Study Finds 3G Capabilities Achieving Broad User Awareness

Consumers have high awareness of 3G capabilities but not yet convinced about cost; benefits remain a mystery to the mass market of mobile phone users. Huge potential for enterprise and business mobility remains largely untapped. While 61 percent of mobile phone users in 15 countries are aware of the service capabilities associated with third generation (3G) mobile technology, only 29 percent say they plan to upgrade, according to the latest Mobinet study of mobile phone users.

The research indicates education campaigns about 3G are creating awareness, but the cost/benefit trade-off between current technology and 3G mobile wireless services remains a mystery to most consumers.

The study of 6,000 mobile phone users is conducted twice annually by global management consulting firm A.T. Kearney, a subsidiary of global services leader EDS, and The Judge Institute, Cambridge University's Business School.

"Users clearly want to experience increased value and faster Internet access capabilities with existing information and data services before upgrading," said L. C. (“Mitch”) Mitchell,
A.T. Kearney vice president and leader of the firm's communications practice in the Americas. "Seventy percent of Mobinet respondents have yet to access the Internet over their phones mainly because they don’t yet understand the total ‘user experience’ -- the pricing structure and the content isn’t yet compelling enough. If users are not adequately enticed to try the service offerings of the mobile Internet with current technology, they won’t be compelled to move up to the enriched service offerings delivered using next generation (3G ) technology.”

Early experience in markets such as Japan, where 82 percent of respondents have access to the Internet via their mobile phones, highlight the potential market opportunities for consumer-oriented offerings, according to the study.

However, the business or enterprise markets -- where wireless capabilities can provide competitive advantage through faster customer response times and improved productivity -- remain largely untapped worldwide.

“Since we launched Mobinet in 2000 our results have consistently pointed to an uphill struggle to persuade consumers that Internet-enabled telephony is a must-have,” said Paul Collins, the A.T. Kearney principal who led the Mobinet research. “However, awareness of new technology is high and creating the right content and service, at the right price, could boost demand significantly.”

In the six months since the previous Mobinet study was completed, mobile phone users have become increasingly cost-conscious regarding future and existing wireless services. More than one-third (36 percent) cited cost as the most important factor preventing them from upgrading to 3G. Another 36 percent said they either didn’t need or didn’t understand what the technology could do for them.

Among users who currently access the Internet via their mobile phones using pre-3G technology, the number of respondents citing cost as the reason they don’t use the Internet more often jumped by 80 percent from the January 2002 Mobinet study. It is the first time since Mobinet began in 2000 that cost was named as the primary reason for not using mobile phones to access the Internet more often.

Concerns about slow access also jumped significantly in the last six months. The number of mobile Internet users citing slow access as their reason for not using the Internet more often rose by 66 percent from the January 2002 Mobinet study.

When given a choice of three possible benefits of 3G functionality, nearly half the respondents (45 percent) cited faster Internet access for current information and data services as the one most attractive to them. More advanced services such as sending/receiving pictures and video or downloading music were named most attractive by 34 percent and 21 percent, respectively.

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The latest Mobinet study also found:

The use of mobile advertising continues to increase. Four-in-10 mobile phone users surveyed have received an ad on their mobile phones. However, only one percent of users across the 15 countries has ever made a purchase based on an ad to their phones. Pilot advertising efforts continue with numerous channels in all market areas and early experiments with movie coupons and fast food chains indicate the potential for this channel to reach consumers.

Text messaging is rapidly becoming a mainstream consumer capability with more than half of 19-34 year olds using short messaging service (SMS) at least once a day. Penetration of SMS use in most regions of the world ranges from 50 percent to 75 percent. However, cost also is becoming a factor in SMS as signs of price sensitivity to premium SMS and multi-media messaging service (MMS) messages are evident. But given the popularity of basic SMS, mobile carriers and content-based service providers have a strong opportunity to increase the use of premium services through offerings that demonstrate their enhanced value.

More people are gaining the capability to access the Internet on their mobile phones but fewer are using it. In the last six months, the number of mobile users with Internet access via their phones increased 25 percent. Usage of mobile phones to access the Internet, on the other hand, decreased by 20 percent among respondents.

"If 3G adoption is delayed there will be a rush by telecom operators to see which services in the two key areas of MMS (multi-media messaging) and mobile payments can function with 2.5G," said Professor Chong Choi of Cambridge University.

THE MOBINET INDEX
This unique research project was initiated between global management consultant A.T. Kearney and Cambridge Business School – The Judge Institute. Led by A.T. Kearney principal Paul Collins, teams of post-graduate students with appropriate linguistic skills call and interview a statistical sample of mobile phone users in Europe, North America, Asia and Australia. For Mobinet 5, approximately 6,000 interviews were conducted with mobile phone users in 15 countries: Australia, Brazil, Canada, China, France, Germany, Hong Kong, Italy, Japan, Korea, Singapore, Spain, Sweden, the United States and the United Kingdom. The feedback is consolidated and analyzed and forms the basis of the index.

The Mobinet study has been conducted every June and January since June 2000.