Vodafone: Services, not technology, will fuel growth

If other mobile operators follow what Thomas Geitner, a board member of Vodafone Group, is preaching, users can look forward to a future of innovative wireless services that offer value and are easy to use.

"Technology alone doesn't sell," Geitner told an audience of communication experts Monday at the European Telecommunication Market conference in Bonn, Germany. "We learned that lesson with WAP (Wireless Application Protocol) and GPRS (General Packet Radio Service). What the mobile industry needs to continue growing are compelling, easy-to-use and attractively priced services."

Geitner is practicing what he preaches. The Vodafone board member, who is responsible for global products and services, headed up the team that developed Live!, a new entertainment and information-oriented service that features MMS (Multimedia Messaging Service), chat, downloadable ring tones and games, as well as access to e-mail and information services such as financial news through content partners.

At the end of May after its launch in October, Live! had more than 1.5 million customers, generating on average 12 percent more ARPU (average revenue per user) than voice-centric GSM (Global System for Mobile Communications) customers, according to Geitner. "No service at Vodafone has won as many customers and generated as much revenue as quickly as Live!," he said.

The focus on service, though, will require some changes -- a major one being the relationship between operator and handset manufacturer, he said. "In this new era of services, handsets are gateways to network services," he said. "Increasingly, operators will require devices that have specific functions and user interfaces for customers to access and use network services more easily. Such is the case with the handsets we launched with Live! And this is only the beginning."

In the future, Vodafone plans to become active much sooner in the development of new handsets to help coordinate their functionality with network services and content, according to the board member.

Although Vodafone intends to continue working with Nokia, one of the widely branded handset manufacturers in the industry, the U.K.-based operator will do so in line with its new gateway strategy, according to Geitner. "We're going to see more handsets coming from the same manufacturers that look different because of operators' individual requirements," he said. "The relationship between operators and handset manufacturers is going to change dramatically."

In addition, Vodafone aims to work closely with Microsoft Corp. in the area of its Office applications but has no plans at present to use its wireless operating system, Geitner said.

In October, rival Orange SA launched the world's first mobile phone running Microsoft Windows-powered Smartphone 2002 software.

Another change will be in the area of standards for content. "Standards offer security for content providers," Geitner said. "Content providers will invest in mobile content in a big way only if they are ensured sufficient copyright protection and a secure billing platform."

Vodafone is active in the area of DRM (Digital Rights Management) technology for mobile content, he said.

The operator is also a founding member of the Mobile Payment Services Association (MPSA), an initiative with two prime areas of focus: establishing a new payment scheme that will allow mobile phone customers to make low-priced purchases through mobile operator-managed accounts; and creating an easier, more secure way to make both smaller and larger purchases using mobile phones together with credit and debit cards. Other members include France's Orange SA, Spain's Telefonica and Germany's T-Mobile International AG & Co. KG.

"We expect to see the first results of this initiative by the end of this year," Geitner said. "We're working very hard to move this effort forward."

The mobile industry has come a long way at record-breaking speed, according to Geitner. In less than 15 years, more than 50 percent of the population in the industrialized world uses a mobile phone. Alone in China last year, mobile operators registered an average 5 million new customers each month.

"But to create more growth, we will need to create new demand, and this will require new services that offer customers true benefits and that they are willing to pay for," he said. "Indeed, service -- not technology -- will be our biggest challenge moving forward."

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