Michele Mackenzie
Vodafone's deal to keep traffic on the wireless network
It has been reported today that Vodafone UK has established a new wholesale package for wireless data traffic. According to the report, independent content intermediaries such as MonsterMob and big brand content providers such as Ministry of Sound will be able to buy wholesale data traffic packages at around £0.30 per Mb. For third-party providers, this will lower the barriers to entry to full-track music downloads and other premium services such as mobile TV, markets in which they have thus far been unable to compete. Vodafone has confirmed that this is at the pilot stage, and is not yet a commercial offering. Initially it plans to target content intermediaries, the offering is UK only and is initially designed for 'rich media'. Obviously it could have wider competitive implications; for example, if it was widened out to VoIP. Comment: This announcement is not altogether unexpected and we predict that other operators will follow suit fairly quickly. There is a big question mark over the viability of offering rich media applications such as full-track music downloads and video over the wireless network. Rich media is a much harder sell for wireless players, as they come up against fierce competition from the online players. Full track downloads over wireless are already sold at a premium to the fixed offering (£1.50 versus £0.70). Large players such as Vodafone, which can absorb the cost of the traffic for their on-portal offerings, have a chance to compete in this market - end-users benefit from a bundled content/traffic charge. For smaller players that have to charge their end users a hefty traffic charge on top of the content charge, it severely limits their competitiveness. This wholesale deal will allow the independent players to offer a competitive, integrated price for rich media. Surely this is a good thing for the wireless music market. The uptake of rich wireless music services has been slow. In order to grow the overall market for rich wireless applications and drive up usage, it is important to lower the barriers to entry to non-network owners. There are a large number of wireless content intermediaries, both generalists and specialists, who will be instrumental in building this market. But it is also in the wireless network operator's interest to provide wholesale traffic deals. Players such as MonsterMob were planning to enter the mobile music market anyway, providing full-track downloads over the fixed network to PCs and enabling sideloading onto the wireless device. Encouraging users to bypass the wireless network altogether is not good news for the operators. They want to avoid being locked out of the value chain at all costs. Providing wholesale traffic deals to third parties is a new revenue stream for them - better wholesale than "no sale", as they say. Other operators will need to follow quickly, or else they stand to lose out.
