The Australian - article on mobile phone futures

An article from The Australian IT by Michael Sainsbury:

Digital media players do the numbers on mobiles
Michael Sainsbury
JANUARY 22, 2007

AH, the humble mobile phone. How far it has come in such a short time from its days as a lumbering in-car contraption that could drain the battery of a Rolls-Royce.

Most handsets these days are all-singing, all-dancing gadgets that fit snugly in your pocket.

Armed with increasingly good digital cameras, MP3 music players, email and shrunk-down versions of personal computer software, mobiles are fast emerging as the next major media platform.

At least that is what telecommunications and media companies are placing their bets on.

After stumbling a number of times over more than half a decade in their bid to provide rich content services on phones, mobiles companies are finally getting it right -- although Australia still lags Europe, the mobile market with which we have most in common, by a year or two.

A number of critical things have fallen into place.

Perhaps most fundamental is that third-generation networks are now fast enough for people to access content without getting fed up. The latest 3G upgrade, a mouthful known as HSDPA, is a real improvement, with much faster speeds promised by networks over the next few years.

Consumers, who are getting increasingly used to much faster fixed-line broadband speed, simply won't put up with slow and clunky mobile service.

Operators, led by Hutchison's 3 Mobile, are better finessing their charging model.

And pricing, the bane of any service attempting mass market acceptance, has been falling, although still not far enough in many cases.

But despite their best efforts and a renewed push by market gorilla Telstra, take-up of mobile content services has been far slower than most had hoped.

One reason is that mobile content/services/internet -- whatever you want to call it -- has primarily been driven by the telcos who win the network and bill the customers. Network and engineer-driven telcos have struggled to understand content.

But this is all starting to change.

Here lies the most important shift that is starting to emerge: digital media players such as Ninemsn, Yahoo7, The Australian's publisher News, Fairfax Media and the raft of smaller players are getting active in mobiles.

Through the Australian Interactive Multimedia Industry Association they are planning a consumer "mobile content education campaign" to show people there is something worthwhile at the end of the rainbow.

This type of education is far from altruistic; it's more about advertisers finding the rainbow's pot of gold.

For what started out as a nice-to-have add-on to voice services is fast becoming an imperative for the fast-changing telecommunications industry and a media industry being forced through rapid change as the internet starts to erode revenues and margins for traditional media.

Basically, mobile is a rolled gold opportunity that none of them can afford to stuff up. The mobile is perhaps where we are seeing the truest expression of that most over- used of terms: "convergence".

So with many of the hurdles -- apart from pesky demand -- cleared, content providers are starting to ask that most basic question: where's the business model? If you look at "3" which has more of its customers paying more each month for non-SMS content than its rivals, a small monthly subscription fee of between $1 and $5 for a growing range of content packages -- news, movies, chat, sport, etc -- appears to be working best.

But while that is working, the spectre and opportunity of advertising on mobiles is looming fast.

Spoon fed on years of free-to-air television and now with the myriad free content options available on the internet, consumers remain reticent to pay for electronic content, or at least reticent about paying too much. In Australia, the remarkable resistance to the charms of pay-TV only bolsters this.

So it is logical that we will increasingly see more advertising on phones.

Chris Noone, who runs the mobile side of Ninemsn, Australia's most popular consumer portal, believes 2007 is the year mobile advertising will start to make its mark.

"Last year it was mainly hype; this year it is happening."

Noone also says that opportunities will multiply as operators bring down the mobile "walled gardens" that force customers to only access content on the operator's portal. This only works for so long, as AOL found out on the fixed-line internet to its, and its shareholders, chagrin.

Advertising is also a perfect match for location-based services that mobiles can provide by identifying the location of a user through triangulation of GPS technology.

Still, advertisements that work on TV or the internet banner ads and pop-ups will not, in most cases, work on mobiles.

On a mobile screen which is much smaller, advertisers need to be sophisticated in finding new ways to approach the new platform.

One way being suggested is that advertisers will sponsor certain content.

What is for certain is that success will often require close co-ordination between operators, advertisers, media companies and handset manufacturers.

But the opportunity is enormous. Unlike the TV or even the PC, mobiles are truly the personal individual device and the marketing opportunity as niche as you like.

As such, companies that find smart ways to use mobiles to advertise their wares and connect with customers will doubtless find their pot of gold.

sainsburym@theaustralian.com.au

Beats the heck outta me why the newsfeeds still have the journo's work email address. Sometimes it comes with their desk phone, mobile phone, cubicle number and pants size too!

Why do technology writers always limit LBS to advertising? o.O It's like say "wow! web pages would be great for pop-ups!". I mean, he kinda says that but doesn't offer any other LBS solutions. Silly, really.

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