A major event for the mobile industry was announced on June 23. The network operators, apparently not satisfied with the diversity of access devices that drive their revenues, formed the Open Mobile Terminal Platform "OMTP". The goal of this new club is to ensure that all mobile terminals will provide a common user experience in the next few years. The mobile experience, it seems, will no longer be about the convenience of talking on the move that has become a common experience. No, it will be about the navigation of a growing suite of data rich value added services that will transform our lives.
The ever popular SMS will wane as the operators enable us to access a Valhalla of services where they expect hidden treasures, in terms of rising ARPU, to be mined. Industry boffins project the proportion of data revenue will double in five years to represent 30% of total mobile spend. That this event created little noise is significant. Only network operators can be members but other players in the mobile "ecosystem" can ante up and join as participants albeit with restrictive "rights".
The OMTP website sets out a rather benign mission and strategy. Clearly they do not want to alienate the most important part of their supply chain that they will have to rely on if the OMTP is ever going to achieve its goal. But why have the operating giants realigned their focus on cooperation rather than competition? In the rich world the industry is quite mature. Much of the M&A action has dried up. Unlike the firm from Newbury who preferred to pay lots of cash to its bankers in return for the mother of all mobile balance sheets, other operators have recently chosen to emphasise the less costly but perhaps also less rewarding route of alliances.
That the operators were collectively slapped in the face by way of 3G license fees may have been a catalyst for unity. In the developing world growth is predicated. Subscriber numbers are expected to surge by more that CAGR 40% in Africa and Latin America over the next few years and Asia is still on the up. But the playing field is mostly established and Governments are finding it extremely difficult to sell additional licences. Anyway the focus of the developing nation operators must be on enfranchising people to the voice network not flogging fancy ring tones.
The familiar battle for market share has not produced a clear winner in terms of profitability ratios. The bottom line, it seems, is best suited to improve in line with the top. War will now be waged on the ultimate top line frontier - end user ownership. And the mobile oligarchs have some new threats to consider. The operators' decision to create the OMTP may have arisen from their analysis of the fixed line world where a "common user experience" has been achieved. But it was not realised at the operators' request. BT, NTT et al did not tell the PC manufacturers to load up the same operating system for all devices that will connect to the internet.
That 95% of us share a common user experience to access the internet would be unimaginable were it not for a certain Seattle based software house that has achieved this by proxy. Apart from France, where Minitel was preferred to the Internet until 1999, the fixed operators have not participated in the war for control of user experience. And now fixed line connectivity is very much a commodity. But in the mobile world the curtains are only beginning to be drawn. Whereas the IP protocol is universally achieved on fixed networks the mobile industry has been split between evolving versions of GSM and CDMA; interoperability of handsets is relatively new. Whereas a plethora of fixed licenses have been issued in a deregulated theatre, there are great barriers to enter the mobile club and only recently has the re-seller MVNO model caught on. PC access to the fixed world is done through a common window but the mobile world has spurned competing handset software platforms. Of the five main platforms Linux seems the least popular.
The CDMA world is dominated by Qualcomm's propriety BREW portal. Symbian is supported by all the major vendors but is now dominated in ownership by Nokia. Suns' mobile java, J2ME, is widely used but is fragmented although steps are being taken to address this. And then there is mobile Windows. The above mentioned competitive structure may be akin to the early stages of the PC industry. So will the mobile industry pan out like the fixed? Will airtime and handsets be commoditised and the value swing to the software houses? I would not bet against it. Make no mistake: the emergence of the OMTP is significant. It is the operators' war cry against marginalisation and commoditisation. And it is not about providing you and I with a common experience. No, it is about being a contender and staying in the value game.
