Qualcomm and Teleepoch Enter Into a 3G CDMA Subscriber Unit License Agreement, October 6, 2007

MTN chooses Cambridge Broadband Networks for multi-service wireless network in Rwanda, October 6, 2007

Brazilian government to publish 3G bidding rules soon, October 6, 2007

KTF 3G service suffers from technical problems, October 6, 2007

Argentina’s Personal lunches 3G service in Rosario, October 6, 2007

Russia has it's first 3G network, October 6, 2007

AT&T could drop Alcatel-Lucent as 3G mobile network supplier, October 6, 2007

Enea Extends License Agreement with ZTE for 3G Handsets, October 2, 2007

LG to unveil premium handsets in Brazil, October 2, 2007

KTF 3G subscribers doubled in less than 3 months, October 2, 2007

3G policy in India will be non-uniform, October 2, 2007

- previous news

3G mobile video services to boost revenue over the long term

April 16, 2004

The revenue opportunity for mobile video services (including telephony, messaging and content) in western Europe is attractive, but not compelling enough, at least up to 2007. However, the strategic importance of 3G networks and video telephony is overwhelming - both in terms of providing clear differentiation to consumers and sending an important message to investors.

"In the long term, mobile video services could be instrumental in driving up the average revenue per user (ARPU), and hence it has assumed greater strategic importance," says Frost & Sullivan research analyst Jan ten Sythoff. "However, in the short term, there are a number of limitations - both technical and commercial - that prevent mobile video services from gaining priority."

For instance, device penetration - the number of subscribers with a video capable device - including integration with the fixed network is a key concern across all three applications. Other issues include standards, formats, pricing, billing, roaming, ease of use, image quality and device capabilities.

Initially, the market for mobile video services in western Europe is expected to register sedate growth. However, with device penetration expected to surpass 30 per cent by 2007 and with a critical mass of users availing of such services on a regular basis, the market is expected to take off.

"In the coming two to three years, video telephony services will be introduced, the second generation MMS standard will penetrate the market and the quality of video content will improve. Once these points have been achieved, the market will be ready for further growth," elaborates Mr ten Sythoff. "Prices will decline as usage increases, and video services will move from being a high end, advanced service - as it is seen today - to a more mainstream application."

At present, mobile phone penetration in western Europe is more than 80 per cent and mobile video services are only expected to become more important as more advanced colour devices increasingly penetrate the market. As technical issues are solved, end users are likely to become used to the phone as more than just a communication device.

Clearly, penetration of video-compatible 3G devices is one of the most important issues in the mobile video services industry. This is currently extremely low, but is likely to increase gradually. By 2007, all devices shipped will have some type of video enablement, although a significant portion of them will be capable of only receiving video messages.

"Total revenue from mobile video services is likely to reach EUR 1.6 billion around 2007 and the majority of it is predicted to come from messaging and content services," says Mr ten Sythoff. "Video telephony is likely to take much longer to develop because of the requirement for higher penetration of 3G devices."

Interoperability is another critical issue that is stifling market growth.

Multimedia messaging services (MMS) suffer from lack of interoperability and the same is likely to happen with video telephony. Even if operators carry out thorough testing prior to the launch of the services - interoperating with other carrier networks, both fixed and mobile - there are likely to be some critical issues to be ironed out.

In the case of video content services, the prevalence of variety of standards and formats pose barriers to growth. These issues are being overcome, but they still add significant costs to the services. In fact, quality content is lacking and this requires investment. However, video content producers are unwilling to develop applications simply with revenue share agreements since they cannot regain their costs with low penetration of devices.

Quality of mobile video is likely to be a critical determinant of success.

Therefore, it is important for operators and media owners to work together to create quality content. Besides forging complementary partnerships, participants have to make sure that the content suits different types of mobile devices.

Pricing and billing are the other critical issues that need careful handling by the service providers. A range of pricing plans for different applications is available in the market and operators should take into account not only the individual pricing of services but also the relative difference in services, as they have implications on each other.

"Pricing must be used wisely as it is such a sensitive factor that can prevent market adoption and create a wrong perception about a service," says Mr Sythoff . "Price bundling is important to keep usage levels high, but 'one-off' charges can also encourage users to try new services".