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Experts Tackle Mobile Internet Business Model
By David Molony, CommunicationsWeek International
01 December 1999
As if the telecommunications and Internet industry did not have enough of a technology headache figuring out how the cellular phone will be made to browse and retrieve pages from the Web, it seems no one has yet thought of a business model for the mobile Internet either.
Industry experts at the ISP Forum in Amsterdam today wrestled with that problem, and it quickly became clear there are more questions than answers to the central issue of who will pay and how?
"The model now is based on a combination of advertising plus transaction pricing," said Bjorn Modee, director of business development at Yahoo Europe. "But we are extending the business model right out into a new channel. In five years, 50% of Internet access could be by mobile, and that's scary when you think that the business model may not work!"
Everyone seems to agree that the future of Internet is in the hands of the cellular phone user. After all, there already are between 150 million and 200 million of them worldwide - about as many as there are Internet subscribers.
What's more, from next year it will become difficult to buy a new phone that can't access the Internet.
And within a year or two, by one estimate, as many as half of the Internet's browsers will be coming to it from a mobile terminal of some sort. But mobile Internet will not be simply an extension of the current wire-tied Internet.
"This is a wholly independent business," said David Worlock, managing director of EPS Limited, "It should be started on a different business model, on a different site and in a different relationship with the customer."
Some companies already are constrained by the technological migration from wireline to mobile service, and frustrated they cannot market the perceived value of their principal service.
"We are effectively dumbing down our product [for mobile] said Alison Mordue, director of business development at Turner Broadcasting Systems Europe Limited, of London, the producer of CNN programming. "We use just 4% of the video [capacity] we have to produce the [mobile online] channels we do at the moment."
Mordue doubted whether charging against simplified information services would work, when users would have an increasingly sophisticated source at the desktop. But she also doubted whether advertising, touted as the main alternative by some, could replace tariffs in the mobile version.
"Operators will have to change the pricing model for sure," said Yahoo's Modee, "They will have to find other revenue models. It won't be pay per minute or advertising."
Early mobile data service operators in Scandinavia are using wireless application protocol to squeeze page displays onto handsets. And some, perhaps wisely, are being cautious in testing the market.
Finland's Oyj Radiolinja AB, of Espoo, a cellular service provider, launched a WAP pilot service last month, offering 150 services. Mikko Mattinen, market analyst team leader at Radiolinja, said users are being charged sign-up fees and a per-minute rate, but risk no additional charge.
"Users only go into the service for one or two minutes to get the information direct from the service they want, said Mattinen, "They are not browsing."
But Sonera Corp., of Finland, is charging a start-up fee, plus a per minute charge, plus an additional tariff according to the type of service used.
Business planning for mobile Internet could require a rethink of the current idea of the Internet. Applying old content models is one sure recipe for disappointment.
"Simple re-use of content never works," said EPS's Worlock, "It never worked in publishing. Now we are going to dump the Web into the world of mobility and expect that simply to work. That relationship isn't going to happen."
Worlock, a publisher turned e-commerce consultant, recounted the experience of his own board's venture into digital publishing, thinking they would simply collect more money for the same content.
"The first half a million pounds of funding lasted six months," said Worlock, "The second fund was for two and a half million [pounds] and that lasted nine months. Now the fund is eighty-five million pounds."
Now, Internet content and service providers could face a similar education in the mobile world. Turner's Mordue said her company was looking to develop content specific to the mobile Internet platform. And most contributors agreed that at least the characteristics of dedicated mobile Internet services can be defined; they will be personalized, location-based and much more focused on the type of user and service.
"The current business model will be shot to pieces," said EPS's Worlock, "But we will see some marvellous services at the end." |
