The Finnish mobile industry, part deux

I today attended and gave a speech at a mobile marketing seminar arranged by SSML (the Finnish direct marketing association). An excellent event where most of the people working with mobile marketing in Finland were present. A big thanks to the arrangers. A lot of stuff was covered, future possibilities discussed, and great case examples presented. What struck me, however, was that much of the more advanced stuff is being done right now in other countries, and many of the case example were about campaigns implemented abroad (I had the pleasure to speak about what can be done right now – and yes, we’re still pretty much limited to SMS). Isn’t Finland supposed to be the wonderland of mobility? Yeah, right..

There are many reasons why the development of the mobile environment has stagnated during last couple of years. I’ll try to explain my opinions about the industry and markets here in Finland, and the causes of why I think we’re somewhat behind in many things. As a background, I’ve been working with mobile marketing in Finland for almost exactly 5 years now.

• The local market

  Is tiny, with a population of 5 million. So what if the GSM penetration is 100%, volumes are key in a transaction oriented business. This is also directly reflected to marketing budgets. I’d say the cost of implementing a mobile marketing campaign is pretty much the same in Finland as in, say, the UK. However, the cost is more easily justified in a bigger market, as the cost per contact is significantly smaller.

• Fierce local competition

  There are many mobile oriented companies in Finland, some might say too many. Instead of co-operating, many companies fight fiercely for market shares in a relatively small market. Dumb? Absolutely. We’ll continue to see bankruptcies and mergers in the future. The current situation, even though improved during the last couple of years (after the hype), isn’t stable. Many companies have a shared goal of expanding and utilizing their technology and know-how in business abroad, but instead they compete each other out of the market locally.

• Carriers

  Finland probably has the cheapest call rates and message prices in Europe due to fierce competition between carries during the last two year. Number portability, which was introduced about a year ago, increased the competition even more, and now we are at a situation where a calls are priced at about 7 euro cents a minute, and SMS’s at a similar level per message. Bear in mind that carriers aren’t allowed (by law) to bundle phones with the subscriptions, so there are now long contracts (which can be seen in churn rates). This is absolutely great for consumers, but for a service provider or marketer this isn’t good. While concentrating on reducing prices, carriers have not worked hard enough and innovated on the service front. IMHO one of the main responsibilities if a carrier is to educate their customers. We’re seeing consolidations happening on front too, and hopefully carriers can concentrate increasing their ARPU’s through service innovation. Only about 1% use 3G technology right now – there is some challenge to get this figure up!

• Handset subsidizing

  Isn’t legal in Finland. It will probably be allowed for 3G handsets and handsets in the 450Mhz network (what’s up with that? why place a limits on particular technologies). A result of this, the handsets that are being used are not that advanced (~50% color screen and GPRS), and as operators do not have direct control of the handset, around 75% of consumers have their WAP and MMS settings properly configured. Handset subsidizing is a tricky thing, long contracts etc are a bad thing for consumers, but it does have its positive sides.

There is a lot of know-how, both on the technical and marketing side, of mobility in Finland. I hope future developments will make the environment more healthy, and that we’ll hear of great success stories that have originated from Finland.