September 24, 2008


By Lai Kok Fung, BuzzCity CEO

The vibe in the mobile industry now is completely different from the tone emanating from Wall Street (and financial districts worldwide for that matter). In fact the mobile internet feels more vibrant now than it did just six months ago. Let me explain.
I was recently in Silicon Valley to speak at CTIA Wireless and participate in an MIH strategic conference. While in the Bay Area, I also visited two games makers – EA and Guitar Hero – as well as made a trip to Facebook's headquarters. These were the impressions I was left with:

  1. The hype surrounding the iPhone's launch has led more cellphone users to surf the mobile internet. People are venturing beyond social networking sites to find useful applications and information.
  2. More people surfing have led to more people publishing. That's a no-brainer. Major sites like Peperoni are still experiencing increased traffic, but their share of the market is falling as more and more content, much of it free, comes online.
  3. The “publisher crunch” that had characterised the mobile internet is over. Earlier this year, a few major sites dominated mobile traffic. These publishers – and the telecom carriers -- were able to dictate advertising rates. No more.

  4. Advertising rates for the mobile internet are starting to settle at a healthy sustainable level. Six months ago, mobile ads were begin sold on the idea that the cellphone screen is personal and that carriers can share profile information. Nokia's CPM rate, for example, was 40 euros. (40 euros per thousand ad impressions.) The comparable price on the internet was less than one dollar. So at 40 euros, marketing campaigns needed a much higher – and unrealistic – conversion rate. Today the effective CPM rate is as low as 50 US cents in India and between US$1 - US$2 in South Africa.  (FYI, falling CPM rates are good news for ad networks like BuzzCity.)
  5. Games companies are taking interactivity, user-generated content and online communities to a new level. They create platforms – backdrops, context, rules, controls. But users drive the experience. The skills of a games company are similar to movie making, where you need to know how to "tell a story". But the games company goes one-step further to allow users to participate in the story telling. The latest version of Guitar Hero, for example, allows users to create music and share it with the Guitar Hero community. 
  6. More than half of Facebook's new users are coming from outside the United States. Friendster is enjoying a surge in its mobile traffic in Southeast Asia.  Even Silicon Valley is beginning to understand that there's life outside the US.  Most “overseas” mobile internet surfers, by the way, use normal mass-market phones.
As overall mobile internet traffic is on the rise, the percentage of users visiting sites built by telecom carriers is falling. Telecom companies are still trying to “control” mobile devices, but the sooner they learn that they're a PIPE, the better.

Carriers can be stubborn though.

"Unfettered access would be a pretty bad experiment”, T-mobile chairman and President Robert Dobson told a CTIA audience. "There needs to be some stewardship or control."


During that same panel discussion, the audience erupted into cheers when asked if they would like to see open access.

Unfortunately some telecom companies still use dubious techniques – like browser hijacking – to direct consumers to their sites. South African carrier Vodacom, for example, recently launched a mobile internet service that it claims enhances user experience. Their service is being widely condemned by consumers and industry participants though. In fact, online services from internet banking to messaging to YouTube have been rendered inactive by Vodacom's meddling.
The South African chapter of the Internet Society (ISOC-ZA) says Vodacom is “breaking the Internet for millions of customers.” The carrier counters that it allows content publishers to opt out of their service.

I wrote about browser hijacking a few months ago and showed how Singapore-carrier M1 was altering our mobile web pages. Well, I'm happy to note that M1 has quietly removed their branded header and significantly scaled down their footer. This isn't the complete withdrawal we've sought, but it's clear they've gotten the message that users don't want their interference.

As a business consumer, I do have a suggestion for how the telecoms could maximise revenue AND provide a better service. Differentiate between business users who need better service and retail consumers who are more price-sensitive. Provide businesses with Quality of Service agreements and charge a higher price for reliable, always-on network coverage. Charge a low flat fee to retail consumers who don't mind the occasional spotty coverage. It's like the difference between flying economy and business class. The carriers should also dedicate resources to provide better indoor coverage and consistent high-speed connections.

Carriers' insistence on providing content reminds me of
an article I recently read in the International Herald Tribune about the online adult entertainment industry. Subscription-based porn sites are suffering a downturn in their business for the first time. There's just too much free content online so consumers aren't spending what they used to on the product. Porn producers are trying to turn the situation around by producing better quality movies. One company even said they built an impressive waterfall as a backdrop. I broke out laughing when I read this. People watching porn don't care about waterfalls!

Similarly, telecom carriers should provide customers with what they want. Don't sell us bundled products with bells, whistles and portals we don't need. Sell us what we want – unfettered data transmission!