US Carriers Watch Canada
US Wireless Carriers Watching Canadian Music Initiative
Joseph Checkler
Dow Jones Newsletters
New York
20-05-2005
cellular-news.com
While U.S. wireless phone operators are surely watching Rogers Wireless Inc.'s foray into cell phone music downloads in Canada before they roll out their own versions, that doesn't mean they are going to sit back forever, industry analysts told Online Retail Report.
"They'll be eager to see how this goes because the next nine months are all about testing music services," said Adam Zawel, a wireless industry analyst for Yankee Group Research Inc., referring to Rogers' recent deal with Melodeo Inc. to bring mobile phone music downloads to North America for the first time. "What we see come out first is going to change, so they're probably happy to be able to look across the border to see how Rogers fares."
Several U.S. mobile carriers, including Verizon Communications (VZ) and Cingular Wireless LLC, have recently dabbled with video and some audio on cell phones. Cingular, in its mMode store, allows customers to download 750,000 songs and send them to their PC. Sprint Corp. (FON) has a music ringtone service that allows customers to download select songs as ringtones before they come out on the radio.
But using the phone to both download and listen to full-length songs has not yet arrived on a large scale. The closest yet was a November deal between AT&T Wireless Corp. - now owned by Cingular - that allows owners of one type of smart phone to join Napster Inc.'s (NAPS) Napster To Go subscription service. The phone can only hold six songs at once, although memory cards are available for the phone model.
U.S. cell phone carriers may be particularly interested in two features of the new Rogers service: a peer-to-peer option that allows customers to share songs with their friends, although the friends would have to buy the song; and a dual-delivery function that downloads songs to customers' phones and home computer simultaneously.
Zawel said that the combination of peer-to-peer sharing that is tied into billing - customers' cell phone bills are automatically charged for the music - is something U.S. carriers could really take advantage of.
"They can use a local area network to transfer the file but the cellular network still controls the transaction," Zawel said. "It's a way for the carrier to stay in the game even when their network's not being used."
Mike McGuire, media research director for Gartner G2, said, "Tapping into this viral sharing and communication could be very, very powerful if some of those other hurdles are dealt with." Some of the hurdles include battery life and pricing - the downloads in Canada cost between $1.25 and $1.99 with dual delivery costing $1 extra.
"There's a fairly substantial pricing gap," he said, adding that Rogers and Melodeo might have to eliminate the extra $1 charge to get customers to download dually.
Customers may have to spend still more money to increase the storage capacity of their phones. Don Davidge, senior vice president of sales and marketing for Melodeo, said some of the phones with MP3 player capabilities accept memory cards, which could be used to expand the number of songs their phones can hold.
In Europe and Asia, where cell phone technology is much more advanced, phones can typically store many more songs and have much better battery life.
But Davidge said the four phones that currently support the music - two from Nokia Corp. (NOK) and two from Motorola Inc. (MOT) - are set up so the screen automatically turns off when music is playing.
"There is very little impact on the battery," Davidge said. He said music playing "uses far less battery consumption vs. a voice call" and that it's more comparable to a text message.
Because of the questions that still exist, analysts McGuire and Zawel agreed that while testing in the U.S. would probably start within the year, not all cell phone carriers are sold on it. Melodeo confirmed it is in talks with several U.S. cell phone companies, but Davidge said the company "is not ready to make any announcements."
Zawel added, "Everybody's thinking about the scenarios but no one has really made a go at it yet."
(Online Retail Report covers online and multi-channel retailers and the markets in which they operate) <<
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