Too Close for Comfort?
By Peggy Salz, Mon Dec 10 00:00:00 GMT 2001

How much longer can the operator claim to own the customer when it's the vendor who's really pulling the strings?

Remember the old days when the aspiration to build a network was enough to inspire investors and keep rivals at a distance? Well, they're gone forever. Telcos need to wake up to what KPMG Consulting calls "an altered state of telecoms reality," which dictates that selling voice minutes to a mass market isn't a profitable business - selling customized world-class data services is.

"It all boils down to a deceptively simple choice: does the next generation of telecoms companies focus on customers and services, or on networks and technology?" according to Martin Heath, KPMG Consulting partner and head of its global Communications and Content Consulting practice. If operators choose the role of a network provider, then they need close partnerships with their suppliers to implement and integrate data networks. If they choose the service provider model, then they must rely on relationships with vendors to come up with the necessary killer-apps.

Either way operators have to accept that vendors are out for some - but not all of their business. Rather than worrying about vendors moving in on their business, they should be glad that someone is helping them generate traffic. "Owning the customer has gone beyond being able to bill the end-user to being able to entertain, interest and motivate him. This is not in the realm of what operators can do alone. But it is what they can do together with handset manufacturers," notes Fraser Curley, a partner at the Düsseldorf office of Arthur D. Little International.

Let us entertain you:

Siemens has turned its attention more to developing services that make its handsets - and its operator customers - attractive to end-users. In addition to co-branding services with operators timed to events such as the German Oktoberfest, Siemens is also breaking new ground in the ever-evolving vendor-operator relationship.

In November Siemens ICM sealed a deal with T-Motion, a venture jointly owned by Deutsche Telekom's mobile and Internet subsidiaries, to supply premium services such as financial news, restaurant guides, and greeting cards to end-customers. The collaboration between Siemens IC Mobile and T-Motion represents a "new concept for the provision of mobile services," according to Lothar Pauly, Siemens ICM Group board member.

Siemens develops the applications and concludes contracts with attractive content providers to deliver the contents. With the help of Siemens technology, applications and content are combined into premium services and operated on a Siemens hosting infrastructure. T-Motion provides the services in its portal, markets them, collects fees, and shares the sales with the service provider. "But not every content is suited for every user. Therefore we have put together packages for various customer segments and can thus help companies (operators) offer their customers individualized service," Pauly says.

Nokia is also making great gains in the content space. Its Club Nokia wireless portal and community, available in Europe since May, now counts a whopping 10 million members and expects to grow to about 50 million by 2004. That gives Nokia a huge lead on the likes of mmO2's (BT Cellnet) Genie portal, which claims 5.5 million registered users [ Peggy Anne Salz monitors the global telecoms markets and contributes regularly to Communications Week International. Her articles have also appeared in a number of daily and weekly publications including TIME, Fortune, The Wall Street Journal Europe and The International Herald Tribune.