Ms. Kaisu Karvala is the chairman of the biggest European wireless operator community, GSM Europe, representing 146 mobile operators across Europe. In this function she acts as a spokesperson and an ambassador for the whole European mobile operators community globally. In this article, Ms. Karvala discusses the impact of increased entertainment available through mobile phones.

With a penetration of more than 106% in some countries, what can the mobile industry still gain? What are the future possibilities and threats? Is the regulatory environment going to kill us?

I strongly believe there is still a huge potential to grow and gain new business opportunities, if we just dare to go and get them. One of those is clearly mobile entertainment.

Two of the most significant commercial developments over the last decade have been the mass market take-up of mobile phones and the growth of online information and entertainment services. These developments are now converging with the growth of mobile content. Without hyping it, mobile phones look set to be the next mass market platform for entertainment. With bandwidth, functionality and penetration increasing, mobile handsets offer great promise as ever-present entertainment devices, especially for portable music and video. Critical to the enablement of mobile content, though, is the deployment of digital rights management (DRM) systems.

Two segments in digital music

The state of the digital music market today is a tale of two segments: online and mobile.

The online market accounts for a large amount of content consumption and, as we know, much of the content is illegally acquired via peer-to-peer networks. Recently, however, the market for online music stores supported by DRM (such as iTunes) has been established and has shown very rapid growth. At the same time, indicators suggest that piracy is reducing, although clearly it is still prevalent.

The mobile segment has a very different history. Historically, piracy has not been an issue as, among other things, mobile devices and networks were ill-suited to receive large files. While the popularity of mobile music was reflected in the commercial success of ringtones, these were DRM-controlled to prevent sharing, and mobile users became accustomed to paying for mobile content rather than sharing the expectation of many online users that content (especially music) should be downloaded for free. At the moment we are still struggling with a number of different, non-compatible DRM standards, but the mobile industry in Europe works to an open standard (OMA v2) that is developing to support interoperability across mobiles.

Statistics supporting the assumptions
 
Revenues from mobile content in Western Europe alone are forecast by IDC to increase to €3.7 billion in 2010, up from €1.1 billion in 2005. Mobile music downloads are estimated by Juptier Research to be worth four times the value of digital music in the online environment by 2009. What a revolution!

The IFPI estimates that the European market for music on mobile phones already accounted for over 40% of the overall market for digital music in 2005 and up to around 70% of the digital music market in countries such as Spain and Italy.

As a result, content owners can harness the undoubted benefits of mobile distribution - such as greater reach, lower distribution costs and more customer information to guide product development and marketing - while preserving the ability to recover costs and gain a return on investment.

So even if the mobile industry is the new target for internal market regulation, there are still huge possibilities to grow using our scarce resource with innovative services.

We just will need to be stronger, wiser and faster than existing players in order to survive.

Kaisu Karvala – GSM Europe & TeliaSonera – From her presentation given at the Experian Decision Analytics Telco Forum 2007

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