Content providers impress the impartial fans

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The ice hockey final at the Torino Winter Olympics was a brilliant game. Sitting to my right at the Ice Palace were families of the Swedish players and to my left families of the Finnish players. Not caring which nation won (Sweden prevailed in an evenly fought match), I had a fabulous time cheering on both teams.

Some years ago, I made the move from industry insider to industry observer, when I became a journalist – and I have enjoyed a similar view from the bleachers ever since.

Liberated from the corporate obligation to believe that your company’s offering is the best, I no longer cheer for one side or the other, as I seek to provide a balanced perspective.

Employees rarely enjoy this luxury, which is why few industry insiders are likely to voice the opinion that mobile telephony is becoming a commodity rather quickly.

Mobile operators sell phone calls. Nothing sexy about that. But margins are good and mobile voice continues to steal revenues from the wireline network. It is still a great business.

On top of the basic voice networks, mobile operators also offer an array of added services, which they spend billions enabling and marketing. Sadly, few are successful. When was your last video call while walking down the high street?

But the industry has already moved on to the next dubious gimmick: the hype now is all about mobile television.

You might point to SMS and ringtones as two great successes for the industry – but these were not created by a mobile operator.

This is not to say that the innovation and money spent on services such as MMS picture messages or video calls has been wasted.

They were important catalysts on the way to increasing the reliability and speed of wireless data connections. And this fact reinforces my belief that mobile telephony is destined to be a commodity.

A good mobile IP connection is just a bearer, it is not a service. Cisco sells routers and AT&T sells bandwidth so that consumers can get what they want from Yahoo and Google. Neither Cisco nor AT&T sells content or runs an internet portal. Should Vodafone?

Naturally, the mobile operators see it differently. They believe that selling as many services as possible will keep customers loyal to their brand. But how strong or durable are these brands?

Is Orange or Vodafone a compelling label to an 11 year old child? No comparison to Disney. And the teenager will likely favour the edginess of Virgin. The cost-conscious know that easyMobile must be a good deal.

Today, Disney, Virgin and the easyGroup all sell mobile phone services as so-called virtual mobile network operators (MVNOs). These buy wholesale access to an existing mobile network and resell the service under their powerful brands. Virgin Mobile was the first, when it began to piggyback on networks in the UK and US nearly four years ago.

Daryl Dunbar, director for next-generation product development at BT, puts it well: “Virgin has a window and they market to that. They could market jelly beans to that window and they would be successful.”

How many mobile operators could make such a boast?

So far the tie-in between brand and mobile content has been straightforward. Sports channel ESPN, for instance, has targeted American fans with real-time match results, video clips and team-specific content.

MTV and Universal Music will soon launch Amp’d, an MVNO that will target the youth market with music and video downloads. It will be interesting to watch the first head-to-head fight between MVNOs, as Amp’d and Virgin Mobile vie for the same market.

Disney’s new service, however, promises to integrate mobile communications with the company’s entertainment universe in a way that no mobile operator could ever dream of doing.

Disney Mobile, to be launched in the US in June and later this year in the UK, will appeal to children through themed content as well as specially designed handsets.

But cleverly, the service will also provide unmatched parental controls that can be managed online, allowing parents to block or set spend limits on specific services, restrict telephone numbers and calls during certain hours as well as locate children via a GPS module in the handset.

“This service will shift the [business] model away from a single user profile to a targeted community, the family.

“This will generate revenues by taking money away from other family budgets – such as for entertainment,” explains Polly Sumner, an executive at Telcordia, the telecoms software company that provides the service platform used by Disney.

Another unique aspect of Disney Mobile is that the services will be guided by the company’s entertainment brand managers.

This will shift service innovation to the company’s marketeers, away from the telecoms folks.

Disney’s model brings sophistication to the MVNO space, as it offers value that goes beyond brand or even content.

MVNOs that focus on niche content, such as Amp’d or ESPN, may find that they are simply pursuing the same shaky content models that have eluded operators for years. But then MTV and ESPN have been hugely successful at selling content.

In the end, people will buy brands. And MVNOs enable a brand to become a phone service, rather than trying to make a brand out of a service.

However the market plays out, MVNOs have inserted a wedge between the service and the underlying infrastructure provider. This could be an attractive opportunity if you have a great brand. But it is pretty frightening if you are just a commodity hiding behind a name.

I am happy to watch all this from the sidelines.

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