Carriers Mean Business
By Carlo Longino, Tue Apr 30 00:00:00 GMT 2002

Mobile operators are taking on service integrator roles to grow corporate data revenues.

As wireless carriers look to increase their networks’ data capabilities and expand their data application offerings, many are looking toward the enterprise market with longing eyes. After all, revenues from business users have been key to carriers’ growth thus far, and huge corporate voice contracts bring in loads of money without many of the downsides regular consumers bring – churn, unpredictable spending habits, and little brand loyalty.

The data market is no different – IDC predicts spending on enterprise mobile data services in the US alone will be $16 billion a year by 2005, while a survey conducted for database powerhouse SAP showed 98% of European businesses surveyed planned to implement applications for mobile access to corporate data within two years.

Carriers have realized that to attract and maintain corporate customers, they must facilitate mobile data applications and access to corporate IT systems, be that e-mail, personal information management, or customer resource management data. But the wireless data application value chain is much more convoluted than that of its brother, wireless voice. Whereas in voice, there’s the carrier, the handset manufacturer, network gear maker, and back-end carrier software (i.e. billing, etc.) developers, data adds a few more levels – end-user application, platform, and middleware developers.

All of these disparate elements are overlapping and interdependent; remove one and the rest will fall. But interdependence doesn’t necessarily mean cooperation – each of these players has turf to protect, and to some extent, each is trying to elbow its way up the value chain. A network infrastructure manufacturer has its preferred vendors and products; a carrier will only work with certain application developers; handset manufacturers will only support their own platforms – each trying to use their muscle to open up a little more space for themselves, only to the detriment of the end user.

What the chain is begging for is a service integrator to pull all these separate pieces together and to keep an eye on them from the end-user perspective – provide one point of contact and act as a clearinghouse to provide customers with the best possible solutions. But who can best fill that role? The usual suspects of systems integrators and technology consultants, web services firms moving into the wireless space, or specialized wireless boutiques? Surprisingly, many carriers around the globe are positioning themselves in the space, offering up that they’re best suited to deliver the entire wireless enterprise data package.

This may at first glance appear to be a purely defensive move by the carriers to protect their relationships with customers and retain “ownership” of them – much like their walled-garden approach to WAP content. Cynics would suggest that carriers have set up their networks in such a way that they must be involved in order to provision and deliver the services to customers, just to guarantee short-term success. But by capitalizing their existing technical and marketing skill to increase their service offerings and integration roles, carriers are opening up a valuable new revenue stream that should provide for long-term success.

The why…

For carriers, the reasons that they should be doing this job are pretty clear. “The carrier needs to be the one that does this,” says Steve Krom, the vice president of business marketing and product development for US carrier Cingular Wireless. “They have the strongest economic tie to the customer.”

And those ties in mobile data are in some cases long-established. Cingular has been in the wireless data business through its corporate predecessors for around 10 years and has worked for over 400 of the Fortune 1000 companies. Vodafone in the UK says it has a 60 percent corporate market share for voice and data, while Orange’s French operations holds a 50 percent share in its market.

In the mobile workplace, wireless carriers see themselves providing not just network access or a blind pipe for data like traditional Internet service providers, but a service to their end-users that includes a number of valued relationships - relationships they’re not willing to give up, most namely provisioning and billing.

“We’re in the business of being a service provider, not an access provider,” Krom says. It makes sense to see things this way from a voice perspective – you’re not merely buying the ability to access their network with any type of client software or device, you’re paying for the use of services they control and determine – and support of those services as well.

“We are not just a bearer,” says Naresh Chouan of the Orange Developers Forum. “Differentiation comes in by being able to provide network support. We can swap out nodes or devices if they drop out. We have engineers and consultants to support the enterprise IT team.”

But will this view work for data? Many carriers’ data-only networks have thrived on letting third-party resellers sell a service that uses their network (most notably Research In Motion’s BlackBerry service and, but most consumer-based efforts thus far have been executed from the same perspective as they see voice, and have failed miserably.

Mobile operators haven’t pushed the service angle enough, according to Gartner Group analyst Nigel Deighton. “They have been too preoccupied about selling mobile data rather than selling mobile services and solutions. Who’s going to buy ‘mobile data’ for God’s sake?”

One could argue that i-mode’s huge success has been due to the fact that NTT DoCoMo has developed the best data pipe they possibly could, and is really in the business of being an access provider; on the contrary, DoCoMo not only provides a useful service to consumers – again, billing and provisioning - but has created an environment where everybody on its i-mode value chain stands to benefit from higher usage. And this is a lesson not lost on today’s carriers.

And the how…

Carriers have learned from their first run at WAP that they have to create an environment in which everybody benefits. By keeping their WAP users in walled gardens, carriers stifled application development, which going back to the interconnected value chain, is essential for future growth.

“What makes it successful is the right ecosystem that combines all the elements,” says Cingular’s Krom. “A cornerstone is working with application developers,” and providing them the proper tools and resources so their applications will run on carriers’ networks. Indeed, over 4000 developers are registered with Cingular’s developer support program. Carriers around the world offer similar programs, and are supporting new standards like the M-Services Initiative.

Perhaps their attempts at becoming mobile content companies are fresh in their minds as well, as carriers have been quick to strike important partnerships carriers forge with enterprise and network software companies and traditional systems integrators.

“Our corporate customers are used to dealing with the partners that we have, which puts us in a stronger position when targeting this market,” says Kevin Billings of Vodafone. “If a company has to reconfigure its IT system to accommodate wireless connectivity to the corporate intranet, we may not be the best people to sell that service directly. That’s why we are associating with companies which have the appropriate IT and systems integration skills.”

And that offers comfort to clients for whom compatibility with existing systems is key – which also spurs carriers to partner with popular enterprise software companies to develop mobile editions of their software. Microsoft, for example, announced deals with 8 carriers around the globe at the recent 3GSM trade show in Cannes, all presumably built around delivering mobile access to carriers’ customers who use the software giant’s Exchange server and Outlook software for e-mail and PIM functions.

It would seem, then, that Microsoft could use its clout to dominate this market – but that may not be the case. They can’t yet cut the carriers out of the equation, as they still need someone to carry the mobile data. And is entering the mobile services arena something Microsoft wants to do? Probably not – they’re happy just selling their mobile software and letting someone else install it.

Are these symbiotic, cooperative relationships necessary, or couldn’t carriers theoretically elbow these other players out and expand their role on the chain? “It’s not feasible,” says Krom. “We both bring something to the table, and we want to keep the relationships.”

It’s just as infeasible for other players to try to push out carriers – at the end of the day, they’re the only ones that can provide wireless services to the customer, and the only ones that can provision and deliver such services, so in one sense they’ve got no choice. But in the same way, the carriers have to depend on their partners to deliver on their parts of the chain.

By going it alone, carriers would risk upsetting, alienating, and losing important corporate clients. But drawing on the expertise of partners allows carriers to take the driver’s seat in selling these wireless data services, keeping the disparate elements and separate partners working towards the same goal. “It’s not rocket science [to pull everything together],” says Krom. “It’s being diligent.”

Carlo Longino is a freelance writer based in Austin, Texas. His previous experience includes work for The Wall Street Journal, Dow Jones Newswires, and Hoover's Online.