Gardens without walls

08 Jan 2007

The days of the walled garden content model - which dictates that end users can only browse and buy content on their operator's branded portals - are just about over. Indeed, such strategies are becoming extinct. Even where walled gardens do still exist, more often than they are offered alongside an open content model.

What's changing their minds‾ For one thing, mobile operators realize that their own portals simply cannot hope to match the breadth of content that end users increasingly require. The rise of independent WAP sites and portals like Jamba and MonsterMob which have high-profile-brands and international reach are also helping drive mobile operators to open up their networks to third party content providers and services providers. Between improvements in mobile search and browsing solutions, and the entry of disruptive players like Skype and Internet brands like Yahoo! and Google into the mobile space, mobile operators have essentially been forced to rethink their content strategies.

If nothing else, the chief driving force is simple economics - operator-branded portals are not driving massive revenues.

Take Europe, where 50-70% of content revenues are reportedly driven from outside of the operator-branded portals. Vodafone, for instance, reports that in the UK about 70% of its non-messaging data revenues are now off-portal. The figure is lower in the US - around 40% - but it is growing fast, according to research firm Ovum.

As such, some mobile operators are already shifting their focus to enabling brands and other third party players to offer direct-to-consumer (D2C) services as they realize supporting users off-portal can drive traffic revenues. They're also discovering that there are additional revenue opportunities linked to off portal advertising, such as sponsored search. T-Mobile's move to 'Web' Walk and its partnership with Google is an example. Meanwhile, E-Plus in Germany has forged an agreement with Skype as one of the first steps the operator has adopted to exploring opportunities outside of its own portals by opening up its network to third-party providers.

In Asia, the most notable example is NTT DoCoMo, whose i-mode business model is widely seen as a semi-walled garden approach, whereby DoCoMo i-mode users not only access official on-portal i-mode content but also thousands upon thousands of 'unofficial' off-portal i-mode WAP sites.

But while these moves reflects increased awareness among cellcos that they're better off tearing down their walled gardens - or at least building a bypass around them - many cellcos are still addicted to control and have been resisting the call to let go.

A wrong approach

This at least partially explains why 3's announcement in mid-November of the global launch of its X-Series flat-rate broadband mobile Internet offering caused a stir. The X-Series service - under which a flat rate gets users unlimited access to a host of services including unlimited Skype VoIP calls, IM via Microsoft Live Messenger, e-Bay, Sling Player for mobile and remote access their home PC via Orb - kicked off in the UK last month and will spread to 3's other operation units across the world, including Hong Kong, Australia and Italy. Hutchison Whampoa chief finance director Frank Sixth proclaimed the X-Series nothing short of a flat-out rejection of the walled garden that its 3G units have stuck by for the last couple of years.

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