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News & Highlights
Special Focus: Developers Have Their Say

The EdgeDaily Online
2004

We asked three content developers, Ati Bakush of Matrix Internet & Wireless, Hishamuddin Mohamed of Howtraffic and K K Lim of iNavigate for their views on what is coming and who are those that can benefit.

Who are some of the existing Malaysian content owners who have taken advantage of opportunities to make money from mobile delivery of content to phones. And what seems to be the best model to make this work?

Hishamuddin: The model that seems to work is still guesswork for me but I think it has to be a hybrid of packet-based and also one-time charging. An example of Malaysian content owners are those who create or own rights to locally created content such as the associations running sports like Football Association of Malaysia (FAM) and the Badminton Association of Malaysia (BAM). Beyond sports, there are local musicians and of course, the obvious ones are newspapers, television channels and radio stations.
Lim: As far as the business models are concerned, each player in the mobile value chain should work together by focusing on their core competencies rather than attempting to do everything on their own. The win-win-win business model developed by NTT DoCoMo and widely used in European countries is, the celcos should focus on key mobile service delivery infrastructure, mobile phone providers on developing new handsets, and content aggregators and content developers on developing new and innovative applications and content to exploit the mobile data bandwidth to generate higher revenue for celcos.

How should content owners approach this new medium?

Ati: Content owners should maintain realistic ambitions with regard to revenues from this stream. It requires a long-term perspective where revenues may not be immediate. Content should be priced realistically in order to have maximum reach. Content owners should also work closely with content providers to tackle issues such as media formatting for different handsets. In the future, content may have to be manufactured differently so that it may be more easily adapted to the mobile medium.

What role should telcos play beyond delivering the content?

Hishamuddin: They should be realistic about the revenue share model and not take too much out of the deal. This stimulates the industry and creates strong players.
Ati: Telcos should place heavy emphasis on user education of this new technology and explain its use to mobile subscribers. Simply advertising that '3G', 'video streaming', or 'high speed data' is available on their networks will do nothing to compel subscribers to adopt any new technology. The technology 'concept' needs to be presented to users, to describe to them what it will do for them on a daily basis.
Lim: They should ensure quality and a good mix of content and services to end-users and create a conducive business and technical environment for innovative content and applications to flourish. They should also act as a single point to negotiate, collect and pay appropriate intellectual property rights fees to music publishers

If telcos stick to delivering content, how crucial is this role in the entire value chain and what should be a fair revenue deal for them?

Hashimuddin: Thirty per cent is fair and more importantly, stimulates the market. There is no single content house in the world that owns 90% of its content outright. Telcos must accept this. Most content is a hierarchy of ownership structures. Telcos need to find the right blend of revenue-sharing models with content providers and owners. Then, the business will fly.
Ati: Telcos will eventually find themselves overwhelmed by the content market. Growing and maintaining a mobile network is hard enough without sourcing and creating new applications and content. New technologies will open up unlimited possibilities. Imagine if an Internet service provider (ISP) decided it would be responsible for managing and delivering all of the content available on the Internet to its subscribers. As advanced mobile platforms create new opportunities, Telcos will need to rely on others to create new content and applications.
One of the biggest challenges which the industry will be facing is the ability of the telcos to upgrade their systems to a) support new types of content and
b) manage increasing transaction volume. Their role in the value chain is crucial, failure to deliver content consistently and in a timely fashion will disrupt the value chain more than any other component.

Excluding Japan, most Malaysian operators are fairly competitive regionally with the current 70:30 revenue share in the content providers' favour. This figure has more to do with revenue leakage and risk calculations than the type of content which is delivered. From a network cost perspective, it is in fact cheaper and more profitable for an operator to deliver a polyphonic ring tone or video clip than it is for them to deliver a classic monophonic ring-tone.

Who are the local content owners in the best position to generate revenue from this medium?
Ati: I believe that the owners of the following type of content will be well-positioned for next-generation mobile media; popular culture; owners of localised popular culture such as cartoonists, and music/TV artistes; localised news; local general and financial news stand to be a popular source of content. Streaming traffic information via video will be a guaranteed success.
Lim: Media production, advertising agencies, creative artists, TV channels and other industries such as security, insurance and banking.

Will there be any losers?

Ati: If 'losers' is defined as content owners who will not successfully sell their IP through this medium, I would say that local sports will be considered a loser.

Can government deliver better services through this medium?

Ati: Governments can most certainly deliver better services through next generation networks. Access to interactive self-service applications over mobile will greatly increase the efficiency of government departments to their customers — the public. The much touted, 'e-government' initiative will finally momentum in usage and viability once web-based self-care applications are ported to mobile platforms. The majority of self-care interactions with government departments within the next five years will be conducted over mobile as opposed to the web. The facilitation of next generation media platforms will revolutionise this area more than any other.
Lim: Absolutely! Many government info services can be better provided through this medium, such as weather, flood, traffic and health alerts.