3g-g
25th April 2005, 09:23 AM
Reported in the Guardian:
It's not really anything that we don't know already, but it's good to see the operators are aware something's going to need to be changed to increace the take up of 3G. Maybe if they manage to get the £4Bn back from the government that they're chasing just now we could see some price drops from all the networks?
FINANCIAL OVERDRIVE: After investing ?22 billion on 3G licenses, the mobile phone industry is desperate to find content and revenue streams that will justify the pricetag
THE GUARDIAN , LONDON
Monday, Apr 25, 2005,Page 11
After splashing out £22 billion (US$42.13 billion) in the UK for instance on third-generation data licenses during the height of the dotcom frenzy, there is a strong desire to make 3G profitable -- so the operators are working in overdrive.
"And they have to be," said Julian Hewett, chief analyst at Ovum. "According to our forecasts, revenues from voice services are going to be in decline."
This is the stark financial imperative for mobile operators to broker content deals and trumpet new products. Faced with declining profits from voice calling, the networks have turned to content as their third way -- a ploy to get customers to keep spending money.
Ringtones and messaging continue to perform remarkably, but operators and handset manufacturers alike are increasingly placing their focus on mobiles -- especially 3G phones -- as the perfect platform to deliver valuable text, video and music.
The future's data
"This is an exciting time," said Bob Iannucci, a senior vice president at Nokia and the head of Nokia Research Center, where the mobile manufacturer develops new products and interfaces.
"Over time, as end users get more familiar with the packaged services, they will demand more flexibility."Simon Garth, marketing vice president for Symbian.
"The mobile industry had explosive growth around voice in the 1990s. Now, over the coming years, it is data -- video, music and the like -- that is going to explode," he said.
This prediction is shared by most industry insiders, a proposition that essentially boils down to "the future's bright, the future's data." They dream of properly translating the revolutions that have rocked the internet to cellular networks.
It is a promise that phones have never really delivered on, but has now become possible using existing protocols and faster technologies such as 3G.
At the moment, this is delivered to customers in a limited fashion through walled-garden operator portals.
By contrast, the world inhabited by Tomy Kamada, the co-founder of Japanese software licensing firm Access, is one that looks a lot like the Internet. That's because it is: he is one of the brains behind i-mode, a Web-browsing mobile application that sets a new standard for bringing content to mobile users.
Here, the walled garden has a much lower fence around it, and everyone -- broadcasters, publishers and amateurs -- can get their content out to mobiles.
"Content providers who really want to make money from mobiles spend money on making their content specific for mobiles," he said, but the restrictive barriers of the operator portal have been broken down.
Six years ago, Kamada's firm linked up with Japanese telecoms firm NTT DoCoMo to create i-mode, an alternative to the WAP (wireless application protocol) mobile Internet standard. When i-mode launched, the information superhighway was bustling with youthful vigor, and far-sighted mobile manufacturers knew that people would want to get Web-based information on their phones.
Inroads
Fast forward to this year, and i-mode has more than 42 million subscribers in Japan alone. What started as an untested joint venture now dominates its home ground -- and has valuable lessons to give the nascent European market, where it is beginning to make inroads.
It is launching services with networks including French operator Bouygues Telecom and Spain's Telefonica, and later this year it will make its first appearance in Britain under the banner of O2.
"There's a two-year advantage for the Japanese market," said Kamada, who believes that content is the most important thing 3G has to offer customers.
"Why? First of all, it's the price of the devices. This year, handset manufacturers will start to make 3G handsets affordable in Europe. Then there are the prices of 3G services. If price is acceptable and handsets are affordable, then we'll see growth," he said.
Right now, in the UK that growth has not happened. It has taken the company known as "3" two years to get past the 1 million subscriber mark, despite being the only 3G operator for most of its lifetime.
Vodafone, which launched its 3G service last November, is struggling to encourage uptake -- some have pegged the figures at less than 200,000.
Higher prices and limited interest have made it relatively slow to take off, but Charles Dunstone, the chief executive of Carphone Warehouse -- Britain's biggest mobile phone retailer -- last week said he believed "3G will go mad in the second half of the year."
It is unlikely the restrictive WAP browsing of 3G-based content has had much effect on uptake, with price the major factor. But the future could be different: the war over content will really heat up once the price of switching to 3G drops and content providers begin to take an interest.
There are, however, striking parallels with other technology that mean the content war between networks could be a short-lived flare-up rather than a raging inferno.
"This is the same cycle we had with the Internet," Hewett said. "Just look at what British Telecom did a few years ago when they launched broadband: it was all about the content they could deliver. Now that's been dumped almost completely. Ultimately, service or content providers don't want to be limited to one network, they want to be on as many networks as possible because that's where the value is."
Democratizing content
This "Internet effect" -- the democratization of content -- has been a major driver on the Web, letting users out of their ISP's clutches and giving them the freedom to read whatever they want.
Although some services, such as AOL, promote a contained browsing experience, most simply provide the pipeline through which customers access the Web.
The Internet effect gives media companies the opportunity to deliver output directly to consumers, rather than through a third party. Internet browsers that give users the freedom to surf fully on their phones -- such as i-mode and the recently released version 8 of Opera -- offer a kind of freedom that hands power back to content creators.
The middleman has lost his way, and if free browsing becomes standard on mobile phones, the operators could suffer the same trouble ISPs did five years ago.
"At the moment, the platform is chosen by the operator," said Simon Garth, vice president of marketing for the software firm Symbian.
"The product is packaged and given to the end user rather than them having freedom. But over time, as end users get more familiar with the packaged services, they will demand more flexibility," he said.
It is a bind worthy of Joseph Heller, if not quite as dramatic: operators use content to differentiate themselves from rivals and draw in more customers -- but, once 3G uptake is large enough, content providers become more important than networks.
Relationships change
The same content will be running across multiple operators, and it will become more difficult to stand out from the crowd.
For example, customers might stop saying "I want the network that has Premiership football highlights" and start asking "why doesn't this network have Premiership football highlights?"
It is a subtle difference, but one that changes the relationship between the operator and the brands it carries.
If content providers wrestle power back for themselves, through the Web or other on-phone applications, networks could be left in the lurch -- relegated to the role of an Internet service provider.
"Frankly, you can do some of this already," said Symbian's Garth. "On smartphones you can already run non-operator applications. And we see smartphones reaching the mass market by 2006 or 2007."
Thomas Husson, mobile specialist with Jupiter Research, is more upbeat.
"Strong brands like Disney or MTV will want to go straight to the user, but at the moment the mobile portal is the way into the data," he said.
He thinks operators have enough time to get stronger before the Internet effect takes over.
"Search engines are still some way off and the networks are using the content to build their own brand," he said. "For example, 3 is focusing more on sport, while Orange is maybe more interested in cinema."
Tailoring content
But the situation means networks are finding themselves in some strange places. The desire for mobile video is sending them towards broadcasters such as BSkyB, while tailored news services will compete against established Web sites such as the BBC.
Orange's music download sales, meanwhile, are being incorporated into the download music chart, placing them in an area more familiar to Apple's iTunes.
Are they network services or Internet portals? It is still unclear, but the lessons of the Web suggest they will struggle to be both. Perhaps operators must face up to the fact that control will eventually be handed to content creators.
It's not all bad news, though.
"There's little loyalty from consumers," Hewett said, "but even if the operator only gets a 20 percent share of content revenues, it still could be a substantial piece."
It's not really anything that we don't know already, but it's good to see the operators are aware something's going to need to be changed to increace the take up of 3G. Maybe if they manage to get the £4Bn back from the government that they're chasing just now we could see some price drops from all the networks?
FINANCIAL OVERDRIVE: After investing ?22 billion on 3G licenses, the mobile phone industry is desperate to find content and revenue streams that will justify the pricetag
THE GUARDIAN , LONDON
Monday, Apr 25, 2005,Page 11
After splashing out £22 billion (US$42.13 billion) in the UK for instance on third-generation data licenses during the height of the dotcom frenzy, there is a strong desire to make 3G profitable -- so the operators are working in overdrive.
"And they have to be," said Julian Hewett, chief analyst at Ovum. "According to our forecasts, revenues from voice services are going to be in decline."
This is the stark financial imperative for mobile operators to broker content deals and trumpet new products. Faced with declining profits from voice calling, the networks have turned to content as their third way -- a ploy to get customers to keep spending money.
Ringtones and messaging continue to perform remarkably, but operators and handset manufacturers alike are increasingly placing their focus on mobiles -- especially 3G phones -- as the perfect platform to deliver valuable text, video and music.
The future's data
"This is an exciting time," said Bob Iannucci, a senior vice president at Nokia and the head of Nokia Research Center, where the mobile manufacturer develops new products and interfaces.
"Over time, as end users get more familiar with the packaged services, they will demand more flexibility."Simon Garth, marketing vice president for Symbian.
"The mobile industry had explosive growth around voice in the 1990s. Now, over the coming years, it is data -- video, music and the like -- that is going to explode," he said.
This prediction is shared by most industry insiders, a proposition that essentially boils down to "the future's bright, the future's data." They dream of properly translating the revolutions that have rocked the internet to cellular networks.
It is a promise that phones have never really delivered on, but has now become possible using existing protocols and faster technologies such as 3G.
At the moment, this is delivered to customers in a limited fashion through walled-garden operator portals.
By contrast, the world inhabited by Tomy Kamada, the co-founder of Japanese software licensing firm Access, is one that looks a lot like the Internet. That's because it is: he is one of the brains behind i-mode, a Web-browsing mobile application that sets a new standard for bringing content to mobile users.
Here, the walled garden has a much lower fence around it, and everyone -- broadcasters, publishers and amateurs -- can get their content out to mobiles.
"Content providers who really want to make money from mobiles spend money on making their content specific for mobiles," he said, but the restrictive barriers of the operator portal have been broken down.
Six years ago, Kamada's firm linked up with Japanese telecoms firm NTT DoCoMo to create i-mode, an alternative to the WAP (wireless application protocol) mobile Internet standard. When i-mode launched, the information superhighway was bustling with youthful vigor, and far-sighted mobile manufacturers knew that people would want to get Web-based information on their phones.
Inroads
Fast forward to this year, and i-mode has more than 42 million subscribers in Japan alone. What started as an untested joint venture now dominates its home ground -- and has valuable lessons to give the nascent European market, where it is beginning to make inroads.
It is launching services with networks including French operator Bouygues Telecom and Spain's Telefonica, and later this year it will make its first appearance in Britain under the banner of O2.
"There's a two-year advantage for the Japanese market," said Kamada, who believes that content is the most important thing 3G has to offer customers.
"Why? First of all, it's the price of the devices. This year, handset manufacturers will start to make 3G handsets affordable in Europe. Then there are the prices of 3G services. If price is acceptable and handsets are affordable, then we'll see growth," he said.
Right now, in the UK that growth has not happened. It has taken the company known as "3" two years to get past the 1 million subscriber mark, despite being the only 3G operator for most of its lifetime.
Vodafone, which launched its 3G service last November, is struggling to encourage uptake -- some have pegged the figures at less than 200,000.
Higher prices and limited interest have made it relatively slow to take off, but Charles Dunstone, the chief executive of Carphone Warehouse -- Britain's biggest mobile phone retailer -- last week said he believed "3G will go mad in the second half of the year."
It is unlikely the restrictive WAP browsing of 3G-based content has had much effect on uptake, with price the major factor. But the future could be different: the war over content will really heat up once the price of switching to 3G drops and content providers begin to take an interest.
There are, however, striking parallels with other technology that mean the content war between networks could be a short-lived flare-up rather than a raging inferno.
"This is the same cycle we had with the Internet," Hewett said. "Just look at what British Telecom did a few years ago when they launched broadband: it was all about the content they could deliver. Now that's been dumped almost completely. Ultimately, service or content providers don't want to be limited to one network, they want to be on as many networks as possible because that's where the value is."
Democratizing content
This "Internet effect" -- the democratization of content -- has been a major driver on the Web, letting users out of their ISP's clutches and giving them the freedom to read whatever they want.
Although some services, such as AOL, promote a contained browsing experience, most simply provide the pipeline through which customers access the Web.
The Internet effect gives media companies the opportunity to deliver output directly to consumers, rather than through a third party. Internet browsers that give users the freedom to surf fully on their phones -- such as i-mode and the recently released version 8 of Opera -- offer a kind of freedom that hands power back to content creators.
The middleman has lost his way, and if free browsing becomes standard on mobile phones, the operators could suffer the same trouble ISPs did five years ago.
"At the moment, the platform is chosen by the operator," said Simon Garth, vice president of marketing for the software firm Symbian.
"The product is packaged and given to the end user rather than them having freedom. But over time, as end users get more familiar with the packaged services, they will demand more flexibility," he said.
It is a bind worthy of Joseph Heller, if not quite as dramatic: operators use content to differentiate themselves from rivals and draw in more customers -- but, once 3G uptake is large enough, content providers become more important than networks.
Relationships change
The same content will be running across multiple operators, and it will become more difficult to stand out from the crowd.
For example, customers might stop saying "I want the network that has Premiership football highlights" and start asking "why doesn't this network have Premiership football highlights?"
It is a subtle difference, but one that changes the relationship between the operator and the brands it carries.
If content providers wrestle power back for themselves, through the Web or other on-phone applications, networks could be left in the lurch -- relegated to the role of an Internet service provider.
"Frankly, you can do some of this already," said Symbian's Garth. "On smartphones you can already run non-operator applications. And we see smartphones reaching the mass market by 2006 or 2007."
Thomas Husson, mobile specialist with Jupiter Research, is more upbeat.
"Strong brands like Disney or MTV will want to go straight to the user, but at the moment the mobile portal is the way into the data," he said.
He thinks operators have enough time to get stronger before the Internet effect takes over.
"Search engines are still some way off and the networks are using the content to build their own brand," he said. "For example, 3 is focusing more on sport, while Orange is maybe more interested in cinema."
Tailoring content
But the situation means networks are finding themselves in some strange places. The desire for mobile video is sending them towards broadcasters such as BSkyB, while tailored news services will compete against established Web sites such as the BBC.
Orange's music download sales, meanwhile, are being incorporated into the download music chart, placing them in an area more familiar to Apple's iTunes.
Are they network services or Internet portals? It is still unclear, but the lessons of the Web suggest they will struggle to be both. Perhaps operators must face up to the fact that control will eventually be handed to content creators.
It's not all bad news, though.
"There's little loyalty from consumers," Hewett said, "but even if the operator only gets a 20 percent share of content revenues, it still could be a substantial piece."