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Users 'will pay' for wireless video streaming

Update: Having concluded its trials of a mobile video and audio streaming service, O2 says it has found significant consumer interest in a commercial service

Mobile phone operator O2 has concluded its trials of a video- and audio-downloading service for mobile phones, saying the tests showed consumers would be willing to pay to download news clips, sports updates and movie trailers.

The telco is also making progress on a separate service that will allow consumers to download complete song tracks on to a digital music player and has signed up several major record labels, according to a report.

O2's findings could be significant for Europe's mobile-phone industry, which is looking for ways to earn revenues from data services, in light of slowing growth in handset sales and text messaging.

From May until this week, O2 and Israel's Emblaze Systems, which is providing the technology for O2's service, gave 262 subscribers access to multimedia clips and video messaging services over O2's GPRS network. The most popular content proved to be video news clips, updated three times a day by BSkyB; sports and film trailers were also popular, Emblaze said.

Users were mostly from the UK, with some German and Irish participants, according to an O2 spokesman. The service ran on Nokia's 7650 handsets.

Customers said the service was easy to use -- scoring it a 7.9 out of 10 in that area -- and 94 percent thought it was interesting enough to demonstrate to friends and family. However, not as many were keen to let their wallets do the talking: 45 percent said they were likely or very likely to use a commercial service, if it were reasonably priced.

James Parton, head of video services for O2, said the company was looking at launching the service commercially later this year, but has not yet made a firm commitment. When the services launch, they will be marketed under the O2 Active brand, intended to compete with Vodafone Live.

Emblaze, which sells the media player and back-end technology for the system as well as managing the portal, said its strategy is aimed at making it easier for operators to roll out sophisticated data services. "(The trial) is an endorsement of our strategy to provide end-to-end solutions rather than only one component of the mobile-streaming solution," said Emblaze Systems chief executive Itai Ben-Dor in a statement.

According to a report in Sunday's The Business, O2 has signed commercial licensing deals with three of the five major record labels. As ZDNet reported in March, the mobile operator is planning to launch a service that will let its customers download music directly to their handset. Bertelsmann's BMG is so far the only label that has publicly announced it will take part in O2's service.

Graeme Wearden contributed to this report.


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