Porter’s Place A Marketing Strategy Blog by Dana Porter, Head of Amdocs Global Marketing

Microsoft is in the process of acquiring Skype – which has partnered with Facebook. Do these new developments signal that the sky is falling for service providers?

The quick answer is “no.” First of all, some analysts are even predicting that partnering with Facebook may hurt Skype, turning it into a type of dumb pipe. Regardless of the outcome of that specific partnership, service providers would be wise to adopt a “If you can’t beat ‘em, join ‘em!” mentality, because although the immediate going might be rough, VoIP just might eventually stand for “Various Opportunities, Interesting Potential.”

An example of this interesting potential is Comcast’s announcement that subscribers equipped with special gear will soon be able to use Skype on their HD sets.

VoIP strategies and planning can no longer wait. Service providers have already begun blocking, partnering and launching their own VoIP solutions. Each approach is potentially beneficial to service providers.

Blocking lowers the risk of cannibalizing voice revenue and protects network performance. An example of this approach is T-Mobile Germany’s past decision to block Skype traffic on smartphones with mobile Internet connections. The downside to this approach is negative publicity/customer anger. In fact, customer dissatisfaction most likely played a role in T-Mobile Germany’s later decision to allow Skype with the payment of a premium charge –$14 U.S. or upwards depending on the tariff. It is important to note that the future viability of the blocking strategy may be in jeopardy after The Netherlands became the second country in the world to enshrine the concept of network neutrality into law.

Service providers partnering with over the top (OTT) players can add value with network services, including QoS, security and fixed-mobile convergence, and offer a differentiated service. An example of this approach is Sprint’s decision to allow all of its subscribers to use their existing Sprint phone numbers for Google Voice. One potential drawback is the potential for conflicting interests among the partners.

Launching their own VoIP services will allow service providers to effectively target certain segments (such as students, international callers and business travelers) and lower operator costs through better service design. More importantly, providers can offer unified communications and a unique customer experience by integrating services, such as combining VoIP with video and location.

My sister-in-law lives in Italy (you should taste her cooking!) and we began Skyping with each other a number of years ago. Skype has definitely become more user-friendly and reliable over the years. As the same becomes true for mobile VoIP, service providers will continue to analyze the different options closely to make sure they aren’t missing the boat. There is certainly reason for optimism, in spite of the challenges.

* Special thanks to Eric Danis for his editorial assistance with this blog entry.

After Verizon Communications Inc. announced that it was stopping unlimited plans for the iPhone, a batch of stories and blog entries appeared telling us that unlimited is dead. After all, Chief Financial Officer Fran Shammo was quoted as saying that unlimited data plans, such as the $30 per month plan that Verizon had offered to iPhone subscribers, are “not a long-term solution.”

The data crunch is certainly very real and service providers must deal with it. But like spring flowers that reappear every year after brutal winter rains, I don’t believe that we’ve seen the last of unlimited data plans.

It was only a few short years ago that service providers were happy to sign up consumers for unlimited plans as a way to monetize a new and exciting service. But it didn’t take long for the data crunch to hit hard, and since then analysts have been busy planning unlimited’s funeral.

An unlimited data package may have prevented his bill shock…

Probably because of these continuous reports, many of the participants at our Amdocs InTouch Business Forum in Miami last month seemed quite surprised to hear that some service providers plan to continue offering unlimited plans. Sprint will continue to support unlimited data plans, for example. MetroPCS also said at InTouch that it will continue to offer its unlimited data packages ($40 a month, for unlimited voice, text and mobile Internet; $50 for a metered bucket of video minutes or $60 a month for unlimited video).

Why are some operators choosing to continue offering unlimited packages? The answer is simple. Actually, the answer is simplicity. Sprint said it will continue to support unlimited data plans because they help maintain customer satisfaction: there are no “surprises” when the monthly bill arrives.

And make no mistake about it, there will always be customers, particularly older ones, who will find it difficult to understand the technological aspect of their plans and will fear “bill shock.” Other customers may find it difficult to remember their limits in today’s busy world. The Guardian newspaper reported last year that a consumer group in Britain “found that 6 million people either did not know or had only a vague idea of their monthly limit for call minutes. Five million were unsure of their text and data allowances.”

Unlimited certainly isn’t for every service provider and it isn’t for every customer. As the crunch worsens, we can expect the desire for simplicity to grow and there will be ways to achieve simplicity for customers while factoring in the data crunch. Stay tuned…

* Special thanks to Eric Danis for his editorial assistance with this blog entry.

T-Mobile USA offers its customers a monthly, prepaid plan with unlimited texting (voice calls are 10¢ a minute). That plan doesn’t appeal to you? Then you probably aren’t a teenager.

Today’s young people are helping to drive the move away from voice and towards texting and other forms of nonverbal communication. According to CTIA, the wireless-industry trade group, the number of text messages sent every month has skyrocketed: from about 10 billion in 2005 to nearly 188 billion last year.

“I’ll text you later…”

A Pew Research Center study found that “cell-phone texting has become the preferred channel of basic communication between teens and their friends…fully 72% of all teens — or 88% of teen cell phone users — are text-messagers.”

Service providers must take these trends into account, especially considering their desire to attract young customers who may stay with them for a long time. For instance, plans whose main emphasis is low rates for voice calls will not be particularly attractive to today’s youth. Many service providers promote tiered pricing plans, which offer customers lower rates as they talk for longer periods of time. This will not appeal to young people, who speak briefly and try to avoid long conversations (as any parent will tell you with a frustrated sigh). In fact, service providers should consider reverse tier pricing to attract the young. Calls can be charged at a cheaper rate at the beginning and become more expensive as the call progresses. For example, TrueMove, a mobile operator in Thailand, offered its subscribers a plan that cost 0.25 baht for the first minute and 1.50 baht per minute afterwards.

It is of course well known that today’s youth love Facebook, but service providers might be surprised by its popularity in so-called emerging markets. For instance, 77 percent of mobile users in the Philippines and Indonesia are accessing Facebook from their mobile devices. Globe Telecom Inc. recently unveiled a new offer specifically designed to tap this market in the Philippines. “Globe Super Facebook” is a mobile plan that allows prepaid subscribers to surf Facebook on their mobile phones for 5 straight hours for only P10.  It seems that even in emerging markets, users (especially younger ones) are moving away from voice and using their phones very differently than service providers may have originally envisioned.

Although I’m sadly no longer considered part of the youth demographic (no matter how hard I try), even my patterns are evolving. When traveling abroad I arrange for reduced rate voice plans, but lately I have been experiencing bill shock upon my return home – clearly I am downloading data and sending SMSs more, and talking less. Young people, on the other hand, know upfront that they are mostly interested in sending texts and surfing the Web. Now it’s up to service providers to figure out how to best capitalize on those tendencies.

Special thanks to Eric Danis for his editorial assistance with this blog entry.

In an effort to ease the data crunch, some providers are launching priority mobile broadband services. For instance, Singapore SingTel announced a new “Priority Pass” service that gives priority to customers on its existing 7.2 Mbps and 21 Mbps mobile broadband plans when the network is taxed. Executive VP Yuen Kuan Moon said the service will be a free add-on for customers and compared it to an “extra lane on the expressway” when Internet traffic becomes congested.

Is this network discrimination? I don’t think so. It is important to note that this service is offered free to high value customers who are already paying a premium for data service. This seems fair, since this type of “pass” holds more value for heavier consumers as opposed to the average data user. Customers are free to choose to pay more for a higher quality of service, or pay less and risk not benefiting from optimum speeds.

I was in Singapore recently for the Amdocs Asia Pacific InTouch Business Forum, where Amdocs CEO Eli Gelman publically discussed our recent decision to acquire Bridgewater Systems. This acquisition will combine our proven technology with policy management, so that service providers can prioritize services on the network according to the type of customer. For instance, service providers can offer faster broadband speeds to “high value” customers so they remain satisfied and consume more.

This type of innovation will help service providers build customer loyalty. During an innovation panel that I chaired at InTouch, Loo Cheng Chuan, the acting chief executive officer of SingTel Digital Media, pointed out that “in a commoditized market, the user experience will become the greatest differentiator for service providers.”

User experience is indeed an important differentiator, and one way to create a positive one is by giving consumers the services/speeds they believe they paid for. A recent study in the UK by telecommunications regulator Ofcom, which looked at 11 packages provided by the seven largest Internet service providers, found that “the average UK broadband speed remains less than half that advertised.” Frustrating online mobile experiences can further strain service providers’ already over-stressed customer support services and turn off once-loyal customers.

I was recently trying to watch a Beyoncé video on my mobile while on the way to the airport (before my flight to Singapore), but slow streaming ruined the experience, reminding me once again that an uninterrupted viewing experience is truly “Irreplaceable.” Personally, I am willing to pay extra for priority service, if (“when” is probably more accurate) my provider offers it.

Mohandas Gandhi said, “There is more to life than increasing its speed.” While that is undoubtedly a good life philosophy, it’s probably not one that most mobile consumers wish to adopt.

* Special thanks to Eric Danis for his editorial assistance with this blog entry.

Having recently returned from maternity leave, I know what’s keeping me up at night: my beautiful new baby. I also know declining voice and SMS revenues are causing you sleepless nights, which was a crucial factor behind Amdocs’ recent acquisition of Bridgewater Systems. Fully integrated policy and charging systems will help service providers better monetize data services, but today I want to focus on another differentiation aspect – increased effectiveness and heavy promotion of multi-channel customer support services.

Sprint was recently recognized in a survey of 20 major industries as a “J.D. Power 2011 Customer Service Champion” for answering customers’ calls faster, attempting to always resolve service issues on the first call and trying to prevent problems before they happen. Virgin Media is another example of an organization that is working hard to serve its customers more effectively. The UK service provider was an early adopter of all types of social media and its @virgin media twitter feed was launched way back in 2008. Their efforts have helped measurably boost customer satisfaction levels.

Subscribers now feel the need for a personalized, individual service. It used to be that retail stores were for selling and call centers were for support. But the rising popularity of smartphones means that sales people must also be knowledgeable during the point of sale to minimize returns and decrease/prevent future help requests. A recent Amdocs-sponsored survey revealed that smartphone support calls significantly increase the burden on call centers. Up to a quarter of customers are returning their smartphones if they experience support issues or delays, even if there is nothing wrong with them!

Some consumers want to talk to an actual person when they need help. Others prefer to seek help online or to turn to Twitter or Facebook. Service providers who don’t offer, and promote, integrated multi-channel customer care will alienate potential and existing customers.

Slate’s technology columnist Farhad Manjoo’s recent complaint about free Web applications’ lack of adequate customer support will sound familiar to many of you. “Who are you gonna call when something gets screwed up? No one…This is the grand bargain of Web software…these sites support themselves through ads, and ad-based businesses only work at huge scale. Gmail has 193 million users, and it’s still growing. Customer service, on the other hand, can’t scale.”

I can relate. My father’s Gmail account was hacked and then locked. Who could he speak to? Like Manjoo, no one. He had to go online to try and answer automated questions that most people would not remember the answers to (such as “Google products you used with this account and the date you started using each one”). My father did eventually manage to reopen the account, but only because we personally know someone who works for Google.

Service providers are working hard to minimize and prevent calls to their call centers, for obvious reasons. But they shouldn’t be minimizing the promotion of their support services. Customers want to know they have access to a variety of reliable and integrated support channels, including Web self-service, social media, online forums, and yes, call centers, too. The customer experience continues to drive brand loyalty and in today’s connected world, full-fledged 24/7 support certainly beats having “no one” to talk to.