The growth of mobile data services has taken a significant jump around the world. Operators are increasingly seeing demand for services such as personal GPS systems, social networking, mobile Internet, and location-based services to compete with core voice and messaging traffic.
This core strategy shift was evident at Mobile World Congress, in Barcelona, this year, where several major announcements were made by leading players in this space.
Orange announced a large push into the combined mobile and PC Internet space, through a joint deal with HP. Skype announced deals with Nokia and Sony Ericsson to integrate its service into several different phone models. And before Christmas, the operator Hutchison 3G UK and INQ, a handset vendor focused on social networking, launched the INQ1, which built Internet services such as Facebook, MSN, and eBay directly into the software of the handset.
To date, it's operators in North America and Europe, which have seen the most significant increase. However, the South African market is starting to see a real surge in these services. For example, late last year, Nokia reported that 13% of mobile users accessed GPS navigation services from their handsets, and this figure is expected to jump significantly in 2009. This presents both distinct opportunities, as well as challenges for operators.
The biggest challenge is the infrastructure. The current infrastructure has not been designed to cope with the amount of data that will be running through the networks. It means the backhaul links are expensive to operate, the cost of which can be passed on to consumers, limiting uptake. This is currently being addressed through significant investment from all the major operators in South Africa to develop a fibre network across the country, but this will take time and has only just begun. The other problem is that even with a very fast network, if most of the traffic is coming from North America or Europe, the links to external content can be limiting and need to be modernised.
As fixed-line PC broadband lacks deep penetration across South Africa, mobile Internet has the potential to leapfrog PC-based Internet as the access route for many South African consumers. This means operators have a real challenge maintaining a low cost base while building up the infrastructure and tools to serve the increasing capacity.
In the short term, the key for operators is to use data management and compression techniques. Openwave's experience with customers around the world, including Telstra in Australia, has shown how the ability to rapidly scale to meet changing customer needs, as well as support new protocols, content types and applications is critical to competitiveness. Openwave's MSP (Multi Service Proxy) product is designed to provide a platform with open interfaces designed to flexibly address the market's need for fast, open and secure service management. It also gives the ability to introduce new services without having to overhaul the infrastructure, which can provide significant cost savings. At Telstra, the introduction of Integra has brought a fourfold efficiency gain over an equivalent WAP gateway.
In the long-term, there will be new challenges and opportunities. Bandwidth management will continue to play a key role, both in terms of managing the actual infrastructure, and also allocating appropriate tariffs depending on application size and customer needs. In addition, operators will be able to distinguish themselves from their competitors by offering premium services to customers. However, this will also require close bandwidth management in order make sure that a sufficient portion is preserved for these preferred services.
The wider ecosystem of the mobile Internet will also create new opportunities for operators. As the smartphone market grows, the uptake of a variety of mobile Internet services such as streaming content, location-based services, and applications will provide additional sources of revenue. Openwave experience has shown that the introduction of the iPhone alone can increase data traffic six-fold per customer. The BlackBerry Storm and many other handsets will only boost these trends, and we've seen the start of business models to take advantage through the development of application stores and mobile advertising.
In order to leverage these services, it's critical for operators to gain a deep understanding of consumers' habits online. Openwave's Mobile Analytics tool does just this, working seamlessly and unobtrusively with the data access portal on the mobile phone to monitor usage. This gives operators significant advantages as it already holds subscriber information, and can use data consumption patterns to deliver specific products and relevant advertising to consumers.
The mobile Internet is evolving in South Africa. Uptake for data services is growing and operators need to adjust rapidly to cope with the demand. Data and bandwidth techniques are key now as the infrastructure develops, and a deeper understanding of consumer data consumption habits will be important as the eco-system develops further. Openwave offers industry-leading services to help customers deal with these challenges head-on and seize the opportunities presented by mobile data.
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