ETIB Update: WAP—the backlash has started

Table of contents
SMS and WAP
Too much too soon
Site problems
Legal and security issues
Competition
Prepaid customers
Location-based services
HTML threat
Growing market
Acknowledgement

The industry's costly advertising campaign was largely negated by reports of an unacceptably high number of WAP phones failing to provide even basic services, compared with relatively reliable non-Internet mobiles.

Virgin Mobile's much heralded WAP service went down for four days in mid-August, just three weeks after it was launched, yet only 5,000 of its 320,000 mobile customers are WAP users. Talk of WAP-flop has become so widespread that many impolite words have been woven from its letters—such as "wappered"—so, not surprisingly, analysts are consigning the system to a premature theoretical scrap heap.

SMS and WAP (Back to top)
Kern Judge, managing director of West One Technology, claims the only application that runs smoothly is e-mail, which is already available on non-Internet phones as short message service (SMS), and now XyPoint is claiming it can tweak SMS technology to do almost everything else that WAP claims. Certainly a more sophisticated version of SMS is in the pipeline, enabling customers to request specific information.

That the efficiency of SMS would inhibit WAP sales was predicted by analysts IDC last summer who claimed that, by 2003, SMS would have achieved a 39% penetration in Western Europe, compared with WAP's 14%.

Too much too soon (Back to top)
WAP's problems are largely self-generated. The system was launched without waiting for content providers to convert sufficient HTML Web sites into the Wireless Markup Language (WML) necessary for small screens and narrow bandwidths. There are only about 24,000 WAP-accessible sites worldwide.

The independent community of wireless developers, AnywhereYouGo, said that conversion was slowed by the problem that the 27 WAP phones use various gateways, all with individual characteristics and combinations; despite attempts to standardize by the WAP Forum and its 500 corporate members.

"There's nothing to stop manufacturers breaking away with their own gateways, but lack of compatibility does risk cutting themselves off from a tremendous chunk of money in the future," said Graham Ward of the Nokia WAP. "Although most companies involved in all aspects of mobile communications are cooperating in their mutual interests, it is also not surprising that some want to work in isolation in the hope of driving WAP into areas as yet unidentified."

Site problems (Back to top)
AnywhereYouGo found many sites to be poorly constructed. Of 50 tested, 14 were unusable, some even inaccessible, so it has opened a testing laboratory for pre-launch checks. The French Government says companies must prove quality of service before being allowed to bid for its licenses.

Usage may become less frustrating with the launch of emulators by Mobile Lifestreams, and by Vodafone in partnership with The FortuneCity Network. The latter will search for the best WAP content on customers' behalf, thus reducing expensive call time—around 10p a minute.

Costs could be cut further by a simulator on PCs enabling users to establish which WAP sites would be worth contacting during travel. The mobile Internet company, breathe, is hoping to speed access with a voice-activated portal. Some games will probably help, and now that SCi Entertainment has announced it will launch a Thunderbirds adventure next year, others will not be far behind.

Low-powered radio communication with electronics could draw more customers, as this would enable people to switch on equipment remotely. Several systems are competing—Bluetooth, Digitally Enhanced Cordless Telecom (DECT), Wireless Ethernet, and Home RF—but all are short range so they will need further development before consumers become enthusiastic.

Legal and security issues (Back to top)
Security remains a major concern for WAP as data has been found to be insecure, and version 2.0, due for release in September, is not thought to have overcome the risk of viruses. SMS is also being targeted though, and a virus recently attacked Nokia phones in Norway, disabling keys. As hackers generally use personnel digital assistants (PDAs), which are then thrown away, they are impossible to trace.

Legal arguments over intellectual property rights could impede, including Geoworks' claim that the system is based on its patents, so vendors of WAP-enabled hardware, application, or content should pay royalties.

Competition (Back to top)
Analysts at IDC warned in August 1999 that it would be at least 2001 before mobile Internet takes off; by which time WAP will have developed to the point when existing handsets could be useless. Eighteen new WAP phones are being launched this year, and their success will depend not only on the system becoming more reliable but also on the level of competition from other technologies.

"Even carriers which have invested in General Packet Radio Services (GPRS) could be disadvantaged against newcomers which go straight for Universal Mobile Telephone System Technology (UMTS)," Ward admitted.

The future of UMTS though, was put in doubt when the Hong Kong conglomerate Hutchinson Whampoa announced it intended to pull out of a consortium to operate a German UMTS license, citing higher-than-expected cost and insufficient frequency space.

Ward considers GPRS would boost usage as this runs at speeds of up to 115 kb/s compared with WAP's 8 kb/s, and remains permanently connected with charges being made only when exchange of data ties up a channel

"GPRS will also enable users and servers to build a rapport, as the phone can be programmed to supply specific information, such as alerting the user when a company's shares reach a given level, Ward said."

Prepaid customers (Back to top)
But will sufficient numbers be prepared to upgrade their phones to make any Internet service commercially viable, considering the popularity of pay-as-you-go? This economy service was adopted by large numbers when operators dropped cut-off dates for spending vouchers. Seventy-five percent of mobile phones are voucher-based in Portugal, and 65% in Spain.

Few such users have registered with their servers, and it is obviously difficult to establish a rapport with anonymous customers, but then they may count their blessings when others are bombarded with advertisements.

Finland was the first to use "push technology," when a Web-based brokerage, eQ, sent financial information to customers, and Max Mobil, Austria's largest operator, is due to start sending advertisements in September.

Location-based services (Back to top)
Various trials are taking place throughout Europe, but the companies involved are non-committal over whether reactions are positive or negative. Assumedly, the response will depend on the quality of the messages, so advertisers will have to learn quickly where the dividing line is between being helpful or a nuisance. The introduction of location-based services (LBS) will provide commerce with even more opportunity to target potential customers, but David Mountain, member of a project team researching LBS at London's City University, warned: "Unrestricted unsolicited messages could be counterproductive. If a shop keeps trying to lure you in, you'll soon learn to turn off your phone whenever you pass. But if you are able to program your phone to confine messages to your precise interests and priorities, then that could become very attractive."

Ward considered LBS would be a valuable corporate tool.

"Companies will welcome being able to check if staff are where they claim to be," Ward said. "Although some employees will dislike being tracked, many will appreciate being able to locate and book accommodation and leisure facilities wherever they are. A similar system is already used to track movements of visitors inside buildings so LBS can not be far off; particularly as there is a race between academics and commercial organizations."

BT Cellnet recently launched Findme, but it can only locate mobiles within 100 meters in towns and by 15 kilometers in rural areas. Users find its menu tedious, but there is a dedicated number for McDonalds, so one assumes BT will gradually attract other commercial organizations.

HTML threat (Back to top)
WAP's main threat appears to be systems able to access HTML Web sites, now that PDA developers are working with mobile phone manufacturers to produce Internet-enabled organizers with larger screens and higher bandwidths than WAP phones.

A compact version of HTML, cHTML, is a major contribution to the success of Japan's i-mode. Since NTT DoCoMo launched the system in February, it has attracted nearly 10 million subscribers and is still connecting up to 50,000 newcomers a day, despite frequent lengthy downtime.

Users are impressed by i-mode's ease of use, with clear graphics and a button-sized joystick, and by low costs as it only charges for information download—not airtime. There is also a wide choice of sites as 200 content companies were signed up before the launch, including games specialists.

Growing market (Back to top)
i-mode is not expected to arrive in Europe for some 18 months, by which time there will be several HTML competitors, but, whichever technologies and services prove to succeed, the research company, Ovum, is in no doubt that the mobile phone market will continue growing. It has predicted that there will be 1.5 billion subscribers globally by 2006, 684 million of whom will use Internet-enabled services, compared with 500 million fixed Internet users. Annual revenues from mobile Internet users will be $337 billion by 2006. The financial institutions obviously share Ovum's confidence. Lending to telecommunication companies increased markedly this year, according to data from Bank for International Settlements; from $117 billion in the last quarter of 1999 to $404 billion in the first quarter of 2000.

The Spanish telecoms group Telefonica is rumored to have attracted its shareholding banks into its 3G consortium to speed development, following its success in gaining a UMTS license in the German auction. Telefonica's share price had fallen more than 10% owing worry at the cost of the bid. Lending has, of course, been boosted by the expense of winning operating licenses, but takeovers, mergers, and partnerships also need to be funded; all essential elements of shrinking overall costs to remain competitive.

The Finnish operator Sonera is said to be open to other partners, and Ericsson is working with WorldCom's UUNet to develop a global roaming network for the GSM Association's 400 mobile operator associates internationally.

Sweden's largest listed utility, Sydkraft, has indicated it intends to work with a 3G consortium to expand its broadband business sector. Toshiba Europe and Nokia also launched a joint initiative in August to "implement WAP-based mobile communication solutions for corporate customers."

Despite all this cooperation, there still appears to be contention on the technological front. Delegates at the GSM Association conference on GPRS in August vowed to prevent the technical and managerial problems that had damaged the credibility of WAP to hit GPRS; yet it soon became clear there was dissension on which technologies to pursue. Unless delegates can agree, there is still surely risk that some operators may again choose to "go it alone."

Contact:
WAP Forum, www.wapforum.org/index.htm

Acknowledgement (Back to top)
This material appears courtesy of European Telecoms Intelligence Bulletin and SMi Publishing Ltd.