- The Washington Times - Wednesday, November 23, 2005

Mobile units

as versatile

as computers,

but at a cost



collection of ring tones from the likes of the Backstreet Boys. A handful of video games. Throw in mobile Internet access, and it all helps push Chelsea Ozawa’s monthly cellular-phone bill up to about $100, almost twice the national average.

The 21-year-old San Francisco State University student doesn’t question the need for any of her add-on mobile services. They have become part of her lifestyle, shaping how she projects her persona, how she perceives the world and how she whiles away her free moments.

“I like the ring tones of my favorite artists, and I assign them to different friends, so I know who’s calling,” says the Daly City, Calif., resident. “The games are fun, too. I play them when I’m bored in my class.”

Miss Ozawa is part of a small but growing group who use their cellular phones in ways unheard of years ago. The expanding universe of services comes with a catch: Users have to figure out how they are going to pay for it.

It’s insightful to note that Billboard magazine not only lists chart-topping hit songs, but also sales of the most popular ring tones downloaded from the Internet, says Jeff Joseph, vice president of communications at the Consumer Electronics Association in Arlington. The nonprofit organization represents 2,000 companies involved in consumer technology.

“It’s a huge market,” Mr. Joseph says. “One of the many benefits of digital technology is personalization. You can add wallpaper or photos to change the background. You can have your own personalized ring tone. You can have access to information and entertainment anywhere and anytime, but it will cost you.”

Yet customers like Miss Ozawa are barely scratching the surface of what’s available. Even as they latch on to text messaging, ring tones and picture mail, the large constellation of mobile services is expanding, offering everything from music downloads to live television, GPS navigation and even social networking services.

Fueled by advances in cellular-phone hardware and new DSL-fast data networks, carriers and their mobile-content partners are offering a mind-numbing array of mobile choices that are limited less by technology than by price, ease of use and consumer awareness.

Increasingly, they see mobile-data revenue as a way to bolster their bottom line and tap new cash streams that will be the key to future profitability.

Telecom carriers and content providers hope to increase the still relatively small number of mobile-data consumers by coaxing them to pay more for extra services.

On the hardware side of technology, the trend has been that as features and functions are added, prices go down, Mr. Joseph says.

“It’s very difficult to say what will happen in the content and access world,” he says. “Certainly what we will see in the future is more instantaneous access to entertainment information and cool new technologies. As that competition increases, it’s likely that it will drive down prices.”

This year, non-voice-data revenue from add-on services such as messaging, entertainment and information is expected to generate $5 billion, about two-thirds of which will come from text messaging, according to the Yankee Group, a

research and consulting firm specializing in communications technology. By 2009, the market is expected to grow to $15.7 billion, with text messaging accounting for about half of that total.

For that scenario to unfold, the revenue generated from the average amount of data a person relies on getting from his cell phone will need to triple, from about $4 a month to about $13.

Many analysts say that shouldn’t be difficult and predict the monthly tab could top $20. One who holds that view is Lewis Ward, a senior research analyst at IDC, a research and consulting firm that specializes in information technology and the telecommunications industries.

“Messaging has been the foundation of data revenue, but as the market grows, messaging will become a smaller component of the total,” Mr. Ward says. “Content will continue to hold steady, and the other bucket is emerging growth areas, things like video. I also can see location-based GPS services getting pretty popular.”

Innovations in the wireless space are surfacing at a fast clip. Indeed, Sprint recently said it was launching the first wireless music store, allowing buyers to download songs over the air for $2.50 per tune. The company then topped that with a deal with four of the largest cable companies to bring cable content to cell phones next year.

This means cellular-phone subscribers can play games simultaneously with friends online, get alerts when friends are nearby and play video podcasts from their handsets. In the near future, subscribers will be able to listen to satellite radio or use their cell phones to pay bills.

For the young, tech-savvy generation under 30, the technological advancements are in line with their expectations. Many have come to demand that their handsets deliver the same versatility and power they get from their personal computers.

“Because computers and the Net are such an integral part of our lives, when you’re on the road now, you expect it,” says Frank Lee, 27, of Berkeley, Calif. “It’s just good stuff.”

Mr. Lee spends $20 to $25 a month on a data plan from T-Mobile to get unlimited text messaging, a chat service and eight ring tones. He says he might consume more data if the prices were cheaper and the delivery speeds faster.

Mr. Lee touches on a key point in this evolving wireless future: At what point will the collection of services become too expensive?

Taken one at a time, many of the services don’t appear to put a strain on the pocketbook. A ring tone can be had on average for $2 or $3. Nevertheless, if you start a collection of them and begin dabbling in Web browsing ($10 a month), some live television ($10 a month) or video games ($3 to $6 or more a month), the proposition becomes a little trickier.

A study earlier this year by the Yankee Group tackled this question when it asked users how much they would be willing to spend on mobile-phone services if they had additional money.

The study found respondents in the lucrative 13-to-34-year-old demographic were willing to spend about $10 to $13 a month more.

Meanwhile, respondents 35 and older said they were willing to spend just about $7 more on data applications.

Casey Murillo-Williams, 28, of Petaluma, Calif., epitomizes the kind of consumer the telecom industry is pursuing. She spends about $25 a month for an assortment of ring tones and e-mail alerts but is cautious about spending much more in the future.

“If it costs more than that, I’d take another look,” she says. “My thinking would be at that point, I could be spending my money elsewhere.”

For Lydia Nayo, $25 a month on data services is unthinkable. She pays barely $2.50 a month for a ring tone and some text messages and says she is not prepared to shell out any more. She’s of the opinion that cellular-phone users are already tuning out the world with their phones. More services would just compound the disconnect.

“I’m a little more interested in balance,” says Miss Nayo, a 53-year-old Oakland, Calif., real estate broker.

Staff writer Jen Waters contributed to this story.

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