Mobile Telcos rush to social networking

Kate Norton
09 Apr 2007
00:00

As the social networking phenomenon continues to gather pace, mobile-phone providers are champing at the bit to become members of the club. On Mar. 28, France Telecom's (FTE) Orange UK mobile arm said it would begin offering its customers access to social networking site Bebo this summer.

The exclusive deal comes hot on the heels of Vodafone's (VOD) announcement in February that the world's largest mobile carrier had struck deals to cooperate with News Corp.'s (NWS) MySpace social networking site and Google's (GOOG) YouTube video-sharing site, giving users access to their MySpace pages and allowing them to upload clips to YouTube from their handsets (see BusinessWeek.com, 2/13/07, 'Vodafone and MySpace Connect to Conquer').

New York-based Verizon Wireless, in which Vodafone shares ownership with Verizon Communications (VZ), also has teamed up with YouTube in the U.S. to offer access to the site's most popular clips there.

The mobile is 'Personal'

It's easy to grasp why there's a land grab afoot. In February alone, some 403.3 million unique visitors worldwide visited online community sites, according to researcher ComScore. The figure is growing at an annual clip of about 30%. With mobile phones already the hub of most people's social networks, the combination of the two seems like a natural.

'The mobile device is much better suited because it's very personal,' says Falk Müller-Veerse, managing partner at Munich's Cartagena Capital. 'There's nothing more annoying than giving your PC to your nephew, getting it back, and finding that you are suddenly conversing with his friends.'

Consumers seem to be ready. In a Gartner survey conducted in mid-2006, 35% of U.S. mobile users said they would be 'extremely interested' in using their phone to submit text, pictures, video, or audio content to a blog. In Britain, 10% voiced similar enthusiasm, as did 12% of those polled in Italy.

The killer app‾

The appeal is understandable. Social networking is to some extent about 'information snacking,' or checking friends' pages to see what they're up to, says Nick Jones, vice-president at Gartner in Egham, Britain. Figures from researcher Nielsen/Netratings (NTRT) confirm that the average MySpace or Bebo user spends less than 30 seconds on each page when visiting the sites. In that sense, social networking is ideally suited to mobile phones because consumers can check in while waiting for a bus, for example.

At the same time, social networking could be a 'killer application' that encourages so-far-reluctant consumers to use their phones more for wireless data services. The infrastructure is in place: In Europe, 'third-generation' wireless networks and handsets that offer zippy connections are now mainstream, while in the U.S., carriers are upgrading their networks now for the same capabilities.

The danger for carriers: They may not reap significant incremental revenue, as stiff price competition and aggressive bundling drive down the price of wireless data access. Plus, analysts say, mobile operators"”like wired Internet service providers before them "”run the risk of being little more than conduits for user-generated content and information.

Exclusive arrangements

What's more, it's likely to take three to four years before social networking via mobile phones becomes mainstream, notes Cartagena's Müller-Veerse.

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