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Thursday, 15 February, 2001, 08:10 GMT
Search for 3G revenues
Online gaming will be a big earner for mobile companies in the future
Online gaming will be a big earner for mobile companies in the future
The search is on for ways to make money from third generation mobile phone services.

Last year, mobile operators paid governments huge amounts of money to get licences to offer these services in Europe.

But now investors wonder how long it will take the firms to recoup the cost of buying licences and building the networks.

A new survey forecasts that online gaming is set to be a big earner for these companies.

Revenues to be earned from mobile content - data sent over mobile phones to consumers - will reach more than $31.5bn in 2005, compared with $2.4bn in 2001, according to a survey from Datamonitor released on Thursday.

How the future data revenues divide up
An estimated 36% or $11bn of this will come from entertainment, by far the biggest earner.

About $6bn of these entertainment revenues will come from playing internet games on your mobile phone.

"Gaming and betting will be the largest category. They are a little bit addictive... From the moment you start, you just want to beat someone or challenge someone. It is a very good format for mobile phones," says Datamonitor analyst Panni Kanyuk.

Mobile operators can profit by taking a cut out of transactions carried out over their phones, though some of them may link up with or take over content providers, in order to ensure they have a bigger cut of the profits.

Revenues from data sent to consumers should complement revenue from business customers and voice services.

Analysys's Julie Robson - joint author of a separate report - points out: "These revenue forecasts are modest when judged against total revenues in the mobile market, which were around $250bn at the end of 2000."

Data streams

At first, most money will be made from information and communication data services, Datamonitor says.

But, as the mobile internet matures, entertainment, commerce and multimedia applications should generate more cash.

Subscriptions and pre-pay services will mean that entertainment and multi-media applications will be the most reliable money spinners.

Multimedia - the ability to stream and download audio and video clips - should generate $5.6bn by 2005.

"Multimedia applications are very exciting potentially, but they need so much bandwidth, they are going to be an expensive application to provide. Whether there is a mass market for it we will have to wait and see," she adds.

Tracking down users

However, opinions do vary on where the money will be made.

Location tracking services - based on new technologies that can locate mobile phone users as accurately as within 100 metres - is another potential source of revenues.

This facility can be used to help emergency services track people in distress or for transport companies to track the movements of their fleet.

So far, the impetus for introducing these services has come from the world of business or emergency services.

Analysys believes that this will change and that nearly three quarters of these revenues will come from the consumer market and much of these from the youth market.

While Datamonitor sees these services only generating $2.5bn by 2005 - inhibited by a lack of standards and immature technology - a separate report by Analysys foresees this facility helping companies earn $18.5bn by 2006.

Still not enough

But mobile data is just one potential revenue stream and by itself is unlikely to justify the cost of securing the third generation mobile licences and building 3G networks.

"If we only think about 3G mobile data services, they are not going to be enough to pay off licences on their own," Datamonitor's Panni Kanyuk said.

While some mobile operators estimate that data services could bring in about 30% of total revenues, Mr Kanyuk is sceptical that they will reach this target.

He believes that old-fashioned voice telephony will continue to be the main source of revenue for network operators.

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