More on Swedish GPRS
FEATURE-Sweden looks to repeat Japan's
mobile Internet boom
By Jan Strupczewski
STOCKHOLM, Nov 30 (Reuters) - If there is anywhere the mobile Internet can repeat the success it
enjoyed in Japan, it must be Sweden, where access is free, everybody has a mobile phone and every
second home has an Internet connection.
Unlike Japan, where the i-mode service of operator NTT DoCoMo
has been a roaring success, Europe has been slow to adopt an
equivalent technology -- GPRS -- which allows users to stay
constantly connected to the Internet.
The first GPRS (General Packet Radio Service) networks were
operational late last year, but the lack of GPRS handsets and
must-have services, plus network teething problems, postponed a
broader launch of the technology until recently.
All three Swedish operators -- Telia AB , Tele2 AB and Europolitan AB -- are now offering GPRS for
free to kick-start the usage of mobile data, because subscribers using data tend to clock up higher
phone bills.
Apart from the new revenue potential, the industry is keen to see GPRS succeed because it is a testing
ground for third-generation telephony (UMTS), in which operators have already invested some 120
billion euros ($105 billion) in licence fees and will spend billions more on equipment and marketing.
Equipment makers such as Sweden's Telefonaktiebolaget LM Ericsson , Motorola Inc of the United
States (NYSE:MOT - news) or Finland's Nokia Oyj are equally interested in the success of GPRS
because of expected handsets and networks sales.
Ericsson and Motorola are selling licences to make GPRS handsets to create a critical mass of users
browsing WAP sites, the mobile phone equivalent of Internet websites.
The biggest mobile phone maker Nokia has unveiled a GPRS phone with a built-in camera to send
pictures, a feature operators believe will make GPRS popular among consumers. Ericsson promises a
camera handset combination next year, too.
But Swedish operators, wary of customer disappointment with mobile Internet after the flop of the
painfully slow Internet browsing service on GSM phones, have so far kept a low profile on the
possibilities offered by the new technology.
``They don't want to use the word GPRS or refer to WAP. The result is they don't talk about it at all,''
said Mark Newman, editorial director of 3G Mobile magazine.
SEARCH FOR THE KILLER APPLICATION
To sell GPRS and then third-generation (3G) telephony, which promises video on handsets, operators
are seeking a ``killer application'' to draw users to the service.
``Nobody knows what the killer application will be, but it has to be simple and personalised,'' said
Christopher Bannister, CEO of Hi3G, a consortium with a Swedish 3G licence.
Many industry experts say that the most likely killer application will still be what drove the mobile
phone boom in the mid 1990s -- voice, enhanced with pictures or video.
``It will be communication services. Entertainment, yes, games, fine, but the key is communications,''
said Michael Kluge, head of the mobile division at Vodafone (quote from Yahoo! UK & Ireland: VOD.L)
subsidiary Europolitan.
Others believe the development of the mobile Internet will be driven by less noble aims.
``As soon as you have colour screens, there will be pornography on your mobile phone and that's
where you want it,'' said Bo Dahlbom, president of Swedish institute for information technology SITI
AB.
``Pornography will drive the development of the mobile internet, as always, as well as gambling and
gaming.''
The chief executive of Tele2, Lars-Johan Jarnheimer seems to share this view: ``Sex, Dunhill and
Rock'n'Roll always sell, it's entertainment,'' he said.
Whatever the content, industry experts emphasise it is the services, not the technology they use, that
will drive demand and it is time for operators to shift their focus accordingly.
``Players in Europe worry more about the technology than the content. Without good services there is
no point for people to use these phones,'' said Kazutumo Hori, Chief Executive of Cybird , the biggest
content provider for i-mode.
``Services and content are like living creatures -- you have to take care of them every day.''
MANY SERVICES FEW KNOW ABOUT
Sweden's Telia now offers almost 90 services on its mobile Internet portal, telling clients GPRS is just a
faster way to access them. None of them had been designed specifically with GPRS in mind, and they
work on a regular GSM connection too.
They include finding where you or your friends are, directions on how to get to a given address, the
nearest hospital, post office, flower shop, gas station or wine store.
You can also book tickets to the cinema, theatre or sporting events, holidays, send and receive e-mail,
check share prices and weather, do simple bank transactions, set up your on WAP page, seek a job,
read the news or convert currencies.
And for real mobile aficionados you can also get tips on wine choices and cooking recipes, play games,
shop for electronics or white goods, check TV programmes, the lottery or your horoscope, download
ring tones, read jokes and travel guides or look up a word in a dictionary.
``There are so many services out there it is difficult to choose from. We launched the free GPRS access
because we wanted to finally get rid of this talk that there are no services,'' said Kenneth Karlberg, head
of Telia Mobile.
But without a big marketing push, most mobile phone users remain unaware that the services exist and
the response from shop assistants in central Stockholm when asked about GPRS is that it does not yet
work or that it is very expensive.
``There are half a million WAP sites out there -- only users don't know about that. The marketing effort
should be shared by operators and manufacturers,'' said Bob Schukai, head of Motorola's 3G products
and development in Europe.
GPRS phones in Sweden sell very well, but SITI's Dahlbom says it is not because people want the
service, but because they are used to buying the latest models.
``Applications and services are vital for the mobile Internet. Without them there is no market,'' Ericsson
CEO Kurt Hellstrom said.
PROFIT DIVISION A STUMBLING BLOCK
Operators agree they should not create the services themselves but act as a distribution channel.
``Operators creating content are like the Post Office getting into the letter-writing part of the business,''
said Tele2's Jarnheimer.
But even though they do not compete with content providers, operators are stifling the market by
demanding a high share of service providers' profits.
In Japan, NTT DoCoMo takes a fee of seven percent on the businesses its subscribers do using its
i-mode service and handles the billing, while benefiting from rising traffic.
In Sweden, Telia wants a 50 percent cut, though Karlberg said this was just a temporary arrangement
and Telia was in talks with mobile service firms to change that.
``The proper business model is to charge for the value we are adding to these services, the enabling
cost and the distribution cost. The content provider has to have a service good enough to charge the
consumer these costs, and more,'' he said.
If GPRS is to be successful, operators will also need to work out how to allow customers to use GPRS
abroad and how to offer the service to the huge pre-paid market.
Pulling all this together will take time and not be easy, said IBM's vice president for the
communications sector for Europe, Simon Dyson. ``Doing all this really is rocket science.'' |
