Feature Article

November 05, 2012

Can Joyn Succeed?

One major strategic issue for communications service providers is how to cope with changing underlying demand for legacy services.

A quick glance at a couple of graphics put together by analyst Chetan Sharma illustrates the magnitude of the revenue challenge faced by mobile service providers, largely in developed markets at the moment.

Looking at the three key revenue sources in terms of customer lifecycle, it is obvious that voice and messaging are about to start a declining phase. So one obvious strategic question is “how to react?” 

Some might argue that it is imperative for service providers to meet the challenge head on by creating rival services. Others might argue it makes more sense simply to harvest legacy revenue while focusing on new revenue sources. Yet others might simply argue for a strategy of co-opting the over the top services by buying them.

But that’s always the challenge for markets that are declining. If one believes that voice and messaging are moving steadily toward applications that cost very little, or cost literally nothing on an incremental basis, almost all investment in such services will be suspect. In other words, how much can a service provider invest in a service that yields little to no revenue?

There are strategic issues beyond revenue, up to a point. A communications device has to communicate, no matter what the revenue model. But that does not mean the crucial feature generates direct revenue. Public Wi-Fi hotspots do not generally generate much incremental revenue for cable companies and mobile service providers who support the networks.

Instead, Wi-Fi hotspot access is a key amenity for buyers of mobile or fixed broadband service. And, in some ways, Verizon Wireless is trying to offer voice and messaging as a bit of an amenity for users of its mobile network. That is how some might characterize the “Share Everything” plans.

Basically, unlimited domestic voice and text messaging becomes a feature of “network access,” not a separate revenue-generating service. That strategy essentially assumes that the erosion of text messaging and carrier voice revenue really cannot be halted.

You might argue this is a “developed market” problem. More surprising is the observation that even in many developing markets, such as India, China and Indonesia, voice and messaging is not that far from an adoption peak.

UBS analyst John Hodulik says the number of text messages per wireless subscriber fell sequentially for the first time in the U.S. in the first three months of 2011.

The GSMA hopes that Joyn will help carriers hang on to more of the available messaging revenue, though some might question how effective that strategy might ultimately prove.

Joyn tries to deal with one major shortcoming of messaging apps: both the sender and the recipient have to use the same app. So far, that has been text messaging's saving grace, as it works across phone models, networks, and even continents. Joyn is next generation text messaging, its mobile service provider supporters hope.

Global trade body, the GSMA is pushing its operator-interaction API Joyn  with an emulator enabling developers to start work.  It has also just announced that U.S. mobile carrier MetroPCS has Joyned the club.

MetroPCS follows a handful of European operators in deploying the platform, which the GSMA is hoping will drag customers back into the operator fold for all their communication needs.

Edited by Brooke Neuman

FOLLOW MobilityTechzone

Subscribe to MobilityTechzone eNews

MobilityTechzone eNews delivers the latest news impacting technology in the Wireless industry each week. Sign up to receive FREE breaking news today!
FREE eNewsletter