Mobile Internet: Cheap wins over security

Bengt Nordström of inCode gives his take on how the mobile market is evolving

The mobile phone business is starting to look more like the Internet, with all its advantages and disadvantages. Expect cheaper calls and downloads but learn how to live with lower quality service, in some cases, and less security. That's how Bengt Nordström, an expert on European telecommunications, sees the mobile market evolving.

Nordström knows the market. He started his career at Sweden's Telefonaktiebolaget LM Ericsson before joining a team to launch Swedish telecommunications provider Comviq. He left for Hong Kong to become chief technology officer of Nortel Network's operations in the region. From there, he went on to found the wireless consultancy Northstream, which was later acquired by inCode Telecom Group, another wireless consultancy. Currently, Nordström serves as inCode's chief strategy officer.

In a telephone interview, Nordström talked about several key developments shaping Europe's wireless sector.

IDGNS: One of the buzzwords in the mobile phone sector is mobile TV. There's some discussion of which of the two delivery services -- broadcast or stream -- will generate the greatest attention and thus revenue. What's your opinion?

Nordström: I think operators should launch mobile TV over their 3G networks as a streamed service first. They should see what interest they can generate among consumers in this new service before moving to a broadcast service, such as DVB-H. A broadcast mobile TV service will require a significant investment in infrastructure and handsets. If the broadcast infrastructure is owned by someone else, as it is in most cases, there is also a licensing issue. The groups will need to decide, for instance, how to split revenue. For all these reasons, we're cautious in our market projections for mobile TV.

IDGNS: Any possibility of broadcast mobile TV being offering at next year's World Cup soccer games in Germany?

Nordström: We expect to see trials but no commercial service.

IDGNS: What about VoIP over mobile networks?

Nordström: It's already happening. Skype is offering a service through the German operator E-Plus. Are there quality issues? Yes. But is the service useable? Absolutely. The Internet shows again that a service has to be just good enough to attract users; it doesn't have to be great. The main thing is that the price is low.

IDGNS: But isn't VoIP a technology with some significant security issues and something to use with caution?

Nordström: I disagree with this view. Telcos emphasize quality and security a lot. But the Internet has proven that price is really important. For a vast majority of users in the world, cheap telephony and communications beat quality and security.

IDGNS: Now that's a different view! Aren't companies and even consumers becoming increasingly concerned about online security?

Nordström: There are many different kinds of companies. For instance, banks managing big deals require 100 percent reliability and security. But again, most users in the world just want to make cheap calls; for them, security is less important.

IDGNS: What's your take on mobile music and how do you see the market moving ahead?

Nordströrm: Mobile music has much potential. Most of the technology issues have been removed. Today, we have faster transmission speeds thanks to 3G networks and better handsets with user interfaces that are designed for improved music listening. Also, digital rights management systems are in place to a sufficient degree so that copyrights is now less of an issue.

IDGNS: All of what you say may be the case, but the market for mobile music services doesn't seem to be booming just yet. Would you agree?

Nordström: Operators still need to resolve their business models for this type of service. Many are now beginning to realize that they have to look at the Internet model for downloading content and replicate that model in the mobile arena.

IDGNS: Wouldn't you say that price is perhaps the biggest stumbling block?

Nordström: Yes, definitely. Some operators in Europe have been charging more than €1 ($1.20) per song. That's way too much. Tele 2 in Sweden recently cut its download music prices to 8 euro cents per song. That's in the right ball park. And I think others will now follow. We clearly know from iPod's success there is a huge appetite for portable devices that allows users to conveniently download and listen to music.