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“It
requires no great leap of the imagination to believe that the convergence
of mobile communications and the Internet will produce something big…
but it may take longer than you think”
 Mobile
communications and the Internet were the two major demand drivers for
telecommunication services in the last decade of the twentieth century.
Combine the two—Mobile Internet—and you have one of the major demand
drivers of the first decade of the twenty-first century. That’s the
theory, at least.
As
Figure 1 shows, the two industries have exhibited remarkably similar
growth patterns since the start of the 1990s, but with a lag of about two
years. So, it requires no great leap of the imagination to believe that
the convergence of mobile communications and the Internet will produce
something big, perhaps even the mythical “sum that is bigger than its
parts”. In this view, the convergence of mobile communications and the
Internet would produce innovations, new applications and new services that
would not otherwise be possible. For instance, the service of knowing the
location of a particular mobile user, combined with the service of
targeted advertising, should theoretically make it possible for local
businesses to attract users that are passing by, within a certain radius.
Similarly, multimedia messaging services will open up visual, more
exciting person-to-person communications. Thus, the mobile Internet could
give birth to a whole new family of services.
Exploiting
the new opportunities offered by the mobile Internet will require high
levels of capital investment, possibly higher than ever before in the
telecommunication industry. Investors want to see proof that a market for
mobile Internet services exists. But operators can’t provide that proof
until they build the networks. Because of this “chicken and egg”
conundrum, the mobile Internet is potentially the biggest gamble the
telecommunication industry has ever taken on. The lesson so far is that
the pioneers get burnt fingers: to date, more than US$ 100 billion
has been invested in acquiring 3G licences, even before network
construction and service roll-out costs are taken into account. The timing
of 3G investment could hardly be worse, with venture capitalists running
scared of anything that has the word “telecom” or “Internet” in
it. Consolidation is on their menu, not expansion.
As
previous waves of technological convergence have shown, we should not
necessarily expect to see the commercial fruit of the mobile Internet for
some ten or fifteen years yet. It will not happen straight away, but that
does not mean it will never happen. It is worth remembering that the
“hype” generated by a particular technological development often falls
flat before market development begins to take off. Consequently, the
popular view is that a particular development has “failed”, whereas
the more accurate explanation is that market development has not yet got
going properly. Those who forget their history are condemned to repeat it.
So it is with some caution—and long-term vision—that the pioneers of
this new wave of convergence must prepare their business plans.
Figure 1: Mobile and Internet—identical
twins, born two years apart
Mobile subscribers and
Internet users (millions)
Penetration
rates (per hundred inhabitants), worldwide
Source:
ITU World Telecommunication Indicators Database.
Box 1: Singapore—e-ready, but not
so Internet mobile…
Singapore
has almost 70 per cent mobile phone penetration, over 50 PCs per 100
inhabitants, and over one-third of its inhabitants are Internet users,
making it one of the most ICT-connected and -adept nations worldwide.
Internet use has been actively promoted by the Government, with evident
results: Singapore is considered a world leader in ICT use in education,
with innovative programmes run in schools and universities. Moreover,
the high level of literacy in English means that Internet content can be
easily accessed. The importance of the language factor is also
highlighted by the fact that almost half of Singaporean adults whose
first language is English are online (see chart below). Singapore
is a world leader in e-government applications. In line with its vision
of becoming an “intelligent island”, the Government has promoted the
creation of a broadband backbone network—Singapore One—available to
all citizens.
Rather
surprisingly though, the take-up of mobile Internet has been lukewarm.
Although all three mobile operators, SingTel (the former incumbent),
MobileOne (M1), and StarHub, obtained 3G mobile licences when these were
auctioned in April 2001, none have yet proceeded to roll out 3G networks.
There has even been pressure on the regulator, the Infocomm Development
Authority of Singapore (IDA) to delay or abolish the 31 December 2004
deadline for national 3G network roll-out. The IDA, however, held to its
position, arguing that European and Scandinavian regulators have not
modified their 3G roll-out requirements, and that operators in those
countries are on schedule to provide services according to deadline.
Notwithstanding the optimistic regulatory stance, the operators
themselves are not yet proceeding with 3G network roll-out, more
cautiously opting to further exploit the possibilities offered by WAP
and GPRS. SingTel Mobile, for example, plans to introduce MMS services
in 2002.
Source:
Adapted from ITU Internet case study on Singapore. See www.itu.int/casestudies.
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