M-Business Plans
A fashionable e-commerce business will not necessarily translate well to the wireless Web, because a cell phone is more suited to some types of purchases than others. The immediacy makes it useful for time-critical transactions, but the small display makes people reluctant to browse extensively; an auction or last-minute bargain site is likely to be more successful than one selling books or computer hardware.
This has not stopped companies in the latter category from venturing into m-commerce. The costs of doing so are very low for established e-tailers, and so almost all have some plans for a WAP site. There is less unanimity about what exactly these new sites are for. With analysts in agreement that wireless is the next Big Thing, it sometimes seems that dotcoms must be seen to be doing something wireless to retain their reputation among investors as "tech stocks."
The most successful wireless businesses will probably not be carried over from the fixed Internet, or even from traditional commerce. They will use a cellphone's unique advantages, namely mobility and ubiquity, while relying less than the Web on high data capacity and having the customer's full attention. Many applications have not yet been invented; as in the early days of the Web, they are still forming within the minds of future entrepreneurs. But some are more apparent and have already attracted heavy attention.
Comparison Shopping
The beauty of the Internet, from a buyer's point of view, is that it enables us to shop around without having to physically move between shops. We can just click on a series of hyperlinks, or run a program that automatically queries the likes of amazon.com, borders.com, and bn.com for the price of a book. This has made the Web a brutally competitive environment for companies involved in b2c (business-to-consumer) e-commerce, and has even led to lawsuits in which companies try to block automated shopping tools from checking their prices. But it may provide opportunities in the wireless area.
A mobile Internet terminal means that customers can access this ability to shop around wherever they happen to be. If a customer sees something she likes in a shop, she can instantly see how that shop's price compares with e-commerce sites all over the Internet. Some phone companies are even planning data terminals with built-in barcode readers for exactly this purpose. The customer won't even have to fiddle with menus or look at the sites—she will simply scan in the barcode and let an automated shopping agent search the Web for the cheapest price.
There are obstacles to such a system, the most obvious of which is that real shops will disappear if people just use them to look for products and then spend their money online. Another is that shopping malls are notoriously difficult places in which to get a mobile signal. They are often buried next to subway stations or underneath car parks, and filled with electromagnetic interference from every store's security systems. The owners of shops can improve reception by installing microcells, but they are unlikely to do this if it means being undercut on their own premises.
Banking
The vision is of a phone linked permanently to a customer's bank account. With the ability to make transactions in real-time, this "bank in your pocket" can replace both cash and credit cards—in the offline world as well as in cyberspace. At the push of a button, people will beam money to vending machines and electronic tills in shops, or even pay their kids an electronic allowance.
The reality is much more primitive, but expected to advance quickly. Several companies claimed to offer "mobile phone banking" by 1999, though this often amounted to little more than sending the customer an SMS message containing her account balance. Some offered more interactive services, using custom-designed applications that run under the SIM toolkit. These usually do allow customers to transfer money, though only between accounts of their own; people can move their savings into their checking account, but they can't pay their electricity bill.
Banks are excited by WAP, and were among its first adopters in spring 2000. At the same time, analyst firm Datamonitor predicted that by 2004, mobile phone banking will be used by 16 million Europeans, with another 5 million accessing similar services through their TVs. However, these potential customers seem less keen on the idea than do the banks and analysts. In an effort to kick-start their WAP and other Internet services, some British banks have taken to deliberately creating long queues in branches, intending to put their customers off actually visiting them in person. In their defense, they say that cutting costs by closing branches is the only way to compete with new Internet-only banks.
WAP offers the potential for many more services than simple balance notification, of which share dealing is the one that gets marketers most excited. Their publicity says that people will be able to view real-time quotes and execute bargains while away from their desks, a necessity in a world where many companies are listed on more than one index and exchanges are extending their opening hours. But potential night-traders need to keep in mind that round-the-clock service is rarely guaranteed, and the nature of the stock market means that systems are likely to be overloaded just when they are needed most. Many Web brokerages, and even telephone brokerages, have failed to cope with the demand to sell during even modest crashes, leaving helpless investors with an error message as their assets deflate. Whether fixed or mobile, a connection is only as good as the systems at the other end.
The same applies to more commonplace banking facilities—most importantly, transferring money between accounts. Banks only balance their books once each day; if we pay money in today, we usually can't get at it until tomorrow. Worse, transferring funds between accounts in different names, let alone at different banks, can take days or even weeks. This is due to a process called clearing, left over from the era when checks had to be physically taken to a bank's head office by horse and carriage. The only way to move money instantaneously around the world is to "wire" it through a company such as Western Union, which of course takes out its own cut.
For mobile phone banking to work, the banks will need a real-time clearing system, something that will take many years to set up. Meanwhile, many companies are trying to promote their own proprietary systems of digital cash— uncopyable files, which delete themselves if moved to another computer. Units of digital cash could be downloaded using a mobile phone, then used to make purchases over the Internet or anywhere else. Unfortunately, no form of digital cash has reached anywhere approaching universal acceptance. The restrictions on where it can be spent make it feel more like a digital gift voucher.
Advertising
Mobile operators are privy to all kinds of information about their customers, namely, where they go and who they telephone. This information has obvious value to advertisers, and will become more valuable as more data services become available. An operator that gives its customers wireless Web access gets to see which sites they visit, and one with a mobile phone banking system can see how they spend their money.
Mobile operators can already log every customer's exact location, provided that the phone is switched on and within range. By cross-referencing this data with a map, it should be possible to learn when the customer is at home, how she spends her leisure time, or which shops she visits and for how long. One customer's location log could even be checked against another's to learn about friendships and shared interests, though the operator may already know this from phone call records.
This type of analysis is technically possible, but rarely carried out by real operators. At least, not yet. It risks a customer backlash and relies on data-mining technology, which is still fairly expensive. Plenty of Web sites have tried to track every mouse click, a much simpler process than location logging, only to find themselves drowning in data and unsure how to process it. For many a would-be Big Brother, the cost of the hard disks needed to store the huge database exceeds its commercial value.
Nevertheless, mobile operators believe that advertising will be an important market in the future. They know that people will simply switch their phones off if spammed by commercial messages, so they are instead proposing "pull" services. A customer might request the location of the nearest pizza restaurant, for example, and be presented with advertising for one that isn't necessarily the closest but will give them a special offer. This is the "yellow pages" model: every business is listed, but those willing to pay the most receive a more prominent position. The difference is that the operator can make money from both sides of the transaction—through advertising and by charging customers to look at it.
Location-Specific Services
While people may object to corporations or government agencies knowing where they are, the ability to pinpoint their own location can be very useful. Many operators are planning more advanced versions of existing location-based services, both because their accuracy is increasing and because higher data rates will enable more useful information to be sent in response to a user's request.
The most obvious example is mapping. Instead of having to carry around street plans, people could simply press a button on their mobile device and see a zoomable map complete with "you are here" arrow. This has actually been possible since the early 1990s, though it required a GPS receiver linked to a laptop computer with all the relevant maps stored in its memory. Miniaturization will either integrate the GPS device into a mobile terminal, or determine the location through the network. Maps will be downloaded as needed instead of stored locally, enabling them to keep up-to-date and be used anywhere in the world.
Other location-specific services, such as precise weather forecasts, can be envisaged. Though predicting the weather is an inexact science at best, the error is comparatively small for short time periods. People often aren't interested in the weather a week in the future, and only want to know the answer to questions such as, "When is it going to stop raining?" or "Will there be lightning in the next two hours?" These can actually be answered to a very high degree of accuracy, but the problem has always been getting the information to the customer. Television and radio broadcasts cover a very wide area, which means they can't tell every viewer or listener what time their home will be hit by a thunderstorm. A mobile phone can.
Some operators view location-based services as a Trojan horse for location-based advertising. They know that customers will object to their exact position being logged by marketers, but hope that the services' usefulness will outweigh privacy fears.
Streaming Media
Cellphone vendors often use stereo radio and even high-definition video as examples of applications that will be possible with 3G. The envisaged video-on-demand would enable mobile operators to take a slice of the pay-per-view TV market and let customers watch their favorite programs wherever they are in the world. The same applies to audio—people could listen to radio stations from anywhere and have them automatically interrupted for incoming calls.
Mobile phones already exist with integrated mp3 players, typically able to store up to an hour's worth of music. The problem is actually getting it in there; one hour of music at even sub-CD quality requires at least 32 MB, which would take more than seven hours to download using a GSM or cdmaOne phone circa 2000. Real-time music of this quality would require at least 64 kbps, which equates to five GPRS slots. This is a large and expensive commitment of bandwidth, particularly for an application already available over old-fashioned radio.
Far from taking the place of broadcast radio and TV, mobile operators could lose out to them in the market for lucrative data services. Most FM radio stations offer RDS (Radio Data System), a way of broadcasting short chunks of data along with the analog audio signal. Its initial application was simply telling listeners the name of the station they were listening to, and originally it was fitted just to car radios. The idea was that as someone drives between transmitter areas, the radio could retune automatically.
As RDS finds its way into home stereo systems and even Walkman devices, broadcasters are adding more information, such as the name of the artist and track being played on a music station. The in-car system is also being improved with an ETSI standard called TPEG (Transport Protocol Experts Group). This will automatically suggest alternative routes for drivers approaching traffic jams, or even advise them to use public transport instead and send a list of suitable bus and train timetables.
RDS is limited to a data rate of around 1 kbps, but its successor is far more frightening to the mobile industry. DAB (Digital Audio Broadcasting) offers a capacity of 2.4 Mbps per channel, though in most countries government regulations require that most of this be used for streaming audio. Even so, there is still enough left over to transmit photographs or detailed vector drawings. Several European countries had already begun commercial DAB services by 2000, and the BBC (British Broadcasting Corporation) had even used the system to transmit Web pages. The digital version of Teletext, a popular European system that encodes data within TV channels, might also be used for high-speed Web access.
The common weakness of DAB, RDS, and Teletext is that they lack a return channel, so people cannot request information. However, some location-based services, such as travel and weather reports, are so popular that they could simply be broadcast to everyone. A receiver including a GPS system could automatically tailor the information to the user's precise position.
Games
Simple games have been available on mobile phones and PDAs for some time, but packet-based communications opens up the possibility of competing against other players. A small portable device is not the ideal games platform—gamers are the main market for the fastest, most powerful desktop PCs—but their portability gives them an advantage. People who might not usually spend their time or money on games still appreciate the distraction they provide while standing in line or waiting for a bus.
Combined with online banking, multiplayer games provide the possibility of betting. This is illegal in most U.S. states, but is already being tested by many operators abroad. Even the British national lottery has plans to allow people to play via mobile phone, a prospect that has caused alarm among anti-gambling support groups. They fear that the phone will act as a pocket-sized slot machine, with a direct line to their bank account.