Challenges of New Media to the Mobile Telecommunications Industry - Coursework Example

Challenges of New Media to the Mobile Telecommunications Industry New media over mobile telecommunications networks is one of the most attractive newmarkets, as most consumers will want to take advantage of at least some of the capabilities. It is an exciting new technology and a massive potential market. However, when looking at the use of new media in the mobile telecommunications industry, certain potential problems stand out, but a closer examination uncovers more potential problems which are not so obvious. Problems of supplying enough bandwidth to carry the signals, building the infrastructure to support the services and manufacturing communications devices which meet the many needs of the customer at an attractive price are the obvious problems. Other, less obvious, problems include mobile spam prevention, establishing an accepted standard among networks and creating a viable business model. All of these challenges must be met if this industry is to survive. New media includes a number of very attractive capabilities: 1. file transfer from mobile device to Internet site, phone to phone or to recipient via email: file types include still photos, videos, small programs, ring tones, sound files (including music and voice mail) 2. mobile office: functions would include email, voice mail, schedule, calendar sharing, project management, mobile alerts, conference calling, 3. mobile interactive functions: chat or text messaging, game play, research (both academic and practical, like shopping and travel), cash purchases in enabled machines, fax sending 4. GPRS mobile geo-location, radio and television broadcast reception By digital interactive media we mean computer-driven forms of communication that allow for real-time exchange of audiovisual material among people and organizations. The Internet and its graphical interface, the World Wide Web, are paradigmatic of the kind of digital interactive technology that will permeate industrialized societies during the twenty-first century. The Web has three features that, taken together, distinguish it from past media. First, its digital nature means that users can send, retrieve, transform, and store the material that moves across it.(Turow, Joseph 2002) Considering for the ordinary file transfer capabilities mentioned above, infrastructure in most locations will not support many or even most of these functions. However, even where there is sufficient infrastructure, there are problems with service and signal compatibility and, more important, global agreements providing service availability.. People will want to use these functions and those of the home office even more when they cross borders than when they are at home. People take more pictures abroad, and sales and marketing executives have much more need for connection to their offices when in foreign countries. Unfortunately, there is still no standard and no encompassing trade agreement that will allow the customer’s phone to work away from home. This article concerning the GATT talks shows that some progress has been made, but there is not nearly enough. (Mclarty , Taunya L.; 1998) Domestic, and some foreign, companies are convinced that new media is the next big paradigm shift. We have the technology today to go far beyond the “Dick Tracy Wrist Watch” or Maxwell Smart’s shoe phone. These companies, often with the co-operation of government are beefing up their infrastructure or even building a whole new one, as did Williams Communications in 1998, when it came from under the con0compete clause in the contract with 3Com to which it sold 99% of its network. However, another problem arises in creating a viable business model. Napster taught the industry a lot when it showed how easy it is to share pirated music over the Internet. Now there are several on line music stares which make money from downloads under a dollar. Micro-payments makes the difference for them and three major partnerships between web sites and telecoms in China. There are two considerat9ion which need careful examination and planning: How much are customers willing to pay for certain services and how can micro-payments be administered? The current credit card model will not work, as the transaction fees will outstrip the charges geometrically. Driving the prices up to an unacceptable level. So the business model must include either in house micro-payments or use of a partner who can supply them. "Although mobile spam is a relatively small problem compared with spam on fixed networks, unsolicited text or picture messages can exploit and offend mobile users," said Rob Conway, the GSMAs CEO and member of the Board. "The widespread adoption of this code of practice will minimize these messages and reinforce the mobile industrys reputation for providing secure and trusted services." (M2 PRESSWIRE-15 February 2006) In fact, if staps are not taken to do exactly as suggested above, spammers will surely destroy the networks or, as the very lease, destroy much of the value of these services. So how can these problems be resolved in a timely manner is a primary question on the minds of telecommunications strategists. Resolution of at least these problems is crucial to the future of this industry, or the new media may go the route of early educational software, In the late 1980s when computers were getting into the schools and researchers agreed that educational software could benefit students, everybody jumped on that bandwagon. Schools, and even parents, spent money of educational software. However, it was soon obvious that all software was not created equal, and that there was a lot of expensive trash out there fishing for our dollars. However, the shininess wore off that penny very quickly. Most software was of poor quality and inferior programming which caused it to crash, of dubious educational value and boring. Parents and teachers alike stopped buying educational software as it was mostly books on the computer. The educational software market has never sompletely recovered from this early debacle. Currently the new media industry is precipitously close to the same kind of situation. Most mobile phone plans look a lot better than they really are. The customer soon discovers that they have to pay extra for a whole lot of services which attracted them in the first place. Now that would not be so bad if the prices were regulated so as to be somewhat realistic. However, when you get a camera phone and then find that you can only get the pictures out of the phone via either an expensive add on cable or an even more expensive web plan, the value of that lovely phone is greatly diminished. Some kind of equity in service prices would be far more profitable in the long run, as companies would not lose customer in the meanwhile. Open disclosure in plain language would also benefit the industry as a whole. A few companies are getting it right (example Nextel’s all in one plans), but too many are pricing themselves out of the long term profits. Companies are trying to pay for that necessary infrastructure as they go, and most customer do not like it. One area which is enjoying some success if the instant message genre of services which have succeeded in creating bridges among their respective networks. “The three FaceTime services help service or sales agents coordinate instant messaging with other forms of communication. The three services are: InstantAlert, which allows companies to use instant messaging as a first option for sending notifications to customers and partners. … InstantGroups, which combine multiple people under a single "affinity" name and route messages to available individuals within the group or team. … InstantEmail, which lets companies embed instant messaging links in an E-mail message. …Users without America Onlines Instant Messenger can be connected through a Java applet. InstantEmail is designed primarily for marketing to consumers in the teleworld. (Neff, Raymond K. 2000) A similar area is called Unified Messaging by another group. “The Unified Messaging Consortium sees unified messaging providing three key functions: * Real-time call management (incoming, outgoing). * Two-way message management capabilities (fax is a special one-way case). * Automated personalized assistance. According to Zimmer and Rosenberg, founding members of the Unified Messaging Consortium, the technology is already there and just needs to be leveraged by businesses. All of the messages could be stored on company servers for retrieval via the Internet form the mobile employee’s cell phone, PDA or laptop. (Zimmer, David A. and Rosenberg, Art 1999) So we can probably safely conclude that this part of the problem area of the new media distribution is nearing a solution. So what are the really big issues here? Well, the compatibility of hardware and global portability on compatible infrastructure is a deal breaker for many road warriors. However, with all the companies going global these days, including the telecoms and equipment manufacturers, we can probably assume that there are people working diligently to resolve this problem. The other major stumbling block is the business model. The biggest problem with current business models is that companies, both service and content providers, are including the cost of infrastructure upgrade in their pricing . This just is not going to work. Just as I will not pay fifty cents per picture to upload photos to get them out of my phone, a dollar per minute price tag on wireless Internet access is also completely out of line for most companies. There has to be another way. My proposal would be to set aside the cost of infrastructure and create the pricing plan without it. It can be help aside and decreases annually or even quarterly out of profits. As each quarter, the infrastructure cost and the profits are recalculated, the profits will rise and the cost of the infrastructure will fall. They will eventually balance enough to be included in the formula, but in the beginning, profits will be too low and the infrastructure cost will be too high to make this work. Companies have to beef up their infrastructure anyway to match their competitors. So there is no reason not to simply make this a long term debt for the company as a whole and not charged off to new business. The other major problem with the business model for content providers is the issue of micro-payments. The online music business has developed several viable business models which could be transported to work with other content. Basically, there are three models: pay as you go per download, which requires a deal with the credit card company to make payments under a dollar profitable. Monthly accounting or accounting when the debit reaches a certain minimum can work for this plan. With the heavy competition, the cost per download ifs falling on a regular basis. The second model is to take deposits via credit card and withdraw the micro-payments from that. The third, and probably more profitable method is subscription for unlimited downloads. At first, customers may download well over the value of their payment, but this seems to taper off rather quickly and settle into a more realistic amount., making the subscription once more profitable. International rules are making cross border business difficult for these firms, but it should not take long for the nations of the world to notice this golden egg. The secret here for pricing is to remember that enough bandwidth is the amount of peak traffic, not the overall traffic. At any other time, service level is high and consumed bandwidth is low. The future business models will vary greatly from those of today, but we cannot predict exactly how. One thing we know for sure is that it will be content driven. The first business model on the net preceded the advent of the World Wide Web. Content was dispensed by on line databases which branded the content as theirs and followed a business compensation model of 20% for the content owner or creator and 80% for the distributor. Branded content was genericized and mad subservient to the distribution brand, such as CompuServe Information Network, Prodigy and AOL. Customers paid for time on the network and for premium content. However, as time passed, distribution has become so easy that even a ten year old can manage it. There are even many sites devoted solely to distribution of user created content, such as Blogs and mini web sites like MySpaces. Content is presented free of charge, and the payment, if any, comes for ads on the page, either click through or affiliations. Click through ads pay tiny increments every time a surfer clicks through to the linked page. Affiliation links pay a percentage of anything the surfer spends on the linked site, generally 10%-30%. The only distribution network which has retained its old 20/80 model is AOL, since it depends more upon chat rooms and special interest groups than actual content. It is more a social network. The business model currently in place works well for on line content which is not distributed via wireless distribution networks. “Of course, the price charged by an online service needs to exceed the costs of providing those services. In addition to normal management costs, there are four other types of costs associated with online services:1. Bandwidth costs (Frame Relay, ATM, etc.). These costs represent approximately 30% to 40% of total costs.2. Network management (address assignment, routing, etc.). Network management is mostly considered a sunk cost, but can vary depending on the situation. The management costs may vary depending on the routing technology that the reseller uses.3. Customer support (e.g., marketing, etc.). Customer support costs can vary. Internet Service Providers (ISPs) may try to seek out certain types of customers to limit costs--those who know what they are doing so they wont be constantly calling the ISPs support services. The ISPs marketing strategy determines the types of customers that it will have.4. Content acquisition. AOL, Prodigy, Compuserve, and other ISPs acquire information, which costs money, and resell it.”( Alexander, Alison, Carveth, Rod Owers, James, 1998) Now the model is shifting. Content providers generally reap 80% of the revenue, and the content is branded so that the public can make judgments about the validity of the offerings. Branded content from a reliable source is more valued than generic content from site users. However, once site users create a reputation, even Blogs can acquire legitimacy and extra value. Content distribution is easy and cheap. However, that picture is changing once again with the advent of wireless delivery systems. Considering the cost of maintaining those delivery systems, one has to suppose a new business model will emerge. It is probably that the new business model will split the revenue more evenly between content providers and distribution networks. (Feldman; Tony 1997)The new wireless delivery system will enable content delivery from any location on the Internet, including company Virtual Private Networks. Not only this, but the content can be interactive and the wireless devices can also deliver content to any site on the Web. Revenue streams will include delivery services, content and advertisement on content pages. How these three major revenue streams will divides the user dollars is yet to be worked out. Sources Cited Alexander, Alison, Carveth, Rod Owers, James, 1998; Media Economics: Theory and Practice Lawrence Erlbaum Associates Feldman; Tony, 1997; An Introduction to Digital Media; Routledge M2 PRESSWIRE-15 February 2006-GSM ASSOCIATION: Leading operators join forces to tackle mobile spam; 15 mobile operators sign up to GSMA code of practice on spam(C)1994-2006 M2 COMMUNICATIONS LTD Mclarty , Taunya L.; 1998 Liberalized Telecommunications Trade in the WTO: Implications for Universal Service Policy; Federal Communications Law Journal, Vol. 51, Neff, Raymond K. 2000; Teleworld. Contributors: World and I. Volume: 15. Issue: 5. Page number: 156. COPYRIGHT 2000 News World Communications, Inc.; COPYRIGHT 2004 Gale Group Turow, Joseph 2002; New Media and the Commercial Sphere: two intersecting trends, five categories of concern.(article outlines special issue; Journal of `Broadcasting & Electronic Media Volume: 46. Issue: 4. Publication Year: 2002. Page Number: 505+. Zimmer, David A. and Rosenberg, Art; Business Communications Review, Vol. 29, January 1999 Read More