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Management and Strategy News
New smartphone services fall short of potential as consumers are
confused by data price plans and mobile functions
10-Okt-2012
by Ernst & Young
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Fear of overspending stop users from taking up
new mobile services
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Mobile data price plans still confuse 1/3 of
consumers
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40% of consumers would try mobile payment
sooner with better guidance from mobile operators
London, 10 October 2012 – Consumers are overwhelmed
by new mobile internet services and increasingly complex mobile data
price plans, according to The Mobile Maze, a new survey by Ernst &
Young. The survey, carried out in June, interviewed 6,000 consumers
across 12 countries, and found that while smartphones offer the
potential for new data services, regular usage of these services remains
low.
Consumers’ rapid adoption of internet-enabled smartphones and tablets
has been one of the most significant social, business and technology
trends of recent years. Smartphone users are twice as likely to use data
services as traditional mobile phone owners, however users are still not
utilizing the devices’ full potential because of confusion over data
tariffs, a lack of guidance from operators on the benefit of new
services and concerns over privacy and security risks.
Lack of awareness is stopping consumers from using smartphones
When trying to understand the reasons why consumers were reluctant to
adopt the latest mobile functionalities, the research found that
smartphone users are clearly struggling to understand the relevance of
using such services. Thirty-five percent of consumers said they had no
intention of using mobile web browsing and 34% said they had never even
heard of the service. Similarly, 63% of the respondents also said they
have never heard of social media, while 46% said they didn’t know about
operators’ app stores.
Customers struggle to understand mobile data tariffs and worry about
overspending
The number one reason for customers discontinuing their use of a
smartphone service or not taking the option is the fear of overspending.
As a result, 38% of consumers have stopped using “mobile web browsing”,
mobile payment at “a point-of-sale” (32%), “operator app stores” (28%)
and “mobile money transfer” (28%) because they were either too worried
about overspending or didn’t understand the different pricing options.
Jonathan Dharmapalan, Ernst & Young’s Global Telecommunications Leader
says:
“The widespread lack of understanding of mobile tariffs has a dramatic
impact on customers trying new mobile services. Clear and consistent
communications from mobile operators to their customers would help
change this and may also influence people to try new services sooner. If
operators do not change the way they communicate, by increasing billing
transparency, improving level of customer service and producing clearer
marketing messages, they will fail to take advantage of the
opportunities that exist.”
In particular, almost one in three consumers, say they are either
confused by mobile data tariffs and functionalities, or simply don’t
understand the different options available to them. Looking across the
board, older customers struggle the most with only 46% of 46-65
year-olds saying they can understand tariffs, compared with almost 70%
for younger customers (18-24 year olds).
Consumers feel poorly informed about new mobile services
Forty-six percent of respondents either feel that their service
providers do not communicate new service offerings effectively or don’t
even know if they do or not. This represents a significant barrier to
take-up of new services – 40% of users would try mobile payment services
sooner if they had a greater understanding of the service benefits.
Adrian Baschnonga, Senior Telecommunications Analyst at Ernst & Young
says: “Consumers require high levels of reassurance from their service
providers, particularly for functions such as mobile payments that have
the capacity to transform the device into much more than a
communications tool.”
Even in tech-savvy markets, consumers remain confused – in the US (64%)
and Netherlands (52%), a majority of users fail to understand data
tariffs effectively, suggesting that established mobile data service
propositions need to be reassessed. Nevertheless, demand for new
services is high – “pay as you go” customers take up just as many
services as their pay monthly counterparts, while their spend levels in
markets such as China, Russia and the UK are on a par with contract
customers.
Jonathan concludes: “Overall, the survey shows that smartphones unlock
new mobile phone services, such as web browsing, social media, instant
messaging, music services and mobile video. But regular usage by
smartphone owners remains low. Although non-smartphone users are more
averse to using mobile data services, a high proportion of non-smartphone
owners would actually consider trying new services if they understood
mobile tariffs better, suggesting strong demand that provides growth
opportunities for mobile providers.”
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About the study
Ernst & Young has conducted a major global online customer research
study covering 6,000 consumers in 12 countries worldwide. The research,
carried out in May and June 2012, was designed to highlight short-and
medium-term issues facing mobile operators involved in the mobile
services/applications value chain. As part of our primary research, we
asked consumers to detail their usage of specific mobile value-added
services, exploring take-up drivers and inhibitors, along with their
attitudes toward their mobile service providers in key aspects such as
communications quality and payment preferences.
In this research report, we have supplemented the findings from our
consumer survey with insights from Ernst & Young’s sector practitioners,
to help identify current and future customer needs and the competencies
that operators will need to meet them.
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