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The Money Programme Tuesday, 22 February, 2000, 17:16 GMT
More 2 - 20/2/00
Mobile Mania

A new global industry is being born. And some of the world's most powerful companies are ready to stake billions on its success.

Mobile phones and the internet have emerged from nowhere to be the two fastest-growing business technologies of our time. Now they are being brought together in a new generation of mobile devices handling speech, text and pictures, all at high speed.

"The new generation mobile phone will be people's life in their top pocket " Sir Richard Branson tells tonight's BBC Money Programme. "If they want to buy a rail ticket, a cinema ticket, a plane ticket, they'll be able to do it".

The first mobiles offering internet access - sometimes called WAP phones - are already in the shops. But these are crude devices compared with the new generation phones which the industry expects to launch in two years time.

The government is auctioning five licenses to build the networks required for these new phones. The thirteen bidders include Virgin, BT, Vodafone, Orange and One-to-one.

Today's mobile phones will continue to work. But the new generation phones will offer a much better connection to the network, making it possible to enjoy video clips or music from the internet.

But will we want to use our mobile phones for internet access? The industry has been very excited by the success of internet phones in Japan, the first country to launch them on the mass market.

A year ago the leading Japanese phone company NTT Do Co Mo introduced the I-mode phone, designed to access the internet as well as make phone calls. In just twelve months they've sold an astonishing 4 million of them.

In Japan today an internet phone is an essential fashion accessory. 21 year old Kyoko Yamagishi uses her's all the time to e-mail fellow students. "Without it" she says "I couldn't keep in touch with my friends". She can also use the phone display screen to check out what's on and buy tickets, with the bill coming through on her mobile phone statement.

The runaway success of I-mode has helped make NTT Do Co Mo one of the most highly valued companies in the world, with a stock market value of over 200 billion pounds.

But Japan is legendary for its love of gizmos and gadgets. And although internet access phones are a big hit, in fact they are mainly used them for making old fashioned phone calls.

According to leading telecoms analyst Makio Inui, internet access is a great sales gimmick, but not so far a significant business for NTT Do Co Mo. Transmitting internet data represents less than one per cent of the company's mobile business last year.

European businesses prefer to draw positive conclusions from the Japanese experience. They are rushing to take a commanding position on the mobile internet. Vodafone made internet strategy a key element of its record-breaking takeover of the German mobile phone group Mannesmann.

The mobile internet is also part of Vodafone's thinking in it's 30 million sponsorship deal with Manchester United. Vodafone will offer United fans mobile phones and wireless internet services on which they can access text and audio messages.

When the new generation of mobile phones arrives in two years time - and assuming Vodafone wins one of the new licenses - Manchester United fans might be able to watch match highlights to their phones.

Another idea which phone-makers like Nokia and Ericsson are exploring is video-calling. It would mean building a tiny camera into mobile phones so that you can see and be seen while making your call. The new generation mobile phones should make this technically possible, though whether most of us will want to spruce up every time we use the phone is another matter!

A more serious question for investors in this new technology is what customers will be willing to pay. Yes of course football fans would like to see highlights of the match on their mobile phone as they go home. But the owner of TV rights for the game would want to be paid. And sending moving pictures would use up a lot of network capacity. If the price is too high, the fans will just wait for Match of the Day, as they do at the moment.

These uncertainties about what we will want to do with the mobile phones of the future has not discouraged many of the world's leading companies from jockeying for position on the mobile internet.

Almost every day brings news of deals between handset makers, media groups and network operators. And Britain's best known businessman believes the mobile internet is the key to future success.

"In three year's time", says Sir Richard Branson, "out of a population in the world of 5 billion people, a billion of those people will have mobile phones. It's the fastest growing market in the world."

Nils Blythe

Links to more The Money Programme stories are at the foot of the page.


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