Post-CTIA Wireless 2006, the pundits and ponderers have plenty to chew on. With the conference showcasing the leading edge, the bleeding edge and the receding edges of the wireless industry and mobile technology, it offered a view of where the industry has come from and where it may be headed.
Several analysts noted that mobile advertising garnered a significant amount of buzz.
“I think the carriers are open to it now, whereas I think a year or two ago they would have said, `No way in hell,”‘ said Adam Guy, director of wireless practice for Compete Inc.
However, Tower Group analyst Bob Egan is skeptical of the revenue potential for mobile advertising, which he called “too intrusive, and not welcomed by most people.”
“I don’t think they’re going to make a lot of money at that stuff,” Egan said. “Frankly, people don’t want it.”
That possibility hasn’t stopped mobile virtual network operator Xero Mobile, which announced last month that it plans to start offering wireless service subsidized by advertising beginning next year and give away 2 million devices to college students by the end of 2007 in order to establish a customer base to target with video advertisements.
Sprint Nextel Corp. officials sent ripples through the mobile virtual network operator marketplace by saying that the carrier was likely to not add many more MVNOs to its network, because the operator doesn’t want to hurt its core brands. Since Sprint Nextel has been the most welcoming of the major carriers to MVNOs-providing its network to back up the services of Disney Mobile, Mobile ESPN L.L.C., Helio L.L.C. and others-this could heighten the hurdles for entrants still looking to get into the market.
“I think this year is going to be a very interesting year for MVNOs,” Sprint Nextel Chief Operating Officer Len Lauer told a keynote audience. “This is the first year you’re really seeing a number of postpaid MVNOs enter the market.”
Egan opined that Sprint Nextel execs may not be as concerned about hurting their brand as they are that the crowded MVNO space is simply becoming too risky to play in. After all, Egan noted, Sprint Nextel includes MVNO revenue in its guidance-and so stumbles by MVNOs on its network could directly impact the overall company’s standing on Wall Street.
And all does not seem to be well in the MVNO space, with both Mobile ESPN and Amp’d Mobile Inc. precipitously dropping their handset prices from their original price points. Mobile ESPN’s exclusive Sanyo Electronics Co. Ltd. device, the black MVP clamshell, was originally supposed to cost consumers $400 after a $100 rebate. After market trials, Mobile ESPN dropped the price to $200 after rebate for the national launch and recently began running a promotion to sell the device for $100 after rebate. Amp’d Mobile, after reaching its target $100 cost for its Kyocera slider entry-level handset, now is offering the sliders for $50 after rebate. You don’t typically cut prices on hot handsets.
Despite continued hype surrounding mobile TV, one of the most anticipated entries into the wireless industry-and one with oodles of video content to offer-Disney Mobile opted not to make use of Sprint Nextel’s high-speed CDMA 2000 1x EV-DO network for video. Disney Mobile’s phones rely on the carrier’s slower 1x network for data services. Steve Wadsworth, head of the Disney Internet Group, said that Disney’s research as it developed the wireless service showed that the ability to access video content was nowhere near the top of its target consumers’ lists-though he added that Disney was likely to add video content when the time was right.
Compete’s Guy also said he was surprised that Disney Mobile’s offering did not include push-to-talk service, which he said seemed like a natural fit for families. Guy added that he expects the national carriers to quickly replicate Disney Mobile’s features, such as handset tracking and parental control over children’s minutes of use.
Indeed, Sprint Nextel didn’t wait long to unveil its Family Tracker service, which offers the ability to track handsets using Global Positioning System technology and for parents to receive alerts about their children’s whereabouts.
Verizon Wireless Chief Executive Officer Denny Strigl said that his company expected to offer family-focused services soon as well.
On the infrastructure side, IMS and IP continued to show promise, though Andy Seybold of Commentary 4Mobility noted, “There is still a lot of hype. It will take a lot longer than expected to convert existing wireless systems to all-IP, and there will be glitches and hiccups along the way. But we will get there.”
Sprint Nextel’s Lauer noted that other opportunities for wireless connectivity exist beyond the phone-for example, in cameras or video cameras, so that images from such devices could be shared via cellular networks.
From the point of view of independent industry analyst Jeff Kagan, the wireless industry “is morphing into two distinct industry segments. One is the stand-alone wireless device that we have been following for the last 25 years. The other is as part of the larger bundle of services offered by larger companies like AT&T [Inc.] and Verizon [Communications Inc.] and Comcast [Corp.].” Kagan added that he thought that attention would shift to the service bundles in the coming years.
Effectively bundling mobile data services in with cellular voice service is likely to be another challenge for the carriers, according to Philip Taylor, director of wireless Internet applications for Strategy Analytics-especially as carriers explore mobile TV offerings. Taylor noted that an increasing number of subscribers with 3G-enabled handsets are beginning to change the market dynamic and could drive data use. But Strategy Analytics’ research shows that beyond a certain percentage of eager early adopters, many subscribers were unwilling to pay extra for advanced services such as mobile TV.
However, Taylor added that carriers such as Sprint Nextel were having success with their 3G package of data services and that offering bundles with all-you-can-eat mobile services, rather than charging per use, was likely to be a more effective model to help drive uptake. Another component, he said, would be that “advertising is going to be needed to support some of these models.”
