Building a Global Playground
By Heidi Kriz, Wed Aug 01 00:00:00 GMT 2001

Globetrotting wireless guru, Richard Siber talks about the globalization of the wireless industry.

As managing director of Accenture's global wireless practice, Richard Siber accrued more than a lions' share of frequent flyer miles; his accumulated wisdom on the subject of wireless around the world. This has made him the toast of wireless executives, financial institutions, top government officials and even presidents and kings.

In fact, Siber and some of his colleagues at Accenture were among the only two, outside, non-government entities invited to present their views at the recent G8 meeting in Davos, Switzerland. And they had the full attention of presidents and leaders from around the world at this years World Economic Forum.

TheFeature spoke to Siber recently to ask him about the subjects he knows best - the globalization of the industry, the coming convergence of wireless technology and culture, and the impact the explosive Asian market will have. What do you see as the dominant trends and concerns, in terms of consolidation and globalization in the wireless industry?

Richard Siber: Outsourcing of handsets is one. You will see companies like Ericsson, that will farm out manufacturing, but keep their R&D, because somebody else can be much more cost effective at providing their manufacturing needs.

You will also see distribution channels emerge as a critical factor. Pricing and billing will be a global challenge. Roaming, being able to carry all of these services and functionalities with you wherever you are, will be a challenge.

There will be further consolidation in the industry which will actually create opportunities for other companies. When six carriers come together as they have in Verizon, you can end up with a lot of chaos. A lot of internal consolidation will need to take place with billing systems, call centers, customer care, distribution capabilities and so forth. Other companies can help serve those needs.

TF: What are some of the most significant regulation issues facing the industry worldwide?

RS: The biggest issue the industry faces in this area are in the US not Europe, or Asia. And it concerns the issue of spectrum for 3G. US carriers are being stalled in acquiring, through the FCC's auction process, the spectrum they need for 3G. This puts them at a huge disadvantage to other carriers worldwide. The Clinton administration made a strong commitment to addressing the 3G issue, but it's too early to tell what will happen with this, the Bush administration.

It's been our argument that the US was one or two years behind. Now it's easy for me to defend that we are two years behind Europe and four years behind Japan. The evidence is popping up all over the place. Countries will be launching 3G services when we will not even have had an auction of the spectrum.

TF: You talk about the US, and other countries being behind the curve compared to Japan. The greatest current example is the wild success Japan is enjoying with DoCoMo's i-Mode service. Is such a service culturally specific to Japan - will it fly elsewhere?

RS: Yes, yes, yes. DoCoMo was not convinced that i-Mode would be the incredible success that it is. They had projected they would have 17 million users in 2005. They launched in February of 1999, and by December of 2000, they had 17 million users - in less than 22 months after they launched!

The way we summarize i-Mode is that it is a business model. It's not a technology and it's not something specific to the Japanese culture. What's unique about it is that its build upon something that's relatively open, which is HTML (versus WAP). Let's create an end-to-end environment, with services for a segment of the population that hasn't really appealed to mobile: female teenagers. And make this really affordable. It's 300 yen a month, which is about $3 US dollars a month. And charge companies a commission to host their applications. So that's the business model.

Now, in terms of whether i-Mode is culturally specific, that's an interesting question. The biggest applications in Japan today tend to be off-track betting, virtual fishing, and karaoke ringtone. So, will karaoke ringtones fly in Lubbock, Texas, USA? I don't know. But we did do a study not too long ago that looked at five or six countries, including Japan, the US, Germany etc., and looked at some of the cultural elements in wireless use and behavior. The findings of this study basically suggest there is nothing culturally specific. Intuitively, though, it seems that there has to be some differences. The study didn't get to the down and dirty of "Will you subscribe to karaoke?..."

TF: Well it sounds like, since you consider i-Mode first and foremost a business model, that you believe cultural issues are irrelevant.

RS: Right. If you look at it as a business model, then it can be "exported" into any country and culture in significant numbers.

TF: And will DoCoMo continue to be the apparent front-runner in terms of innovation?

RS: As far as innovation coming out of Japan, they are very, very dedicated to being "first." Secondly, they have relationships with device manufacturers like Sony, Mitsubishi. Well, when you think about the heritage, all of these companies are consumer brand companies. And they certainly understand technology especially miniaturization, chips and video. So, a lot of the next generation developments in wireless are coming from Asian companies in Japan and Korea. Because they already have the expertise in video and in consumer packaging. So DoCoMo is aligning themselves with them.

No, what's really fascinating to me is that the Japanese government has said "All of this 3G stuff is great, but we think you need to be working on something else - 4G. And we think in 2010, we should rollout 4G and we'll be first." DoCoMo said, "Why wait till 2010? We think we can rollout 4G in 2007."

TF: How about another Asian nation - China. Obviously, the potential number of subscribers there makes the market very attractive. If penetration approaches what the industry hopes, what will be the likely impact on the culture of the industry? Is China likely to become an innovator?

RS: I have met recently with the Chinese Ministry of Information. What they realize is this - first of all China will be the biggest market in the world this year. Second, to get at that size, they know they can't do it alone. So they are entering into partnerships with companies like Nokia, Ericsson, Motorola and others. And now DoCoMo, being innovative again, is saying they are going to develop an Chinese character-based i-Mode. Everyone is trying to get at the size of the market, and in fact it's projected that more than fifty percent of the wireless market worldwide will be in Asia within three years.

In terms of China emerging as a leader in innovation, it depends on what how you define innovation. Many developing countries that have limited wireline infrastructure, will see wireless providing a platform for improvements into their health care system, their education system, and so on.

At the World Economic Forum, in Davos, Switzerland, and the G8 meeting, the message we're delivering to developing countries, about the digital divide and the lack of competitiveness, is that countries can use wireless as a platform for reform and social improvement. We're going to see more and more of this happening.

TF: What about developing regions like Africa? Places where there are a lot of other complications, like regulation, nationalized PTT's...What is their disposition towards wireless? How can they benefit?

RS: There is a recognition among governments in regions like Africa, that in order for them to get competitive, they need to put in place an infrastructure which allows them to educate, which allows them to improve the general health of their population, and wireline can't do it quick enough or cost effectively. So the PTT's, though may be competitive, typically have a wireless arm or subsidiary that they'll run this through.

TF: Competing technologies - how will something like the Bluetooth technology impact the wireless industry?

RS: It will be big. We view Bluetooth as a potentially disruptive technology for a couple of reasons. Bluetooth was originally developed to provide cableless connectivity. And what it has emerged to the point where we have Bluetooth applications that allow you to purchase, or make a voice telephone call that bypass the wireless carrier network in billing mechanism. So from that standpoint, it could be very disruptive. But there are three small problems with Bluetooth right now; there are interoperability issues with the two different versions; second there are interference issues at the 2.4 gigahertz range; three the price of the Bluetooth chip was supposed to be five dollars, instead it's thirty US dollars. With the growing pressure on handset margins, you can't put a thirty dollar chip in 100 dollar handset. But once Bluetooth reaches economies of scale, which they will, you will start to see this as much more pervasive.

TF: What other trends are emerging that you are working on right now at Accenture, that people haven't really started talking about?

RS: Let me give you two. These come under fabric of the industry plays. For an enterprise customer, they are quite challenged because there multiple technology choices, there are lots of interface choices, whether it be a PDA, a mobile phone in your car...and we're working on a mobile services platform to try and eliminate a lot of the risk. That the carriers and the enterprise customers are now taking on themselves.

Number two, if you look at the investments that will be made - $300 billion US dollars in spectrum, $750 billion in infrastructure for next generation wireless, there's no economic model that exists that will allow a carrier today to recoup that investment and have any type of return. So we've identified initially twelve different revenue generation models that include location, time of day, events, advertising. By being integral to everyone transaction in this space, micropayments, and alike, begin to allow carriers to fundamentally get a return on their investment.

So those are two big trends. One is eliminating risk for enterprise customers and carriers, and two helping carriers and equipment manufacturers and content providers, and location based companies, become part of the ecosystem and share in the revenue that will be generated - by you walking up to a McDonald's and ordering a hamburger by the use of your wireless phone.

Richard Siber has fifteen years of experience in the wireless telecom industry. He is the managing director of Accenture's worldwide wireless communications consulting practice. Currently he provides a broad range of marketing, strategic and industry oriented consulting services to carriers and vendors worldwide in the wireless industry.

He is a frequent industry speaker and has chaired, moderated or spoken at more than 150 wireless conferences worldwide, in addition to being quoted in such influential news sources as The Wall Street Journal, The Economist, The Financial Times, CNN and CNBC. Additionally, Richard is part of the marketing department at Boston College, having taught there for the past seven years.