Philippine carrier offers free 3G service

PHILIPPINES--The newest player in the local telecommunications space has unveiled it would offer 3G services for free, as long subscribers agree to receive advertisements through their handsets.

Connectivity Unlimited Resource Enterprises (CURE) unveiled its new service offering, dubbed "U Mobile", during a mid-day press conference Monday.

Ardie Balderrama, CURE's chief marketing officer, said the operator's business model is the first of its kind in Asia. Another carrier in the United Kingdom called Blyk, has successfully implemented the business model, Balderrama said.

The executive acknowledged the ad-supported business model was risky, but said it would be more risky for the company to compete head-on with incumbents using the traditional pay subscription model.

He added that there was no way CURE could catch up with "entrenched" mobile network providers if it stuck to the conservative route. The Philippines' 55 million mobile phone subscribers are almost evenly shared by rivals Smart Communications and Globe Telecom, with late entrant Sun Cellular managing to snatch some 2 million subscribers.

CURE, however, was acquired by Smart Communications for 420 million pesos (US$10 million) last month, though it will operate as a separate unit. Officials from Smart, as well as from its parent company PLDT, were absent during Monday's press launch.

Prior to the launch and the Smart buy-out, CURE faced threats of a possible sanction from government regulators because of its failure to roll out its network--a requirement after the company was awarded a 3G license in December 2005.

CURE is currently establishing its executive board and it has no CEO yet. It is expected, however, that the chairman will either be from Smart or PLDT.

Like the Google model, Balderrama said mobile advertising has been steadily gaining ground locally and globally. From 2001 to 2006, mobile advertising grew by a whopping 7,000 percent, he said.

Quoting a report from ABI Research, the executive said mobile marketing and advertising is expected to be worth about US$3 billion globally by 2007 and US$19 billion, including mobile search and video advertising, by 2011.

Balderrama acknowledged that some users may not receptive to mobile marketing as they find this intrusive.

"This is the reason why we are expressly getting the permission of our subscribers for us to send them relevant ads," he said. "We've also set parameters in the frequency and the appropriate time that the ads would be sent out."

CURE said it will limit its subscribers to the "youth" and "yuppies" who are within the 15 to 35 age bracket. Balderrma said majority of the lifestyle brands cater to these market segments.

The mobile operator said enrolment for the free service would be on a invitation-only basis, with some 10,000 subscribers projected to be registered per month. After a year, the company expects to sign up at least 100,000 subscribers.

"This target is very achievable for us because Blyk, the U.K. firm which first implemented this business model, was able to get 100,000 subscribers in half a year. Now, they are expanding to The Netherlands," Balderrama said.

CURE said the service will initially be available in prepaid model, with calls within the network pegged at 15 centavos (US$0.03) each. Balderrama said the network is already interconnected with major telecommunications providers.

To jumpstart its operations, CURE 3G subscribers registered from June to August, will be provided 100 pesos (US$2.30) worth of load credits each month for the next six months.

Subscribers will also be credited with 50 centavos (US$0.02) each time they view a mobile ad or video. To top up their load, they can also buy credits online or through prepaid cards which the company said it would distribute soon.

Subscribers will have to provide their own 3G handsets, although SIM cards will be given away for free for the first three months of CURE's operations.

Apart from free calls, text messaging and Internet surfing, the operator said it also intends to provide customers with mobile VoIP (voice over Internet Protocol), "self-care Web site" and virtual phone services. Subscribers are also permitted to change their mobile number once without charge, with succeeding changes costing 50 pesos (US$1.20) each.

Melvin G. Calimg is a freelance IT writer based in the Philippines.