To Internet or not to Internet is the question.
Some carriers have embraced the idea of selling wireless content over third-party Internet sites, while others have steadfastly rejected it. Content providers like Walt Disney Internet Group are clamoring for the technology in hopes that it will spur sales, but the strategic issues surrounding such a capability so far remain unresolved.
The issue is being played out at Sprint PCS, which recently decided to extend its billing-on-behalf-of service to Internet sites run by its content partners. Thus, Disney soon will be able to sell ring tones and graphics directly from its DisneyMobile.com Internet site and have the payments billed directly to buyers’ Sprint accounts. The technology means DisneyMobile.com will no longer have to give users detailed and complicated directions on how find Disney content using the WAP browser on their Sprint phones. Instead, Disney fans simply can enter their Sprint phone numbers and passwords on DisneyMobile.com to have the content sent directly to their phones. The cost of the content will show up on their Sprint monthly billing statements.
Although Sprint’s new billing-on-behalf-of capability is not a revolutionary technology by any means, it raises several notable issues.
“It depends on how the carrier wants to interact with the customer,” said Linda Barrabee, senior analyst at the Yankee Group.
By selling content over third-party Internet sites, carriers run the risk of losing their grips on their customers’ wireless experiences. Subscribers may not look to their carriers for new content, but rather to other brands and Internet sites. On the flip side, such a technology opens a new channel for wireless content sales, which in turn could boost overall data revenues. It also gives content providers like Disney the chance to sell their wares more easily-those visiting DisneyMobile.com won’t have to fire up their WAP browser to get Disney content on their Sprint phones.
“It makes sense,” said Seamus McAteer, managing partner and senior analyst at Zelos Group. “It’s a sensible move on Sprint’s behalf.” However, McAteer said DisneyMobile.com surfers still have to authenticate their identities before scoring content-a process that could hinder sales.
Others disagree with Sprint’s strategy. Verizon Wireless, the nation’s No. 1 wireless carrier, said it has no plans to extend its billing capabilities to third-party Internet sites.
“That way we can best protect against licensing infringement … and viruses, and best meet our financial objectives,” said Jeffrey Nelson, a spokesman for Verizon.
Nelson said the carrier intends to keep all of its content sales channeled through its phones. Thus, Verizon can ensure all of the applications its sells will work seamlessly on subscribers’ handsets-and that it scores the revenues from such sales.
Some carriers sit between Sprint and Verizon.
“Obviously, if there are other ways to access content, we’ll look at that,” said Ritch Blasi, a spokesman for AT&T Wireless Services Inc. Blasi said the carrier has no specific plans to sell content over third-party Internet sites, but AT&T Wireless is not fundamentally against such a capability.
Sprint’s billing-on-behalf-of service extends only to content providers with which the carrier has agreements, such as Disney. Therefore, only registered Sprint content partners can sell ring tones, games and other content through the Internet and pass the cost on to a user’s Sprint bill. This way, Sprint spokeswoman Jenny Stevens said, the carrier can ensure the content will work on a user’s phone.
However, content providers don’t necessarily have to partner with carriers to sell content over the Internet. Zingy, for example, sells ring tones, games, screen savers and other content over its Internet site, and users can pay Zingy directly using their credit cards. Once a user pays for content, Zingy then sends a text message to the customer’s phone that includes a WAP link to the desired content. The user can then download the content directly from Zingy-thus cutting the carrier out of the picture.
Although Yankee Group has no specific numbers, Barrabee said the vast majority of wireless content sales are conducted through wireless carriers. She said only a small portion of content sales to date occur on Internet sites outside of a carrier’s purview. However, she said, that may not remain the case.
“There is a risk,” Barrabee said. “If (the carriers) don’t make content easy to find, buy and use then the user might find it somewhere else.”
Indeed, Europe has become a major breeding ground for third-party content providers working outside of carriers’ distribution networks. There are dozens, even hundreds, of Internet sites selling wireless content.
“There are free ring-tone sites; they are out there,” Barrabee said. “The challenge is how to get the carrier to participate.”
