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BARCELONA (Reuters)—Wireless operators need to make mobile Internet much cheaper if they want it to become a success that can generate extra revenues, major mobile phone and mobile software makers said on Feb. 12.
The telecoms industry in developed markets has bet the farm on wireless broadband networks, sinking 100 billion euros in licenses and more than the equivalent amount in infrastructure, but the popularity of phones that take advantage of these new networks is sinking.
Sales growth of the more expensive and high-margin phone models slowed in the third and fourth quarter, especially in Western Europe, hitting mobile phone makers such as Nokia, Motorola and Samsung.
"When voice went mobile, it took a while for prices to become reasonable and understandable," Kai Oistamo, the head of Nokia's mobile phone division, said at 3GSM, the world's biggest wireless trade show.
"With data, the unclarity of how much it costs is the biggest problem at the moment. And of course prices are high as well. That really needs to be solved," he told Reuters.
Sales of handheld connected computers and smartphones, the most advanced handsets that can run computer-like software applications, slowed to 30 percent in the fourth quarter, from 50 percent in the third, according to Canalys market research.
In Europe, smartphone sales grew 16 percent in the third quarter as most people opted for cheaper handsets, using them mainly for voice calls.
At the world's No. 4 mobile phone maker, Sony Ericsson , President Miles Flint said wireless data traffic pricing was not transparent, and even flat data tariff packages contained complicated restrictions.
Hitting a ceiling
Mobile software makers also said things needed to change.
"Notionally all operators understand that the future is in data. But the execution of that strategy is a little different," said Pieter Knook, vice president mobile and embedded devices at software maker Microsoft.
"It has to change. The tariffs decide if it's going to be successful," he told Reuters.
Fellow software firms said data needed to save the day.
"Something will need to happen in Europe, and in North America where subscriber growth is hitting a plateau," said Nigel Clifford, chief executive at Symbian which supplied software for 70 percent of the 64 million handsets sold in 2006.
"The tariffing, that's something operators may want to look at," Clifford told Reuters in an interview at 3GSM.
Revenue from Internet access and other wireless data traffic only generates 5 to 6 percent of operator revenue, and will need to grow fast if it is to make up for voice call revenue, which is under pressure from competition and government regulation.
"If we want to go to the next phase of mobile communications four factors need to be in place: great devices, 3G (wireless broadband) networks, the pull of service and brands, and tariffing that is predictable and affordable," said Clifford.
"In EMEA (Europe, Middle East and Africa) the fourth factor will be important," he added.
He said there was keen interest from media and Internet companies to work with mobile phone makers, and they all relied on easy and affordable wireless access to services.
Microsoft said it was promoting a novel concept of pre-paid data cards, similar to the pre-paid voice calling cards.
"We believe there could be a huge opportunity and we're making that case with operators," Knook said, adding that it would allow travelers to buy pre-paid data cards from a local carrier and pay the normal local tariff, rather than the exorbitant prices charged for data roaming.
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