Mobile data services to replace voice by 2005

Better late than never, as 3G operators come up with funky data applications
Written by Wendy McAuliffe, Contributor

Data will replace voice services as the killer app for wireless in as little as four years say analysts on Monday.

While voice revenue will halve by 2005, data services are predicted to account for nearly half of mobile revenue streams by 2005. Analysts speaking at a streaming media conference organised by IBC telecoms, revealed video streaming will account for 44 percent of monthly revenue streams for mobile operators in four years time. By contrast, mobile users will be decreasing their spend in voice services from £277 to £154 a year.

"Consumers will pay for data services if the perceived value of the application is higher than the perceived price of the service," explained Jim Cook, general manager for video streaming services firm PacketVideo. "Over time the perceived value will go up," he added.

A recent study from mobile phone company Nokia found mobile users would be willing to pay a 50 percent increase on their monthly bill in order to receive 3G data services. A similar study by the Yankee group predicted the streaming media market to be worth $3,300m by 2006, if ten percent of mobile users spend $10 a month on data services.

3G data services will be media rich, incorporating video, text and graphics. Video quality will be driven by bandwidth, which with UMTS will translate to 120kbps or 15 frames a second, producing watchable content. The challenge for network operators is to stream content that can be adapted gracefully to changing bit rates. "Bandwidth is not stable being affected by where you are, and in the wireless world there are errors, and you have to make sure you don't crash when errors occur," said Cook.

The demand for data services will vary depending on the markets the operators are targeting. "No one knows what the next version of SMS will be," argued James Bruce, business development manager for streaming media firm Luxxon. "Japan will spend $4 a week to have a cartoon character on their phone," he added.

European customers have displayed a preference for two-way live wireless video. Ideas such as Pubcam -- where users can tune in to their local pubs via a mobile device -- could be popular in Britain. According to research by Emblaze Systems, clips of goals could also be successful in generating revenue, with mobile users claiming they would pay 70 cents per view. This single application could produce $7m in its first year, rising to $135m in five years time.

Commercial 3G networks are not expected to roll out until 2004 in Europe. £22.5bn was spent on 3G licenses in the UK last year -- the bidding was driven by five mobile companies who were convinced that 3G networks, which will allow high-speed, always-on connections to the Internet, would generate large amounts of revenue.

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