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by Richard Blackwell
The Globe and Mail
June 7, 2006
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Cellphone users love the idea of adding
new bells and whistles to their phones -- such as video streaming, music
or Internet access -- but they aren't willing to see their bills rise
sharply to pay for it, a new survey from KPMG suggests.
Because of that attitude among users, cellphone companies are going
to have to look at other revenue streams, such as advertising, if they
want to keep their customers happy and make more money, the accounting
firm concludes.
The survey of almost 3,600 cellphone users around the world showed that
those in Asia have the most experience in using add-on features such
as text messaging, song downloading, games and videos. In Asia, "any
hesitation or mystery surrounding convergence services has long since
dissipated," the KPMG report said.
Partly because so many people have long commutes to work, and thus have
considerable time to use their phones, "Asian consumers have developed
a remarkably intimate relationship with their cellphones," the
study said.
But consumers in Europe and North America are also very open to new
uses for their cellphones, KPMG's survey shows, particularly for information-related
purposes.
Over all, however, consumers accustomed to free content on the Internet
are loath to pay substantially more for add-on services, the study shows.
Europeans are the least willing to pay extra, while Asians are more
open to the idea.
"Consumers are definitely willing to use their cellphones as a
convergence tool to get access to other services," said Nathalie
Bernier, industry leader for information, communications and entertainment
at KPMG Canada. However, "they have clearly said they're not interested
in paying a premium for all these services," she added.
Kaan Yigit, president of Toronto market research firm Solutions Research
Group, agrees that getting people to pay for add-on cellphone services
will be a tough sell.
One reason for this is that much of the demand for content on mobile
devices is "still pretty much centred in the 15-34 age group,"
he said. That demographic "is not keen on paying extra for anything
unless it's an exclusive vanity purchase, such as a ring tone, or something
that has potential to attract the opposite sex, like texting."
Because of this phenomenon, KPMG's advice for cellphone firms is to
look for other ways to increase revenues, such as partnering with advertisers
who want to reach a captive cellphone audience.
KPMG said its survey results suggest consumers may not resist having
some forms of advertising popping up on their cellphone screens -- such
as movie trailers or electronic coupons. But more research is needed
to test consumer attitudes to advertising, acknowledged KPMG partner
Carl Geppert in Denver.
By earning revenue from advertisers or other corporate sponsors, telephone
companies can "avoid the grave dangers of declining revenues and
profits which are currently being witnessed in the world of voice offerings,"
the study said.
To entice advertisers, cellphone companies must demonstrate that they
"own" the relationship with customers, KPMG said. There may
be room for only a handful of companies in each market that can do that,
it said, because cellphone users prefer having just one supplier sell
them all related services.
In all markets worldwide, users also show a preference for a single,
consolidated bill for all the services they use, the KPMG survey showed.
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