With flat-lined revenues out of voice and data, operators have been avidly scanning other opportunities for growth. One segment that has received a keen interest is the application (app) market, primarily those of mobile apps. This was a virtually untapped segment until Apple came along with the ‘i’ family which quickly garnered a cult following. Since then, other players, most notably Google, have entered the market determined to dislodge Apple – from its profitable applecart. In all these different arrangements, operators had a limited role in the whole ecosystem. The primary beneficiaries were the platform providers –the device in the case of Apple or the OS in the case of Google. Developers too got a piece of the pie, although due to the high failure rate the number of successful developers remained small. Operators were pretty much rough-shod in this arrangement, relegated to a dumb-pipe obtaining only secondary revenue sources from subscribers signing on to data rate plans. At this point operators were not able to compete to deliver an offering which would provide customers with more choice due to the positioning of device manufacturers. What was unexpected was the sudden surge in data traffic, the result being that the additional revenues mopped up from data tariffs were insufficient to offset the investments in infrastructure needed to support the traffic. The operator now found himself on the defensive, shouldering the blame for spotty service, slow data rates and dropped calls.

Current initiatives

In order to meet the competition head-on several operators initiated their own app store, with a vision of a set of ‘operator apps’ running on all mobile devices offered by the carrier. However, they have had more of a cautious start, with Orange, BT, Vodafone and Telefónica all making inroads with varying degrees of success. In many cases, there have been several false starts. Technologies have proven far more complex in implementation especially in the absence of universally accepted standards. Traditional business models have failed, especially since the Telco’s main source of revenue were paying subscribers rather than search and advertisement based, as in the case of the Web majors. A few of the major efforts are chronicled here to develop a better understanding of the evolution towards the current state of the Telco app industry.