So far, the question has been: Who drives the traffic?
Do content providers for the wireless Internet push user traffic for wireless carriers, increasing their revenue stream, or do carriers support the survival of content providers by exposing wireless Web users to content?
Executives for newly formed Wmode don’t really care.
“We can facilitate the flow of money in either direction,” said Emanuel Bertolin, vice president of marketing and sales for the company.
Wmode said it plans to make the “survival” question obsolete. The company hopes to get rid of the current wireless Internet business model altogether, replacing it with one inspired by NTT DoCoMo’s i-mode service in Japan, but structured for the more competitive and varied marketplace in the United States.
“There is a tremendous opportunity here … for someone to facilitate customers getting content,” said Dennis Woronuk, Wmode’s president and chief executive officer.
Wmode, which was founded last year and plans to launch officially during the Cellular Telecommunications & Internet Association’s wireless show in March, offers itself as a kind of clearinghouse for both content providers and carriers. The goal is to cut down the barriers between the two.
Under the current wireless Internet business model, a content provider must make individual technical and commercial relationships with each carrier, and both parties must work to maintain that relationship. This, Wmode executives assert, limits carriers’ access to the market, slows the entry of content providers and-ultimately-will turn away the consumer.
The model, Bertolin said, can only go so far.
“It’s really impossible to get all the content providers to integrate with the carriers’ billing structure,” he said.
If Wmode’s model becomes accepted, company executives said, these intricate relationships would be torn down. Wmode is working to set up a structure that would be open to all carriers and content providers, acting like a ubiquitous billing and service architecture. This would allow users to access any content provider’s site and pay for it through their carrier’s billing system, all the while maintaining their privacy. Wmode would manage the subscriptions and account for the delivery of content, taking a small percentage of each transaction-between 3 and 7 percent-for profit. Content providers would receive mini payments for each user without having to worry about the administration of individual transactions, and carriers would benefit from the increased traffic on their network.
Ultimately, under Wmode, consumers would drive wireless Internet content.
The concept for Wmode’s clearinghouse came from DoCoMo’s i-mode, which benefits from a prepaid billing structure and a simple standard for content providers to follow.
“They monetized the Internet,” Woronuk said of DoCoMo. “We see we can play a very similar role.”
However, the situation in the United States is much more complex-with multiple carriers, a variety of billing structures and a different markup language.
One major hurdle for Wmode to jump is carriers’ already-established “walled-garden” Internet offerings, in which carriers pick and choose their content based on the deals they strike with content providers. Wmode executives said they would be able to work around walled-garden agreements.
“Our system runs in conjunction with that,” Woronuk said.
However, Wmode executives also see their clearinghouse as a way of getting rid of the walled-garden approach.
“A walled garden will not attract customers,” Bertolin said.
The real obstacle, though, is getting everyone to agree to join the program.
“We’ll have to wait and see if anyone gets on board,” said David Bishop, an analyst in wireless mobile technologies for The Yankee Group.
Bishop said content providers would most likely be more open to the idea. “I think those are the guys that are gong to get on first,” he said.
As for the carriers, Wmode executives said they are receptive to the idea.
“We’re in discussion with most, if not all, of the major carriers,” Bertolin commented. “The reception on the carriers’ side has been quite good.”
