Characterized by its large size and intense competition among Deutsche Telekom (DT), Vodafone and Telefonica/ O2, the German market represents one of the most interesting worldwide regions for mobile services, serving as a showcase for the wireless carriers’ varying strategies in navigation and Location Based Services (LBS), according to iSuppli Corp.
Each of the three German carriers offers navigation applications to customers as part of its service portfolios. O2’s solution is not branded, while Vodafone’s applications are branded the same way throughout all its European subsidiaries. For its part, Deutsche Telekom provides branded solutions that until recently were available only in Germany.
Among the three, DT provides a truly in-house branded navigation solution. The company’s NaviGate, which had been part of various Telekom business units until the beginning of this year, is now in its third version. Development of the application moved between Tegaron and T-Systems until it was finally outsourced to Appello Systems at the beginning of this year.
Aiming to follow a similar path as DT, Vodafone provides an in-house navigation solution for customers across different countries, using LBS technology from Wayfinder, an acquired company. However, by the time the Wayfinder acquisition was completed, the navigation market had shifted, with Google and Nokia providing free turn-by-turn navigation solutions. Vodafone closed the door on Wayfinder in March and then announced future plans for the existing intellectual property in July, with Wayfinder assets turned into an open developer platform for third-party LBS applications.
For its part, O2 in May announced it was providing Telmap Navigation for free on 40 handsets. New handsets since the announcement come pre-installed with the application on board, but existing users can download the application just the same if it is not yet present on their device. The offer is not simply limited to smart phones but also includes traffic information from Germany’s ADAC. And even though O2 does not charge a subscription fee for the off-board application, the carrier levies an appropriate cost for data traffic generated by the application. O2’s strategy is to make data access as easy and cheap as possible for end user in hopes of generating more data traffic as well as attracting new customers that are not interested in signing the kind of long-term data plans offered by the competition.
As the home-grown carrier, DT is the market leader in Germany with 37 million wireless subscribers. However, the carrier in recent quarters had to battle to keep its current customers, let alone gain new ones. Vodafone is DT’s closest competitor, with 35 million customers. Telefonica’s local subsidiary, O2 Germany, is a distant third with 16.3 million customers.
From a revenue standpoint, DT continues to lead the pack with slightly more than 2 billion euros for the mobile sector in the second quarter of 2010. In comparison, Vodafone reported 1.6 billion euros for the same time period, with data revenues contributing 339 million euros. Data revenues have been growing at Vodafone the past year, which the company attributes to flat-rate mobile Internet plans such as SuperFlatRate, for which 3.9 million users signed up in 2009. Meanwhile, mobile revenue for O2 amounted to 726 million euross.
All three carriers are starting to deploy LTE network technology, which they hope to use in order to provide customers with additional mobile services and LBS, increasing data revenues in turn. Such a move is necessary to compensate for falling voice revenue as well as account for legislative changes anticipated not only in Germany but also throughout Europe. Limitations on roaming charges are the main culprit for the carriers.
The German mobile market illustrates the varying strategies deployed by carriers to provide navigation services and LBS to further drive data revenue. And while pay-per-use applications like Telekom’s NaviGate and navigation application subscriptions such as Vodafone’s Navigator remain available, a clear trend can be seen toward free navigation.
DT, for instance, continues to expand its free Navigon select program to more mobile platforms. O2, on the other hand, is providing an off-board solution without monthly subscriptions and is focusing on charging its customers for the necessary data traffic.
In addition to its own branded services, each German major carrier is offering users access to third-party applications and services provided by the likes of Nokia and Google, or applications from developers on any of the available application stores.
While supplying access to a broad range of services is important for each carrier, providing services tied closely to each carrier’s own brand and services will remain a high priority. For the carriers, generating revenue from increased data traffic is one thing, but being shut out completely of the add-on services and applications business is unacceptable.
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