The report predicts that the first applications to reach a mobile mass market will be those that exploit cross-over recognition by offering seamless access to popular fixed services. The ground-breakers will be those providers that also integrate inherit differentiators of surfing-on-the-go such as instantaneity, personalisation, location and efficiency in presentation. Berg Insight believes that established internet services, cleverly adapted for and ported to mobile, will eventually lead the way for uniquely mobile services and applications.

The challenge for service developers and providers will be to design, package and introduce mobile-specific features, such as context-sensitivity, so that they become a natural and easily accepted evolution of online communication, which will require a deep understanding of how users communicate and how they interact with each other and mobile technology.

“Mobile operators no longer consider WLAN a threat against data revenues”, said André Malm, telecom analyst, Berg Insight. “As flat-rate plans for data access become the norm, encouraging subscribers to use a local Internet connection actually makes much sense as a way to prevent data overload in mobile networks.”

Berg Insight has a more cautious outlook for the adoption of other connectivity technologies such as NFC and UWB in mobile handsets. The number of handsets with integrated NFC or FeliCa is forecasted to grow from 35 million in 2007 at a compound annual growth rate (CAGR) of 43.8 percent to 215 million in 2012, corresponding to an attach rate of 13 percent. UWB is not expected to appear in significant volumes before 2010 and only be featured in 1 percent of the handsets shipped in 2012.

Berg Insight recognises a significant potential for both technologies but believes that neither of them have yet become widespread enough to motivate integration in high-volume handsets. NFC is closest to achieving a breakthrough, which could be achieved as early as 2010 or 2011.

The development will be driven by consumer demand for ubiquitous Internet access. Rather than replacing fixed networks for Internet access, mobile broadband will first and foremost be a complementary access technology, providing a secondary Internet connection when outside of the home. As embedded HSPA/LTE chipsets gradually become a standard feature in notebook PCs designed for the European market over the coming three to five years, end-users will simply need to insert a SIM-card into their computer to get online at virtually any location. Berg Insight believes mobile operators will face a formidable challenge in managing the explosion in network utilisation.

Mobile data traffic, primarily generated by USB-sticks and PC-cards, already exceeds mobile voice traffic in terms of volumes on advanced markets. In Sweden for example, some half a million mobile broadband terminals are estimated to have generated twice as much network load as all 10 million handsets in the country combined. Consumers already account for 80 percent of the data volume in spite of only making up roughly 40 percent of the mobile broadband subscriber base.

 ”Every mobile broadband service provider has a dilemma”, said Tobias Ryberg, senior analyst, Berg Insight. “On the one hand they have a highly attractive proposition – a novel mobile service with high ARPU. On the other hand, the very popularity of the service stretches the mobile network infrastructure to its utmost limit – threatening to degrade the level of service for all subscribers.” The main response by operators has been to impose some restrictions on data traffic. Furthermore, the actual data speed is normally much lower than advertised due to lack of network capacity.

Ryberg concludes that significant network investments are urgently needed if operators want to keep up with demand. “In a few years, Internet users will expect to be able to view full-HD streaming IPTV via their Internet connection. Then it will not do to offer 14.4 Mbps which is actually 1 Mbps or unlimited data traffic which is in reality limited to a few gigabyte per month,” he concluded.

The market is still guarded and fragmented, but in the long term consumers will not accept to handle multiple devices, cards, accounts and passwords. A long-term pragmatic view and initial cooperation is necessary to enable the paradigm shift that will morph the mobile phone into a terminal for communicating with intelligent objects in the environment. ”Local contact-less services are already available to over 50 million mobile users that can shop, travel and get information by just waving their phones over readers”, said Sabine Ehlers, associate analyst, Berg Insight.

In Japan for example the service is well-established and a great success in terms of number of readers installed, service partners linked and subscriber terminals in use. When it comes to actually applying the technology however, the mass of consumers apparently need time to change deep-rooted behaviours. In Europe the development is held back by uncertainty about business models and the lack of coordination between different players. Especially mobile operators regard the new business field with caution due to its lack of obvious revenues for network owners. Berg Insight does however identify several important contributions from the operators, and reasons why they cannot afford to stay outside this exciting new field. The report gives a thorough technical background to the contact-less mobile field, identifies the best strategies for initial services and how to progress from there, and discusses experiences from a large number of trials and services from around the world. 

see what’s happening in Japan here

“GPS is about to become a standard feature in mass-market handsets which are highly advanced and support third party applications. Many will try and a few players will most likely succeed in creating location-enabled mobile applications that will have the same impact on the mobile industry as MySpace and Facebook had on the Internet.”

High adoption rates will however not immediately translate into high revenues. LBS providers are going to have to depend on advertising sales in the same way as other online players. The mobile advertising eco-system is still undeveloped and needs many more years to become mature.

“First there must be a critical mass of active users to work with, then someone must create a successful model for reaching out to these individuals via their handsets and after that the mobile media must be embraced by the top spenders in the advertising industry”, said André.