Making more of the Mobile Web

3 parent company Hutchison Whampoa broke rank with other operators in Europe last month when it opened up the mobile internet to a host of fixed-rate internet services that threaten the established model of data revenues. What’s going on here? 
 
3’s new mobile internet service, dubbed the X-Series, is a flat-rate package that also offers instant messaging (Yahoo!, Windows Live, Google), eBay auctions, Sling video to access home television remotely – plus unlimited calls from a mobile using Skype and full access to the internet.

Subject to fair usage, access will cost under £15 per month on top of the normal 3 airtime subscriptions.

This charging structure overturns the traditional telephony model of charging per minute, per message, per click, per event and per megabyte.

3 says this is made possible by the rapid development of all IP (internet protocol) mobile networks, HSDPA and HSUPA network speed upgrades, peer-to-peer technologies, and a number of efficiency improvements in every aspect of a mobile operator’s business. “As a result, the cost of providing broadband internet and media applications in mobility may be expected to continue to decline, as it has in the internet and fixed-line broadband world.”

The service launches this month on Nokia N73 and Sony Ericsson W950i handsets. It will roll out to other markets early next year.

Customers can watch terrestrial, cable and satellite television on their mobile phones by purchasing a ‘Slingbox’. They will be able to record, pause, rewind and queue recordings on their home personal video recorder.

An X-Series customer who purchases a Slingbox (a transmitter that plugs into the back of a television) will be able to watch on their mobile anything they are able to watch on their own TV. That includes terrestrial TV, Freeview, cable, and satellite TV. Slingbox will also let X-Series customers control their home personal video recorder (PVR) to watch shows they have recorded, pause and rewind live TV, or even queue a recording when away from home using their mobile.

They will also be able to access any content on their home PCs using Orb – an application that enables X-Series users to access the digital content that they have stored on their PC at home, including music files, playlists, digital photos and videos, on their handset. Orb has specifically designed a user interface for X-Series handsets.

“Giving customers the economics of the broadband world will lead more customers to join 3,” said Frank Sixt, Group Finance Director of Hutchison Whampoa. “The X-Series heralds important changes in the business model for mobile media and internet. Moving away from unit charges will set mobile users free to enjoy broadband services without fear of ‘bill-shock’.”

T-Mobile has already embraced flat-rate mobile internet tariffs and some big internet brands with its Web ‘n’ Walk service, such as Google and eBay, but it has kept users within the T-Mobile browser and away from competitor services like Skype and MSN Messenger.

3’s new service includes some caveats in that regard. Skype calls are possible, but only to and from PCs and other phones running Skype.

Other commentators pointed out that, whatever the promise, the user experience of the mobile internet has to be good or else it will fail, as it has to date.

“People are avoiding the mobile internet because of high costs and poor experience when using the technology,” said Haran Sold, managing director for EMEA at internet research firm Keynote Systems.

“Users demand an exceptional service when accessing the fixed internet. If the mobile internet is to be successful, it must be both useful and usable. It is crucial the time is taken in advance to create the best experience for customers or the mobile internet risks being a missed opportunity.”

3 has previously reported a major success for instant messaging. Since launching mobile MSN Instant Messenger (now called ‘Windows Live Messenger’) in the summer, 3 has been seeing an average of more than 1m messages each day.

“We have been watching with interest at how quickly the ‘super-connected’ generation has adopted instant messaging on their mobiles” says 3 UK Marketing Director Graeme Oxby. “Our core user group of 16 to 24 year olds spends a large proportion of time online and happily uses a mix of instant messenger, texting and mobile calls, depending on what suits them at that particular time.

Windows Live Messenger is already available free for life for 3’s contract customers, and is free until December 2007 on 3’s pay-as-you-go service.

John Delaney, principal analyst at Ovum, commented: “Everything about the internet that worries the mobile operators is here. Flat-rate data tariffs remove the link between service usage and end-user revenue. VoIP undermines mobile voice revenues. Instant messaging offers text messaging at a fraction of the price of SMS.

“Embracing the internet model is risky. In the worst case, 3 could end up having its role reduced simply to providing internet access. But as the UK’s smallest operator, and the one with the least legacy stake in the traditional business of mobile telecoms, 3’s best hope of out-flanking the competition has always been to embrace disruption. That seems to be the path it has chosen to take.”

 
 

ALL TOGETHER NOW

The movers and shakers of the internet world queued up to support 3’s launch of the X-series, and of course they could not contain their enthusiasm:

• Joe Costello, Chairman and co-founder of Orb Networks: “3 Group just gets it. They are the first mobile media company to give their customers the freedom to use the mobile web the way it was intended to be used …”

• Niklas Zennstrom, CEO, Skype:
“This is a real milestone for Skype because now you can use Skype beyond the PC …”

• Blake Krikorian, co-founder and CEO of Sling Media:
“3 understands the power of mobile broadband to deliver compelling, value-add applications and services …”

• Sharon Baylay, General Manager, Microsoft Online Services Group UK:
“ Mobile broadband will bring a rapid shift in the delivery of internet services …”

• Meg Whitman, President and CEO of eBay:
“Throughout the brief history of the Internet, there have been key milestones where you realised everything was about to change. I believe the launch of X-series is another one of those …”