Another Year, Another Dollar...
By Carlo Longino, Fri Dec 29 00:00:00 GMT 2000
Looking back is all well and good, but let's take a look ahead to 2001.
It's the time of year when all and sundry make their predictions for the next twelve months. And I, of course, am no exception. I'm here to subject you a little bit of my holiday cheer and gloom and doom as I look into my crystal ball and get up on my soapbox.
3G: Stop the Madness
2000 was a busy year in mobileland, and of course at the top of everyone's hot list was 3G. After watching operators shell out an amount of cash not seen since fruits of the commonwealth were flowing into London for UK UMTS licenses, lesser amounts in Germany and several other countries around the world were labeled "failures" by bureaucrats with dreams of budget surpluses dancing in their heads and telecoms journalists who'd grown tired of bashing WAP.
Certainly the beauty contest has proven itself to be the best method at distributing the licenses, but money-hungry governments aren't very likely to see it that way. But in 2001, as stock market woes continue and operators' debt concerns rise, more countries will turn to the beauty contest, selling licenses for fixed prices in the realization that the piles of cash they'd foreseen aren't coming, and that they have an interest in determining which operators can best serve their populations. In turn, expect more surprises along the lines of Telia being denied a 3G license in its native Sweden, as innovative young carriers pop up to threaten the former state monopolies.
Oh No, Not Globalization!
But the real trend among mobile network operators will be consolidation. 2001 will see a handful of large operators -- Vodafone leading the list, followed by NTT DoCoMo and Orange --make moves to expand into new areas through acquisitions. Perhaps not by the end of the year, but certainly within the next few, mobile networks will be dominated by these global carriers, who will find geographical expansion a way to grow revenues in the face of 3G buildout costs. Expect South America to be a hotspot as the world's carriers will have a hard time weaseling into the world's fastest growing market, China.
And this leaves small independent carriers, especially those spun out from state-owned phone companies, pretty vulnerable. The most successful of these will be companies like Finland's Sonera, which is positioning itself in the mobile services market, one with more potential than the population-constrained Finnish mobile phone market. Companies that innovate services (like Sonera's Zed portal and Mspace services or Telia's Speedy Tomato offering) will find much more success in selling them to large operators than in running their own tiny networks. And they cannot hope to compete with the economies of scale available to companies like Vodafone and Orange.
Also look for the "virtual network" to take off. Richard Branson's Virgin Mobile has been wildly successful in the UK, taking advantage of the Virgin brand to offer a service over Deutsche Telekom's One2One network. Operators won't care who is buying their airtime as infrastructure costs pile up, and they'll be glad to sell airtime without the hassle of dealing with -- gasp! -- customers. Many of the world's leading brands will look to leverage their strength into the consumer mobile market, and leave the operators fighting over business subscribers when their relatively nascent brands just won't be able to compete with names like Coca-Cola, Mercedes-Benz, or Marlboro. And perhaps a virtual network offering by a handset manufacturer would finally settle the debate with operators over who owns the customer...
Technologically speaking, I'm not willing to be so brash (which is probably for the better in any case!). I know a few things that will not happen in 2001, though. I-mode will not rule the land. I think DoCoMo will have a difficult time selling Hello Kitty characters to hip Europeans, whose tastes are altogether different from hip Japanese. And let's face it, there are too many people that have a vested interest in seeing I-mode go down worse than bad sushi outside the Land of the Rising Sun, which will make its success an impossibility. In much the same way, DoCoMo's initial conclusions on 3G won't necessarily play out in the rest of the world. Japan is a very unique animal compared to Europe or the Americas, and how consumers react to 3G services there won't provide an accurate indication of how they'll react in the rest of the world.
Still No Hope For WAP
But WAP won't win out, either. It's depressing how few people really understand the opportunities WAP can provide, and this will continue to hold back its acceptance. Hopefully 2001 will see the release of version 2.0 of the protocol, but of course this won't be of any use until the handsets are in circulation. But WAP won't get anywhere, least of all in consumer markets, as long as marketers tout the "wireless Web" and developers deliver poorly conceived services that really don't work that well anyway.
Don't expect M-commerce to really get anywhere. Nobody has figured out the value proposition yet, and until consumers are presented with a damn good reason to shop over a painfully slow mobile connection, they're not gonna do it. The novelty of buying something with your phone wears off quite quickly when the site you're trying to buy that copy of "Men Are From Mars, Women Are From Venus" from keeps crashing.
But one thing I do think will succeed will be text messaging in the US. American teenagers will be eager to catch up to their European counterparts in sending SMSs, much to the chagrin of parents and teachers. Not only are messaging-capable phones being more widely introduced, but Motorola has launched a series of inexpensive, funky, teened-out text and e-mail pagers. After watching Mommy and Daddy e-mail work with their Motorola or Blackberry device, Junior will want in on the action too, and the text messaging craze will sweep across the US.
Carlo Longino is TheFeature's resident business guru and over-opinionated American. His previous experience includes work for The Wall Street Journal, Dow Jones Newswires and Hoover's Online.
And he swears it's a glass of mineral water.