re: Measuring Wireless Data Success
EMC Cellular will shortly commence publishing "EMC World Cellular Data Metrics" (a Quarterly Excel Datasheet of messaging and mobile data indicators. The first issue will include:
* SMS traffic volumes per quarter from Q1 2000 to Q2 2002, including the top European SMS markets, selected Eastern European markets, Australia, China, Japan, Korea, Philippines and USA.
* GPRS and cdma 1x subscribers, as well as Japanese benchmarks for i-mode and Sha-Mail, all live commercial data available for 120 networks
* MMS tariffs providing a comparison for all commercial MMS services worldwide by end-August 2002 including ratio of picture message to existing SMS price
* MMSC contract awards listed by operator, the date of MMSC contract award and commercial launch status worldwide permitting the user to conduct vendor analysis of MMSC contracts
* Mobile data deployments including GPRS and cdma 1x infrastructure contracts and commercial launch status
* Data as % of revenues with data points for Q1 2002 & Q2 2002.
An annual subscription is $5,530 but hopefully some of the data will spillover into freely published EMC data.
In the interim Mark Lowenstein discusses metrics for measuring wireless data success.
>> New Metrics For Measuring 3G Success
Mark Lowenstein
September 23, 2002
Wireless Week
There's much debate on what applications will drive 3G and whether 3G will succeed. But how is success actually measured for 3G? For example, Research In Motion's BlackBerry often is used as a reference for the one truly successful wireless data service in North America. From a usage and customer satisfaction standpoint, this may be true, but there are fewer than 500,000 Blackberry users, with only about 40,000 added each quarter. In the wireless voice world, these numbers would describe a small regional operator. This tells us that the math for 3G data is very different than in the voice world.
So I think it's time to start a dialogue about some metrics for measuring 3G's success. They fall into several categories:
* Network Usage. I'd like to see 5 percent of network traffic, outside of SMS, used for data by the end of 2003, or some quantitative evidence of solid sequential growth.
* Subscriber Uptake. Ten percent of an operator's customer base subscribing to a data plan is an important benchmark. Alternatively, I'd like to see 25 percent of new customers (or switchers) subscribing to data/buying a 3G device.
* Usage. Just having data subscribers is not enough because historically there is an initial "coolness" factor that spikes usage. Data customers should only be counted if they use the service (launch a browser, check e-mail, etc.) at least once a week. I'd also wait six months after a customer has a data plan to make any conclusions about usage patterns.
* Revenue. We need to see some measurable increase in average revenue per user attributed to data. A 10 percent ARPU impact by 2004 would be a positive. We also need to include revenue, outside of ARPU, from individual downloads (such as $2.99 for a game or ringtone), pay-per-use applications, revenue share from content providers and transactions. It will take a lot of these to show up on the top line, given the size of voice revenue.
* Profitability. We need to look at whether gross margins for data are different than voice and what the cost is to acquire and support a data customer. We need to think about bottom line impact from data as well as top line.
* Multiplier Effect. Success in data will lead to positive results in other areas. For example, we should see increased voice usage by data subscribers (such as calling someone as a result of viewing an e-mail).
* Churn Reduction/Market Share Increase. This is a tough one to quantify because so many factors influence churn. But presumably, if a customer invests in a high-end device, she is an active data user and takes steps to personalize/customize her device, she is less likely to switch carriers. If an operator can demonstrate a 30-basis point reduction in churn, we could assume data is at least a contributing factor. This impact on churn also could translate into a meaningful market share increase.
* Devices. Over the next year, we will see many exciting new mobile devices across a range of form factors. An important driver of 3G success is an up-tick in the handset replacement rate, which historically averages about 50 percent of new handset sales. On a related note, it would be great to see some hot new sellers, which would help create a bandwagon effect around wireless data. We haven't had a "hit" (remember the StarTac?) wireless device for some time in North America.
Two more thoughts on measuring 3G. First, let's avoid rash judgments, such as deciding 3G is a dud if we don't see instant success. This is going to take time, and the math is different. As we're still in launch mode–with networks, new devices, applications and customer education–I don't think we'll really have a good sense of where this is headed until the end of 2003.
Second, the operators will have to be forthcoming to the media and analyst community. Simply knowing the number of data subscribers (which was the only metric disclosed in 2G) does not provide enough contextual information, and unfortunately in the new wireless order, no news is assumed to be bad news.
Mark Lowenstein, a veteran wireless industry analyst and consultant, is managing director of Mobile Ecosystem (http://www.m-ecosystem.com). <<
- Eric - |
