Mobile beyond voice

In tough economic times, the mobile phone industry is coping better than most sectors. People around the world now regard being able to make mobile phone calls as one of life’s essentials, while texting, or the short message service (SMS), remains very popular. There is still tremendous potential for growth in these basic services in developing countries in particular. However, in other places where the market is near saturation — and increasingly in developing countries too — mobile phone manufacturers need to create new “smartphones” with advanced features and Internet capabilities. And operators need to find new revenue streams from services beyond voice that will attract new customers and retain existing ones.

Applications and their platforms

One of the most striking trends recently has been the launching of “application stores” by more and more mobile operators, following the success of the “App Store” created by the producers of the iPhone, Apple Inc, which has recorded more than 500 million downloads since it opened in July 2008. From these websites users can download to their phones, or other mobile devices, applications that are created by any developers (who may share revenues with the store owner). The applications include games, business tools and education such as language learning. Providing an easy way to download an attractive array of such programs is one way in which mobile phone companies can attempt to stand out from the crowd in a highly competitive marketplace.

In October 2008, Google opened its “Android Market” for users to download applications and content for mobiles based on the open-source Android operating system, developed by Google and then by the Open Handset Alliance (OHA). This is an industry group that comprises equipment manufacturers such as Motorola Inc and Samsung Electronics, as well as such mobile operators as NTT DoCoMo and China Mobile, and chip makers and software firms including Intel Corporation. Two of OHA’s members, Vodafone and Huawei Technologies, announced their first Android phones in February 2009. China Mobile, the provider with the world’s largest number of subscribers, has said it will launch its own application store and that it is heading the development of an Android-based “Open Mobile System” which supports China’s standard for third-generation (3G) networks known as TD-SDCMA (time division synchronous code division multiple access).

Android competes as a mobile operating system with those from Apple Inc, Palm, Nokia and Symbian, as well as Research In Motion which makes BlackBerry devices. Spring 2009 should see the launch of an application store for a new “BlackBerry Storm” smartphone, while Nokia has said it will launch its “Ovi Store” early in the year. Before summer, Palm Inc is expected to launch the “Palm Pre” handset, using the new palm webOS.

At the GSMA Mobile World Congress, held on 16–19 February 2009 in Barcelona, Spain, Microsoft announced that a new Microsoft Mobile 6.5 operating system will appear towards the end of 2009, including links to a “Windows Marketplace for Mobile” accessed from both smartphones and computers. There will also be a complete overhaul of the platform with the introduction of Mobile 7 in 2010, according to Microsoft’s Chief Executive Officer (CEO) Steve Ballmer. In a speech at Barcelona he emphasized how “people want to be able to access all kinds of information and experiences from their mobile devices that they might take for granted on their computers — bringing together the best of what each of these two form factors has to offer… More than anything, consumers want experiences that extend seamlessly across their home and work lives.”

Convergence of computing and mobility

Mr Ballmer foresees that the ubiquity of Internet access and increasing power of microchips will lead to the creation of a single platform covering computers, mobile phones and other devices, and extending to “the massive data-centre storage and computing capacity that lives in the Internet.” This will bring “incredible opportunities to deliver sophisticated, powerful mobile devices and valuable new services,” he said.

Although reportedly not planning to make its own phone, Microsoft is moving further into the world of mobile communications, and computer manufacturers are doing so too. The world’s third-largest vendor of personal computers, Acer Inc, announced on 16 February 2009 that it will begin producing a new range of smartphones. Already, it makes “netbooks” — small computers that give portable Internet access alongside their other functions.

Both firms (like many others) regard mobile connectivity as the most likely source of profits in future, as well as during the difficult economic times being experienced at present. As yet, only a small fraction of the world’s 4 billion mobile phone subscribers have a smartphone. Acer says that the global growth in sales of such devices is expected to rise by up to 15 per cent a year over the coming three-to-five years.

Mobile phone firms are reported to be considering moving into the netbook market, while computer manufacturers are looking at opportunities in smartphones. In fact, the devices that people carry about with them in future are likely to combine both sets of functions — and more.

Music, movies and television

Using pre-installed or downloaded applications, an advanced mobile phone can act as a diary, a games machine, a radio, a camera, or a newspaper. In particular, though, the industry sees promise in promoting the phone as a video and music player. Mobile music revenues (including ringtones as well as complete tracks) will reach USD 14.6 billion globally by 2013, according to a report by Juniper Research Ltd, a firm of analysts based in the United Kingdom.

Users can transfer music files from their computers to the phone, or download songs directly from sites that are operated by mobile firms, such as T-Mobile’s “Mobile Jukebox” or Vodafone’s “Music Station”. NTT DoCoMo, for example, has various music packages as well as a site from which videos up to 30 minutes long can be obtained.

However, when it comes to video, the general trend worldwide seems to be for phone subscribers to download short clips from such websites as YouTube. These are free of charge, unlike mobile television services which (although growing slowly) are used only by a small minority of subscribers around the world. Juniper Research estimates that, by 2013, global annual revenues from mobile broadcast television will be USD 2.7 billion, but are likely to be held in check by the launch of handsets with microchips that need comparatively little power to receive standard, free-to-air television channels.

Echoing the popularity of the YouTube model of video content, some 250 entries from over 100 countries were put forward for a prize at the first-ever MOFILM Film Festival, which took place in February 2009 during the GSMA Mobile World Congress. All films were no more than 5 minutes long and specially made for viewing on a mobile phone. Speaking at the event, Hollywood actor Kevin Spacey described how this new medium would give people everywhere a chance to share their work, and at the same time allow others to watch a film — maybe, in some countries, for the first time.

Location, location, location

More and more mobile phones are equipped to double as navigation devices that use such satellite technology as the global positioning system (GPS). Knowing where a phone is means that location-based services can be delivered to the user, ranging from emergency response, to details of nearby tourist facilities, to advertising. By sending information to drivers, and assisting the management of traffic, mobile phones can also be incorporated into an intelligent transport system (see The networked car, the environment and climate change).

Social networking online, through such websites as MySpace, is, potentially, a major growth area as a location-based function of mobile phones. Companies including Pelago, based in the United States, and GyPSii, based in the Netherlands, offer services that allow people to find where their friends are at any particular moment, exchange messages and arrange to meet. Another important aspect of sharing data through networks in this way is the ability to transmit content that has been created by users themselves. This could mean, for example, sending a photo to a group of friends on a social network. Or, it could be the growing trend for users of navigation applications to send information through the network to update maps — for the benefit of everyone. User-generated content is seen as becoming increasingly important on mobile platforms.

Mobile social networks are especially popular in China, Japan and the Republic of Korea, and are gaining ground in Europe and North America. In developing countries, where Internet access is achieved mostly via mobile phones, social networking is being provided by such services as MyGamma, owned by Singapore-based company BuzzCity, which also provides a network for mobile advertising — another sector that is growing fast.

Developing countries too

In December 2008, BuzzCity conducted a survey * of some 3400 customers in 14 countries across Africa, Asia, Eastern Europe and the Middle East, as well as the United States (see Figure 1). It revealed how people use their mobile phones for Internet access, with 60 per cent communicating with friends through online tools such as chat rooms and blogs, and 16 per cent seeking entertainment, including music, video and game downloads.

The third most popular reason to connect to the Internet was to seek information such as news and weather reports. The survey also asked what new functions users would like their phones to have (see Figure 2). Overall, more than a third of respondents wanted the ability to transfer airtime and to buy groceries and other items, and to pay bills. Financial services, including loans and remittances, were sought by 13 per cent of users.

Mobile banking could have a significant impact in developing countries, where many people have little access to traditional facilities (see A boost for mobile banking). Another service that could be very important is the use of mobile phones in the monitoring of medical treatment (see Promoting mobile phones to support health).

Preparing for the next generation

China and India are set to roll out 3G networks this year, but currently some 90 per cent of the world’s mobile phone subscribers do not have access to 3G. Not all new services need this technology; mobile banking, for instance, is being carried out with 2G phones. Nevertheless, as well as sophisticated handsets, many of the new functions for mobile telephony depend upon 3G networks, which must have the capacity needed for the increased use of data-rich applications. This is being added with enhancements through high-speed packet access (HSPA) technologies, and HSPA+ is on the horizon.

The next step is towards WiMAX or long-term evolution (LTE) networks with even more capacity. The worldwide subscriber base for WiMAX is already around 3 million, according to analysts Research and Markets, based in Ireland, and substantial growth is predicted. LTE could arrive soon. At the Mobile World Congress in Barcelona, Verizon Wireless, a joint venture of Verizon Communications and Vodafone, announced that it would build the United States’ first LTE network, planned to open in 2010. LTE trials have also been conducted in Europe.

The provision of broadband connectivity through any technology requires more of the radio-frequency spectrum. Around the world, mobile phone companies are calling for such allocations, including the spectrum that becomes available as a result of switching from analogue to digital television broadcasting. They also want the chunks of spectrum to be harmonized across regions, so that interoperability and economies of scale can be achieved, thus helping advanced mobile services to enter the mass market.

Already it is clear that, for huge numbers of people, mobile phones are no longer considered a luxury, but rather a necessity. And increasingly, the perceived necessity is not only for simple voice or text communications, but also for access to the Internet. Whether by phone, netbook or other device, such connectivity seems certain to be the wave of the future.

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* “Who uses the mobile Internet?” BuzzCity, 30 December 2008.