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Emerging Mobile News

In the past 18 months, ESPN Mobile, Disney Mobile and youth-targeted Amp'd Mobile have all flamed out. About 10 wireless resellers have closed shop, leaving about 55, says consultant Alex Besen of the Besen Group. Others are struggling.

Even Virgin Mobile, the No.2 reseller, said Monday that first-quarter earnings fell 75 percent vs. a year ago.

A few years ago, organizations from Disney to 7-Eleven to the local pinochle club were jumping into the cell phone business, leveraging their brands to appeal to niches untapped by the big carriers.

Now, many are digesting a hard reality: Running a wireless company isn't as easy as it seemed.

Many resellers of cell phone service -- which lease the networks of national carriers -- are closing, going bankrupt or struggling.

"Most of these people came in with a gold rush mentality," says Roger Entner, senior vice president of IAG Research. "Let me show up, and millions will flock my way."

The latest casualty is Sonopia, which helped clubs and organizations set up their own mobile services. The company is shutting down, says Greg Beltzer, a spokesman for Sevin Rosen Funds, a Sonopia investor.

Earlier this year, Hispanic-focused Movida Communications and high-end boutique Voce filed for Chapter 11 bankruptcy. While Voce shut down, Movida was quickly snapped up by Paul Greene, CEO of gear provider APC Wireless.

In the past 18 months, ESPN Mobile, Disney Mobile and youth-targeted Amp'd Mobile have all flamed out. All told, about 10 wireless resellers have closed shop, leaving about 55, says consultant Alex Besen of the Besen Group.

Others are struggling. Even Virgin Mobile, the No.2 reseller, said Monday that first-quarter earnings fell 75 percent vs. a year ago. That followed a $14.7 million fourth-quarter loss.

The company largely blames the sluggish economy.

Resellers, also known as mobile virtual network operators (MVNOs), are being tripped up by:

*Fresh competition from the major carriers. With U.S. cell phone penetration reaching 84%, the big carriers are targeting the faster-growing youth and lower-income prepaid markets that had been the province of MVNOs such as Virgin, say Entner and Yankee Group analyst Chris Collins.

*Failure to offer a distinctive service. ESPN, Amp'd Mobile and Helio coveted the same high-spending, data-savvy subscribers sought by large carriers "that can do it better," Collins says.

Rick Heineman, a spokesman for Helio, which is partly owned by EarthLink, disagrees, saying the start-up stands out for its global-positioning, music and video services. The company, with nearly 200,000 subscribers, had 2007 losses of about $320 million. Heineman says the losses were expected.

*Low volumes. Some firms targeted tiny niches. Many clubs that joined Sonopia had just a few dozen subscribers. "You need to have volume and scale to survive," says Ovum analyst Raymond Yu.

*Operational blunders. Movida, a prepaid service, offered a jumble of confusing rates and gave subscribers free texting even though it paid Sprint Nextel for the service, Greene says.

"Things were upside down," he says, adding that he's fixing the problems.

Besen says an upturn is ahead. Today, big carriers are loath to offer MVNOs favorable lease terms because they're eyeing the same customers.

That will change, he says, when the market is 100 percent saturated in three years. Then they'll need MVNOs to lure subscribers from rivals. He expects MVNOs to serve 17 percent of mobile customers by then, up from 7 percent now.



The Mobi Blog for Emerging Mobile News 2008

Emerging Mobile News


It’s inevitable with any new form of marketing that after awhile U.S. laws and regulations will be established both to protect consumers and limit what exactly constitutes an acceptable message.

It had happened first with print, then voice, then fax, then email and now the cycle continues with mobile messaging.

In the past few months, the most of the major carriers have either implemented or tightened their restrictions on mobile marketing and this trend shows no signs of abating any time soon.

In one sense, these new requirements actually point to a rapidly maturing mobile marketing industry. The last couple of years were essentially the testing and proving grounds for text messaging, mobile content and most recently mobile search.

Companies were largely in an experimental mode, trying out various combinations of mobile campaigns to see what worked and what didn’t. Now, in 2008, these companies have largely settled on the types of mobile initiatives they want to implement and are starting to launch such programs in earnest.

Not surprisingly, this increased usage has brought with it an increased scrutiny. One of the biggest reasons for this is due to the fact that, unlike most other marketing channels, there is a hard cost to the consumer to receive these messages.

While it’s true many consumers have unlimited or extremely high data/SMS plans with their mobile devices, there are still many more that do not. And that is just for campaigns that do not have a fee associated with them. When it comes to mobile messages or subscriptions that include a charge, called a premium campaign or message, the regulations get even stricter.

Still, the largest source of contention and proposed laws center around what are called Location Based Services (LBS), which take advantage of the fact that mobile consumers are just that and send campaigns based upon their current location.

The biggest focus of concern centers on consumer protection/privacy. While such services have flourished in Europe for years, in the much more litigious United States LBS is a target for consumer advocacy groups.

In fact, this week the Center of Digital Democracy held a town meeting with the FTC, urging them to prevent mobile marketers from enabling LBS-based alerts and advertisements with their subscribers by citing the possible consumer privacy violations.

While organizations like the Mobile Marketing Association have established guidelines for mobile campaigns, the fact remains that any of these programs must be approved by the major cell phone carriers, notably AT&T, T-Mobile, Sprint and Verizon. Each one has their own requirements, many of which have changed as noted above so here’s a quick summary of how the carriers operate currently:

AT&T

Just last month, AT&T changed its certification process to be much more stringent in terms of approving new shortcodes and price points for premium services. The sender must now be identified in every message received, known as Mobile Terminated or MT, to the subscriber.

AT&T also requires that every subscriber must agree to opt-in before starting to receive the messages. For text campaigns, this means that there are even fewer characters to work with when composing the message.

Verizon

Verzion has also made some changes to their provisioning process over the past few months. Any new premium shortcode or even just a new pricepoint for an existing shortcode must now be approved by the carrier’s new certification board.

Senders must be prepared to build in some extra leadtime for this in their schedules. Fortunately, at least for now, text message campaigns still do not require opt-in to be received by Verizon subscribers. However, given the current trends, mobile marketers should be prepared to have a double-in requirement soon.

T-Mobile

T-Mobile hasn’t made any recent changes to their certification process because it was already fairly stringent to begin with but mobile marketers must be aware of the carrier’s policies. The most notable of these is the fact that all T-Mobile subscribers must opt-in to receive campaigns and a specific message flow (how the campaign will work) must be approved prior to the shortcode being approved.

Sprint

As it stands right now, there are no changes with Sprint. Nevertheless, it’s again expected that the carrier will eventually follow suit with the others in terms of at the very least requiring double-opt in for mobile marketing campaigns.

So, as you can see, mobile marketing is increasingly becoming a more regulated (and yes, restrictive) form of communication. Eventually these issues will dissipate as the technology continues to mature and address such concerns. Yet for now, it’s in a mobile marketer’s best interest to ensure that they understand and more importantly comply to the requirements set forth by the carriers. Otherwise, they will find themselves unable to reach out to their consumers with this exciting and dynamic form of communication.



The Mobi Blog for Emerging Mobile News 2008

Emerging Mobile News
E-commerce without transacting personal or financial information, without the Internet, even without a computer. Impossible? Not anymore.

Amazon.com is pushing the m-commerce envelope with the launch of Amazon TextBuyIt, a new way of mobile shopping that bypasses its mobile web site, providing consumers an entirely different path to merchandise when away from a computer.

Amazon.com customers who have set up accounts with default shipping and financial information via the e-commerce site can find a product they are looking for and complete a purchase using TextBuyIt.

A customer sends a text message to the telecommunications short code “AMAZON” (262966) with the name of a product, search term, UPC bar code number, or ISBN code for books, and within seconds Amazon.com replies with products that match the search, along with prices.

To buy an item, a customer replies to the text message by entering only the single-digit number next to an item. The customer then receives a brief phone call from Amazon.com with the final details of the order, then confirms or cancels the purchase.

When a customer purchases something for the first time using TextBuyIt, Amazon will ask for an e-mail address and the shipping ZIP code on the Amazon.com account. With this information, Amazon.com uses the customer’s default settings for payment method, shipping address and shipping speed to complete the first purchase and future purchases from the same phone.

“It’s great that you do not have to transact personal or financial information using the phone. That breaks down a common online barrier,” says Vidya Drego, senior analyst at Forrester Research Inc.

Challenge to retailers

In the realm of m-commerce, the most significant thing about this new offering is that it does not require consumers to have Internet access on their mobile phones.

Use of text messaging is far more common than use of the mobile web. This year 46 million U.S. mobile phone users, or 19%, will access the Internet from their phones, while 166 million, or 69%, will send text messages, JupiterResearch projects. Thus, adding the text message component to its m-commerce offerings means Amazon.com has vastly increased the number of consumers who can access its merchandise via mobile phones.

“This is fantastic for a user interface because text messaging is so commonly used,” Drego says. “Text messaging is way up there; the mobile web, not so much yet.”

As a result, TextBuyIt could potentially affect bricks-and-mortar retailers, m-commerce experts say.

“This is huge,” says Nikki Baird, managing partner at Retail Systems Research LLC. “Retailers better get on making product information available on consumers’ phones right away; otherwise, consumers will be getting that information from Amazon—and buying products from Amazon while standing at the other retailers’ shelves in stores.”

The text message format is an important stepping stone to mobile web sites, she adds. “There eventually will be a much richer experience available on mobile web sites,” Baird says. “But if retailers wait for that before creating a mobile presence, they will be hopelessly behind.”




The Mobi Blog for Emerging Mobile News 2008