NTT DoCoMo has warned that 3G networks may not provide the revenues European operators expect.
Keiichi Enoki, who runs its NTT DoCoMo’s iMode mobile internet service, said on Wednesday that DoCoMo’s internal tests show 3G mobile networks are unsuitable for carrying large video or sound clips. If true, this could be a major problem for operators, such as Vodafone, which have based their revenue predictions for 3G services on downloading songs and videos over mobile networks.
DoCoMo is right to be concerned about the revenue potential of multimedia applications. Mobile multimedia content will not be available at a cheap price in the near future. Multimedia content is compelling, and capable of generating substantial ARPUs (average revenues per user), but due to low user penetration rates, it will remain only moderately important in absolute revenue terms.
Instead of revolutionizing mobile data services, 3G will improve the user experience for current applications, diversify the content mix and drive the development of mobile content. The ‘killer apps’ for 3G will involve new types of content, especially tailored to the capacities of mobile technology. As DoCoMo says, snappy movie trailers and music previews, rather than full length video clips or MP3s, are a much more realistic scenario.
One possible way of allowing multimedia mContent delivery, however, will be to segment service offerings, so that high-value customers have access to valuable multimedia content at a premium charge, while the majority of mobile data users receive basic services for a lower subscription fee or free of charge. Another possibility for lower-value customers will be to integrate mobile and fixed services, so that users can order multimedia on their mobile and collect it on a fixed network.
Until 2005 it will indeed be difficult for mobile operators to get returns on their 3G license investments. Content providers and mobile operators should therefore concentrate on developing simple applications that are viable on current networks.
