Survey reveals mobile phone revenue hurdle

Mobile phone users are unlikely to pay extra to access the growing range of video and audio content available on their phones, according to a global KPMG survey. This trend could push operators into rethinking their business models.

Mobile phone users in Asia, where multimedia products are more advanced than in other regions, are already reluctant to pay a premium for this content. Similar behaviour is expected in Europe and the US as media companies step up efforts to sell content to wireless users.

The survey of nearly 3,600 mobile phone users found almost 40 per cent said they would not pay a premium on their current bill to receive multimedia services, such as music videos, television clips, news and other content.

“Mobile service providers will need to stop thinking of converged services purely as a revenue booster,” said Sean Collins, global chair of KPMG’s communications practice.

“They should consider them as a churn reduction tool, allowing them to present a much more stable, loyal subscriber base which should be attractive to advertisers and digital commerce partners.”

The report, to be published on Monday, comes as media companies and mobile phone operators step up efforts to tap into the growth expected from wireless content.

That, together with internet-distributed content, is expected to be the biggest driver of profit growth in the future.

Until now, most users have been willing to add services such as text messaging.

However, the combination of higher bills and the fact that most consumers are used to getting content on the internet for free, means there is likely to be a growing reluctance to pay.

An analysis of willingness to pay for music on mobile phones, showed Asian users, the most used to using their phones to listen to music, were the most price sensitive.

The study also found regional differences in the type of content people were already using and were likely to use, with the Asian market more interested in entertainment-type content and European and US users more interested in information services.

A second study conducted by KPMG, also released on Monday, shows 44 per cent of telecom executives expect revenue growth of at least 15 per cent in the next two years.

“Growth, however, will not come easy, as convergence and competition are fueling a relentless decline of prices,” said Carl Geppert, head of KPMG’s Americas media and communications practice.