Mobile Internet Development: Opportunities and Challenges

Vietnam is hungry for and engaged with, mobile devices. In every corner, we can see consumers using mobile phones for entertainment while they are on the move - whether it is searching for information, playing games, chatting or sending emails. This mirrors the primary function of mobile phones, which is for users to stay in touch. As users become more familiar with what mobiles can offer, and with data costs falling or becoming more predictable, we will witness an increase in the demand for other services.

 

Mobile web-enabled devices are now the norm and we are heading towards a time when interaction through the mobile Internet will be more frequent and not just limited to smartphones. Crucial to the growth of the mobile Internet is the emergence of handsets that are, too simplistically, described as feature phones to differentiate them from the smartphones. Most of the handsets sold in emerging markets in Asia over the last 18 months are Web enabled. While it is unlikely that Android-based handsets will change the landscape in Southeast Asia in the immediate future, the arrival of feature phones priced below US$100 are a clear signal of things to come, whetting even more the appetite of consumers who aspire to have a high end device.

 

The mobile Internet is truly reshaping the way we access the Internet around the world and in Asia. According to IDC, the number of people accessing the Internet with mobile devices globally will double from 600 million in 2010 to 1.2 billion by 2014, with mobile device access set to outpace access from the PC within the next five years. Asia Pacific countries, including Vietnam, are setting the pace for rapid growth in the consumption of the mobile Internet and we can expect to see a surge in the demand for content, applications and services.

 

The results of a study by The Nielsen Company, also supports the existence of this trend; it indicates the increasing importance of mobile devices in the lives of consumers when it comes to accessing digital content. The study showed search engines and general portals are the top online sources used for digital content information when users are on their mobile devices. About seven out of ten users spend about 15 minutes or less looking up digital content on their mobile devices during a typical session, while two out of five find mobile devices to be extremely helpful in keeping them up to date with digital content. When mobile data usage made its debut, carrier portals were the gateways for users to access information, news and mail services or to download ringtones and other mobile personalisation content.

 

The evolution of the mobile Internet market has been rapid and this has radically changed the rules of the game. The arrival of the iPhone, ‘open’ operating systems, pre-loaded applications and applications stores as well as lower data prices are allowing users to go off-deck more cheaply. This has meant carriers are further challenged to provide a starting point for users’ mobile Internet needs. What has exacerbated the situation is carriers are not only facing pressure on their ARPU in this relatively new area of their business, but also directly in core areas such as voice and SMS as applications using the Internet protocol compete in this space.

 

Clearly carriers cannot afford to become dumb pipes and let their ARPUs decrease without a fight. Such a profound change will force carriers to make tough decisions regarding their role in the mobile Internet market. Some carriers are still focusing on promoting mobile downloads such as ringtones and wallpapers to satisfy short-term financial targets. However, a good many others are taking a brave and long-term view and accepting that the more they focus on pushing services to their subscribers that consumers are only, at best, partially interested in, the more the carrier will become irrelevant and consequently bypass its subscribers when accessing the mobile Internet.

 

On the contrary, carriers can play a crucial role in adding value to the mobile Internet experience in a way that no other company can. Instead of trying to compete head to head with companies whose core business is to provide media and Internet communication services, it should focus on and leverage their core strengths as carriers, which is insight into consumer behaviour and billing. These two assets alone can open endless opportunities from personalisation, granular targeting, and content profiling to seamless payment solutions that most Internet companies can only dream of.

 

The challenge however remains - finding ways to harness these strengths. There is no single solution that fits all. Certain carriers will decide - and hopefully have deep pockets to fund and build internally - to use their own solutions to cater to the needs of customers for their mobile Internet usage. These decisions require huge investments to develop, but even more to maintain, such services and compete in the open market. These carriers tend to be former incumbent government or global companies that can leverage their scale and in some cases, their ability to offer a multi-screen strategy. On the other side of the spectrum, we see smaller new entrants that favour partnering with external providers for part or all of their mobile Internet value-added services so they can focus on aggressive pricing strategies.

 

Whatever the size or ambitions of carriers, they will need to make brave and necessary decisions in the face of the changing tide of mobile Internet consumer behaviour. By coupling their areas of strength and finding expertise from within or without their organizations, telcos will find that far from becoming dumb pipes, they will be in a privileged position to capitalize upon the consumer’s insatiable and increasingly sophisticated appetite for mobile Internet services.