Why the future will be wireless: Telecoms operators, internet providers and online brands are all gearing up to be the winners with WAP technology, writes Matthew Reed. Welcome to the world of m-commerce

Techies love an acronym and three letters that are causing considerable excitement in the telecoms and internet industries are WAP - Wireless Application Protocol - technology that brings the internet to your mobile phone.

Techies love an acronym and three letters that are causing

considerable excitement in the telecoms and internet industries are WAP

- Wireless Application Protocol - technology that brings the internet to

your mobile phone.

To date, most of us have thought about internet access in terms of PCs,

or possibly interactive TV but with WAP, miniaturised mobile internet

sites can be accessed from mobile phones and this is where the industry

expects internet access will really take off.

With the explosive growth of mobile phone ownership - more than 40% of

the UK population now owns a mobile phone - the link between two of

today’s hottest technologies is expected to create a potent


It has certainly sent equipment manufacturers, mobile phone networks and

e-commerce operators racing to launch WAP phones and services. And there

will be no turning back.

In only a couple of years, new telecoms networks that support high-speed

mobile internet access will be in place and internet-enabled phones are

expected to be the norm. By 2004, Forrester Research predicts that

one-third of Europeans will regularly access the internet via their

mobile phones.

However, this is virgin territory and a lot about the mobile internet

market remains unclear. As the mobile phone operators, internet content

providers and e-commerce operations all jostle for position many

questions remain as to just what the technology will or won’t offer,

from both the marketer’s and the consumer’s point of view.

There are some obvious and immediate problems. One is that WAP may not

deliver in the way that some hope. Unrealistic expectations may have

been created for the technology in its current form.

Technical glitch

There was a delay in the first phones reaching the market because the

incorporation of the miniaturised internet browser proved to be more

difficult than was envisaged, says Simon Buckingham, founder of the

Mobile Lifestreams consultancy.

WAP is still evolving and Buckingham for one thinks that it has hit the

market too early.

’The customer hasn’t been given any consideration. What (the current

version of WAP does is quite limited and rudimentary - you can’t push

information to customers at the moment, the onus is on the user to find

information,’ claims Buckingham.

’It would have been good if we’d held off for a year and launched it

with the GPRS network,’ he says. GPRS network (see glossary box) is seen

as one of the most important factors for WAP as it will allow high-speed

mobile internet access.

With a range of content providers investing in WAP services, the

mismatch between expectations and possibilities could be damaging, says


’The expectations have been set so high. I’m worried that we will damage

ourselves by hype.’

Nevertheless, few doubt that in the longer term, mobile internet will

take off. ’I think WAP will be a big success. In the next few months, we

will see handset availability and mobile portals launched,’ says


Despite the teething problems, many companies clearly believe that they

cannot afford to stand back. A recent study by Forrester Research found

that 90% of European e-commerce operators surveyed expected to launch

mobile internet sites and nearly 50% of them expected their sites to be

live by the middle of 2000.

These companies believe that mobile internet services add value and that

in the multi-channel future, their customers will automatically expect

the services .

However, Falk Muller-Veerse, European research manager at Durlacher, the

internet investment group, forecasts that it is e-mail that will be the

initial killer application for mobile internet services, paving the way

for instant messaging and mobile commerce.

There are limitations with the mobile interface which will probably

discourage users from undertaking complex internet operations from their

phones - but mobiles may be ideal for certain other forms of


Users carry their mobile phones with them, so they are ideal for

time-sensitive information, such as news alerts, share price

information, sporting results and travel and weather updates. People

could use their mobile phone during a night out to book film or concert


While PCs and televisions are often shared, mobile phones are invariably

used by one individual owner - so the phone is ideal for targeted


Also, positioning systems can be used to deliver location-dependent

services - a sale alert can be sent to an individual’s mobile phone as

they stroll along the high street.

Travel operators, news providers and banks have made early commitments

to mobile commerce - although advertisers, auction sites and online CD

retailers are also set to offer services.

Airlines have been among the first movers - internet-enabled phones

could give customers access to journey information and check-in


Finnair launched SMS- based services in spring 1999 and moved to WAP in

autumn 1999. Swissair and Lufthansa also offer WAP services.

More recently, in December, the BBC announced an agreement with Vodafone

Airtouch to develop mobile news services for WAP and UMTS. The WAP

service is expected to go live in the next few months.

Audience reach

’The partnership with Vodafone is important because it’s the largest

operator,’ says a BBC spokesman. However, the partnership is not

exclusive and other agreements will be announced through the year.

’It (the mobile platform) enables customers to get news anywhere and any

time,’ adds the spokesman. For news providers this is important - in

recent years they have had to seek out new ways of reaching their


NatWest and the Woolwich are among the financial services groups

developing mobile internet services. The Woolwich is working with Nokia,

while NatWest has linked up with Orange and plans to run a WAP trial in

spring 2000 with a view to launching the service later in the year.

’We’re looking to have a similar level of functionality as on our web

site. There will be added features - for example, text messaging to

alert you if your account drops below a certain level,’ says

spokesperson for NatWest.

Boxman, the internet CD retailer, has a WAP service up and running in

Sweden and plans to roll out local versions across Europe, starting with

the UK in early February.

Christopher Codrington, vice-president of commercial partnerships at

Boxman, observes that: ’There’s no map to this - it’s like the internet

four years ago.’ However, he believes that impulse behaviour will be

important - people might hear a track on the radio and decide to buy it

from their mobile phone straightaway.

Durlacher predicts that by 2003, advertising will be the leading mobile

commerce application. Sponsorship and branding of the mobile interface -

rather than the banner ads that dominate internet advertising - will be

important components of mobile advertising. Additionally, marketers will

be able to take advantage of customisation and personalisation to

develop more targeted mobile one-to-one marketing.

So who are going to be the key players in the new mobile commerce


The mobile phone networks are in a powerful position - they have a

subscriber base, a billing relationship with their customers and access

to information about their subscribers.

As with the PC-based internet, portal strategies will be important and

most mobile networks are building mobile portals and linking with

content providers and e-commerce operators to offer mobile services.

’They have to become serious portal players,’ observes


Mobile phone operators are also likely to move into m-commerce directly

- Mannesmann is expected to offer banking services within 12 months, for


Durlacher also forecasts that the mobile phones will be used widely as

electronic wallets for mobile e-commerce activities.

The other issue for debate is how open the new mobile services will


Forrester Research predicts that a number of operators will try to lock

in subscribers by launching ’closed’ services that block subscriber

access to the wider mobile internet.

However, in the long term, services will open up. Content providers will

not want to be tied to one network and it may be that new intermediaries

called mobile internet providers (MIPs) - probably backed by existing

ISPs and portals - will become key players and help open up the


Subscribers to MIPs will be able to dial into a public WAP gateway with

access to any mobile internet site. Forrester expects market pressures

to have forced mobile operators to provide open access to all users by


But one barrier to the take-up of mobile internet services in the

short-term is likely to be cost. Currently, the cost of mobile internet

use tends to be high because the bearers that support mobile internet

access are slow and users are charged by call duration.

However, the cost should come down as the faster GPRS is introduced and

new payment models are devised. GPRS is an ’always-on’ system, so users

are likely to be charged according to the volume of data transmitted

rather than a time-related charge. Alternatively, charging might depend

on the services used.

Pre-pay WAP phone packages - due out in the second half of the year -

are expected to trigger growth and the mainstream adoption of WAP.

The handsets will probably cost between pounds 120 and pounds 130. In

reality they cost a lot more, but as with all mobile phones the cost to

the consumer is subsidised by the network. Handset prices are likely to

come down as the phones move into mass production and lower-end models

are introduced.

However, the mobile internet revolution will keep on rolling and will

not be limited to mobile phones. Within a few years, we are likely to

see the distinctions between mobile phones and consumer electronics

products become blurred - there may be devices that are both phone and

MP3 player, or phone and games console.

’You’ll see different devices for different people with different uses,’

says Muller-Veerse. ’It’s a major change for the telecoms world and the

consumer electronics world - only a few (companies) have expertise in

both fields.’


Wireless Application Protocol (WAP)

The standard for connecting wireless devices such as phones to the


Short Message Service (SMS)

Allows text messages of up to 160 characters to be sent to and from

mobile phones.

Global System for Mobile Communications (GSM)

The prevailing mobile standard in Europe and most of Asia Pacific.

General Packet Radio Service (GPRS)

Standard within GSM that will allow instant, high-speed internet access

from mobile devices. European mobile phone networks will begin to

introduce GPRS in the second half of 2000.

Universal Mobile Telecommunications System/Third Generation


High-capacity, third generation network that will support mobile video

as well as audio, graphics and text. The first UMTS licence has been

awarded in Finland and the rest of Europe will start to award licences

this year.


The Nokia 7110 is the first WAP phone to be available in the UK -

although there are still precious few units in the shops. Nokia says

that it started to distribute the handsets in September 1999 and they

should now be widely available. Ericsson is already selling a

WAP-enabled PDA (personal digital assistant), the MC218, and is to

launch two WAP phones in the first half of this year - the R320 and the

higher-end R380. Motorola’s WAP phone, the Timeport P7389, will be

launched this month and is expected to cost about pounds 120, depending

on the network.

Orange launched a WAP service in November 1999, based on the Nokia 7110

- the Orange 7110e, which costs pounds 129.99. Orange’s WAP services

include news from ITN, sports news from PA and Sporting Life, traffic

information, listings, business directories and information about travel

offers from Lastminute.com. Orange is also developing online banking

services with NatWest. While Orange’s service is currently closed -

users cannot access other mobile internet services - the company says it

will move to open access shortly. Access was free until the end of

January - but now charging will be on a per minute basis until new

pricing structures are introduced.

Vodafone is launching its mobile internet services in July. Vodafone has

linked up with Sun Microsystems, IBM and Infospace.com on the technology

side, while Travelocity.com and the internet stock broker, Charles

Schwab, are to provide content. In September 1999, Vodafone launched

Vodafone Interactive - an SMS-based service that allows customers to use

text messaging and e-mail and to receive news alerts.

One 2 One plans to sell branded WAP phones from March this year - the

handsets are expected to be the Nokia 7110, Motorola Timeport and

Ericsson R320. The initial WAP services are likely to be e-mail, games

and customer services so that users can check bills online. One 2 One is

trialling news, sport, weather and travel services. The target market

will be 16- to 35-year-old early adopters. Initially, pricing will be

per minute. Later in the year, One 2 One will launch pre-pay WAP


BTCellnet unveiled its mobile internet services at the end of January.

Subscribers will be able to access tailored internet content from

providers including Lastminute.com, the BBC, Guardian Unlimited, Excite

and European Investor.com, as well as the content and services already

available through Genie Internet, which has 500,000 subscribers. The BT

Cellnet internet phone is a branded version of the Nokia 7110, priced at

pounds 129.99. Calls will be charged at 5p per minute.

Virgin launched its mobile phones in November last year. It is plannning

to introduce web browsing to its phones using its own version of WAP. It

will be written onto the Virgin Mobile SIM card rather than into

specific handsets. The company says its Advanced Wireless Technology

platform will allow customers to browse internet sites without the need

of a special WAP phone.



- More than 117 million people in the EU own mobile phones and many are

already using mobile data services - two billion SMS text messages are

being sent in Europe each month.

By the end of 2000

- 7.1 million Europeans will buy internet-enabled mobile phones and 6.1

million of them will visit at least one mobile internet site a


- 10%-15% of all mobile phones sold this year will be ’media-phones’ (ie

internet-enabled phones) and more media-phones will be sold this year

than laptops.


- 40 million Europeans will have internet-enabled phones.

2002 and beyond

- 14% of Europeans will be regular users of mobile internet services and

this figure will rise to 20% by 2003.

- By 2003 more than 200 million mobile phone subscribers - more than 85%

of mobile phone users - in Europe will have WAP phones.

- By 2004 more than 219 million people will own internet-enabled mobile

phones and more than 131 million - one-third of all Europeans - will

regularly use their mobile phones to access the internet.

- From 2003, no major manufacturer will produce a mobile phone that does

not have an internet browser.

Countries taking up WAP

- Mobile internet services are likely to be most important in those

countries that already have a high penetration of mobile phone ownership

and SMS use.

- Finland has more mobile phone users than fixed phone subscribers.

- Mobile internet services will accelerate internet penetration in

countries such as Spain, Italy and Greece that have otherwise lagged in

internet use.

Market value

- The European mobile commerce market - which was worth 32m euros

(pounds 194m) in 1998 - will be worth 23.6bn euros (pounds 14.25bn) by


- Italy will be the biggest single m-commerce market, worth 4.8bn

euros,(pounds 2.9bn) followed by Germany ( 4.1bn euros, pounds 2.47bn)

and the UK (3.4bn euros (pounds 2.05bn).

- By 2003, the main application for mobile internet access will be

advertising, which will account for 23% of the mobile commerce market.

Financial services will account for 21% and personalised shopping

services for 15%.

Sources: Forrester Research, Nokia and Durlacher.


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