Wireless content isn't king in U.S.

While telecom carriers throughout the world are finding a way to pay mobile content makers their worth, U.S. carriers are creating a "revenue wasteland" for the same companies.

Ben Charny Staff Writer, CNET News.com
Ben Charny
covers Net telephony and the cellular industry.
Ben Charny
2 min read
While most of the telecommunications carriers throughout the world have found a way to pay mobile content makers their worth, U.S. carriers have created a "revenue wasteland" for the same companies, according to a new study from Jupiter Research.

By 2003, carriers will be spending $7.5 billion for mobile content. Nearly two-thirds will come from providers in Asia and Europe. Carriers in the United States will only be able to offer the same companies about 10 percent of that content pie, according to Jupiter Research.

"Carriers are being stingy with their content providers and milking as much revenue out of this as possible," said Jupiter analyst Dylan Brooks.

The study adds yet another layer of problems for U.S. carriers, which are fighting a battle on several fronts. With rates dropping, the carriers are searching for new ways to make money. They've pinned some of their hopes on offering games, stock quotes, and other content to cell phone users.

To do that, carriers have spent billions building high-speed networks and acquiring the new spectrum they need before the next generation of cell phones hits the market. Wall Street is not happy, and investors have put a financial cloud over the entire telecommunications sector.

Many look to NTT DoCoMo in Japan, which is regarded as the most successful wireless company in the world and one of the innovators in wireless software. One of NTT DoCoMo's biggest revenue producers is a fishing game that consumers play on their cell phones. Short messaging is another big revenue producer in Europe, where consumers exchange billions of messages every month.

While it's only a matter of games or short messages, it's also very big business, and the competition to attract the best of the content providers is clearly being won by those outside the United States.

Part of the reason for this derives from the fact that these companies can offer more cash to the content providers. Companies like NTT DoCoMo bill customers for the data downloaded to phones. This creates an easier way to track who's using what content and to divide the revenue.

But in the United States, carriers have shied away from even offering a subscription payment model. Instead, they are charging consumers for minutes spent on the phone. Content providers are even asked to pay some carriers like AT&T a fee to be listed prominently on their wireless Web home pages.

Some in the U.S. carrier market agree with Jupiter's findings.

"It's just not working," said a Cingular Wireless source who declined to be named. "Nobody seems to be interested in this stuff."

Brooks is urging the game makers, news providers, and mobile e-mail service providers to stay away from the United States until the carriers can mirror the same type of payment system that providers enjoy overseas.

He said he's already seeing content companies, mobile service providers, and others key players in the wireless game pulling out of their plans to infiltrate the U.S. market.