5 Reasons Why Voice is No Longer King (as this article has carelessly concluded)

Implications: Wireless researchers keep getting the voice to data point wrong, and they shouldn't still be making this mistake.  Consumers aren't using data because they have been given poor devices with poor interfaces, not because they wouldn't use the Internet or other data if the device was better.  I provide five reasons why voice is no longer king, and data awaits the ARPU throne.

Analysis: Reason 1: Though hardly excellent, voice quality has improved across wireless carriers, especially with the migration to 3G.  

In a J.D. Power report published in March of last year, the following quote sums up the current situation: "Wireless providers have clearly made great strides in improving call quality," says Kirk Parsons, senior director of wireless services at the market research firm. "One key advantage to this [3G] technology upgrade is that carriers can greatly increase the capacity of handling voice and data transmissions with existing network equipment. As more wireless subscribers use cell phones that are 3G-enabled, the rate of call quality problems decreases significantly."

This has greatly reduced the competitive differentiator, over time, that certain carriers have over the other in terms of call quality.  Don’t get me wrong, though I’m an AT&T user in large part due to their better phone selection (currently an iPhone), I’ve had to switch from AT&T to Verizon and then to Sprint in order to pick up service on vacation in South Carolina.  It’s just that the difference is less apparent than it was several years back, when Verizon blew the other carriers away.  While I was heading a multi-carrier distributor, we saw a dramatic change in voice coverage when Cingular merged with AT&T, and the difference has continued to evaporate.

Reason 2: As sad as this may be, consumers have become used to be dropped calls or no service areas in the U.S. due to our lack of a continuous network (unlike in Europe, where uniform technology stretches across the network), and churn has dropped as a measure.   

Over the past decade, as wireless has become ubiquitous, this failure has hardened U.S. consumers to an imperfect network.  Churn has dropped significantly.  Four years ago, carriers were all frantically attempting to drop their churn below 3%, a feat only achieved by Verizon and Nextel (prior to Sprint).  For the past couple years, AT&T and Verizon have dropped their churn rates significantly below 2%, in part due to longer contracts (2 years instead of 1) and the early termination fees (ETFs), improved networks, and customers who have adjusted their tastes to accommodate imperfect networks.

Reason 3: Carriers are moving toward price wars over all-you-can-eat voice plans, with attached data, signifying that they can’t continue sucking huge dollars for voice from consumers.    

Sprint made the first move in this direction, and now AT&T is following suit.  Voice price has been falling swiftly, and it will continue to fall.  The carriers have felt that they could wait and attempt to suck the last voice dollar from consumers, but now they know they have to differentiate on data and phones in order to extract large ARPU from consumers.

Reason 4: Consumers need to see and use features like the Internet before they recognize their use and utility. 

One mistake that analysts make that bugs the *&^$ out of me is they ask consumers whether they want Internet, GPS, etc on their phone, and consumers say, “Nah, it isn’t a big deal.”  That is what the analyst in this report erroneously concluded.  This has been the guiding beacon that has halted innovation for carriers and manufacturers (especially Motorola) for years.  So we’ve spent years with weak phones with awful interfaces (WAP and Microsoft Mobile have been epically flawed, with innovation paces that only a turtle could love) and slow data connections.  Read my lips: provide consumers the right device, and they will use the data.

Reason 5: The iPhone, the explosion of Safari Internet use, Blackberry, the proliferation of smartphones, and growth of the pro-sumer are proofs that data is the heir to the thrown. 

Within a half-year after the iPhone’s introduction, the Apple Safari browser overtook Microsoft Mobile as the top mobile browser in the U.S. with a mere fraction of the installs.  Today, globally, Safari is nearing half the traffic of Nokia’s browser, after soaring past Microsoft … and yet the iPhone only has about 2% market share of all smartphones.  And this is all prior to the Apple iPhone going 3G!  The iPhone is proof that, if you give consumers a better device with a better user experience, they will utilize the Internet.  Sure, iPhone users are on the cusp of the curve, but the data is undeniable.

Give consumers poor devices with poor interfaces, and, yes, then voice is still king.  Wireless analysts should be smarter than making that kind of association.