It's lousy running a network business. The capital expenses are horrendous. The customers complain all the time. There are endless congestion and delays. And you don't make any money at the end of the day either.
It's awful running an airline, isn't it?
But the airlines could teach the telecom industry a few lessons. Consider frequent flyer miles. These progams have become so valuable that they are often the sole profit centre of the airline. When airlines threaten to go bankrupt, their points partners like credit card companies bail them out.
The bad news is that people redeem these miles and this means flying expensive planes around and adding more fuel for every kilogram in the air. But what happens when you move from bums on seats to bits in pipes?
Today I saw an advert (sorry, forgot URL) for Rolling Stone magazine promising a sweepstake for 5000 downloads. There's zero incremental cost in minting these 5000 files. It's a genius idea; conjure money up from nowhere. The music industry should see where its future lies: you don't sell the music directly, you bolt it on to other profitable acivities.
"Minutes of use" are also effectively zero marginal cost. Although wireline metered telephony is feeling rather unwell and writing a will as a matter of urgency, pay-by-the-second alive and well on wireless.
So if I was a wireless telco, my next step would be to create a good old-fashioned loyalty scheme. Only open to monthly payers (we really love that recurring revenue stuff!). But you can earn minutes by taking out a mortgage, buying a new car, or applying for a loan.
It's money for old rope, as they say. Except you don't even need the rope.
Posted by Martin Geddes at 9:01 PMTrackBack URL for this entry:
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