MVNOs – mobile virtual network operators – always tend to offer some of the most attractive PAYG (pay-as-you-go) deals in most countries of the world. Here in the UK, one of the most interesting offers comes from GiffGaff – a viral MVNO that offers support via an online community of elders, with back up from the MVNO’s parent, Telefonica O2.
Telefonica O2, of course, is a tier one cellco in the UK (and across Europe) in its own right, but the GiffGaff PAYG deals offer bundles of minutes and data, the latter usually without any restrictions, caps or other `fair use’ caveats that most of the UK cellcos impose.
How can O2 offer this service? My experience and observations suggest that it all comes down to data session prioritisation – put simply, a GiffGaff SIM-based handset placed side-by-side with an O2 SIM-based handset at peak times in a heavily-loaded cell will not achieve the same mobile data speeds, as the O2 data session will get priority.
This actually makes a lot of sense, as the UK’s cellcos have invested billions in their network hardware, so using software to prioritise data sessions means that premium customers – high-spending contract users – should get priority over native network PAYG customers who, in turn, get priority over MVNO users.
This strategy of offering consumers relatively unlimited monthly data allowances is one that is being mirrored over at Three, the smallest of the UK’s five main cellular carriers, which has recently revealed that 97 per cent of its network traffic is data.
That’s an extraordinary percentile and – more than anything – indicates the rising take-up of smartphones and mobile broadband in the UK. It also explains why – with the exception of Three – none of the remaining four UK cellcos still offer unlimited mobile data deals.
But where does this leave the mobile content and allied monetisation industry?
In rather a difficult situation, that’s where. On the one hand we have a rising uptake of smartphones, with users snacking and consuming the mobile Internet on the move – typically only moving to WiFi when stationary at home or in the office.
On the other hand we have the five main cellcos in the UK all wanting better utilisation of their 3G network resources, even if those resources are fully stretched at peak times and it city (metro) areas.
Latest figures from the Mobile Entertainment Forum suggest that growth in the mobile content space will remain in double figures during 2012 – despite the economic downturn – and building on the 20-plus per cent seen in 2010 and 2011.
So how will the 3G cellcos meet the soaring needs of mobile content providers?
With LTE (long term evolution – aka 4G) still only on the horizon for a mid-decade commercial rollout in Western Europe in city areas – and only O2 planning to test the technology in London in 2012 – I predict that Europe’s cellco’s will re-double their efforts to migrate mobile data users over to WiFi, wherever possible.
And this is the business model of a new MVNO in the US called Republic Wireless. Launched in November 2011, the service piggybacks on Sprint’s 2G and 3G networks, but its on-handset (Android) software actively bumps users on to a WiFi network wherever such services are available.
Sign-up costs $199 – which gets you the Android-based LG Optimus smartphone – but the ongoing PAYG subscription is a jaw-dropping $19.00 a month for (fair use) unlimited voice, text and data services.
The Republic Wireless model is no-brainer for just about any US mobile data user and mobile content providers are reported to be watching with great interest.
Sprint Nextel, of course, is the third tier one cellco in the US – after AT&T Mobility and Verizon Wireless – so allowing Republic to soak up spare capacity on its network makes a lot of sense.
Republic claims that most mobile users are within range of a WiFi network around 60 per cent of the time. And its calls will only be carried via Sprint’s 2G/3G network when beyond the range of a roamed-to WiFi base station.
This business model could be one that mobile content providers will look to, in order to ensure easy access to their content. And let’s not forget that Apple takes a 30 per cent cut on its in-app purchases on the iPhone and iPad, meaning that Apple will almost certainly favour the extra revenues it derives from in-app mobile content.
And with the iPhone 4S being something of a best seller at the moment, Apple may yet pressure the cellcos to sort out their peak time loading issues using the WiFi option…
We await the launch of the iPhone 5 with interest…
+SG