and only 30% of this group of subscribers access the Internet with computers simultaneously. When we continue to compare the most popular service items of the computer-based and handset-based Internet services, we will see completely different landscapes too, "because their usage patterns are different!"
Why is the difference (or connection) between the fixed-line and wireless Internet so important? Because it is the factor that decides where telecom operators would go to find the first handset users for their 3G mobile Internet service. A common perspective is that they should start from the users of the computer-based Internet, assuming that receiving and sending emails might be a service needed by this group.
But do you still think so?
I will leave that question to my readers and let’s think about it together. With all the discussions regarding the business aspect I have made in these articles, what I hope is that Taiwan could get on the right track for its 3G sector right from the beginning. After all, we cannot afford to have another 3G bubble. In addition, 3G has a brighter outlook in Asia than in Europe and North America. Let’s look forward to the day together!
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3G Time Comes (8) Who Are First Users of 3G? - 2003/05/18
