Re:Attendance Check on April 8. Topic 2

[wesley]

Mobile Telcos Rush to Social Networking

Telecoms are vying to offer customers access to the likes of YouTube, MySpace, and Bebo from their mobile handsets

As the social networking phenomenon continues to gather pace, mobile-phone providers are champing at the bit to become members of the club. On Mar. 28, France Telecom's (FTE) Orange UK mobile arm said it would begin offering its customers access to social networking site Bebo this summer.

The exclusive deal comes hot on the heels of Vodafone's (VOD) announcement in February that the world's largest mobile carrier had struck deals to cooperate with News Corp.'s (NWS) MySpace social networking site and Google's (GOOG) YouTube video-sharing site, giving users access to their MySpace pages and allowing them to upload clips to YouTube from their handsets (see BusinessWeek.com, 2/13/07, "Vodafone and MySpace Connect to Conquer").

New York-based Verizon Wireless, in which Vodafone shares ownership with Verizon Communications (VZ), also has teamed up with YouTube in the U.S. to offer access to the site's most popular clips there.

The Mobile Is "Personal"

It's easy to grasp why there's a land grab afoot. In February alone, some 403.3 million unique visitors worldwide visited online community sites, according to researcher ComScore. The figure is growing at an annual clip of about 30%. With mobile phones already the hub of most people's social networks, the combination of the two seems like a natural.

"The mobile device is much better suited because it's very personal," says Falk Müller-Veerse, managing partner at Munich's Cartagena Capital. "There's nothing more annoying than giving your PC to your nephew, getting it back, and finding that you are suddenly conversing with his friends."

Consumers seem to be ready. In a Gartner survey conducted in mid-2006, 35% of U.S. mobile users said they would be "extremely interested" in using their phone to submit text, pictures, video, or audio content to a blog. In Britain, 10% voiced similar enthusiasm, as did 12% of those polled in Italy.

The Killer App?

The appeal is understandable. Social networking is to some extent about "information snacking," or checking friends' pages to see what they're up to, says Nick Jones, vice-president at Gartner in Egham, Britain. Figures from researcher Nielsen/Netratings (NTRT) confirm‎ that the average MySpace or Bebo user spends less than 30 seconds on each page when visiting the sites. In that sense, social networking is ideally suited to mobile phones because consumers can check in while waiting for a bus, for example.

At the same time, social networking could be a "killer application" that encourages so-far-reluctant consumers to use their phones more for wireless data services. The infrastructure is in place: In Europe, "third-generation" wireless networks and handsets that offer zippy connections are now mainstream, while in the U.S., carriers are upgrading their networks now for the same capabilities.

The danger for carriers: They may not reap significant incremental revenue, as stiff price competition and aggressive bundling drive down the price of wireless data access. Plus, analysts say, mobile operators—like wired Internet service providers before them —run the risk of being little more than conduits for user-generated content and information.

Exclusive Arrangements

What's more, it's likely to take three to four years before social networking via mobile phones becomes mainstream, notes Cartagena's Müller-Veerse. For one thing, the current quality of user interfaces on many phones could discourage mass adoption.

It's also cumbersome to have to download software to connect with a mobile networking community—and even then, users may run into technical glitches.

Vodafone is aiming to make this easier by preloading MySpace mobile software on select handsets, although those using models without the preloaded programs still will have to download software. Orange says its customers won't have to download software to access the Bebo site.

Both the Vodafone/MySpace and Orange/Bebo agreements are exclusive arrangements for the time being. While that's a start, for mobile social networking to flourish, carriers will have to foster partnerships with many online brands. "The social value increases exponentially with the number of people you can reach," says Müller-Veerse.

Stay Awhile

The biggest hurdle, by far, is likely to be pricing. Some countries, including Britain, now have flat-rate ("all you can eat") and bundled pricing packages for wireless data—something analysts say is crucial to kick-starting widespread use of the mobile Web. Other countries, such as Germany, have yet to embrace such business models. Unless this changes, analysts say, it could severely delay uptake of mobile social networking because the primary users—youth—won't be able to afford it.

Of course, for both operators and the social networking sites, it's all about making money. But at this point, just how much is anyone's guess. "It's so early in the game that most are doing this as an act of trust," says Gartner's Jones.

The carriers aim to bring in new customers and boost wireless usage and uptake of data services. Orange, for instance, will target primarily prepaying customers, who, like Bebo members, fall largely within the 18- to 24-year-old demographic. Mark Watts-Jones, head of product development at Orange UK, says this is a promising avenue to boost data update because Bebo users spend a lot of time online. Indeed, researcher Nielsen/Netratings figures Bebo members spend an average of 2 hours and 37 minutes on the Internet site each visit, far more than visitors to rival MySpace.

Watts-Jones declines to give out details on pricing yet, but says customers will be able to buy a bundle that allows unlimited wireless access to Bebo.com. It's also planning special deals to woo Bebo users to become Orange customers, and it will offer paid "taster" sessions of the service.

Bridge to the Mobile World

Social networking sites also stand to gain from going mobile. Gartner's Jones says one of the most promising opportunities is to leverage multiple channels. For example, mobile operators are finally starting to roll out location-aware services that deliver information and ads to customers based on where they are (see BusinessWeek.com, 10/13/06, "Europe Takes to Location-Based Cell Service"). Social networking sites could tap into that information by introducing members to each other based on location. They also could deliver customized services to members logged in via their PCs, based on where they most recently traveled with their phones.

Helping ease content providers' transition to the mobile sphere is the job of firms like London-based ShoZu, a startup whose software lets mobile users access and share pictures, podcasts, videos, and music with other mobile or PC users. Companies like ShoZu are key to the growth of mobile social networking, says Cartagena's Müller-Veerse. "Because none of those Internet companies have competence from the mobile world they need a ShoZu to open it up," he adds. "They are the bridge."

These alliances are just a hint of how mobile social networking may look five years from now. After all, while loose "communities" existed via message boards a decade ago, who could have then envisioned a MySpace or a Bebo?