Internet Goes Mobile

Emergence of new data world is being watched and welcomedwith great caution and enthusiasm. Mobile Internet is inevitable and is actuallythe ultimate technological evolution to 3G/IMT-2000. The "anywhereInternet" implies a change in technology, drivers, pricing, user habits andthe operator’s role.

The power of mobile Internet will help improve customerservice, link more closely with strategic partners, reduce costs, gaincompetitive edge, create global awareness and increase shareholders’ value.With the mobile data coming in, it will not be just a question of subscribersanymore as mobile chips built into new applications will allow formachine-to-machine communication. This enforces operators’ belief that theyhave to shift their focus from gaining scale via subscriber growth andacquisitions to applying that scale to value creation.

Typical mobile Internet business opportunities being speakingmail-web interface, localized information services (travel services, yellowpages, restaurant guide, emergency services, parking services, hotel booking),advertisements (datamining, personal guide, push advertisements, localizedadvertisements), wireless telemetry applications (remote control, electronicbill board, vending machines, industrial applications, electronic home), etc.Great opportunity exists for operators to give a tremendous boost to theirrevenue stream earnings.

Key Issues

With mobile Internet expected to grow even faster than theexponential growth of mobile telephony, cellular operators and others should bedetermined to seize the opportunity. By 2005, about 1.4 billion people will beusing mobile communications. Of these, a billion users will have access tomobile Internet via their mobile devices and phones. As mobile Internet becomesthe true global medium, the innovations and persistent efforts of individualsare needed to build a network that is capable of supporting a variety ofservices in a robust manner. In the future, like in the past, user needs, humanergonomics and context of use will define the basics of mobile product. Humanuser interface for mobile services and the cost of handsets will also play animportant role.

3G will offer at least 15-fold increase in data rates overthe existing 2G technology. The increased bandwidth will give enough neededcapacity to offer a whole range of new services at significantly reduced costs.Mobile Internet calls for new technologies, and for many operators, W-CDMA isthe answer. Transmission speeds may vary from 384 Kbps per user initially to 2Mbps per user later. Wireless e-commerce should be determined not to make themistakes that left its wired counterpart vulnerable to hackers and vandals.Online security should be built in, not logged on.

Mobile Internet will only move forward if consumers havesecure methods of sending sensitive information such as credit card numbers. Thesolution is extremely robust wireless security. Also, IPV-6 is a basicpre-requisite for true Internet mobility. In addition to superior addressprocessing, IPV-6 meets all of the high demands on security inherent in mobileInternet
applications.

Great Opportunity Knocking

The mobile Internet market in some countries is changing therules of the game and several traditional value chains have been upset. In today’scompetitive world of business and finance, the seconds that tick by while onewaits for information are the seconds in which some one else could be acting.That is why the race is on in order to getting them at anytime and anywhere viathe most reliable way of mobile Internet.

The biggest data success story of 1999 was NTT DoCoMo’sI-mode. The services offered were e-mail, weather, news, restaurant guides, etc.on a mobile phone with data speeds of 9.6 Kbps. By the end of February 2000,I-mode had 4.47 million subscribers. Finland, possibly the centre of wirelessinnovation, gives us a view into the future in terms of what wireless dataapplication will ultimately be and how they affect our lives. It is estimatedthat the global m-commerce market in 2005 will be about $111 million. Vodafoneestimates that by 2003, 80 percent of its subscribers in developed countrieswill use wireless data services and that it will account for over 20 percent oftotal revenues. Lucent believes that by 2005, 50 percent of traffic will be fromdata. Motorola believes that more people will surf the Web from wireless devicesthan wired by 2003. Thus, the birth of the wireless Internet represents an"instant replay" of what was experienced in the PC-based Internet.Indian Internet users are estimated to be around 3 million. By 2003, the usersare expected to be around 70 million. It is forecasted that Indian e-commercemarket would be worth about $1.7 billion by 2003.

How many of these will be true wireless Internet users is yetto be seen. Wireless Internet has a very good prospect in India but it is stillalmost 9-12 months away from take-off in a much bigger way. But are theoperators ready to grab this opportunity?

Revenue and Profit Model

The business models of the mobile Internet are similar tothose of the PC-based Internet, but some differences have been identified. (1)The role of portals in the mobile internet is more prominent than-thetraditional Internet (2) The emerging classes of services will have more impacton the success or failure of the mobile Internet than mobility enablingtechnologies, (3) Mobile Internet represents a major opportunity for e-commerce.

The models are likely to continue to evolve as operators havebetter information regarding usage. Some of the important revenue/cost modelsare:

• Flat rate versus per minute pricing or packet-based charging.

• Moving up the value chain transaction-based and if so, for whom and how much?

• Subscription and transaction-based revenues from some technology providers.

• Portal platform revenues or content carriage fees for content providers.

• For wireless ISPs, the incremental margin on m-commerce and m-advertizing revenues is high. It validates
  revenue streams for many business models.

The Ultimate Winner

Whosoever "owns the customers" will be the ultimate winner. Rightblend of technology, excellent marketing strategy, good profitability model,creatively spent money, and incredible focus on customers will be the key tosuccess. Access to Internet (any time any place), cheaper handsets, low pricing,and lots of applications will be a tremendous source of revenue generation. WAP,GPRS, and UMTS will revolutionize the mobile Internet opportunity but lurkingbeneath this new era is a constant challenge.

VP Singh
VP Engineering and Operations, Birla AT&T Communications