How Mobile Data Can Aid in Cost Reduction Strategies

A number of recent announcements have suggested that mobile wireless data costs will continue to decline. Providers applying the pressure for pricing changes are not the leading carriers, but the fourth largest carrier and a newcomer to mobility.

Google becomes a mobile wireless supplier

Last month Google confirmed the rumor:  it will become a mobile wireless supplier. While Google claims its aims are innovation, it has much to gain by driving mobile data costs even lower. One-half of all online advertising is with Google. Driving more users to YouTube, for example, will affect mobile data usage and pricing. As a new competitor in the wireline broadband market, Google’s market entry will impact pricing.

According to Sundar Pichai, Google’s Android chief speaking at the Mobile World Congress in early March, Google’s plans to become a mobile operator are small scale. While not confirming details, it is rumored that Google expects to operate as a Mobile Virtual Network Operator (MVNO) using the spectrum and networks of T-Mobile and Sprint.

Cost savings in mobile data

Along with these actions by Google, T-Mobile, with only 3% of business customers, has signaled its intention to grow this segment of their business. AT&T and Verizon Wireless together account for 87% of mobile business customers. T-Mobile CEO John Legere vowed not to raise data rates, speaking at a recent T-Mobile company “Uncarrier” event, pronouncing he aims to change the industry. Some recent moves include removal of long term contracts, allowing customers to carry over data, and the intent to spend up to $650 per line to allow customers to get out of contracts with competitors.
           
Many analysts believe that T-Mobile’s success will likely come from the small to mid-size business (SMB) markets, unlike the large enterprise customers driving much of Verizon Wireless and AT&T’s business. When Sprint recently announced its offering for the workplace, T-Mobile’s Legere dismissed the plan as an attempt to offer an “age-old bundle service per seat where you try to aggregate everything that happens in the office place.” Legere commented, “I have very little concern about Sprint.”
           
In the mobile wireless industry the consumer segment typically leads business in terms of innovation, features, and applications. The recent actions on behalf of Google and T-Mobile aimed at the business segment are expected to have pull-through benefits for consumers. ERA clients can rest assured that our consultants in ERA’s Technology Center of Excellence are tracking developments in the mobile wireless market. Our objective is to help clients capitalize on the benefits of market competition, leading to cost savings, process improvement, and productivity gains.

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