Mobile carriers still offline in a world of digital content


BARCELONA, Spain -- When you come to a confab like this week's Mobile World Congress in Barcelona, you have moments that tend to encapsulate the entire state of the industry.

I wasted no time having one. On Monday morning, the first of four days of the world's biggest annual cell phone event, I learned that MTV sells more videos through Apple's iTunes than it does through 50 mobile carriers combined outside the U.S.

The lesson: For myriad reasons, mobile users are forsaking video services offered by giant carriers like Vodafone in favor of PC Internet-based sources like iTunes, from where they transfer content over to their MP3 players or phones, a practice known as "sideloading."

"Mobile operators have a big opportunity, but they're being lapped," says MTV senior vp digital media Gideon Bierer, who sells such shows as "South Park" and "SpongeBob SquarePants" on-demand to gadget users.

Like many content industry executives, Bierer is calling for carriers to get their act together. Whereas not long ago media companies griped about carriers' stingy revenue sharing, today the rallying cry has more to do with carriers' clunky, hard-to-use services and with pricing that can be expensive at worst or impossible to understand at best.

Bierer and his media industry counterparts are itching for the mobile world to turn into an Internet-like environment, where users pay a provider -- the mobile carrier -- a flat monthly rate for open access to the Net's breadth of content. Carriers are slowly getting there, and they're more advanced in some countries than others. But the truth is, many carrier entertainment services are scaring away potential users. Even in one of mobile entertainment's bright spots -- music downloads -- consumers are using the side door of PC transfers.

No wonder, then, that such handset vendors as Nokia and Sony Ericsson are jumping into the services business. Nokia launched its Music Store late in the summer, and here in Barcelona it announced a social networking site and an advertising network to deliver ads to mobile phones. And there's also Sony Ericsson's PlayNow Arena music service.

Now that Apple has come out with the iPhone and an Apple-based sideloading iTunes service to serve it, the pressure is on other phone companies to do the same. They risk upsetting their customers, the carriers, but Nokia and Sony Ericsson have decided that's a risk worth taking.

"Some operators don't like PlayNow -- they may not like the idea that PlayNow is Sony Ericsson's brand," Sony president Hideki Komiyama said. For offended carriers, Sony Ericsson is willing to co-brand the service.

Not all handset companies are taking the services plunge. For now, Korean giant Samsung is toeing the operator line, handing phones to Vodafone to sell the services.

"We don't want to go head-on against the operator," says Youngcho Chi, senior vp marketing at Samsung. "These services are a big, big thing for the operator. They're saying, 'Come on, kiddo, this is my revenue.' "

But perhaps in response to it all, operators are beginning to change. Vodafone, for instance, is offering clearly priced, weekly, unlimited access to over-the-air downloads from U.K. digital music firm Omnifone in a co-branding deal.

Now, if only they'd start sharing data with the rest of the media industry. "I could fit all that information for the last three years on one piece of paper," quips Bierer. Then maybe advertisers would finally flock to the mobile phone and really get this entertainment thing going.