WIRELESS INDUSTRY EYES PROFIT FROM WIRELESS WEB, LOCATION DATA

In Europe, where short messaging services (SMS) have taken off, entertainment has been most popular application “bar none,” said J.F. Sullivan, vp-marketing for AirFlash, which sells middleware to carriers and ISPs to create location-based wireless applications. “We see that location-based wireless services are out there and running with usage centered around people’s social lives,” he said, and in Europe service providers also are earning money from sports scores.

Lack of automatic location-based information has been one limiting factor so far in U.S., where 95% of services that pinpoint user’s whereabouts now require subscriber to punch in zip code, SignalSoft Pres.-CEO David Hose said. When people travel, they are less likely to know zip of area they are in, making that requirement cumbersome, he said. “We're on the cusp” of putting together technologies to provide automatic location, he said, referring to upcoming E911 implementation.

While panelists agreed E911 would help drive technology advances, they also concurred that it wasn’t revenue generator. “The return on investment equation is just being settled now,” TruePosition Exec. Vp-Founder Louis Stilp said. One advantage is that location-based services can be added easily to enhance existing applications. Just as consumers are willing to spend 95 cents to make directory assistance call, Stilp said he anticipated wireless subscribers would be willing to pay similar amount to access traffic information tailored to their location. “E911 has to flush itself out a little bit,” said Scott Pomerantz, pres.-CEO of Global Locate, which develops GPS chip for wireless devices. “How much has been met on Phase 1 even? At the end of the day, revenue is going to drive real opportunity.”

“Privacy is probably one of the biggest issues that is just waiting to sit up and bite us as an industry,” SigmaOne Communications Vp-Sales & Mktg. Tom Williams said. “The onus will be on carriers to carefully sculpt services.” Still, panel of location-based hardware and software providers, which didn’t include representative of wireless carriers, remained relatively bullish on prospects for addressing privacy issue so services could make money. Several cited research indicating customers were willing to receive e-mail alerts on products as long as they controlled circumstances. “From the subscriber side, that could be pretty valuable as long as it’s not wireless spam,” Pomerantz said: “Sure it’s coming -- it might ultimately be the best advertising platform after TV.” Location-based advertising is inevitable, Hose said. Ability to track people in real time is “bounty” for advertisers, he said. Limitations of technology may help calm privacy fears, he said. To track “everybody in this room, all the time, you would need a lot of capacity,” he said, and that’s not realistic scenario even in 3G environment.

How wireless Web will generate revenue and how it will be shared is one theme that has run through panel discussions here this week. Peter MacKinnon, vp-gen. mgr. for applications and devices at Nortel Networks, said he was heartened by success of BlackBerry wireless e-mail solution developed by Research in Motion, in which Nortel has stake. “It’s a good sign for operators that they will be able to get more money for applications,” he said.

Some panelists also wrestled with how consumers in Japan and Europe, where SMS has taken off rapidly and broadly, differ from U.S. counterparts. In discussion moderated by Nokia Pres. Kari- Pekka Wilska, Cellmania CEO Ronjon Nag said driver behind mobile data applications in Europe had been youth and business markets while Japan had been driven more exclusively by youth market. Thrust in U.S. has been interoperability of different devices, he said, although synchronization between devices is less important elsewhere in world where desktop PCs aren’t as ubiquitous.

Success of NTT DoCoMo’s i-mode service has been raised repeatedly as benchmark for potential uptake of wireless data applications elsewhere. Kent Thexton, pres. of British Telecom’s mobile Internet unit Genie, said DoCoMo penetration rates in first year of i-mode operation were being realized in U.K. Services based on Wireless Application Protocol (WAP) reached 10% penetration of BT Cellnet’s 10 million subscribers within 10 months, he said. It took i-mode 9 months to reach roughly same penetration rate, he said. Mobile devices will be primary Web access devices in U.K., he said. “It’s happening already.” Genie has evolved from primarily offering SMS to providing higher value wireless Web services, he said. Company has portal that can sign customers of rivals such as Vodafone and Orange on to BT’s mobile Internet service, he said. They then are encouraged to move to Genie with “online billing and online customer care,” Thexton said.