Generation IP: Operators playing catch-up with smartphone owners

By Stephen Sale

Smartphone owners under the age of 35 have vastly different usage patterns and attitudes towards mobile voice and messaging services in comparison with the rest of the population, according to The Connected Consumer Survey 2013: voice and messaging report published by Analysys Mason.

The 18–24 and 25–34 year old age groups have widely contrasting approaches compared with older smartphone users, particularly in relation to VoIP, IP messaging and social media services such as Skype, WhatsApp Messenger and Facebook, as well as the criteria for choosing their next mobile service.

The high penetration of data services within the 18–34 age range represents a step change in the values of the younger generation, which has serious implications for how mobile operators price, segment and market their services. A thorough understanding of this changing value mix is critical if operators are to optimise the pricing and tiering of services and maintain average revenue per user.

The report, which canvassed 6610 consumers aged 18+ in France, Germany, Poland, Spain, the UK and USA, revealed that 18–34 year olds are by far the heaviest users of messaging – more than 40% consume IP-based messaging but only 20% of those aged 65 and over do so. SMS usage persists among 91% of 18–34 year olds but only 67% of those aged 65 and over use the service. In the UK alone, 53% of 18–24 year olds consume IP-based messaging services, ranking it third behind Germany and Spain respectively in terms of messaging penetration by age and country.

VoIP usage remains relatively limited and its even distribution across countries suggests that the conditions for mass-market adoption on smartphones do not currently exist. However, broken down by age, VoIP services are most popular with the youngest age group – more than one in ten of those under the age of 35 use a VoIP service.

Operators will note that despite the high penetration levels of IP-based alternatives, full messaging service substitution has not yet occurred. Operators should continue to embed the use of SMS in customers’ behaviour, particularly with younger users, by offering unlimited messaging plans. However, such initiatives should be undertaken alongside a review of the messaging feature set and any related initiatives such as RCS or telco OTT services.

Additionally, the low penetration rates of VoIP services favour operators, but they cannot afford to be complacent. Following on from Skype, Facebook and Google are making advances in this area, and Microsoft is also expected to make aggressive moves in this area later this year. Operators must ensure they are proactive with changes to pricing structures and the core feature set.

More than anything else, the respondents’ criteria for choosing their next mobile service indicates the steep contrast in attitudes delineated by age. ‘More data’ is a bigger factor than ‘more messaging’ or ‘more voice’ in the 18–34 age group, but ‘more voice’ is a bigger factor than ‘more data’ in every other age segment.

The report goes on to contend that the demarcations of value within mobile contracts will change during the next few years, as the customer experience becomes more data-centric. The ability to predict and monetise these changes is crucial if operators are to maximise revenue.

Most importantly, this report’s results indicate that an operator’s next-generation communication strategies need to be much more focused on segmentation, with commercial and technical decisions taking into account differentiation in various customer segments. If not, then operators run the risk of becoming relegated to secondary providers of communication services for some user groups.

Notes to the editor

The Analysys Mason research report, The Connected Consumer Survey 2013: voice and messaging, is based on an online survey of 6610 consumers aged 18+ in France, Germany, Poland, Spain, the UK and the USA. All survey participants were representative of the demographic characteristics of Internet users in each country, and respondents were selected until nationally representative quotas for gender, age range and employment status (as well as geographical region in the case of the USA) was reached.

About the author

Stephen Sale is the author of the report and Principal Analyst for the Voice and Messaging research programme, at Analysys Mason.

Analysys Mason delivers strategy advice, operations support and market intelligence worldwide to leading commercial and public-sector organisations in telecoms, IT and media. Analysys Mason consistently delivers significant and sustainable business benefits. We are respected worldwide for the exceptional quality of our work, our independence and the flexibility of our teams in responding to client needs. The company has over 250 staff worldwide, with headquarters in London and offices in Cambridge, Dubai, Dublin, Edinburgh, Madrid, Manchester, Milan, New Delhi, Paris, Singapore and Washington DC.

www.analysysmason.com

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