Digital Content

The money-grabbing cellphone industry is plotting its revenge on ungrateful consumers. Customers have blithely ignored fancy services like television, video conferencing and internet access on their handsets despite the operators, cellphone designers and content providers pumping millions of dollars into those technologies. With consumer apathy making a return on those investments unlikely, the industry is now hatching a plot where resistance may be futile: mobile advertising.

A tiny amount of mobile advertising is already trickling through, particularly to people who enter SMS competitions or hand out their cellphone number when they fill in forms.

Advertising is among several new ways in which the operators hope to diversify their revenue as voice calls reach saturation point and stiff competition erodes profit margins. Making financial payments via a handset, listening to music and accessing e-mail, Word documents and other work-related software are also up-and-coming niches.

The focus on those services at the 3GSM Congress in Barcelona last week was a discernable shift. A year ago, delegates hailed television on the small screen as an unstoppable revolution. This year mobile television was still on the agenda, but in a far less convincing way.

"We have built up (services) without discussing with consumers whether they want what we are busy building," said Rudolph Grager, CEO of 0' Germany. "We are wondering why the customer isn't buying that stuff." What makes mobile adverts so attractive is that consumers will not be the decision makers.

The sheer size of the market excites Arun Sarin, CEO of the world's largest operator by revenue, Vodafone. "There are 2-billion cellphone users compared with 1,4-billion TV sets and 1-billion PCs," he said. "It's the ideal advertising medium that advertisers should pay a premium for."

Adverts could be personalised to suit the different interests and locations of customers, and delivering adverts, music and handling mobile payments promised new cash flows. "To grow larger pools of revenue we have to move into adjacent markets," Sarin said.

What should worry consumers is that the industry seems blissfully impervious to the danger of provoking a backlash. Just imagine if all the spam that clogs up your computer's e-mail comes to your cellphone instead.

Advertising is poised to grow dramatically. Yahoo has just signed up several global brands to run adverts in 18 countries when users tap into its home page on their handsets. So far Africa is not one of its target markets.

The GSM Association's CEO, Rob Conway, briefly raised the idea of an "opt-in" system, where anyone who did not actively ask to receive advertising could not be added to a mailing list. But opt-in protection for e-mail adverts adopted in some countries has barely diminished the deluge of spam.

Conway at least proposed some sort of code of conduct and the creation of a mobile advertising forum to unite the advertisers, content providers and network operators.

What concerns the operators more than the threat of furious customers is the risk that they may lose their financial stranglehold. Internet players including Google, Yahoo and YouTube are adapting their hugely successful computer services to cellphones, and the operators want a slice of that.

"Adjacent industries are moving into mobile and competing in our space" said Sarin. "We have to move faster otherwise others will eat our lunch."

Business Day