A visitor from Italian mobile operator WIND told a vendor-sponsored business breakfast today how local content and service providers may best reap revenue from converged mobile data services.
Paolo Baldriga, head of value-added services and messaging at Italy's third biggest mobile operator, WIND, said that converged mobile data services harnessing SMS, MMS, email, WAP and DoCoMo's i-mode were growing strongly for WIND.
Providing appealing content was key to increasing traffic which grew revenues, not the other way around, he said.
Soccer, adult content and 'viral content' such as Joke of the Day were proving especially popular with users. Some 42 percent of WIND's revenues from mobile data services were from community messaging-type applications, up from 35 percent last year and 19 percent in 2002, he said.
Gossip, music and entertainment and news were still strong but shrinking in relation to community messaging, Baldriga said.
“We have around 800 different local TV stations and around 400 different satellite channels. There's now more than 100,000 people interacting with TV in order to make games and everything. It's not only for Big Brother. I'd like to emphasise that,” he said.
WIND had been having great results with NICE! Day, an Italian-made application with viral content based on Simpsons-like characters. Such content was offered at low cost – even free, he said.
Revenue was made from stimulating use of the service, while standard rates were kept high to enable high-impact promotions that “hooked” new users into the services. WIND charges 60 European cents an SMS, he said.
“Viral is a very important thing – and we tend not to think about viral customers. But they are customers with extensive [people] networks who send more SMS to different types of customers,” Baldriga said.
It was easy to piggyback a brand on something popular and internationally-recognised – such as the Simpsons TV cartoons – without violating copyright laws, he added.
Some 70 percent of WIND's mobile data services applications used locally-produced content. “It's very easy. i-mode [for example] is based on HTML so ... it is very quick to start an [i-mode] site,” Baldriga said.
i-mode did not cannibalise SMS. Availability of i-mode simply seemed to encourage subscribers to send more text messages, he said.
About 40 percent of WIND's largely low-income, youthful customer base tended to forget they had subscribed to a certain service. Often, they stopped using it while still paying.
“That is their problem. This is a way to start to squeeze the customers,” Baldriga said.
However, he warned that pricing needed to be calibrated very carefully. A misstep price-wise could cost a provider significantly. Operators needed to have a flexible, responsive billing system, Baldriga added.
Customers were still very much “post paid-averse”, with 98 percent sticking to prepaid subscriptions, but that didn't seem to adversely impact revenue as more got addicted to the applications, he added.
Live chat and streaming media such as video were “working”, but experiencing lower rates of growth and only in certain cases. Baldriga said he had been disappointed by the relatively low enthusiasm for video in the market.
WIND had 8715 staff, three million fixed line customers, 10 million mobile customers and 15 million internet customers adding up to a 17 percent market share. This year, WIND becomes cash-positive, after five years of operation, reporting 4.4 billion Euros of revenue, Baldriga said.
“We have been trying to leverage convergence since the beginning,” he said.
He said that partnering charities to use WIND mobile data services to raise funds had also proved a very effective way to increase revenue for both partners. In 10 years nearly all fundraising efforts would take place over the telecommunications network, Baldriga predicted.
Baldriga was speaking at Ericsson's latest NetworX Executive Series breakfast in Sydney. Ericsson is waving its flag high in Australia around its system integration capabilities.
WIND is a customer of Ericsson's in Italy, where Baldriga claims that Ericsson delivered effective cost containment and reduction through deploying horizontally-layered infrastructure.
Hardware and software had been consolidated, and the operation had achieved an effective de-coupling from the IT department. This had helped free WIND up to make decisions and change service offerings much more rapidly in response to swift shifts in market demand, Baldriga said.
“We have improved time to market from four to 10 weeks to two weeks,” Baldriga said. “You must have no more than one week for an implementation of these types of services or you're completely lost.”