The growth of mobile internet is still being held back by price

12 October 2006

Being involved in a number of projects on a daily basis, it's easy to lose sight of the big picture. Occasionally I look for major trends in the mobile industry, so I checked the Mobile Data Association's website, text.it, the other day.

Amazingly, the inexorable rise in person-to-person text messaging shows no sign of abating - now around 120m messages daily. The trend in WAP usage is less encouraging. Over the last two years previous growth has stuttered, showing no real increase. That's puzzling and worrying, as much of my activity, and the industry's, is around mobile portal services.

During the last two years the penetration of WAP-enabled handsets, colour handsets and 3G handsets have all increased greatly. So for total page impressions to remain static, you could argue that usage has fallen in real terms.

The only factor to have changed markedly in that period is cost. Two years ago some operators weren't charging their customers for general browsing and downloading, but now they do. You might be completely unsurprised by that: charge for a previously free service and take up falls. QED.

I'd have to agree with that, although it underlines the point that there's price sensitivity for mobile data.

The launch of 3G should have seen an increase in mobile browsing, similar to that of internet usage under domestic broadband. Unfortunately, while domestic broadband cuts costs for heavy users, 3G increases costs, as tariffs haven't decreased and speed of access has increased.

Every project that I've been involved with that has considered rich media services has had to eschew them, to avoid customer bill shock. I'm also aware that major brands have decided against launching mobile portals, as the cost of data prohibits video services. That's not helping operators; as such services would deliver premium revenues and increase data consumption, at reasonable rates.

I have applauded O2 for deploying i-mode in the UK. Whether it's enjoyed great success with the service is a matter for debate, but I'm convinced that it would be closer to the stellar take up enjoyed in Japan if a megabyte of data costs closer to the 2p enjoyed by Japanese users than the £2 charged in the UK.

Operators have been falling over themselves to strike deals with internet search giants. I wonder whether they underlined that their portals are the only sites that can offer multimedia content at a clear and affordable price. There can be no mobile Napster, iTunes, YouTube or MySpace; as such D2C services would be too expensive.

Zero data charges on operator portals is an interesting competitive advantage that may need investigation from industry regulators. Icstis is already taking an interest in data costs. A £1.50 download that costs several pounds in data could be construed as misleading pricing. Ironically, the excess charge is accrued by the operators alone and not shared with the service providers that could be penalised. Not a healthy state of affairs.

I'm not lobbying for operators to give data away blindly. If they were to do so, a Skype client on every handset would threaten the voice revenues that still represent three-quarters of operator income. However, there must be a better mechanism to protect against such a threat than prohibitive data pricing.

I feel that this issue is the single greatest obstacle to a thriving mobile internet.



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

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