23 Sep 2004 13:45
As chief marketing officer of UK mobile phone giant O2, Kent Thexton was in charge of convincing subscribers to gobble up wireless data. The company gets 23 percent of its revenue from wireless data, including SMS, every year.
But Sexton's now left O2 to become co-CEO of Seven, an influential wireless data company used by top-tier US carriers.
US cellphone service providers, including Seven customers Cingular Wireless and Sprint, are counting on wireless data services like downloading games and movies to succeed in order to offset steep declines in the price of phone calls, their core product. That makes Sexton's mission most critical.
Sexton recently talked with CNET News.com about kick-starting mobile data use in the United States, whether Wi-Fi phones are the answer and other topics.
Q: 3G services are hitting the United States. But how much value is there in paying $80 a month for what, on its best day, amounts to a very slow DSL connection?
A: If you're just really a heavy-file power junkie looking for speed, I agree -- it won't meet my needs. But if you're using it with a PDA or phone, and pulling down simpler emails and photos instead of PowerPoints, I think it'll be a pretty good service.
But it's not really fast enough for video, which carriers seem to be banking on quite heavily?
That's where codecs can help. I sit on the board of a company creating better ways to download music onto cellphones. What they and others are doing is making it much easier to run these sorts of music applications. The same thing is happening to video.
What are carriers doing wrong in their approach now to wireless data?
In the early days, people got ahead of themselves. Now we have colour screens and as a result you're seeing more browsing traffic on phones. Camera phones are definitely helping. Now you're seeing two-megapixel camera phones, which is a lot more data to push across a network. That forces manufactures to have faster processors, better quality screens and more memory.
What's the wireless data landscape look like a couple of years down the road?
If you're a business person now, and you don't have a cellphone, then people look at you crazy. That will be the same for wireless data on cellphones. It'll be very easy to use, and pervasive. There will be lots more and much higher quality camera phones. In the business environment, instead of bringing a laptop, you can do most of your work on your handset.
Is that a long way to go in two years, considering how low wireless data use is now?
I got into the business in 1990 and shortly afterward, everybody was saying this is going to be the year of mobile data. But in Europe, it's really happening. O2, which I came from, gets 23 percent of its revenue from wireless data every year. That's over a billion pounds ($1.8bn). That's a pretty good number in my book. In my view, we're already there.
But revenue from wireless data is in the single-digit percentages in the United States.
While the US market has been behind, there are lots of signs it's moving quite healthily. In the US, text messaging is growing very rapidly now, even faster than at the same point in time as in Europe.
Just how much revenue is there for US carriers to grab?
In Europe, 15 (percent) to 16 percent of a carrier's revenues come from data. In Japan, it's more like 15 (percent) to 20 percent. In the United States it's about 2 percent. Human behaviour is not that different across the globe, so it'll happen.
Verizon Wireless customers send about 400 million text messages a month. How much higher can that number go?
I see them getting to between one billion and two billion a month in the next two or so years. I say that because at O2, we had about 70 percent of our customer base using SMS (short message service) every month and the average customer was sending 100 messages a month. If you do the maths, that's 700 million text messages a month. We were doing more with fewer customers.
What's going to make it happen?
In the US, everybody knows somebody who has a cellphone. That's the first step. Next you need interconnection agreements so anybody can message anybody else, regardless of their carrier. We're not there yet. But once we are, it's a viral application. Most people have an email account, so there are hundreds of millions of emails out there. BlackBerry has proven that you can mobilise email.
What's the future you see for Wi-Fi phones, which appear in the US this Christmas?
They make a ton of sense. But because Wi-Fi services are usually free it could end up cannibalising some data services that cellphone operators offer. And the Wi-Fi hot-spot business model isn't too clear yet. If you're a hot-spot provider offering service for free, how do you pay for the backhaul? There are also not nearly enough hot spots in general.
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