In May, Bytemobile sat down with Ronan de Renesse of Screen Digest to discuss the state of mobile media. This week, Ronan has been kind enough to answer some questions for our readers.

1) Screen Digest recently published a report on the state of the 3G mobile broadband market. Where do you see 3G mobile broadband fitting into the overall mobile ecosystem today, and where do you see it in three years? How does this affect what carriers are doing, aren’t doing or should be doing?
Mobile broadband today is worth more than mobile TV, mobile video, mobile music, and mobile games combined. The number of mobile broadband connections has multiplied by 10 between 2006 and 2008 and is still rising. Five years after the launch of 3G, mobile operators have finally found a way to monetize their 3G licenses. However, the real potential for mobile broadband is as a primary home connection, and today’s services work well only as a secondary broadband connection. As a result, growth is likely to decline over the next couple of years until mobile broadband can become truly competitive with fixed broadband.

2) You frequently cover mobile video and mobile TV. How would you assess the current state of the mobile video and mobile TV industries? What is the key driver that will increase adoption (network solutions, handset advancements, content)?
Mobile TV/Video is the mobile content category that has suffered the most from the economic downturn. In 2008, we experienced drastic changes in business models with the emergence of mobile content bundles such as SFR Illymitics in France and disruptive technologies such Telegent Systems’ analog mobile TV chipset. The industry realized that mobility by itself does not justify a subscription fee for mobile TV. Quality of experience (i.e., large screens, premium content, good QoS) is key in order to drive the uptake of paid-for mobile TV services. With the increasing availability of free-to-air services, the industry runs the risk of consumers thinking of mobile TV as a feature (like a camera or FM radio) instead of a service. In 2008, 76% of mobile TV users watched it for free.

3) How do you see the growth in adoption of mobile video and mobile TV affecting network infrastructure? Networks already seemed to be bogged down with data traffic. Are they ready for widespread adoption of mobile video and TV?
The rise of mobile broadband, added to the increasing popularity of smartphones (typically sold with flat-rate data plans), has certainly put a lot of pressure on 3G networks lately. Mobile operators are doing a lot to upgrade their networks as quickly as possible in order to accommodate the demand for mobile data. Fixed networks can only handle widespread adoption of online video and TV, and mobile networks are very far from it - especially considering that there are far more mobile connections in the world than fixed ones. However, there are other ways to get content on your handset than through the 3G networks. Over 90% of videos and music tracks on mobile phones are side-loaded from the PC. Taking control of this delivery mechanism and monetizing or reducing it is a big challenge for handset manufacturers and operators.

4) You recently published a report that discussed how, as the walled gardens come down, handset manufacturers are moving in to provide services to operators. Will handset manufacturers continue to drive and influence the wireless industry? Does anything threaten this influence?
The success of mobile broadband and flat-rate data packages has shown several mobile operators that they are better at selling access than content and that opening the walled gardens can work to their advantage. Mobile operators are therefore increasingly opening up to third-party service providers. Handset manufacturers, on the other hand, are suffering from a difficult economic context where mobile users opt for SIM-only contracts instead of handset upgrades. Handset manufacturers are therefore looking at alternative revenue streams and/or new ways to differentiate from their competitors, and content is coming up as a relatively good option. In addition, Apple has proved with its App Store that vertical integration of hardware, software and services works well in mobile.

5) Forrester recently published a report declaring that the term “smart phone” is dying off. Is there a future for mass-market handsets? Why or why not?
There is certainly still a future for mass-market handsets, which will be primarily driven by growth in emerging markets such as China and India. The recession has also helped to keep low-end handsets in the market. However, there has been cannibalization between feature phones and smartphones which are typically populating the mid-range and high-end device segments in Western markets. Smartphones have been taking market share from feature phones for the past 12 months, as smart phones become more accessible in terms of price and feature-rich. I would say that the term “feature phone” is more likely to die than the term “smart phone.”

Stay tuned for commentary from other key industry influencers on the trends and issues important to the mobile internet ecosystem. If you have any questions you’d like us to ask, feel free to leave a comment or send an email to sinfantino@bytemobile.com.

-Stacey Infantino

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