I recently read somewhere “The mobile phone is the world’s most universal communications device”. It is a fact that mobile devices have now surpassed the Internet and have become the most common communication method in the world. Mobile phone use is growing at a far greater rate than PC adoption. Today, mobile phones out-rank PCs by almost 3.5 to 11, and more than 25 percent2 of those phones are enabled to receive multi-media messages, access the Web, display photographs and receive streaming video.
The unrelenting quest for higher growth in digital mobile telephony and increase in ARPUs has long been a source of concern for mobile telecom service operators. In an industry as exciting and dynamic as telecom, Telcos are burning the midnight oil on finding ways to understand the demographics of customers and tap into newer ones. A case in point is the UAE, that has one of the highest mobile penetration rates in the world at almost 140 per cent and which at some point of time in the future is expected to slow down.
Mobile content or data services seem to be like ‘manna from heaven’ and the solution to maintaining the continuous growth of companies. Voice calls is passé and SMSes are ubiquitous. Customers are increasingly becoming more experimental to try out new services that extend their persona and enable to express themselves.
That takes us to the question on what will be the growth driver for Telcos tomorrow? Beyond a doubt – mobile content. Mobile content services have the ability to dramatically transform a mobile phone into an invaluable source of information, a powerful tool to express and share their world with others. Look around and you will see that it’s already started happening. Today, mobile devices have metamorphosed into a bundle of information and entertainment. The proliferation of 3G enabled mobile phones has only fuelled the momentum, reducing the dichotomy of the traditional ‘haves’ and the ‘haves-nots’ for access to high-end mobile content.
The story so far
So what started it all? The earliest form of mobile content i.e value added services began in the form of SMS (Short Messaging Service) and the limited array of pre-loaded monophonic ringtones. Not to forget the basket of basic productivity tools such as an organizer, calendar, alarm etc. These were meant to complement the main functionality of the mobile phone – voice calls.
The next generation of mobile handsets came with cameras. They debuted with slow VGA cameras. However, constant improvements led to the introduction of the megapixel snappers. With the strengthening of the mobile cameras a new service was born – multimedia messages or simply MMS. Personalization took a whole meaning with the advent of mobile cameras as now users could take spontaneous photographs and share instantaneously!
Not to be left behind was mobile music. Newer versions of mobile phones came with digital media players supporting most popular music and video formats. ‘Music on the go’ became the buzzword. Most mobile handsets also support games.
For business users the availability of push e-mail, preloaded software for viewing and editing documents has been a boon. Crammed with so many features, mobile handsets are becoming all-in-one devices and practical alternative to digital cameras, music players and even personal computers in many cases.
Technologies such as WAP, GPRS, EDGE have triggered a whole range of mobile content seen never before. Downloadable ringtones – both monophonic and polyphonic, downloadable games, mobile wallpapers, icons, full song downloads, full video downloads, caller tunes have become popular with the masses. Technologies such as Bluetooth have enabled people to share their mobile content with others in ease. The Japanese and European markets have traditionally been very receptive to mobile content. In contrast the North American market has been slower to adopt mobile content.
How does the future look for mobile content?
Let’s look at some major factors that are re-shaping the mobile phone as we know it:
Handset and network technology Customization of mobile content to target different age groups and user profile.
Anticipated rapid growth in demand for mobile content
‘The current market for value-added services in the Middle East is estimated at around US$350 million, which is distributed across the various players along the value chain according to a web of content fees
and revenue sharing agreements,’ according to Booz Allen Hamilton. ‘Half of the current market value is in the form of mobile personalization services such as ringtones, logos, wallpapers, etc. Operators, media owners, and independent value-added services providers are already tapping into this market. As a result, future growth is expected to come from value-added services categories such as general entertainment, interactive media services, gaming, and information, bringing the total market to over US$1.7 billion by 2010.’ Now that’s a lot of money to think about.
Clearly, it is technology coupled with savvy marketing that will ensure the continued success of mobile content. It is interesting to pause and think for a moment how the advent of 3G is already infl uencing the business channels. This is all the more interesting when one takes into consideration that historically the focus of telecom operators has been on providing reliable voice and not data services. But this is undergoing a major shift now. Telecom operators such as du – the UAE’s new telecom
operator have the advantage of having a low learning curve due to the lack of having a legacy network. For example. du is the fi rst telecom operator in the UAE to offer services such as Mobile TV and international video calling beside offering other value added services such as mobile
payment and USB mobile broadband.
The P2P or Peer-to-Peer model is likely to gain further momentum in the next few years. The social networking revolution made possible by the advent of Web 2.0 technologies is very likely to fi nd its way to the mobile space as well. The availability of high bandwidth and stronger compliance systems will help mobile operators to tap fully into this medium offering premium content. This could enable the take off of things like mobile video blogs. “The future of mobile content services is in transition from
SMS and MMS to instant messaging, media and video blogging,” notes Frost & Sullivan Industry Analyst Lindsey McDonald. “Building of mobile content communities and sharing of video clips is becoming a norm.” Content users are no longer just downloading content, they are sharing, personalising and creating content. At the same time, mobile content services are moving towards business communication and mobile advertising.
The key challenges
The telecom industry has numerous challenges to overcome if it has it witness the continued success. These are as follows:
The desire for control: The world of content and media represents an area of expertise that is new for telecom operators. If operators persist with a walled-garden approach and restrict customer access to the mobile internet, the uptake and adoption of services will remain very low. This calls for a collaborative approach with all stakeholders in content, media, advertising, and cross-operator collaboration to build these new markets.
Pricing for data: One of the key drivers for the rapid growth of the internet has been affordable fl at rate pricing for access – unless mobile operators move in this direction, the promise of the mobile internet cannot be realized.
Issue of Digital Rights Management (DRM) Induce more trials for customers leading to greater usage
A handful of independent players are already starting to shape the mobile content market, but many operators and agencies have been less engaged. Overall, the potential size of the mobile marketing prize is signifi cant. However, the market will only realize its full potential if players actively and cooperatively invest in developing the market and the ecosystem of players and respect consumer privacy, instead of focusing on unsustainable short-term gains.
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