Can you make money from WAP?

Despite flopping miserably and being castigatigated in the press all across Europe WAP content over mobile devices has been warmly embraced by Middle East companies.

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By  Barnaby Chesterman Published  December 23, 2000

Despite flopping miserably and being castigatigated in the press all across Europe WAP content over mobile devices has been warmly embraced by Middle East companies.

The Saudi Telecommunications Company (STC) recently revealed it had begun testing the wireless application protocol (WAP) for Internet access through mobile devices. It has even set (provisionally) January 8 as a target date to begin a six-month experimental phase.

Saudi Arabia thus becomes the latest Middle East country to embrace the rapidly exploding m-commerce phenomenon being driven by the convergence of WAP services with mobile telephony. Most other Middle East countries are involved in some form of testing for WAP and some have even begun offering WAP services through mobile devices.

But as the Middle East rushes to catch up with the technology evolution that’s accelerating so rapidly in Europe, the question begs, why WAP? This question is particularly prominent given that WAP services have been widely regarded as a complete and utter failure in Europe so far and have been pilloried from post to post by the press. So if this technology is castigated in Europe, why is the Arab world so eager to embrace it?

Well, firstly, despite its considered failure in Europe, many leading consultants and experts still expect WAP to take off in the next few years. According to a global survey by the Boston Consulting Group (BCG), although consumers are dissatisfied with the mobile commerce applications on offer, most current and potential users believe mobile services will play an important role in their daily lives in the future.

The survey discovered that one in four owners of mobile devices stopped using m-commerce applications after the first few attempts, the most likely reasons being high costs, slow speeds, awkward navigation, difficulties with typing text using a phone keypad and unreliable service. Yet 82% of the people surveyed believed that the mobile device will become their personal travel assistant within the next three years.

And almost as many (81%) predicted they would be using mobile devices to perform daily activities such as sending e-mails, gathering information and shopping.

The report predicts that this level of consumer acceptance will generate global B2C m-commerce revenues of US $100 billion by 2003, the reason being that according to BCG, operators and equipment manufacturers are taking steps to address the frustrations felt by consumers.

It concluded by suggesting certain measures, particularly lowering customer expectations about the quality and speed of the mobile Internet technology currently available, that would help reduce the pessimism surrounding WAP.

A separate study by the British company, Datamonitor, forecasted that 270 million Europeans will have access to wireless mobile telephony by the end of 2005. And 69% of these subscriptions are expected to be data-enabled using the WAP protocol.

Now that’s more than 186 million WAP-enabled cellular mobile subscriptions in less than five years. That’s not bad for something that is a perceived failure.

The key findings emerged from the Datamonitor report, Next Generation Mobile Devices: The Call of Wireless Data. According to the report, WAP services are being driven by tremendous industry backing and are set to become an essential value-added component of many mobile subscription services.

Many companies are preparing themselves for the m-commerce revolution due to the rapid rise of mobile data services. But it’s not just going to be about WAP content over a GSM network, many of the new subscriptions will be based on General Packet Radio Service (GPRS), Universal Mobile Telephone System (UMTS) or third Generation (3G) standards that allow greater bandwidth mobile data communications than today’s GSM networks.

The report predicts that next generation wireless services will herald many new devices and applications, from wirelessly connected portable video cameras to real-time moving images on mobile phones.

“Wireless mobile services will continue their rapid expansion in the new millennium with an increasing number of subscribers looking for value-added data applications,” says Datamonitor consultant, David Hall.

“While current GSM networks and WAP devices have limited data functionality, third generation networks will add portability to multi-media services. These new services are likely to lead towards increasing commoditisation of traditional mobile telephony. This should introduce increased price competition in basic service markets which will help attract new customer demographics.”

This is running a little bit ahead of the whole WAP issue, although it is intrinsically tied into the whole m-commerce topic and it’s difficult to address WAP without considering mobile data services as a whole.

“WAP is here and now. Hype is becoming a reality for mobile data communications,” continues Hall. “WAP services are set to be swiftly adopted by subscribers in Europe. All the major mobile phone manufacturers and service providers are working together to develop markets for mobile data services based on WAP. This strange cooperation between traditional competitors seems to be paying off with demand for WAP services set to explode in the new millennium.”

So with this apparent prosperous future for WAP, it would seem that the Middle East is right to be embracing it. Yet positive expectations and predictions don’t generate revenue and the fact remains that customers in Europe have thus far rejected WAP.

Operators and manufacturers may not have lost faith but it’s consumers that are important. So what makes the Middle East market any more responsive to WAP than Europe has been?

Muhammad Ali Dariq, director of technology for Generation X Technologies, a Middle East content provider, believes there are three definitive reasons why WAP flopped in Europe.

“When they say it’s a failure it means that it didn’t meet the expectation people had because the technology was sold as wireless Internet, whereas in reality it was mobile data,” he says.

“Everybody expected to see Yahoo and compared it to a 15-inch or 17-inch monitor, expecting to see the colour graphics we see every day on our computers or the Internet, on a four line screen, which never happened.”

Dariq identified the second factor as the excessive control imposed by the operators.

"The operators in Europe tried to control the environment for WAP. They wanted to become the content providers, the developers and the controllers of all the applications. However, the technology is independent of the operator, it can run without it,” he says.

With the dominance exerted by the operators they were always going to hold the fate of WAP in their hands, and Dariq feels they got it all wrong.

“The third factor is the pricing,” he says. “There was no particular pricing model. For example BT Cellnet and Vodafone were charging UK £28-40 (AED 154-220) per year to subscribe to their service. People were thinking, why should I pay for this service when I can get it free of charge over the Internet.”

Not everyone is entirely sure that WAP was a complete flop in Europe, though, including the mobile information provider Info2Cell’s CEO, Bashar Dahabra.

“We believe that WAP, rather than being a failure, faced a lot of difficulties in reaching out to the mobile subscribers in Europe due to the fact that it wasn’t well positioned and it wasn’t marketed or supported by GSM operators,” he says.

“I think it was just a matter of being mishandled. There were high expectations from the actual operators as well as the media. The consumers weren’t ready and there wasn’t enough time given for the learning curve process.”

Although WAP was deemed a collective failure in Europe, certain markets and certain industries did actually warm to the technology. Finland for one went mad for WAP telephone banking. In fact the banking industry as a whole is very positive about WAP.

Keith Williams, head of retail banking, Al-Ahli Bank Bahrain, said: “In Europe a lot of papers took to knocking it, but you can’t ignore the explosion of mobile technology. I had a mobile in the late 1980s that was like a brick. It was difficult to carry around and was highly embarrassing when it rung. Yet in the last 10 years it’s gone and become a phenomenon.”

The question now is whether the Middle East can learn from the lessons learned by Europe. It’s one thing knowing where someone else went wrong, but fixing it yourself is another issue entirely. Dahabra feels that his company has come up with the answer, though.

“The difference with what we are doing in the Middle East is that we are cultivating SMS services with our WAP services,” he says. “So what we’re saying is that subscribers to our WAP service can receive alerts using SMS and only go to WAP when they require it.”

The European model launched WAP independently of SMS, thus requiring users to simply browse WAP sites until they got fed up with the slow load times and poor quality.

“There was no driver for them to browse,” says Dahabra. The service Info2Cell is offering, however, is what Dahabra calls ‘push WAP’. It will be sending customers SMS messages, alerting them to particular news of interest or even news they’ve subscribed to through a SIM Toolkit.

These SMS messages will arrive with hyperlinks built into them, allowing the user to read the message and then click on the hyperlink to be transferred to the corresponding WAP pages.

“We’re using the SMS as the mechanism to alert the subscribers that there is a need to browse, that there is breaking news or there is something happening in an item they are interested in,” says Dahabra.

Most people seem to be championing the WAP cause in the Middle East, but Brad Taylor, managing director of Jinny Software, a company providing a portal server for companies that have created a WAP portal site, is advising people to embrace with caution as he sees certain limitations to WAP technology. He sees WAP content on mobile devices as purely a value-add service that should be treated as such.

“There has been an awful lot of hype about WAP and what it’s going to do. The handsets and the screens aren’t very good, it’s slow and the content is very basic,” he says.

“But I think once we get started with these services and understand how to manage the customer and the technology, we’ll get better content, better handsets, better infrastructure and in 18 to 24 months you’ll be looking at some really valuable services.”

Despite his enthusiasm for the near future prospects, he says there’s definite limits to how much you can get from WAP.

“When you’re on the road you’ll look at what’s important to you from your handset, but never, in my opinion, will you sit down and play with your handset to surf the net, instead of your computer.”

It’s a valid point. No matter how much better mobile Internet devices become, the ultimate Internet device will always be the home computer. It’s the only one that can give you quality access to the Internet with the best graphics and the fastest load times, so there will never be any competition.

The banking industry seems to be the most keen on WAP at the moment and a lot of people are talking about it in terms of the most likely service to succeed. Andrew Tomes, technical manager of WAP applications facilitators, Advanced Digital Technology, says his company aren’t particularly interested in WAP because he finds it “too fiddley”.

He says: “We’ve been approached by a lot of people about providing WAP content and we are involved with WAP but for us it’s just a value-added service. It’s a short-term facility as we move towards GPRS. We’re more interested in publishing WAP services such as stocks and bank balances.”

Jinny’s Taylor agrees that banking services are the most useful and dismisses basic information services. “I don’t know a whole load of people who are going to go to their handsets just to look at their horoscopes,” he says.

“But if you’re somebody who has a banking application and you can check your balances, I think those services are more valuable.” But despite the interest in offering banking services, Tomes hit the nail on the head when he spoke about value-added services. In fact few people actually see WAP services as potential gold mines.

Williams doesn’t think his bank will make money from WAP, but did liken it to when ATMs were first introduced. “I would be surprised if we make money out of it [WAP]. It’s just an extra service for the customers,” he says.

“It’s like the ATMs in Britain in the 1970s. They cost money then, but they’re saving it now because banks don’t have to open new branches and hire more staff to cope with the demand for instant cash. In the short-term WAP won’t make money, but maybe in five to ten years it will save money.”

The whole question of making money raises divisions amongst the interested parties. Ziad Tassabehji, president of Web site development company, Interactive Technologies, thinks the telecomms companies in the Middle East are too powerful to make WAP worthwhile for anyone else.

“We don’t plan to develop WAP content ourselves,” he says. “We believe it’s too early for that. If you try to sell content then you’re at the mercy of the telco. M-commerce hasn’t delivered yet. So no, tomorrow you can’t make money out of WAP.”

In the long-term, Tassabehji believes that there is potential for WAP, but that it won’t reach critical mass until faster GPRS or 3G networks become a reality. He also doesn’t rate the telco’s chances of making much money out of WAP. “I think they are confused,” he says. “They don’t know if they should be in it or they should support it and only be an enabler. They are not sure how to make money from it.”

It’s not all doom and gloom although no-one seems to be considering WAP content over GSM networks to be profitable. Everyone seems to be indicating that only when faster, improved networks with greater bandwidth, such as GPRS, UMTS and 3G are launched, will WAP becomes profitable.

Dahabra sees WAP as the mechanism by which his company can educate the market about mobile information services and the role that they can play in their lives. This doesn’t necessarily mean that WAP will be the protocol that becomes profitable in m-commerce, that may yet be the Internet.

“To a certain extent we see it as playing the role of introducing consumers to mobile information services,” says Dahabra.

“But we are not expecting that it will be self-funding, there has to be other mechanisms to support it.” Dariq believes it’s more than just that, though. “It’s a stepping stone,” he says.

“The reason is, whoever’s been involved in WAP has learnt one thing, it’s an emerging technology which helps everybody understand enough to be part of the mobile Internet and mobile data revolution, which still has to be seen through GPRS or 3G or technologies like UMTS. WAP is like the early stages of the Internet when there were only text browsers but people still had Web sites and had been working on content. The Internet started improving and that is why people started making money. That is exactly what WAP is doing to mobile Internet and mobile data today.”

When it comes down to it, the major issue with WAP isn’t actually WAP itself, it’s m-commerce. WAP is the current protocol with which companies have managed to launch some sort of mobile information service.

The service is poor and it failed in Europe because people expected so much more from it. In the Middle East, mobile data providers are conscious to lower customer expectations and thus avoid the widespread disappointment felt in Europe.

The service will improve, however, when data is transmitted over better networks than GSM. The question is, will WAP last long enough to see it?

Jon Tullett, editor of Communications Middle East (a sister publication), is convinced that WAP is doomed for failure.

“The current service is poor and when the networks are in place to improve it, people will demand a protocol that is superior to the current basic text-model on offer through WAP,” he says.

He believes that the new networks will bring with them the Internet itself and future handheld mobile devices will have the capability to accommodate the larger screen needed to browse graphics on the Web.

Whether this be on the handsets themselves or through new technology such as a semi-transparent eye-piece (such as the prototype IBM headset mini-monitor) that allows you to either focus on it and see a full-sized screen or look through it as if it were a sheet of glass or plastic.

Studies such as those conducted by Datamonitor and BCG predict great things for WAP, through m-commerce. But we must be careful to distinguish between WAP and the broader m-commerce market that as of yet portrays no discernible boundaries.

Mobile commerce services may well grow at the rate predicted, but they may also leave WAP well and truly behind.

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