Data serves ‘killer cocktail’ for 3G apps

10 Jun 2003

Despite the joke that 3G stands for games, gambling and girls, adult entertainment will not be a driving force behind takeup of 3G telephony, according to Phil Taylor of UK-based consultants Strategy Analysis. His company has estimated that by 2008 mobile adult entertainment content will be worth only $1bn. In fact, there will be no single ‘killer app’ for 3G, rather there will be a ‘killer cocktail’. The big question is what combination of data services at what price will make up that mix.

Taylor made this comment at a Seminar on Mobile Applications for 3G organised by the Commission for Communications Regulation (ComReg) in Dublin last week. Speaking afterwards to, Taylor said his company’s conclusions were based on an analysis of the adult entertainment industry. “If you look at the Private Media Group, which is one of the world’s top five companies in the sector, it only had earnings of US$34m in 2001. And in the third quarter of 2002, of its total sales of US$9m, only 14pc came from online services. A lot of people think that a mobile phone is suitable for viewing adult content. It’s private and although displays are poor at the moment they will improve. But with online pornography so easily available the advantage of mobility is not huge.”

A new briefing note from ComReg takes a look at just what applications will drive demand for 3G services. Previewing the note at the seminar, Jonathon Evans, the note’s author, broke the potential applications down into seven categories: Communications, which would include such things as voice-based instant messaging, aka push-to-talk, where the phone can become a walkie-talkie; Business & Financial: new high speed mobile data services will give mobile workers access to the same services as office based ones;
Information: services such as text alerts are already common. High speed connections could combine information services like public transport timetables with location-based services;
Education: mobile applications could allow students to access information, check grades and submit work while parents could monitor their children’s progress; Entertainment: higher speed connections and specially designed devices promise to increase the popularity of mobile gaming. Other possibilities are text-based soap operas, gambling, and music. In the Government category, mobile networks extend the reach of e-government. Possible applications include e-voting. With Medical applications, access to medical information and health monitoring are likely to be important mobile services.

Questions still remain to be answered regarding monetisation of these services and, according to Evans, the billing model chosen will be important for getting them off the ground.

A number of case studies then explored the practical aspects of developing mobile applications. John Hurley from Network365 examined the role of high speed networks in a mobile lifestyle and the potential for the mobile device as a means for paying for a range of services such as movies, parking, banking and so on. The company has developed a platform called mZone and is providing this to Japanese network NTT DoCoMo who were looking for a secure payment sytem. The particular solution implemented by Network365 is built around a mobile wallet. The wallet, he said, converts the mobile device into a “remote control for your life”. In addition to allowing payment it could also be used to verify the holder’s identify and as such could be used to purchase alcohol and tobacco.

Gillian Taylor of iTouch also looked at the entertainment aspects. Her company already runs competitions where entrants send text messages to a premium number and provides text alerts to subscribers. However high speed mobile networks offer the possibility of much more multimedia-intensive service. For instance, users could suscribe to a goal alert service that not only notified the subscriber whenever a goal is scored but streams a video of it to his mobile phone.

Applications such as this will play a major role in driving the success of 3G, says Phil Taylor. In fact, mobile networks may distance themselves from the technology when they launch the new services. “The launch of Hutchinson’s 3 service has brought people’s attention to video services,” he points out. “But the question we are hearing is, ‘is 3G just GPRS with video?’. There is a growing realisation that 3G is not about money. It’s about marketing, business models and marketing advantages. Migration issues are huge because of the money involved. 3G is all about ‘evolutions not revolution’ and the carriers are finally starting to realise that. Vodafone has taken a massive backstep and have launched the product very softly. They want a natural migration from GPRS to 3G.”

So how will the carriers market 3G? Will they go for a big bang effect getting as many people to switch at the beginning or will they wait for people to upgrade their phones and then sell them a new 3G one purely on the service? “I think it will be a mixture,” says Taylor. “Part of the reason Hutchinson is struggling in the UK is that they only have two handsets at price points that haven’t convinced the public. The other networks with an installed base won’t want to cannibalise their high spending GPRS users by offering 3G at cut prices. So they will not be launching separate brands, rather they will extend the existing brands they have been developing for over a year.”

By David Stewart