Mobile content: Keeping a wireless industry growth engine on track

Editor’s Note: Welcome to the first edition of Reality Check, a feature for RCR Wireless News’ new weekly e-mail service, Mobile Content and Culture. We’ve gathered a group of visionaries and veterans in the mobile content industry to give their insights into the marketplace. In the coming weeks look for columns from Laura Marriott of the Mobile Marketing Association, Tom Huseby of SeaPoint Ventures, Linda Barrabee of The Yankee Group, and more.
Let us know what you think: E-mail us at [email protected].
It wasn’t supposed to happen this way, with consumer-facing content driving the growth of non-voice wireless services. When CTIA took over the management of the Wireless Data Forum in 1998, the expectation of the wireless community was that enterprise applications would drive market adoption of data products and services. Even the name of the organization was IT oriented.
Then, a funny thing happened on the way to the development of the enterprise market: ringtones. along with a cascade of other non-productivity, consumer-oriented. stuff. Stuff that could no longer be stuffily called “wireless data,” but acquired the more user-friendly term of “mobile content.”
Today, non-voice services are the fastest growing segment of the wireless industry, comprising 13.5% of total ARPU as of December 2006, according to the latest figures from CTIA’s semi-annual wireless industry survey, or $15.2 billion in dollar terms, up 77% from the year earlier. Of that total amount, CTIA estimates that “mobile content” (including downloadable and streaming content, as well as information services) accounts for approximately two-thirds, with messaging services making up the remainder. By any and all measures, mobile content is making a substantial and growing contribution to wireless service providers’ bottom lines.
But at times it seems as if mobile content is succeeding in spite of the industry’s efforts, not because of them. Many of the problems associated with market adoption of mobile content are related to the limitations associated with the platform itself: a device with limited screen space, operating in an often harsh environment and expected to perform as if it were on a desk in a living room connected to a fat pipe. Other issues seem self-inflicted: When a representative of one of the first major carriers to roll out ringtones bragged of the service, a group of us handed him a phone and told him to download one from his Web site. Thirty-one clicks later, having not yet succeeded, he gave up. Things have improved significantly since then, but a number of issues still remain.
One of the issues that has plagued content providers from the beginning has been the discoverability of mobile content. In the beginning especially, content providers that were not at the top of the carrier decks were often doomed to product oblivion, no matter how good the content. The fact of the matter is that not being at the top of the deck means that content is buried just too deep for a normal consumer (someone who must find something in four or five clicks, maximum) to locate it. In order to address that problem, and unlock the potential of mobile content to add to their bottom lines, the carriers (begrudgingly in some cases) came to realize that they would have to allow more distribution channels than just their decks and Web sites. In the last year and a half, carriers have been providing billing-on-behalf-of services to an ever-growing universe of content providers who assume responsibility for marketing and delivering the content to subscribers. Among carriers, the willingness to facilitate these providers has been based on the belief that a rising tide will lift all boats, albeit with a healthy concern that their customer-service departments would be on the hook for providers that failed to live up to their claims, from delivering the right content type and to living up to the terms of service.
Not long after significantly increasing the number of third-party content providers that it would bill-on-behalf-of, a representative of one of the major carriers who had responsibility for developing their consumer products approached CTIA with a problem. While he was convinced of the value of allowing third-party providers onto his network, he was concerned that the actions of some of them could potentially set the industry back to the time when content was available only via the carrier deck (or for purchase via credit card. and we all know how unsuccessful that approach is in getting the consumer to complete the transaction). He was getting complaints from subscribers about getting content that was not ordered, was ordered and not delivered, that was charged for when it was supposed to be free, etc. In response to customer complaints, the carrier was simply refunding the subscriber, often after paying the content provider, resulting in a substantial leak of revenues. Not to mention that he had been called into the offices of several states’ attorneys general who were contemplating class-action lawsuits against his company (thank goodness Elliott Spitzer got a new job). His complaints were echoed by his counterpart at another major carrier who was going much more slowly in allowing third parties on their network, but who had grown so frustrated he told me he was about to “pull the plug on the whole thing.”
To be sure, the industry has developed best practices around much of this content, which mostly comprises premium-priced, short code-based subscription services, and the industry is doing its best to educate content providers and consumers about those best practices. However, the competitive pressures among providers to get their content noticed is growing unabated, and a number of providers are turning to anonymous affinity marketing groups, who are incented only to get click-throughs, and so are sometimes less concerned about the problems caused by failing to follow the industry guidelines.
To help the industry address this problem, CTIA has launched an Off Portal Content Monitoring initiative, and has hired the telecommunications research firm Telephia to help implement the program. Since January, Telephia has been testing each of the applications registered in the Common Short Code registry for adherence to the industry best-practices guidelines. The results have been mixed. While most programs are in some form of violation of the guidelines, many of the violations are technical in nature and say as much about detailed nature of the guidelines as they do about the overall compliance of the industry. (For example, applications that drop the dollar sign from the message stating the terms of the service are in technical violation, even when they meet the rest of the requirement for clearly stating service terms.) Some of the violations, however, are egregious and are of the type sure to generate calls to carrier customer-service departments, a significant cost to the carrier (e.g. not stopping the service despite repeated attempts to get the service stopped).
At this point in time, we are just starting to report our findings to the carriers, and they are beginning to assess how best to deal with the results. As we get out the word to the providers of the importance of adhering to the guidelines, and present them with evidence of where they are not in compliance, we expect better and better performance, which should lead to more opportunity for them with the carriers. This is a distribution channel of enormous potential for the carriers and of enormous importance for the content providers. But for it to be successful, all members of the value chain are going to have to meet their responsibilities and adhere to the industry’s voluntary code of best practices. If not, the industry will put itself in the position of having legislators and regulators, not to mention state attorneys general, impose responsibility on us.
You may contact Mark directly at [email protected]. You may contact RCR Wireless News at [email protected].