Andrew Walmsley on digital: It's all coming together for 3G

It's six years now since the government raised £22.5bn in the biggest auction ever to have been held, selling five licences to operate 3G mobile phone networks. It was subsequently described by the academics who had advised the government as 'the biggest auction since Didius Julianus bought the entire Roman empire in 195AD'.

Didius lasted only 66 days before being murdered; the buyers in this auction were hoping for a little better. With so much to recoup, operators have been understandably keen to get consumers to buy in to the technology. Progress has been slow. We don't see people making video calls on the bus, and WAP was a disappointment to most consumers, who stayed away in droves.

While the hype was huge, the reality was that the devices were clunky, the content poor and the audience small. The cost of using this as a marketing medium rarely stacked up, often because the small audience sizes meant that the fixed costs of setting up a mobile marketing programme were disproportionate to any value received.

Add to this the understandable concern that marketers felt at the intrusiveness of this medium, and it didn't really equate to a very attractive proposition for marketers.

Yet we all know that the mobile phone is in everyone's pocket all the time; it's there when no other medium can reach a consumer. As users we feel uniquely disconnected when we forget to take it with us, and extremely stressed when we lose it.

So the potential for the mobile to act as a means of reaching people is immense, but so far, it has been just that - potential.

However, 2007 could be the year this changes. Three fundamentals need to exist for this market to take off: devices, content and audiences. All are changing at the moment, which could lead to a tipping point in the coming year.

Devices have come a long way in a short time. They have bigger screens, better connectivity and are easier to navigate. Another significant development has been the rise of using handsets for offline activities such as photography or to listen to MP3s, via five-megapixel phone cameras and ranges such as Sony Ericsson's Walkman phones. iPod sales are down for the first time as the market moves toward these converged devices. The consequence of this is that the phones now in the hands of consumers are capable of a much better online experience.

On the content front, the past few months have seen the appearance of a range of extra services. Vodafone now claims to have 183,000 subscribers to its Sky mobile TV service, and deals for Yahoo!, Google, eBay and Skype have all been struck among the operators.

Sports, games, news and chat are adding to the options, and consumers are becoming more sophisticated in the way they use mobiles; downloads of videos and music are growing, while revenues from ringtones and wallpapers decline.

Moreover, audiences are starting to respond. Nokia generated 200,000 branded downloads during the last series of The X Factor, and Emap claims that 2500 comments a day come in via mobile to its FHM site. According to the Mobile Data Association, 14m people used the mobile internet during September.

If this were the internet advertising market, it would be 2003. We had just been through a period of enormous over-promise and false dawns. Most people were still on dial-up, but broadband was starting to make an impact on audience figures, and we were starting to see an upsurge in business activity as the sector was reinvigorated.

Christmas is just a few weeks away, and we will see a lot of shiny new handsets being unwrapped. Will this new injection of devices and audience be the spur the mobile industry needs finally to create a new mass internet market?

- Andrew Walmsley is co-founder of i-level

30 SECONDS ON ... CONSUMERS AND MOBILE PHONES

- The first mobile phone text message was sent in December 1992; SMS was launched commercially in 1995.

- August 2001 was the first month in which 1bn messages were sent in the UK. In December 2002, 1bn messages were sent globally every day.

- A total of 40.7m UK users were recorded as having used their phones for downloads and browsing the mobile internet (WAP) during the third quarter of this year. The number of users increased from 13m in July to 14m in September.

- A WAP-enabled mobile phone is the second-most popular digital device owned by British consumers after the PC, according to Nielsen//NetRatings; 57% of survey respondents owned a phone that could access the internet.

- WAP use is being driven by more than ringtones and games downloads - Google topped a recent list of sites most accessed by mobile users, followed by chat sites.

Source: Mobile Data Association.

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