Terrified by the stigma of pornography and despite its revenue-enhancing potential, U.S. carriers continue to keep mobile adult content at arm’s length, refusing to offer it through their portals. But that’s not stopping wireless users from getting it.
There’s no question of the worldwide demand for mobile adult content. A recent report by analyst firm The Yankee Group predicts the market will be valued at $1 billion globally in four years, with U.S. users spending $90 million annually on such content.
In fact, The Yankee Group said traffic on an unidentified major U.S. carrier to PhoneErotica.com, a leading adult WAP site, outpaces wireless traffic to MSN.com. Consumers are bypassing their carriers to get to the site and going outside the “walled garden” by using their phones’ Web browsers because U.S. carriers won’t directly offer access to the adult offerings through their portals.
While much of the content is free, the traffic it generates is boosting carrier revenues. Turkish operator Turkcell refused to do business with PhoneErotica.com despite the fact that traffic to the site boosts the carrier’s bottom line by an estimated $2 million a year.
Some operators offer filters for consumers who want to limit access on the mobile Web. AT&T Wireless Services Inc. was one of the first carriers to offer a filter, allowing users to pick one of three levels: high filtering, which blocks all adult content including chat sites and games; medium, which filters adult content and some games; or no filter at all.
“Obviously, (adult content) is something we monitor very closely,” AWS spokesman Jeremy Pemble said earlier this year. “We don’t believe it’s our role to be a censor … but our responsibility is to make people aware that many phones out there are capable of finding content that some might find objectionable.”
While that decision may leave a carrier’s reputation untarnished, it also cuts the carrier out of any revenues outside of airtime charges.
“A lot of carriers worldwide are quite shy in regard to adult content; they’re cautions in the way they want to roll it out and market it,” said Luc Prieur, founder of PhoneBox Entertainment, PhoneErotica’s parent company. “Everybody’s aware there’s money to be made, but they’re not sure how to go about it.”
Not that Prieur is making much money himself-yet. The Web site, which receives more than 75 million hits per week, initially provides free pornographic and non-pornographic images, adult games and chat room access. Prieur hopes the traffic numbers will convince carriers to let PhoneErotica.com inside their walled gardens, which could dramatically drive up traffic.
“I haven’t had any real chats with U.S. carriers regarding adult content yet,” Prieur said. “The markets we’re focusing on are in other parts of the world for now.”
Analysts agree that some regulations must be in place for the adult content market to be viable. Even AWS’ system has a key vulnerability because there is no standard rating system for mobile content. Unfortunately for U.S. carriers, there are few lessons to be learned from overseas markets, where regulations have met with mixed success.
“The carriers are not going to touch (adult content) until they have some mechanism for protecting under-age viewers because the risk far outweighs the rewards,” said Adam Zawel, who authored The Yankee Group study. “Their priority has to be self-regulation.”
In the Far East, government enforcement agencies are working to stamp out pornography altogether. Some European markets have yet to establish any regulations, while Vodafone U.K. installed a controversial opt-in program in July that required users to prove they were over 18 by offering a credit-card number or actually visiting a retail location.
Such obstacles may be effective in keeping kids away from pornography, Prieur said, but they can drastically decrease overall traffic.
“My impression is, the users who come to us are adults, but they’re not going through the hassle of being age-verified … There are various ways (of protecting children), but they all present some hurdle the customer doesn’t want to go through. It’s an impulse purchase; if you put any barrier up, you’re going to lose customers.”
Without any barriers to content, though, the carriers surely won’t help facilitate access, regardless of the economics. And don’t look for the government to get involved. According to an FCC official, there are currently no laws restricting the transmission of adult content over mobile phones, and it’s unclear whether cell-phone content would be subject to legislation outside general pornography laws anyway.
Billing is another major hurdle facing adult-content providers. Leading U.S. carriers such as Verizon Wireless are refusing to link billing systems with services like PhoneErotica.com, meaning consumers must not only browse a WAP site, but must use a credit card for any transactions.
Like Vodafone’s opt-in regulatory system, any cumbersome payment mechanism will dramatically drive down sales, Prieur said.
“The most effective billing mechanism is operator billing,” he said. “The user goes onto the site, he’s shown a preview and is told there’s a charge of $2, and he clicks on yes. That works great.”
If carriers aren’t going to offer content through their portals, though, they’re unlikely to agree to such a scenario. That’s why self regulation is crucial if operators and content providers are going to tap the adult market.
Major U.S. carriers are taking note of the heavy adult traffic, Zawel said, and CTIA-The Wireless Association is working to establish such an industrywide standard. That standard may be parental filters, a nationwide rating system, an opt-in program or any combination of those.
“The carriers are rapidly realizing they have to do something,” Zawel said. “I think the carriers are going to work together to come up with an industrywide rating system. Then, presumably, the onus is on the content providers to self-classify. There needs to be some kind of process.”
