M1 chief skeptical on NFC cash, bullish on LBS ads

21 Nov 2008

The head of Singaporean cellco MobileOne reckons that location-based mobile advertising is one way to grow revenues in a flat-rate mobile data world. Mobile payments, not so much.

Just about every PowerPoint presentation these days comes with a slide showing hockey-stick data traffic growth but revenues from that data - primarily from flat-rate data plans - growing far slower.

"It's going to be a problem," said M1 chief executive Neil Montefiore. "People expect all-you-can-eat flat rates, and that will be the norm in five years, so it's tricky."

M1 has been preparing for the worst by looking for ways to lower opex, such as building out its own backhaul network of fiber and microwave, which will be operational by the end of next year.

In terms of generating new revenues, M1 has been trying services like mobile VoIP packages and enhanced browsing. But one area of promise, Montefiore said, is location-based advertising.

"We've just gone nationwide with a service we're doing with Singapore Press Holdings, where you get SMS or MMS alerts as you walk past a store, and that's doing very well," Montefiore told telecomasia.net. "It's gone from zero to hundreds of thousands of dollars in revenue a month in about a year, so it's promising."

Montefiore said that location-based ads work in Singapore provided the offer is a tangible one - such as discounts or freebies - and it's limited to a couple of messages a day regardless of where the user goes.

Opt-out is also essential, but while every ad comes with an immediate opt-out function, less than 6% of trial users actually do so, Montefiore said. "That's far lower than we expected."

Montefiore also said that mobile advertising in general could generate more revenues, though not until at least 2010.

"We partnered with Google five or six years ago, and we're only just now starting to see the clickthroughs on phones at a rate where they might consider sharing revenue with us," he said.

Mobile payment is another revenue-driving option championed by the GSM Association, which is pushing for NFC-enabled handsets for contactless payments. Payment trials abound in Singapore, with SingTel and StarHub all experimenting with contactless payments.

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