Facebook-friendly phones

Facebook-friendly phones
The past year has seen a boom in the number of people using their phone to access the internet and the volume of traffic going through operators’ 3G networks.

The popularity of social networking sites, such as Facebook and MySpace, has been the biggest driving force in getting customers to access the web through their phones. Facebook recently reported that 15 million people had accessed the site through their handsets globally, and MySpace announced that its dedicated BlackBerry application had been downloaded onto 400,000 handsets in the space of one week.

Ofcom’s International Communications Market Report stated that 800,000 people in the UK were using social networking sites through their mobiles every day. Meanwhile, 3 revealed that Facebook hits have doubled in the past six months, and have reached 44 million per month. This compares with just two million Google searches per month.

Clearer data pricing
Much of the sudden increase is down to clearer data pricing. Vodafone has seen a huge rise in the number of people using data services and the amount of traffic going through its network since the operator started including data in its price plans in spring this year.

A spokesman for Vodafone reveals that data volumes have more than trebled since 2007.

‘We are also training staff in stores to set up customers’ email and social networking sites in a couple of minutes. They [store staff] show customers how to save their passwords and bookmark pages so it’s easy to use,’ says the spokesman.

The operator lets customers browse as much as they like and assures them they will not get billed extra for the amount of data they use; however, customers who consume too much data are notified via text message and are asked to cut down their consumption. The limit Vodafone sets is 500MB per month, which, according to the spokesman, is generally enough for internet browsing and email on the go.

3 has integrated data into some of its price plans and also offers data add-ons for £2.50 or £5 per month. O2 customers can add a data ‘bolt-on’ to their monthly tariffs to cover data costs.
Revenue for services
Mobile data services have already started growing as an important source of revenue for operators. Vodafone made £116m from data services (excluding messaging) in the third quarter this year, which contributed to 9% of the operator’s total revenue for the quarter.

Similarly, O2’s customers were spending an average of £10.30 per month on data services in the third quarter, representing 19.2% of total ARPU for the operator. 3’s non-voice ARPU for the first half of the year was £12.13, which is a third of its customers’ average monthly spends.
The majority of the revenues made by operators from mobile content is from data packages that customers subscribe to – although they also generate a smaller amount from subscriptions to services like Vodafone’s MusicStation.

It is only the operators that are making money from customers connecting to social networking sites through their handsets. The websites are not currently receiving any revenue from mobile
phone access.

MySpace tried charging for access to the site via mobile, before the company realised last year that customers were not ready to pay for something they were used to getting for free on their PCs.

Social networking sites make money from advertising and are expected to try to extend this to the mobile medium. Another future possibility is integrating location-based services to social networking.

Paolo Pescatore, analyst at CCS Insight, says: ‘They are trying to have a strategy for mobile, but at the moment their strategy is reaching out to users. They still have the business working in the same commercials, driven by advertising on PCs. Once they find new ways to use location, there will be new, interesting ways of monetising that.’

Mobile internet for the masses
Although the mobile internet has existed for years, it is only in the past year that mobile users have started using their handsets for web browsing. The biggest inhibitors for mass adoption of internet services have been unclear pricing, network speeds and difficulties in the users experience.

Pescatore says: ‘People were scared of how much it would cost them. Now data pricing has become more transparent and the costs are lower.’

Operators have been criticised for charging per megabyte for data, which gave most consumers little clue as to how many emails they could read or pages they could browse.  

The launch of the iPhone also helped change consumer perception, working as an evangelist in educating people about internet on the move and forcing other manufacturers to improve device design for ease of use. More people now have smartphones, which make browsing the internet on the go a less frustrating experience. According to data from analyst firm, IDC, smartphone shipments doubled since 2007, despite the fact that overall handset shipments fell by 10%. In addition to Apple’s iPhone, handsets like Nokia’s E71 and N95, the BlackBerry Bold and the Samsung Omnia have helped the mobile internet market move forward.

Dropping the price
The push to mobile data is a necessity for operators if they want to keep growing revenues, Pescatore says. Tariff prices are decreasing, with the majority already including unlimited texts and as many minutes as anyone could need, forcing operators to pursue alternative revenue sources.

‘Operators are looking for a revenue lift. There is growth in voice in terms of volume, but there is pressure on price. Operators have to look to new revenue opportunities. A lot of them are struggling to increase ARPU and data is a significant driver for that,’ he says.

It’s no surprise that social networking through mobile phones has taken off so well. Pescatore explains: ‘If you look at what has been successful on mobile so far, it’s peer-to-peer communication: voice and text, so mobile instant messaging and social networking are the next logical steps.’

The INQ way

Although the iPhone is arguably responsible for accelerating mobile internet adoption, the handset’s price tag limits its reach.

3 recently launched its INQ 1 Facebook focused handset in an effort to get as many of its subscribers accessing social networking through their handsets.

The operator’s parent company, Hutchison Whampoa, set up INQ to produce affordable handsets geared
at data usage for 3, as well as other operators.

The success of the Skypephone, launched by 3 last year, prompted the company to think about the growing demand for social networking.

INQ CEO Frank Meehan believes other manufacturers are not producing handsets that offer a good social networking experience that are affordable to young people (the biggest group of consumers to visit community sites).

Meehan said at the INQ 1 phone launch in November: ‘The 85% to 95% of the market that can’t afford an iPhone or an expensive smartphone
have been forgotten.’ 
Written by Mobile Today
Mobile Today


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