I’ll be the first to cheer when even one of Japan’s mobile Internet troika offer substantial per-event traffic billing regardless of number of packets. Realistically, this probably won’t happen on the 2G networks (the spike in usage would swamp the systems, yada, yada, yada), so the interesting question is: which 3G network will offer re-event billing the first? And which will subsequently offer flat-rate? Don’t be surprised if it’s KDDI with their CDMA technology.
Update: How about that!
I went to happy hour on Friday with a senior account executive at a major ad agency that counts one of the top-four Japanese carriers as its client, and my exec contact had a few pointed comments to make over beer and chips.
He related how he has participated in numerous campaign and strategy sessions with his client’s top management, and has been asked on several occasions for his opinion on what kind of data services would sell (and, of course, how to sell them). He’s pointed out that, perhaps, the mobile world should think about evolving towards new forms of content billing – and that maybe carriers should take a hint from payment models used by other media.
“If you stop off at the station kiosk to pick up the Nikkei on your way to the office in the morning,” he said somewhat excitedly, “the guy in the booth doesn’t stop and say, ‘ OK – one newspaper – that’s 30 pages at 10.8 yen per page; that’ll be 324 yen this morning, sir – a little cheaper than yesterday isn’t it?’ No – he sells you one newspaper – however thick – for a set price.”
This model of content billing – one ‘blob’ of content for a set fee – is how it works with newspapers, books, magazines, and other mass-market media consumables. The same model applied to mobile content gives rise to the much talked-about “per event” billing system, something that the Japanese carrier’s haven’t adopted with much enthusiasm.
By the second round of drinks, the exec was getting nicely warmed up. “Just think of all those 40- and 50-year-old male office workers who have keitais but don’t use much data at all, except for the odd mail. Sure – they make voice calls; but surf i-mode? Forget it,” he harrumphed.
Mobile dialers brought up in the boom age of TV, radio, and print (switch it on, watch/listen all you want; buy it, read all you want) aren’t taking to Japan’s wireless Webs and their per-packet billing systems. In the 70s and 80s, telephones in Japan, for example, were expensive and metered by the minute. Subscribers in the post-30s generation just aren’t in the habit of twiddling an i-mode button for hours on end to gobble up packets (issues of screen clarity and font size aside).
But now think about how to replace the printed broadsheet sports newspaper that these non-teens are buying each morning with – Ta-Da! – a cell phone. Dad’s not going to exchange his 300-yen sports paper for a variable-priced download session, but he might do so if the data price was a preset, reasonable sum – say 500 yen for all the text he wants.
But this is unlikely to happen, said my contact as the fish & chips arrived, so long as Japanese carriers are addicted to their per-packet revenues. And addicted they undoubtedly are.
Take the case of NTT DoCoMo. In September, the carrier claimed 34.883 million i-mode users, according to a recent IR presentation, and each i-moder was handing over a tidy 1670 yen per month for i-mode usage (the majority of which comes from packet fees). Although overall ARPU (voice and data) at DoCoMo is trending down, data is comprising an increasing share – 880 yen per user per month in March 2001 to 1690 per user per month (estimated) for March 2003. How would you like to have 34.8 million customers handing over almost USD$15 per month? Especially if that revenue is holding up a bottom line that is otherwise sagging?
Obviously, the carriers’ focus is on boosting per-user packet usage; if those 34 million users (or 17 million in the case of competitors J-Phone and KDDI) can be convinced to use even just 5 or 6 more packets in a month (Five more mail messages? Two more micro-Web page views?), that means DoCoMo would earn an additional 34 million x 6 x .3 = 61 million yen. Hence the carriers’ delight at the packet-gobbling surfing habits of the typical carefree teen…
But until there’s some thought put into creating data services and content that earn revenue in more “traditional” ways, it’s going to be hard to replace those sports papers in the hands of the mid-aged commuters with cellular terminals.
Sure, maps and a few other data ‘blobs’ are already priced by-the-download, but that’s for the content fee (the traffic fee is still by the packet). I’ll be the first to cheer when even one of Japan’s mobile Internet troika offer substantial per-event traffic billing regardless of number of packets. Realistically, this probably won’t happen on the 2G networks (the spike in usage would swamp the systems, yada, yada, yada), so the interesting question is: which 3G network will offer re-event billing the first? And which will subsequently offer flat-rate? Don’t be surprised if it’s KDDI with their CDMA technology.
My ad exec bar mate, perhaps grateful that someone would patiently listen to his ventilation, kindly offered to pick up the tab. The bill, by the way was for an order of fish & chips and four pints and the pub, unsurprisingly, didn’t bill per chip.
– Daniel Scuka