Mobile

At the 3GSM World Congress last month, Vodafone CEO Arun Sarin identified handset costs as a barrier to the adoption of 3G. He may have a point, but there's another problem that's more fundamental.

A famous TV commercial described 3G as being 'almost like broadband on your phone'. That's a fair description - the advantage is that you can get higher data speeds to your handset. But...

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... as things stand, 3G is a recipe for bill shock, as fast data connections cost more per minute than their 2.5G equivalents. Broadband is cheaper than dial-up for even moderate Internet users, but how many would have adopted broadband if all ISPs metered every customer per megabyte? As far as services are concerned, there would be no iTunes if every track carried a data surcharge of £10.

When you buy a computer running Windows, Microsoft doesn't assume that MSN is the only portal you'll ever want or need. It seems that some mobile operators believe their portals are the destination of choice for all their customers. Some offer free data, but only on these on-net services. Otherwise you could be stuck paying £3 per megabyte.

The recent wholesale data tariff from Vodafone is a welcome announcement. Free browsing is a nice thing to have, but it's in rich-media streaming and downloading that data costs currently soar. I also don't expect a lot of direct-to-consumer providers to rush to buy data from operators, having already paid a premium of 25% or more for billing, unless fees are minimal. The more I consider this issue, the more convinced I become that there's only one answer: the operators must give the data away.

I don't expect an act of charity. ISPs and portals make revenue from the volume of transactions and visitors they serve, rather than the bits and bytes that convey information. The same should be true in mobile. If the mobile operator portals want to make significant revenues from mobile search - which they plainly do - then they need a thriving ecosystem of off-net services. Such a community can only develop and benefit from 3G if direct-to-consumer services can sell rich media, which requires free data.

Ironically, the greatest threat to my vision could come from the community that it should benefit. The direct-to-consumer industry has done little to aid its own cause over the last couple of years, most notably through misleading subscriptions. Unfortunately a minority of rogues have tarred all providers with the same brush. This offers operators the excuse that the direct-to-consumer world is a murky one and that only they can safeguard consumer interests. This leads me back to the need for effective regulation, so that legitimate providers will no longer be disadvantaged and consumer trust can be regained.

I imagine this will seem a bitter pill for operators to swallow. It shouldn't be. I wouldn't expect them to offer free data if they hadn't facilitated the payment transaction. Maybe the vehicle for this could be the forthcoming X-Pay service, essentially a WAP billing solution. It would be possible for operators to bundle a data download with an X-Pay transaction, ensuring that they profited from either billing or data. The portals could then adopt a business model akin to their online counterparts, offering their own services but making serious revenues as a conduit to external destinations. After all, that's what 'portal' means.

Without a solution of this nature, you can forget the notion of rich-media services on 3G, as the numbers will never stack up. I see that as a greater threat to 3G adoption than the cost of a handset.

Craig Barrack is the founder of Mobile Networking; craig@ mobilenetworking.co.uk