Am I right or what?!

I’ve been blogging about the Mobile internet since Jan of this year and the theme has been that of not going down the route of the Internet where all services are free and monetized through advertising.

I’m not saying that there is no role for ad supported services on the mobile...there might be, but not at present.

The trouble with giving away free mobile internet services is that we are destroying a perfectly great economic model that is prevalent in the mobile phone services industry. Subscribers are willing and quite used to paying for services available on their mobile devices which would be available for free on the internet. Millions of subscribers across the world pay sms subscription fees for sports scores, horoscopes and even news. They download Games, ringtones, wallpapers from Carrier decks. However, there’s a new breed of content services companies who are trying to replicate and extend their FREE SERVICES model straight from the internet on to the mobile. So they give away scores, news, astro, and other web services for free on the mobile internet hoping to translate them into page views and thus monetize through advertising. Unfortunately, this has not really been successful till now.

Carriers are too unaware or turning a blind eye to these free services on the mobile internet (since it helps them sell data plans!). In the long run however, a great foundation laid will have been destroyed- where carriers end up being Wireless ISP ‘dumb pipes’ with no control over content/services and content companies that will worryingly kill the golden goose of paying subscribers.

Here is a similar opinion in an article published in the NYT on April 5. Very interesting.…wonder If they’ve been reading my blog? :)

Opera Mini- Friend or Foe?

The Opera Mini browser has done more for the mobile internet than all the operators and device makers put together. With its awesome full web to mobile screen crunching technology, superior data compressing and rich experience, it has made the web accessible to everyone with a GPRS enabled handset no matter how feature rich the handsets are. And people love it- the billion page views that it serves month on month is a testament to its growing popularity. It’s surprising that the device makers, apart from Apple, have not been able to develop a worthy competitor to the Opera mini.

However, what peeves me is that content companies and carries have not been able to harness the potential of the Mini. The Carriers on their part have been silent spectators to the runaway success of the mini. Sure, they’re happy that it’s made a lot of people adopt the mobile internet and thus boost data volumes and internet plans. Again, this is another step that will lead to the operator becoming a dumb pipe in the long run.

More worrying is that content and media companies too have not realized that millions of subscribers have been consuming their content and services through the mini without any substantial benefit to these web media companies. You would say, hey, they are getting massive page views? Wrong! With the Opera Mini all the page views are meaningless since Opera Mini fetches all content through a proxy server that reformats web pages into a format more suitable for small screens thorough the Opera Servers based in the US or Norway. Thus, all the page views are just non-identifiable and not serve the basic purpose of any intelligible data that is traditionally known through normal web browsers which can be used for advertising.

Also, the monetisable services that are available in a wap/app format through the carrier decks are bypassed since users the Free to use internet services through the Mini instead! For e.g.- a well known matrimonial web services company in India runs its wap and sms services through carriers on a micro-payment revenue model. However, the same services are available to the user through the Opera Mini for Free!! Now why would anyone pay for the WAP/SMS services now?! Ditto for sport scores, infoservices etc..! Some smart internet content and services companies have thankfully taken this into account and are now identifying the browser type and serving only Mobile internet sites on the Mini like the popular Men’s Mag- Nuts or Loaded in the UK. Nuts mag offered the full web services on the Mini earlier but by the sheer traffic that it got through the Mini lead them into serving mobile users with the mobile internet portal only. Now users can download content from Nuts mag at a price- no more free web services and revenue leakages! Well done, Nuts.

This is a fine example of how web media companies and carriers can truly monetize the mobile internet through the Opera Mini. Sure, I might face some flak saying that it’s detrimental to the growth of the mobile internet etc but with the current economic climate and digital advertising hard to come by, some tough decisions need to be taken for the web companies and carriers to survive lest they get into the mess that the newspapers in the US have gotten themselves into.

Telecom Operator as Dumb Pipe -2

As you read this, handset manufacturers and content companies are slowly clawing their way into the content services space and loosening the grip of the almighty carrier. With their inherent quick decision making and execution, unlike carriers, handset manufacturers have developed or are developing strong content marketplaces to rival the carrier’s own content store.

Handset companies like Nokia, Apple and the likes have, with great speed and agility, become THE place to go to for content publishers to distribute content and consumers to find cutting edge content and services. This again sounds like the inevitability of carriers becoming ‘dumb pipes’ with no role to play in content and services. What's worse for the carrier’s is that the device makers are bringing aboard alternative modes of payment and billing that totally bypass the operator’s most prized advantage- the direct relationship with the subscriber. When you give away billing to external parties, you lose valuable information on the subscriber’s consumption patterns, preferences and of course, the ability to make that much needed ARPU-swelling transactional revenue.

The iphone has already made AT&T a bystander to the content services that the Apple is providing to its subscribers through the itunes app store. Since the average monthly phone bill for an iPhone user is $95.34 and the average bill for other users is $59.59 AT&T probably isn't too worried about this. However, they should, it’s a shame that carriers cannot capitalize on the inherent advantages that they hold- subscriber information and relationships, billing capability, the networks, the content store, the massive infrastructure and resources!...need I say more?!

Its going to get tougher for carriers with Nokia putting all its muscle behind OVI, Blackberry too is toying with the idea of an app store (makes great synergy) and so is Sony Ericsson…

With so much influence in the space, it is absolutely important that operators not give into “easy money” by becoming dumb pipes like the ISPs. It’s time for carriers to start shaping the future of the mobile services space.

Telecom Operator as Dumb Pipe?

In the heady early days of the Mobile Web, telecom operators proudly proclaimed that they would not go down the path of their wired ISP brethren and become “dumb pipes”. They would control the media and services built around the mobile web unlike the AOLs of the world. So they built what they called, a “walled garden”- an operator controlled portal to be accessed by subscribers. The operators in their desire for total control decided to build services and products on their own and limit access to the open internet. Subscribers, on the other hand, resisted and wanted more from their wireless internet services. So operators instead of partnering with the popular service companies and building customized monetisable services for their subscribers decided to do what they resisted in the first place- open the floodgates and replicate the ISP model of allowing unrestricted access to the web.

So now you have telecom operators peddling unrestricted FREE internet services on their phones in their desire to get the subscriber on to their data plans. This has lead to subscribers accessing FREE Sports scores and News on the mobile Web. You know that the business model of the mobile web is all wrong when the most profitable services on SMS-Sports scores and News, are being made available for FREE on the mobile web. The content companies that provide these services for free on the mobile web, in their quest for eyeballs have, for lack of a better word, foolishly replicated their business model of the internet where services are ‘ad supported’. There are already murmurs of discontent brewing about how this ad supported model of offering free services on the INTERNET too is a business model that doesn’t make sense.

As mentioned in my previous post, the mobile web allows for great exciting possibilities of revenue generation and these must be exploited by content companies as well as the operators. The subscriber is accustomed to paying for services like news, sport scores, astrology on the mobile sms/web till now but with growing access to free services, he will expect these services to be free- that expectation will be death knell for the operators and the content companies.

With the specter of recession looming large and mobile advertising hard to come by, it is more important now more than ever that Content companies and telecom operators go back to the drawing board and chart out a new saner business model where both parties thrive and subscriber interests are protected too. Telecom operators must take charge of this before they become irrelevant commodities in the brave new world.

How to Monetise the Mobile Internet

Should the mobile internet business model replicate the internet business model of free services monetised through ads and page views? It would be a shame if it does.

The mobile internet offers a much better model of monetising services than the internet because -

a. Consumers are exposed to paying for mobile entertainment services like ringtones, jokes etc... unlike the internet where consumers expect services to be free. Hence the model of asking subscribers to pay for using mobile internet services is more palatable.

b. Monetising through ads like the internet is still at least 2 years away and is not a sustainable revenue source. With the slowdown, marketers are not willing to spend on mainstream ad media like hoardings so for mobile advertising to succeed in these times, it will take nothing short of a miracle.

So how do you monetise the mobile internet? Well, let me illustrate with some real world examples...I and my friends recently suddenly made plans to eat out as we were heading home from work and we wanted a location that was not too far away from our residences…What did we do? We fired up our trusty Mobile phones and logged on to burrp.com (a site that specializes in restaurant listings in India) from our phone browsers. A few search queries later, presto, we found a restaurant listing that fit in with our requirement. We were satisfied, the mobile operator was satisfied since we just burnt some data and added to their data charges kitty and Burrp.com was happy since they got some users to use the mobile portal. The question is how will a company like Burrp make money out of our transaction? They replicated the internet model...We used their services completely for Free and our page views were hardly worth monetizing…

On the other hand, my other experience with the mobile internet shows that there is a smarter way of making money. I was on vacation in a village in Karnataka and needed to know if my seats on the train back home was confirmed and out of the waiting list. Well, the fastest way I could check that was that I could log on to the Indian Railways site on my laptop but I just could not connect to the internet due to the remoteness of my location… The only other way to do so was to log on to the mobile portal of the Indian Railways through my operator wap portal. To my relief, it opens up. Every bit of information on the mobile portal is transaction-based, a few Rupees here, a few Rupees there and I gladly pay to get the information that I need. I get the information that I need and am happy even the service is not free; the mobile operator too is really happy since I used up my data plan and also paid a few Rupees to access the Railway service; the Indian railways are really happy too since they have a satisfied consumer who transacted with them.

The Indian Railways provide the same set of services on the internet for free but charges them on the mobile portal. The pricing is extremely low but considering the volume of users using the services, I’m sure it makes healthy revenues. They might not have the flashy web 2.0 bells and whistles on the mobile portal but they got the business model of the mobile internet just right- Pay as you use on the mobile portal. In my opinion, this is the sustainable business model for telecom operators, content providers and mobile internet service companies, at least till mobile advertising becomes a sustainable revenue stream.

Telecom Operators in partnership with Content partner must ensure that this model evolves on the mobile internet. Companies that think otherwise and are replicating the internet business model are doomed. Just like the internet made brick and mortar business models obsolete, the mobile internet business model might make the internet model obsolete.