Breaking Out of the Walled Garden
By Justin Pearse, Tue Jun 07 08:15:00 GMT 2005

The mobile Internet has centered on the walled gardens of mobile operator portals. However, in the UK, a wind of change is starting to blow -- a change that could have a significant impact on the very existence of the portal model.

The operator portal, from Vodafone Live! to O2 Active, has long been a source of contention in the mobile industry. Although winning applause for educating consumers on the potential of mobile content, it also serves to constrain the industry by forcing content to stay within the walled garden and pushing providers to costly and time-consuming attempts to win valuable places on the WAP deck.

"In the early days of the Web, ISPs had walled gardens and that model fell apart," said Rob Wells, director of new media at Universal Music. "I've always said the likes of Vodafone Live! have a short shelf life and the same thing will happen as on the Web. There's some hugely exciting stuff going on off-portal."

The end of last year saw many companies start to experiment with downloadable Java portals in an attempt to side-step the operator portals. Now, however, with consumer confidence and usage in WAP booming, that off-portal space is becoming a fertile breeding ground. This is being driven by the use of WAP Push, which consumers are already using in huge numbers to download simple content like polyphonic ringtones, making it easy for brands and media companies to promote their full WAP sites.

"It's all about consumer education and the youth market is now very comfortable browsing off-portal," said Graham Darracott, partner at agency Graphico, which is building WAP sites for a swathe of large brands. "The BBC is also helping greatly by heavily promoting its WAP portal on-air." The embryonic commercial mobile search industry is only going to drive this faster.

The surprising thing is how open operators are starting to be about the effect this is having on their portals. "Direct to consumer was 70% of our 500 million 2004 market," said Vodafone's head of commercial partnerships, Jeremy Flynn. "The portal is still vital and Live! brought the mass market. Vodafone Live! will be the showcase, but the money and margin is in facilitating off-portal services."

Orange, while not so dramatic, also reports that over 50% of its traffic is coming from off-portal. This is surely fantastic news for mobile content providers, meaning businesses can be built without having to worry about striking operator deals. Especially as many operators are refusing to take any new content in popular areas, like games, directly, forcing companies to work through aggregators.

However, it raises interesting questions over the viability of the portal model. For so long seen as the crown jewels in the operator's data strategy, it seems the value of the portal is diminishing. Orange's Kiosk service, which provides a directory-like approach to enabling consumers to get off-portal, now has over 100 services.

"Direct-to-consumer has become the new buzzword and we embrace that," said Orange head of wholesale Ben Hirsch. "Kiosk is now contributing a significant amount to our WAP revenues."

As off-portal grows in significance, this is likely to lead to some friction within operators, one senior operator source suggests, between the wholesale team looking to boost off-portal traffic and the portal team's efforts to keep focus on the portal.

One growing issue here is pricing. Operators such as Vodafone have removed data traffic charging on their portals in an attempt to drive usage. This is starting to raise concerns for content providers as it means a piece of content on an operator portal, all other things equal, is automatically cheaper than off-portal. Some are already talking about the need for fair trade investigations. One senior music industry source even suggests the issue may be used "as an excuse to help shut down the portal."

At the same time, operators are beginning to recognise the need for a balanced wholesale model. "We're looking at a freephone-style browsing concept for off-portal, where the publisher subsides the browsing cost," said Flynn.

This is likely to be very attractive to the bigger media companies and brands keen to support their customers' WAP habits. Especially as ever more view WAP as an essential medium.

"We're actively looking at a direct-to-consumer portal," said Jane Marshall, controller of ITV Interactive. "In the same way a broadcaster has a Web site, it should now have a mobile Internet proposition."

However, in addition to the flood of headline-grabbing brands launching onto the mobile Web, there is also an exploding number of smaller, independent WAP sites, often grouped together in communities such as, which is said alone to have over 720,000 sites.

And people are obviously hungry to find them -- at paid-search giant Overture, which is leading the push by the sector into mobile search, head of vertical markets Sean Walker says that according to its research, there are now over 40 million off-portal searches each month. Online techniques, such as affiliate marketing, are also starting to flourish on the mobile Web.