Making mobile data pay its way

23 Dec 2004

Not so long ago when kids asked for techie gifts from Santa they would have listed Scalectrix or maybe a digital watch. Nowadays, there is Playstation, Xbox, iPods and also this year, for the first time, 3G handsets.

Mobile data services have been around for a number of years but now that 3G has finally arrived, with Vodafone first out of the blocks, mobile operators will be under huge pressure to recoup the massive investment in licences and infrastructure. This was the backdrop to a Wireless Wednesday gathering last week where participants discussed mobile multimedia and gaming, and sought to identify the data services most likely to thrive in the future.

Fresh from a five-week tour of Japan, Tony O’Leary, CEO of Dublin-based games developer Xdeep Games, reported that in the world’s most advanced country in terms of mobile usage — where the mobile entertainment market is worth €3bn a year — music is the most popular application with a 40pc share of consumer spending. This is followed by news and information (31pc), gaming (16pc) and picture
messaging (15pc). However, O’Leary noted, owing to the music labels’ unwillingness to enter deals with content aggregators, the music market was dominated by karaoke and ringtones rather than ‘real’ music.

As a result he saw the power of the music industry as a limiting factor in the growth of the mobile music market — not only in Japan but in Europe too. However gaming had no such barriers to overcome, he pointed out, and in Japan 3G was proving to be an important catalyst, driving the advent of larger game sizes, 3D games and multiplayer gaming.

O’Leary implied that European operators should look to the Far East if they want to understand how to maximise their mobile data revenues. The modus operandi of operators there such as DoCoMo and KDDI is to offer what he described as a “fair deal” to content developers. Not only do the networks take a smaller share of revenue — about 9pc on average compared to 30pc or more by European operators — but they also actively promote new content services through their portals and in other ways, he pointed out. This has helped fuel a huge and vibrant content industry. Also helping to seed the market are innovative billing options, including micropayment (where customers can pay for content in small chunks) and flat-rate services, for example unlimited music downloads for the equivalent of a few euro a month.

“These subscription-based services provide long-term revenues for the telcos and one reason DoCoMo is a success is because it has really pushed subscription,” noted O’Leary, who argued that multi-player gaming, for example, required a flat-rate payment model to really take off.

The growth of the gaming market was also discussed by Gavin Barrett, multimedia business manager at Nokia, who argued that online interactive mobile gaming was becoming increasingly popular because it satisfied gamers’ “hierarchy of needs”. Where inexperienced gamers play just for fun, he explained, seasoned players derive esteem and social kudos from gaming and ultimately want to be top dog either within their own peer group or increasingly within an online gaming community.

He noted that a battle was brewing between mobile gaming platforms such as Nokia’s N-Gage Arena, which runs on a GPRS network and fixed platforms such as the forthcoming Nintendo and Sony Playstation Portable games, where gamers in different wireless hotspots can
compete against each other but are not completely mobile. No surprises for guessing what proposition Barrett felt was the stronger.

However, Gavin Henrick, chief evangelist for Opera Telecom, poured cold water on the mobile gaming market by noting that the biggest barrier facing it, in Europe at least, was the issue of adult content and how to regulate it.

In Japan, Henrick noted that the authorities had a “black and white” attitude to adult content in that the under-18 prohibition was strictly enforced. He noted that although the European mobile industry had recognised the need to protect the consumer, it needed to act decisively both to copperfasten that protection but also to placate the authorities and discourage them from regulating the mobile gaming market.

He was encouraged, however, by the formation of a new UK-based independent organisation, Mobile Entertainment Consumer Protection, which plans to standardise certification of content across the mobile market. He also applauded the responsible line being taken by Vodafone UK through its content-control system, which verifies the customer’s age before adult services can be viewed and enables mobile phone users to block these services completely.

Henrick identified testing as the other problem area for the mobile industry. He said a lack of standards in software and in handsets was creating huge headaches for games developers, who had to ensure their games would work on all devices. Henrick argued that the mobile industry needed to learn from other industries by creating a central standards body that could create some order out of the chaos.

The standards issue was also aired by Dr Liam Murphy of the Computer Science Department at University College Dublin (UCD), who outlined how multimedia applications such as streaming or interactive voice and video pose significant challenges in a mobile environment owing to the wide range of network types. One of trickiest technical problems is achieving a seamless handover between different wireless and fixed networks.

Murphy explained how the Performance Engineering Laboratory — a joint project between UCD and Dublin City University — had developed a seamless handover technology that was now ready for commercial application. Murphy’s recounting of his team’s research efforts was a timely reminder that quality of service and other features that mobile users take for granted always have their origins in a research lab somewhere.

Pictured discussing the mobile mulitmedia market at Dublin’s Westbury Hotel were (from left): Gavin Barrett, multimedia business manager, Nokia; Tony O’Leary, CEO, Xdeep Games; and Dr Liam Murphy, Department of Computer Science, University College Dublin

By Brian Skelly