Event Review: Mobile Commerce World 2002, 24-26 September By Nicholas Brann, Contributing Editor

Not surprisingly, at this year's Mobile Commerce World - Europe’s only dedicated mobile content and commerce marketplace - one of the hot topics was the future prospects of Multimedia Messaging Services, MMS.

According to keynote speaker, Mauro Sentinelli, Managing Director, TIM-Telecom Italia Mobile, “SMS is becoming history. MMS is a whole new medium and will give opportunities for a vast array of services, games, commerce, chat and pictures, to name a few.”

Sentinelli predicts that some 80% of MMS usage will remain peer-to-peer, with the remaining 20% as an application to consumers. For this reason, subsidisation of handsets to achieve a network effect will be a key factor in ensuring the success of MMS services, as will interoperability. Systems integration services provision will thus become increasingly important to address interoperability issues.

Richard Shearer, CEO of Empower Interactive, talked about MMS from an M-Commerce perspective. Although the appeal of MMS as a medium for marketing is clear, Shearer thinks that M-Commerce hasn’t yet taken off because operators don’t want to compete with banks and the systems for clearing and credit checks are complex.  Another hurdle is the high number of pre-pay customers and the relatively small margins (about 4%). On the consumer side, fraud and the threat of MMS spam are also challenges.

Despite these issues, Shearer believes that MMS will become an alternative and credible means to conduct transactions. But he notes, “to be successful, the offering needs to be simple to understand and use – users shouldn’t have to changed their SIM cards or handsets”. 
 

Critical to the success of MMS will be the development of applications. Tiina Zilliacus, Developer Business Program Manager at Nokia, predicts that by 2005 the proportion of revenues from content and applications will reach 30%.  But this figure begs the question of who will pay for content. Will customers support increasing user costs in return for new applications? Or will the burden of the payment fall on mobile operators or even third parties?

Certainly, applications providers will have a tough battle ahead: success will only be as good as their next sellable idea. Zillacus believes that, similar to SMS, children will drive the market. The major concern is whether parents will accept far higher levels of expenditure than current SMS levels. Another issue is how to control MMS content to stop “unsuitable material” from being sent to minors.
 

And there are other challenges: the low value of cards in pre-pay environments, where people typically buy units of around €15, means that consumers will likely resist services that rapidly use up their credit. Furthermore, reverse billing for SMS/MMS presents technical problems that have yet to be resolved. Lastly, there is the challenge of content security: companies such as Warner are worried about how they can prevent material from being copied freely amongst users.

Overall, the discussions at Mobile Commerce World seemed to raise far more problems than it solved. The model for MMS is far from clear at this stage, and it is hard to gauge who, if anyone, is going to make money.  Offerings must be driven by customers’ needs, not what developers want to produce. Going forward, given the issues at hand, it seems reasonable to suggest that the interesting areas for investment in this space would be: 1) security for content, 2) back office systems, 3) ‘killer’ content, and 4) integration and interoperability solutions. But no one holds the crystal ball and companies in the space are all too aware that the fate of MMS lies firmly in the hands of the end-users.