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R&D N 12/2006

Tanja Storsul and Pål Sørgaard

US Mobile Operators and their


Content Services
US Mobile Operators and their Content Services

R&D Research Note N 12/2006


Title US Mobile Operators and their Content
Services

Author(s) Tanja Storsul and Pål Sørgaard


ISSN 0809-1021
Security group OPEN
Date 2006.07.14

Abstract
In the United States the content and media industries are strong. The mobile market is
characterised by different 2G and 3G-technologies and by many mobile operators, four
of which operate on a national level. The calling plans typically have special add-ons for
messaging (e.g., SMS), data traffic and content. Practically all mobile phones are
branded by the operator. Reuse of 2G and 3G phones on other networks is not easy,
and will generally only work for basic voice services.
The mobile operators emphasize their content offerings, especially their video content,
in their marketing. Technical solutions and conditions for use ensure that the content is
available only on the operators’ designated terminals, indicating heavy emphasis on a
walled garden approach. A closer look at the information about the video content
available reveals, however, that only a small fraction of the content is exclusively
available on only one operator’s network. Many of the channels provided are delivered
by a mobile video content aggregator. In summary, the operators have chosen a
business model similar to the model of cable TV.
There are different pricing arrangements for mobile content. We have no data about
use and revenues, but it is our impression that the industry is experimenting with new
ways to distribute content.
Branded terminals, service conditions and calling plans all result in higher switching
costs for the customers. Most likely, the service conditions also result in lower volume
of mobile content. For the mobile operators, this may be a very high price to pay for
increased switching costs.

Keywords
Mobile content, walled garden, exclusivity, switching costs, United States

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Preface
This research note is based on data collected during a common study tour to
the United States in March and April 2006. We were visitors at the Annenberg
Center for Communication at the University of Southern California in Los
Angeles and we are very grateful for the hospitality shown to us at Annenberg.
The material presented in this note is mainly aimed at describing the situation
in the US market. It is a first insight into how US mobile operators approach the
emerging mobile content market. As this note shows, there are many
uncertainties in these market developments. We hope that this note may
provide some fruitful perspectives for further research as well as discussions on
how to approach mobile content markets.

Oslo, July 2006


Tanja Storsul, Department of Media and Communication, University of Oslo
Pål Sørgaard, Telenor R&D

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Contents

1 Introduction.......................................................... 1

2 The main operators in the US market.................... 2


2.1 General trends ........................................................................ 2
2.2 The four nationwide operators ................................................... 3
2.2.1 Cingular Wireless..................................................................... 3
2.2.2 Verizon Wireless ...................................................................... 3
2.2.3 Sprint Nextel Corporation ......................................................... 4
2.2.4 T-Mobile ................................................................................. 4

3 Calling plans, services and terms .......................... 5


3.1 Calling plans and terms ............................................................ 5
3.2 Services ................................................................................. 6
3.2.1 Basic content services .............................................................. 6
3.2.2 Advanced content services ........................................................ 7
3.2.3 T-Mobile ................................................................................. 7
3.2.4 Cingular ................................................................................. 7
3.2.5 Verizon .................................................................................. 9
3.2.6 Sprint (Nextel specific services not included) ............................. 10
3.2.7 MobiTV................................................................................. 11

4 Openness, Walled Gardens or Exclusivity? .......... 13


4.1 Little openness ...................................................................... 13
4.2 Limited exclusivity ................................................................. 14
4.2.1 Exclusive phones ................................................................... 14
4.2.2 Exclusive content? ................................................................. 15
4.3 Walled gardens ..................................................................... 17
4.4 The dominance of the cable TV model....................................... 18
4.5 Why the cable TV model?........................................................ 19

5 Conclusions......................................................... 21

References .................................................................. 22

Appendix: table of video content available ................. 23

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1 Introduction
This research note aims at describing the main mobile operators in the United
States with special emphasis on their offerings of content services.
Expectations are high that the mobile content markets will increase rapidly and
that mobile content services will be a killer application for 3rd generation mobile
telephony (3G). At the same time, both mobile operators and content providers
are searching for viable business models for mobile content services.
Among the key issues in mobile markets is how content services should be
provided in order to generate income. In the Norwegian market, CPA has been
established as a model for service provision that enables the customer to use
and pay for content services across platforms (3). In other markets, operators
are developing quite different models.
We have investigated how US mobile operators have approached mobile
content services. The US mobile market is highly competitive. It has several
mobile operators, and competition between different technologies for mobile
service provision. Further, the content industry in the US is highly developed
and delivers content all over the world. The business models that emerge in the
US may therefore turn out to be of relevance for other markets.
These characteristics of the US market make it very interesting to study how
mobile operators approach content. We have focussed on basic characteristics
in how US mobile operators provide content:
• What content is provided – and how?
• How and for what do customers pay?
• Is content provided openly and to all customers regardless of mobile
operator, or are there measures of exclusivity and walled gardens?
We have investigated the content services provided by the mobile operators
looking at text based information services, and audio and video services. In
one, more focussed investigation we have focussed particularly on video
services, as these are the most advanced services and in the provision of these
services we would expect the mobile operators’ strategies to be the most
explicit.
As a research note, this document mainly serves to document concrete findings
and to provide a first insight into the US market. The note is mainly based on
material available from the web and from the sales outlets of the mobile
operators as of April 2006.1 There are many mobile operators in the US, most
of which are regional (1). For practical reasons the study focuses on the
operators with a national footprint. We have not recorded user experiences and
we do not have economical data that could inform us about the success or
failure of mobile content services.

1
The links are generally in footnotes. These were valid at the time of writing (April-July 2006), but
we cannot guarantee their validity in the future.

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2 The main operators in the US market


Compared to Norway, the US mobile market is very heterogeneous in terms of
technology and coverage. There are four nationwide operators (five if we count
Sprint and Nextel separately, see (1)) and several regional operators. There are
also several resellers (Mobile Virtual Network Operators, MVNOs). Some large
companies like Time-Warner, Disney, Wal-Mart, and 7-Eleven plan to launch
their own MVNOs (1, paragraph 28).
In the following we will give brief accounts of the four nationwide operators.
These accounts are based on information on the web pages of the respective
companies, on material from the Federal Communications Commission (1) and
on several articles in Wikipedia.2 Wikipedia has excellent coverage of the
industry, with up-to-date and sometimes contested articles about the mobile
operators.

2.1 General trends


In recent years there has been considerable consolidation in the US mobile
industry. Independent regional operators have joined forces, the baby Bells
have bought many of these companies, other investors have bought others,
and finally there have been large mergers between the operators. As a result
there were four nationwide operators in 2006 as opposed to six only two years
earlier. Increasingly, the traditional telecom industry has gained control over
the mobile industry, and the former giant AT& is rising again.
Consolidation is the logical answer to tough competition between providers of
practically identical services. Another answer is differentiation, i.e. the
introduction of services, service properties or commercial conditions that tend
to differentiate the operators from one another. A lot of the discussion in this
research note should be seen in this light.
The mobile industry in the US in 2006 was more heterogeneous technologically
than in most European countries. There were four different 2nd generation
technologies (GSM, CDMA, TDMS, iDEN) and two different 3rd generation
technologies (UMTS, CDMA 1xRTT/EV-DO), while 1st generation (analogue)
technology (AMPS) was till in use. There were different kinds of messaging
services, and for a long time, it was not possible to exchange text messages
between operators. Interchange of text messages has, however, been possible
since 2003 (ca). As a result, the use of text messages was in strong growth.
While adoption rates of mobile phones still were somewhat lower then in most
saturated markets, the US market was highly competitive with its four national
operators and additional regional and virtual operators. Wireless Local Number
Portability has been in effect since late 2003, and some believe that was one of
the reasons AT&T wireless was weakened so much that it sought to be bought
by a larger company (the winning bid coming from Cingular).3 This may be
consistent with the relatively low growth rate of Cingular Wireless (see Table 1
below).

2
See http://en.wikipedia.org/wiki/List_of_United_States_mobile_phone_companies
3
The fall of AT&T wireless; http://seattlepi.nwsource.com/business/191742_attw21.html

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2.2 The four nationwide operators


As of April 2006, there were four national mobile telephone operators in the
United States: Cingular Wireless, Verizon Wireless, Sprint Nextel, and T-Mobile.
All of these are results of major mergers or acquisitions during the previous
decade.

Table 1 Nationwide operators in the United States as of April 2006.


Operator Customers4 Recent figures5 Growth6 Technology7
Cingular8 49 109 54 0009 9,96% GSM, GPRS, EDGE, UMTS, TDMA
Verizon10 43 816 51 30011 17,08% CDMA, 1xRTT, EV-DO12
Sprint13 21 507 CDMA, 1xRTT, EV-DO
47 60014 26,08%
Nextel 16 247 iDEN
T-Mobile15 17 314 21 69016 25,27% GSM, GPRS, EDGE

2.2.1 Cingular Wireless


In 2006, Cingular Wireless was the largest mobile operator in the United States.
It was formed in 2001 as a joint venture of SBC Communications and Bellsouth
based on 11 regional companies. In 2004 Cingular Wireless merged with AT&T
Wireless after a bidding war with Vodafone. SBC Communications was owned
by AT&T, but in 2005 SBC Communications bought its mother company AT&T
and changed its name to AT&T. In March 2006 SBC (AT&T) announced its plans
to acquire Bellsouth. Thus Cingular Wireless became the mobile arm of AT&T.
The original Cingular Wireless was a pure GSM (and GPRS, UMTS, etc.) operator
while AT&T wireless ran a TDMA-network. Like all US operators Cingular still
provided an analogue network based on AMPS. In 2006, Cingular announced
plans to close the TDMA and AMPS networks.
The new AT&T emerged as a full range provider of telecom services, i.e. local
and long distance (fixed) telephony, mobile telephony, Internet access over
ADSL, and satellite television.

2.2.2 Verizon Wireless


Verizon Wireless is a joint venture of Verizon Communications and Vodafone
and emerged as the result of a merger in 2000 of Vodafone Airtouch, Bell
Atlantic Mobile and GTE’s wireless operation. Verizon Wireless was the largest
mobile operator until Cingular acquired AT&T wireless in 2004.

4
Numbers are in thousands as of year-end 2004. Source (1).
5
As obtainable in April 2006.
6
Estimates of annual growth in 2005. Based on recent unofficial figures (column to the left).
7
In addition, all operators must provide AMPS until 2008.
8
http://www.cingular.com
9
http://www.cingular.com/about/company_overview
10
http://www.verizonwireless.com
11
http://aboutus.vzw.com/aboutusoverview.html
12
http://www.verizonwireless.com/b2c/aboutUs/wirelessNetwork.jsp
13
http://www.sprint.com
14
Sprint and Nextel:
http://www.sprint.com/investors/annualreports/pdf/2005/Sprint05arAllPages.pdf
15
http://www.t-mobile.com
16
http://www.t-
mobile.com/Cms/Files/Published/0000BDF20016F5DD010312E2BDE4AE9B/0000BDF20016F5DF010
980E317DFA319/file/2005_Q4.pdf

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Verizon Communications was formed when Bell Atlantic bought GTE (the largest
independent, non regional Bell operator) in 2000. Verizon Communications had
previously bought NYNEX (regional Bell for New England and New York).
In 2006, Verizon wireless operated a CDMA network with 3G (1xRTT and EV-DO
technologies). Verizon Wireless also operated an AMPS network.
Besides mobile telephony, Verizon Communications provided local and long
distance telephony, Internet access over ADSL, Voice over IP, video over optical
fibre (the FiOS service) and also Internet over fibre (FTTP, fibre to the
premises, called FiOS Internet).

2.2.3 Sprint Nextel Corporation


Sprint Nextel is the result of the 2005 merger of Sprint and Nextel. Sprint had
its roots as an early independent telephone operator (Brown Telephone
Company, later United Telecommunications) and as the telecom operator of the
Southern Pacific Railroad. Sprint PCS (Personal Communication System)
operated a CDMA network with 3G services on the 1xRTT technology. In 2006
Sprint invested heavily in EV-DO, already reaching more that half the US
population with EV-DO.
Nextel was founded in 1987 as FleetCall and renamed to NEXTEL
Communications in 1993. In 2006 Nextel operated iDEN, a proprietary 2G
technology based on TDMA provided by Motorola.
After the merger, Sprint and Nextel services were still provided separately as
their technologies differed. Sprint Nextel were, however, developing similar
calling plans for services across technological platforms.
Sprint Nextel was also a provider of local and long distance telephony, and of
Internet backbone (Tier 1 Internet service provider under the name SprintLink).
In 2006 Sprint Nextel announced a partnership with several cable television
providers whereby TV customers can bundle their Sprint or Nextel cell phones
with their cable bills.

2.2.4 T-Mobile
T-Mobile in the US emerged as the result of Deutsche Telekom’s acquisition of
VoiceStream Wireless and Powertel. In 2006 T-Mobile operated a GSM network
with GPRS and EDGE, but without any 3G.
T-Mobile HotSpot was the country’s largest provider of WiFi hot spots with 7682
sites all over US, e.g. in Starbucks, selected stores, some hotels, airports and
airline clubs.
T-Mobile has announced that it will introduce UMA (Unlicensed Mobile Access) in
2006. UMA allows for “GSM over WiFi”, thus filling coverage gaps and possibly
(authors’ speculation) allowing for lower traffic charges.

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3 Calling plans, services and terms


This chapter gives and overview of the calling plans, services, and especially
content services of the four main operators. The overview is based on the
operators’ brochures and web-information of early April 2006.

3.1 Calling plans and terms


The calling plans of these four operators followed essentially the same
pattern.17 They were individual plans (for a one-line customer), family plans
(for two or more lines), and the option of using prepaid (pay-as-you-go). The
subscription plans typically required at least a one-year subscription agreement
(two years for some Sprint plans). The subscriptions were sold with proprietary
phones offered exclusively by the network providers (more about this in chapter
4).
Typically, a calling plan would include:
• Monthly access charge
• Minutes included in the monthly subscription (named
whenever/anytime/airtime minutes)
• Night and weekend minutes – unlimited or a basic number included.
• Cost per additional minute.
• In-network minutes are unlimited with the examined Cingular and Verizon
plans. This may be added to the Sprint and T-mobile plans for an extra
charge.
On top of this, the customer could add a number of services such as:
• Bundles of text messages, e-mail and/or multimedia messages
• Broadband access/MB downloads
• Access to content services
Use of content services was charged through the telephone bill. How the
charges were calculated varied between mobile operators, calling plans, add-
ons etc. Charging for mobile content services could be in the form of:
• Fixed add-ons to the monthly subscription charge.
• Airtime charges. The customer might be charged for the airtime while using
content services.
• Volume charges: Customers would in many plans be charged for the volume
of incoming and outgoing data (number of kB).
• Pay per clip: Content, such as videos and music, was often charged per clip
or unit (typically video clip or song). This would normally include volume

17
Sprint brochure 2006 Sprint Choices, Service Plans and Rates, (NV5001-1400 49555604),
Cingular Brochure 2006 Cingular Nation GSM Plans Allover Network (NCP BR T 0206 0232 E
78802), Cingular Brochure 2006 Cingular Nation GSM Plans Allover Network (NCP BR T 0206 0232
E 78802),
http://www.verizonwireless.com/b2c/store/controller?item=planFirst&action=viewPlanDetail&sortO
ption=priceSort&catId=323&cm_re=Home%20Page-_-Personal%20Box-_-Individual%20Plans

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and airtime, but the rates accessible online were often not transparent on
how this would work.
It is important to note that the subscriber usually not only paid minutes for
calling or sending messages, but also for receiving calls, messages and other
forms of data. The caller and the recipient of a call, the sender and the receiver
of a message were both charged. They seemed to be equally charged. As stated
by Verizon about charging text messages:
“TXT Messaging is a two-way text messaging service. Send and receive
text messages of up to 160 characters right on your two-way messaging-
capable phone. $0.10 for messages received and $0.10 for messages
sent.”18
T-mobile described that:
“You are charged for all calls processed through your phone, including
airtime for toll-free calls and for voicemail receipt and retrieval. Your
phone can process more than one call at a time, Certain calls or features
involve multiple calls, and you will be charged separately for each; these
include forwarded calls (in to your phone and out to a forwarded number),
call waiting, and hold, conference calls and unanswered incoming calls
forwarded to voicemail. ... Except with respect to callers and recipients on
rate plans that include unlimited mobile-to-mobile calls, the caller and
recipient each will be charged (...) on a mobile-to-mobile call. .... You will
be charged for all data sent by or to you through the network, whether
received or not.”19
Similarly, Cingular stated that:
“Use of Services will be charged as specified in your plan. Text, Instant,
and Multimedia messages are charged when sent or received, whether
read or unread, solicited or unsolicited. Cingular does not guarantee
delivery of messages.”20
Sprint offered free incoming plans. These were more expensive to subscribe to
than the regular plans. The cost of extra additional minutes was quadrupled in
these plans.

3.2 Services
The services these companies provided were quite similar. They all provided
voice telephony, voice mail, caller ID and other basic services related to voice
telephony. They offered text and picture messages, data services, e-mail,21
Internet access for computers22 – and content services, which are in focus here.

3.2.1 Basic content services


These basic content services were downloaded onto the mobile phone using a
navigation interface. They were typically meant for personalising the phones.

18
http://www.verizonwireless.com/b2c/store/featurePopup?item=planFirst&featureType=incl&featur
eId=1847
19
Brochure: T-mobile 2006: Rates, Services & Coverage (T1031.4.LOS.4x9)
20
https://www.cingular.com/media/terms/#section1
21
E-mail is typically billed by the volume of data sent and received.
22
Internet access for computers is a service all operators provide. We have not investigated this
service particularly other than noting that efforts are made to separate this service from mobile web
and content services. This is discussed in the illustration in the last part of chapter 3.

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Compared to the Norwegian setting, these would be the content services that
had been around for a long time, firstly by SMS, later also available through
WAP. These services included:
• Ring tones and caller tones (tunes the caller can listen to while waiting for
an answer, also called answer tones and ringback tones).
• Graphics, styles and background pictures for the phones.
• Games to download.

3.2.2 Advanced content services


More advanced content services had been available for a short time only. These
included:
• Music, video and game downloads. These were similar to the ring tones and
images in the sense that they were typically downloaded and paid for per
piece, but they differed in quality and length. A ring tone typically would be
10 seconds, for the more advanced services you could download the whole
song.
• Audio and video streaming. This was for watching video or listening to audio
clips – or even real-time radio or television.
• Information services. These were text-based information services with
news, weather reports, sports news, info from the stock exchange etc and
seemed to resemble regular WAP portals with information services. They
were, however, often advertised as web-services. On CDMA, these services
were called mobile web 2.0.23
Both the basic and the advanced content services actualized the relationship
between network provision and content. In the following, we shall see how the
major four operators had approached this differently. We shall mainly focus on
the advanced services.

3.2.3 T-Mobile
T-Mobile provided basic content services like caller tones, ring tones,
background pictures and games. These were downloadable from what they
called T-zones, which the customer could access via their mobile phone or on
the web. T-zones were free to browse, but the customer was charged for all
data sent by or to the customer, whether received or not.24 T-Mobile’s services
were for T-Mobile customers only and would be charged to the customers’
phone bills. We did not investigate T-Mobile’s services more closely since they
did not provide more advanced services.

3.2.4 Cingular
Cingular provided both basic and more advanced services. They described the
following services: Text Messaging, Instant Messaging, Multimedia Messaging,
MEdia Net, Ring tones, Info Alerts, Graphics, Games and Mobile Email.

23
Not to be confused with the popular notion of Web 2.0 referring to new advanced uses of WWW
like flickr, del.icio.us, etc.
24
Brochure: T-mobile 2006: Rates, Services & Coverage (T1031.4.LOS.4x9)

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Downloads

Cingular’s downloads of answer tones, games, ringtones etc were offered by


independent providers. Downloads required an add-on subscription to Media
Net and usage would be charged according to the customer’s Media Net plan25
“Ringtone, graphic, game, and Cool Tool charges are incurred at the
stated one-time download rate or subscription rate, plus a kilobyte charge
for the content transport when delivered.”26
Typically answer tones were described as a service that personalises what your
caller hears. Answer tones were priced at $1.99 each and expires in 365 days.
In addition there was a monthly service subscription of $0.99 regardless of the
number of answer tones ordered. These charges were in addition to the
monthly service fee.
Similarly, ‘Cingular Sounds Tone Club’ provided bundles of downloads of three
packs or six packs of music tones: “Your direct bill will be charged every 30
days and, at the same time, credits will be added to your account which can be
used to buy ringtones and graphics through Media Mall.”27

Streaming

Cingular provided streaming of voice and video when offering channels from
MobiTV28 and MobiRadio.
Subscribers could access MobiTV with over 25 channels of TV for $9.99 a
month.29 The brochure stated that “Media Net service required and usage is
charged, based on your plan. Cingular recommends an unlimited Media Net
plan.”30 MobiTV is not a wireless company but a provider of services to several
network operators.31 MobiRadio are radio channels provided by the same
company.

Information services

Media net provided News, weather, sports, movies and more on a text-based
service.32 The portal looked like a WAP service but was not referred to WAP. It
was further clearly distinguished from computer-based Internet access:
MEdia Net is not equivalent to landline Internet. Only select sites
accessible through a mobile connection are available. You are restricted
from using a home page other than the Cingular home page. MEdia Net is
billed by total volume data sent and received (in kilobytes). .... Cingular
provides connectivity for access to MEdia Net. Information is provided by
unaffiliated content providers and is subject to change at any time without
notice.

25
Cingular Brochure 2006 Cingular Nation GSM Plans Allover Network (NCP BR T 0206 0232 E
78802)
26
https://www.cingular.com/media/terms/#section1
27
Cingular Brochure 2006 Cingular Nation GSM Plans Allover Network (NCP BR T 0206 0232 E
78802)
28
http://www.mobitv.com/
29
Cingular Brochure 2006 Mobitv/mobiradio (DAT TO T 0106 0445 E)
30
Cingular Brochure 2006 Mobitv/mobiradio (DAT TO T 0106 0445 E)
31
http://www.mobitv.com/
32
Cingular Brochure 2005) Cingular Media Net: With Media Net (DAT TO T 1105 0413 E)

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3.2.5 Verizon
Verizon provided basic downloadable content services over its “Get it Now”
platform, and more advanced services over its V CAST platforms:

Downloads

Get it Now provided downloadable applications (games, exclusive content, ring


tones, ringback tones and more) using BREW (binary runtime environment for
wireless) technology. The BREW technology was proprietary, and differed from
the technology used by SPRINT, although SPRINT also used CDMA technology.
V Cast Music was a download-service for music directly to mobile phones. This
required what they called broadband access which meant 3G network based on
CDMA EV-DO.
The procedure for downloading songs was as follows. The customer would find
the tune she wanted searching the V CAST library with her phone. She would
then select the song wanted, confirm the choice and that she (in this example)
would pay $1.99 for the song in order to download it immediately or later. The
song would also be downloadable to one PC.33

- and streaming

V CAST – based on CDMA EV-DO – provided both streaming and downloads of


high quality video, 3D games and music. This was available in areas where
broadband access was offered. V Cast was “Subject to customer agreement,
calling plan, and Get it Now agreements. Plus, additional $15/month V CAST
subscription required for V CAST service.”34
In order to use V CAST a customer had to “add the V CAST VPak to your calling
plan. VPAK includes wireless access to the V CAST Music store, Unlimited
airtime for data services, Unlimited Basic Video Clips, Unlimited Mobile Web 2.0.
$15/month after first month.”35
The video services provided seemed to be many basic channels such as clips
from CNN, ABC News, NBC, CBS, The Weather Channel, MTV, Looney Tunes,
ESPN, Fox Sports etc.36 Watching these clips did not incur airtime charges, but
they were charged individually. The pricing of the clip would be displayed in the
process before downloading it.37

Information services

Verizon’s information service very much resembled a WAP portal, but was
referred to as Mobile Web 2.0SM. The service provided access to text based
services of CNN, Fox Sports etc. To use the service, the customers had to
activate it through a process in which they accepted the terms of subscription:
Subject to Customer Agreement, Calling Plan, Get It Now Agreements.
Get It Now capable phone required. All airtime used applies towards your

33
http://getitnow.vzwshop.com/index.aspx?id=vcast_music_how2phone
34
http://getitnow.vzwshop.com/index.aspx?id=vcast
35
http://getitnow.vzwshop.com/index.aspx?id=vcast_music_how2start
36
http://getitnow.vzwshop.com/index.aspx?id=video_browse
37
http://getitnow.vzwshop.com/index.aspx?id=video_how

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Calling Plan's monthly airtime allowance, and usage above allowances will
be charged at the rate set forth in your Calling Plan.38
Charges for premium content services are in addition to any network
usage costs (whether charged by airtime minutes billed individually or
subtracted from a minute allowance, or by kilobytes billed individually or
subtracted from a kilobyte allowance).39

Observation: Test of Verizon’s advanced content services

In order to check to what degree the US content services resembled the


services provided in Norway, we carried out a small test of the advanced
services provided by Verizon. The test was done in a Verizon-store in Santa
Monica, LA, in which the displayed phones were online and available for testing
out services. We tried two phones, which both were compatible with advanced
services and the 3G network.
We first tried the information services provided. These were typically sports and
news and seemed very much like the WAP services in Norway. The information
services were available without extra cost (except for traffic charges as
described above). What surprised us with this service was the slow speed.
Using information services was much slower than what we were used to with
3G and WAP in Norway. We do not have an explanation for this. It could be that
the information services were provided on 2G only; it could be the CDMA
network, the servers, the phones, the user interface, or something else.
We then tried the video services. From Verizon’s V CAST platform, we could
access some sports and news video clips. The number of content providers
accessible seemed lower than advertised on Verizon’s website, but it might be
that the shop had reduced the number of content providers available on the
display phones to avoid too much free traffic in the store. (As described above,
Verizon charged per clip, and did not charge the traffic to transfer the clip.
Thus, the shop may have provided some clips for free that otherwise would be
charged per clip.) Nevertheless, what surprised us with this service was the
high quality. The pictures were very clear, the sound good, and after a short
buffering time, the video was fluent without the glitches that can be
experienced on Norwegian mobile TV.
Thus, Verizon’s advanced content services were quite similar to the Norwegian
mobile content services. In our test, the differences seemed to be minor and
related to technological features like speed and quality of service, not the kind
of services. The other mobile operators described similar services. Whether the
speed and quality were be the same with other US providers, we cannot
conclude.

3.2.6 Sprint (Nextel specific services not included)


Sprint provided the same kinds of services as the other operators – from
messaging, through ring tones, to more advanced audio, video and games.

38
http://getitnow.vzwshop.com/index.aspx?id=news_web_learn
39
http://getitnow.vzwshop.com/popups/footerTermsWeb.aspx

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US Mobile Operators and their Content Services

Downloads

The Sprint Power Vision Service (Sprint PSP) was promoted as an exclusive
service only from Sprint and included both downloads and streaming of audio,
video and game services.40
The Sprint Music Store offered wireless download of digital tracks – “hundreds
of thousands of full-length songs from virtually every genre”. The songs could
be downloaded directly from the phone – and even to the PC.

Streaming

Sprint also offered the streaming of music through Sirius Hits 1 (a satellite
radio station) and by letting the customers “choose from their many individual
premium commercial-free stations.” Apparently, this was a kind of real-time
radio streaming. The provision of satellite radio content over the mobile
network also raised a discussion of censorship.41
The customer could also get exclusive video clips, performances and interviews,
watch Sprint TV or clips from other TV providers.
MobiTV claimed that they delivered services to Sprint. We could not find any
explicit mentioning of this on the Sprint website. However, the provision of
video content did fit well with an assumption that MobiTV was the main
provider of video content to Sprint (see chapter 4).

Information services

Sprint also provided information services as a WAP-like information portal – and


also an on demand service from which the customers could get “customized,
up-to-date information such as news, sports, weather, money and movies, on
demand the way you want it”.
All these content services were offered in bundles (Sprint Power Vision Pack)
and charged monthly. Some content was priced separately. “Unless a Sprint
Power Vision Pack is selected, customers with a Power Vision phone will be
charged 2c per kilobyte for Sprint Power Vision usage.”
“Usage is calculated on a per kilobyte basis and is rounded up to the next
whole kilobyte.” “You are responsible for all data activity from and to your
phone, regardless of who initiates the activity. Estimates of data usage
will vary from actual use. In certain instances, we may delete
content/items downloaded to available storage areas, including any
pictures, games, ringers or screen savers.” “Premium content (games,
ringers, etc) priced separately.”

3.2.7 MobiTV
Above, the four main mobile operators have been briefly described. Three of
these (Cingular, Verizon and Sprint) provided mobile audiovisual content
(video). As will be described in the next chapter, the video content they

40
Sprint brochure 2006 Introducing Power Vision only from Sprint (AU5000-1301
SPEVDOBRO_11/05
41
See http://www.orbitcast.com/archives/sirius-/-sprint-debuts.html and
http://getsiriusinfo.blogspot.com/2005/09/sprint-pcs-phone-now-with-sirius.html

Telenor R&D N 12/2006 - 11


US Mobile Operators and their Content Services

provided was basically mobile services from the main television providers, such
as Fox, ESPN, CNN, Cartoon Network etc.
How the deals were made between the television providers and the mobile
service providers was not transparent in our data material and should be
investigated further. However, there was a third kind of actor involved which
could be called a mobile content aggregator.
Cingular stated (as described above) that they received their video services
from MobiTV, and MobiTV confirmed this on their website and stated that they
also delivered services to Sprint. MobiTV was also available on some regional
networks in the US, and on Networks like Orange and 3 in the UK, Bell in
Canada as well as on other networks and in other countries.
MobiTV had two services; the MobiTV Service that included a long list of both
live and made-for-mobile television channels, and MobiRadio Service, delivering
more than 40 commercial-free digital music channels.
MobiTV was founded in 1999 and is a privately held company, headquartered in
California. MobiTV calls itself a global leader in television and digital radio
services for mobile devices. On March 14, 2006 it was announced that the
company had been chosen by OnHollywood as one of the Top 100 Private
Company Award winners.

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4 Openness, Walled Gardens or Exclusivity?


To what degree can we find similarities between the provision of mobile content
services and business models in other more mature media markets? The US
media industries have been successful, not only in the US, but also globally. We
may therefore expect that experience from other media markets were taken
into account when the operators developed models for mobile content
provision. When examining the operators’ content service provision and the
terms and conditions for subscribers, we therefore compared the emerging
business models for mobile content services with more established business
models.
The business models within the media industries do, however, vary between
media markets. Three different models may serve as analytical examples.
1. The open model: This is the model typical for the Internet. Content is
accessible regardless of network provider. It makes no difference for the
accessibility of content services which network the user subscribes to.
Terms and conditions may differ between network providers, but anyone
connected to an IP network may access the websites of Fox, NRK, Disney,
etc – and if the bandwidth is sufficient, she or he may stream video.
Typically, network access is paid to the network provider, and pay content
services are paid to the content service provider – not through the network
subscription.
2. The walled garden model: This is the typical model for cable TV. In the
cable TV market, customers can watch the channels provided by their cable
company only. The cable companies negotiate deals with television
companies and pay for the right to transmit certain channels and programs.
The customers subscribe to packages of channels, individual channels, or
pay for individual programmes. The customers are charged by the cable
company, not the content provider.
3. The exclusivity model: This is a model found in the US film industry. The US
film production companies own their own chains of cinemas which screen
their own production. The films are also provided to independent cinemas,
also, but when possible, the film production companies distribute their films
through their own cinemas making it possible to channel income from box
office revenue back into film production. There may also be features of
exclusivity in cable TV and in satellite TV. A cable or satellite company may
negotiate an exclusive deal with a content provider or right holder.42
Typically, however, the TV channels negotiate non-exclusive deals with the
cable and satellite companies.
Which of these models could describe the US market for mobile content
services?

4.1 Little openness


The US mobile content market did not resemble the open model. The content
services were provided and paid through the mobile subscription. There were
no indications that services could be provided directly from the content provider
to the subscriber. We found no evidence of payment arrangements other than
those connected to the mobile subscription. Further, although there was

42
A Norwegian example of this would be the exclusive deal between Canal Digital and TV2 in the
Norwegian satellite market.

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US Mobile Operators and their Content Services

massive advertising for mobile services, including content services, all the
advertising was done by the mobile operators. We found no advertisements
from content service providers.43
Another illustration of the closed environments for mobile content was how
Sprint explicitly separated Internet access for computers-services from the
mobile content services. In fact, phones could not be used for these services
unless the customer has subscribed to a specific plan for this:
“Except with phone-as-modem plans, you may not use a phone (including
a Bluetooth phone), provisioned with a plan that includes unlimited
Vision/Power Vision, as a modem in connection with a computer, PDA, or
similar device.”44
Similarly, Cingular stated that:
“MEdia Net packages are not available on PDAs, RIM devices, or Laptop
Modem Cards. MEdia Net packages are not intended for tethering.”45
One may of course speculate about the motivation for these conditions, but the
effect is clear. There is a technical barrier between mobile content accessible on
the phones and content available from the Internet. Where the barrier is
incomplete; there are conditions that prohibit mixing the two worlds. Thus, if it
is technically possible at all to transfer content from these services to a PC or to
any other device with an ordinary Internet connection, such use is prohibited.
Moreover, the mobile phones cannot be used to access ordinary free content on
the Internet.

4.2 Limited exclusivity


But, how closed was this mobile content market? Was it based on walled
gardens or also on exclusivity? In the advertisements, the mobile operators
promoted their offers as exclusive. On a closer look, however, it became clear
that what were exclusive were their phones and subscriptions. The content
services were mainly non-exclusive.

4.2.1 Exclusive phones


In the retail shops for mobile phones and subscriptions, the phones were
advertised as exclusive offers by the mobile operators, and the phones were
branded with the mobile operator’s logo. The bundling of subscriptions and the
proprietary phones was very strong. Obviously, GSM and CDMA subscribers
would need different phones. Even within the same network standard, however,
the phones were specific to the network company. As we read the regulations in
the US, there is no requirement that there should be handset compatibility
within the digital (or PCS) networks, but that there is such a requirement for
the analogue (or cellular) networked based on AMPS.46
This was the basic picture. Telephones were proprietary and locked to one
mobile operator. Sprint explicitly stated that it would only accept Sprint

43
This is in stark contrast to Norway, where the service providers actively develop and promote
their services, with high visibility in terms of advertising.
44
Sprint brochure 2006 Sprint Choices, Service Plans and Rates, (NV5001-1400 49555604)
45
RIM (Research in Motion) is the provider of the highly successful BlackBerry wireless e-mail
solution.
46
See http://wireless.fcc.gov/services/index.htm?job=operations_2&id=broadband_pcs and
http://www.wirelessadvisor.com/analog-cellular.cfm

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phones: “Our services will only work with our phones.”47 The other operators
did not explicitly refuse other phones, but underlined that services might not
work with phones not purchased through the operator. The terms and
conditions from T-Mobile and Verizon read:
T-Mobile: Use of Phone with Other Providers/Phone Purchases. Wireless
devices and networks do not all use the same technologies. Your Phone
may not be compatible with the network and services provided by another
wireless service provider and, therefore, may not work with that
provider's wireless service. You may buy a Phone from us, or from
someone else, but it must be GSM/GPRS equipment that is compatible
and approved for use with our network and Services and we do not
guarantee that all T-Mobile features will be available with such equipment.
A T-Mobile Phone may be programmed to accept only a T-Mobile SIM
card.48
Verizon: Your wireless phone is any device you use to receive our wireless
voice or data service. It must comply with Federal Communications
Commission regulations and be compatible with our network and your
calling plan. Whether you buy your wireless phone from us or someone
else is entirely your choice. At times we may change your wireless
phone's software, applications or programming remotely and without
notice. This could affect data you've stored on, the way you've
programmed, or the way you use, your wireless phone. Your wireless
phone may also contain software that prevents it from being used with
any other company's wireless service, even if it's no longer used to
receive our service.49
Thus, the terminals were basically sold as integral parts of the mobile
operators’ chain stores and the effective terminal control makes switching costs
very high. It also enabled the operators to preinstall features and applications
etc. According to a salesperson at a T-mobile store, neutral phones were
supposed to exist, but these were impossible to find. Furthermore, as
underlined in the quotes from the terms and conditions above, such phones
would not work with some of the services provided, probably because of
preinstalled software. The issue with phones that are locked to a specific
operator is, of course, controversial.50

4.2.2 Exclusive content?


The mobile operators also branded some of their content services as exclusive.
This was, however, mainly their own packaging of content services. They all
had mobile portals or environments for presenting their advanced content
services. Cingular’s portal service was called Media Net, Verizon’s service was
called V CAST and Sprint’s service was called PowerVision. These portals (or
content environments) were available to the operators’ own customers
exclusively.
The content services available through these portals, the video, audio and text-
based services, were mainly provided by third parties, typically established

47
Sprint brochure 2006 Sprint Choices, Service Plans and Rates, (NV5001-1400 49555604)
48
http://www.t-
mobile.com/Templates/Popup.aspx?PAsset=Ftr_Ftr_TermsAndConditions&print=true
49
http://www.verizonwireless.com/b2c/globalText?textName=CUSTOMER_AGREEMENT&jspName=f
ooter/customerAgreement.jsp
50
See http://www.consumersunion.org/campaigns/handset%20locking%20letter%20FCC%20-
%20mar%2011%2004.pdf

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US Mobile Operators and their Content Services

media providers. These content services were mainly non-exclusive. To a large


degree, the content one operator provided was also provided by competing
operators.
In order to investigate this general impression more systematically, we made a
study of the operators’ video services. This focus on video services was
grounded in an assumption that possible exclusivity would be detectable in this
market as video services are the most advanced and has been regarded as a
driver in the mobile 3G market.
Regarding exclusive video content, we had two alternative hypotheses as to
what we might find.
• Hypothesis A: Video content is exclusive; If this was the case, we would
expect to find major differences in the content available from (through)
different operators.
• Hypothesis B: Video content is non-exclusive; If this was true, we would
expect major overlaps between the content from (through) different
operators.
In order to test these hypotheses we made a large table (see the appendix) of
the video content available from the different operators. T-Mobile does not have
any 3G network (yet), and does not provide any video content. Hence T-Mobile
is not in the table. In addition to the three remaining operators, we have also
gone through the content provided by MobiTV (see above), as content from
MobiTV is offered to many operators, and hence not exclusively for any
operator. The table is based on the information on the World Wide Web
provided by the operators and by the press. This information may be
incomplete, uncertain and subject to change. As an example, MobiTV informed
about a series of channels it provided to Cingular and Sprint (these lists are
identical in the information provided by MobiTV), but we did not find
information about all these channels on the web pages of the respective
operators. This indicates that the operators do not publish a complete overview
of their mobile content services on the web.
For the channels provided by only one operator (hence the potentially exclusive
channels), we have tried to establish whether these had exclusivity
arrangements with one operator, or if they simply happened to be provided by
only one of these three operators. This proved difficult, as far from all channels
used their web pages to inform about their availability on mobile telephones.
With the exception of brand specific channels (such as the V CAST channels
from Verizon, and SprintTV from Sprint), we have only been able to determine
that HBO (Cingular), NFL (Sprint), and The OC (Verizon) are exclusively
available via one operator. Regarding Nickelodeon we found contradictory
reports.
With all reservations due to the incompleteness of information and sources of
error in this analysis, there is still a clear pattern in the data. Sprint and
Cingular clearly had a mobile video offering that was mainly, but not only,
provided through MobiTV. Verizon had a much higher number of channels on its
list than the two other operators had. With the exception of “The OC” (and
possibly Nickelodeon), we have no indications that Verizon had exclusivity
agreements with these channels. They may have had such agreements, but this
was not marketed or stated. We may therefore assume that other mobile
operators could negotiate agreements with the same channels if they wanted
to. What the Verizon case nevertheless indicates is that Verizon made a
stronger effort to brand itself as a provider of a range of mobile video content,

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US Mobile Operators and their Content Services

and that it wanted to be different from its competitors, not basing its services
on MobiTV.
The data we have collected do not clearly support either of our hypotheses.
There is a mixed picture: Most content seemed to be non-exclusive, and there
was considerable overlap of content. Still, there were examples of video content
provided with exclusivity arrangements.
We should also add to this that the existence of MobiTV was new to us. MobiTV
apparently works as a kind of mobile video content aggregator. Its overall
business, results and business models and its competitors deserve further
study.

4.3 Walled gardens


What was emerging in the US mobile media market cannot mainly be
characterised as exclusive arrangements. There were exclusive agreements,
such as between Cingular and HBO, but most of the video services came from
content providers that had not locked themselves to any specific operator. This
seemed to be the case for audio and text-based content also. With some
exceptions, content providers seemed to provide services to any mobile
operator as long as they could reach an agreement. What was developing was,
however, a market based on walled gardens.
The mobile operators negotiated deals with content providers. Based on this,
the mobile operators could provide content services to their customers. The
customers then got access to the content provided through their operator. They
could not access content their operator did not have in its portfolio. The
customers were locked in the walled garden of their operator, which charged
through the monthly bill for the content, through subscription plan add-ons,
and/or pay per piece or kB.
The mix of third party content and walled gardens may be illustrated by using
Cingular as an example. Cingular provided content from independent providers
and MobiTV. Cingular was specific that it was not responsible for the content
from these providers:
“Content may be provided by independent providers. Cingular cannot
control the content of messages, ringtones, games, or graphics. Cingular
is not a publisher of third-party content and is not responsible for any
opinions, advice, statements, other information, services or goods
provided by third parties. Third-party content providers may impose
additional charges. Cingular is not responsible for loss of disclosure of any
sensitive information you transmit or for the effects of Services on
devices.”51
As argued above, most of the content provided by Cingular was available on
other networks also. The exception was HBO for which Cingular has and
exclusive arrangement.52 The Cingular subscriber was, however, locked in
Cingular’s walled garden. The Cingular subscriber could access the content
made available by Cingular, through the MEdia Net services, but nothing
outside of this.
What was not transparent in our material was the nature of the arrangements
between the mobile operator and the content providers. There was not such a

51
http://www.cingular.com/media/terms/#section1
52
http://www.hbo.com/mobile/index.html

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US Mobile Operators and their Content Services

thing as CPA in the US market. Transactions seemed to be between the content


provider and the mobile operator. How were payments made between the
actors? Did the content providers get a share based on usage, or did the mobile
operator pay flat rate for enabling access to the content? And were there more
actors like MobiTV serving as content aggregators? These and similar questions
remain open.

4.4 The dominance of the cable TV model


Thus, what we found was that the open Internet model was not a traceable
model in the US mobile content market. Instead, the finding described above –
of a market with exclusive terminals, and with walled gardens with some
degree of exclusivity – indicate that the US market for mobile content was
evolving in a way similar to the classic cable TV model.
Exclusive terminals: One feature of the US mobile content market was that it
was based on exclusive terminals. This was quite similar in the cable TV
market. Here, the television sets themselves may be used across platforms,
networks and services, but the set-top-boxes for signal decoding, APIs and
conditional access53 are in most markets proprietary. In Norway, the cable
companies provide a set top box with their subscription for the customers to
rent. When cable companies have not agreed on a common standard, the
reason is partly that they have different preferences for technological standards
and the services they want to enable. Another reason is linked to keeping
switching costs high for the customers.
Limited content exclusivity: Another feature we found was that there was some
provision of exclusive content in terms of portals and a limited number of
services, but that most content seemed to be accessible from many operators.
In the cable TV markets, the exclusivity of content is also limited. The most
popular channels are usually available on most cable networks. The channels
and cable companies negotiate terms for making the channels accessible on the
cable network. All networks would want the most popular channels, and
usually, the most popular channels, especially those financed by
advertisements, would want as broad penetration as possible. Consequently,
most channels would want to be able to make agreements with several cable
network providers and avoid exclusive arrangements.
There are, however, several exceptions to this. Typically this would include pay-
TV channels like movie channels and some sports channels, which do not
necessarily need a big audience in terms of market shares, but rather a critical
mass of paying customers. These could benefit from being promoted to
potential customers by the cable company and may therefore make exclusive
deals with cable companies that wish to use exclusive provision of attractive
content a benefit of their network.
Walled gardens: The feature we found that limited the openness of the mobile
content service provision most strongly was that the mobile services were
accessible in walled gardens only. This also parallels cable TV markets which
constitute classic walled gardens. The channels and services accessible for a
cable television subscriber depend fully on which channels that are provided by
the cable company. A subscriber to the services of a cable company cannot
access channels not provided by this company.

53
In the analogue cable market, a set top box is usually not necessary for the basic package of
channels, but for additional services and channels, the subscriber would need such a box. For digital
services, a set top box is required.

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As we can see, the market structure of the cable TV market was quite similar to
what seems to be the basic structure of the mobile content market in the US.
To what degree it is a wise move to base the mobile content market on the
cable TV model is contested and will be commented in the conclusion. We shall
in the following discuss what may explain the choice of the cable TV-model for
the US mobile market.

4.5 Why the cable TV model?


To explain why the cable TV model dominates in the US mobile media market,
it may be useful to look both to institutional explanations – and to the
motivations of the market actors.
In terms of institutional explanations, it is important to note that the US cable
TV industry has been highly successful. It would therefore in those terms be a
tempting model to apply also to other media markets. Further, the US mobile
market has never been one mobile market. The different standards (CDMA,
GSM and iDEN) contribute to creating separate markets for terminals. And –
until recently – SMS was not available on all technologies and there was even
lack of interchange of SMS messages. Thus, an open model for the mobile
market may not even have been considered. A more closed model may have
been the default solution.
The number of choices on how to provide mobile services add up to the mobile
market borrowing several characteristics from the cable TV model. When
discussing the possible motivations for each choice, we can only speculate.
Seeing the market from the point of view of the mobile operators, there may be
several possible motivations for approaching mobile content markets from a
cable TV model:
• Increase switching costs (and hence increase loyalty)
• Differentiation through exclusivity
• Stimulate traffic and increase traffic charges
• Generate revenue from content
• Modernity (not falling behind)
Looking at the strategies regarding exclusive terminals, there is no doubt that
the operators strive for differentiation through exclusivity. They also aim at
increased switching costs, as evidenced by different software solutions on the
phones. With these adaptations, the phones can probably be reused on other
compatible networks, but they will be of little value when trying to use more
advanced services (unless the customer is a geek that is able to change the
software on her phone, but that again means incurring a switching cost).
The provision of content services that require operator specific phones clearly
shows that video content is used to increase switching costs. The way the
content is collected, packaged and marketed shows that exclusive appearance
may be valued as important in order to differentiate, but, there is little
exclusive content except for the packaging itself.
The calling plans vary considerably. Most of them will have as effect that the
operators earn more from increased traffic. Other calling plans have unlimited
minutes but have higher monthly charges. In both cases, there is a motivation
in stimulating traffic and increasing traffic charges (direct or indirect charges).

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US Mobile Operators and their Content Services

It is more uncertain whether there are any ambitions to generate revenue from
content. There are examples of per clip-pricing (audio or video clips) or channel
subscriptions, but we do not know the contractual arrangements between the
operators and the content providers or aggregators. Hence, we do not know
whether the operators get any extra revenue from video content.
Finally, modernity may be a motivation. Even though the volumes appear to be
low, the capability to provide video content is new and the business models are
still uncertain. The operators give much emphasis to their video content in their
marketing. To us, this indicates that there is great uncertainty and a strong fear
from being left behind in case there is a large market for mobile video content.
Hence, modernity appears to be an important motivation. Whether this factor
has any strong impact will be clear when we see the development of subscriber
numbers among the four operators: T-Mobile does not have any of these
services so far, and probably will not get any in 2006. A change in the growth
pattern (see table 1) to the disadvantage of T-Mobile may indicate that this is
important.
Seen from the perspective of the providers of mobile video content, i.e. TV
channels and aggregators, there is clearly interest in increased revenue or
increased visibility from mobile video, as long as these services do not
cannibalise existing business. This may make a business based on walled
gardens and specific terminals relatively safe, as there is practically no risk that
the content will find its way to competing media platforms.
It is more unclear, however, whether the mobile video content providers have
any real interest in exclusive deals with one mobile operator, unless they get
sufficient compensation for not providing the content to anybody else. Our data
appear to support this, as there is considerable overlap between the offerings
and only few examples of truly exclusive content.
We choose to interpret this as an expression of uncertainty, if not confusion.
The content providers feel that they need to try this new channel, but they do
not have any clear strategies or business models for this so far. This is similar
to the early presence of media on the World Wide Web, as observed in studies
in the mid 1990s (2, 4, 5).

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5 Conclusions
Our main findings are that:
1. Phones are exclusive and provided by mobile operators.
2. Content packaging is exclusive. The portals/environments for content
services are exclusively provided to the operators’ customers.
3. The content on these content service portals is mainly non-exclusive.
Although there are some instances of exclusivity, most content services
seem to be provided without exclusivity arrangements. The content appears
to be available to whatever operator will negotiate a deal with the content
provider.
4. The content is surrounded by walled gardens. The customer cannot access
content not provided by their mobile operator, and the content is not
available on other platforms than the operator’s branded terminals.
In launching mobile content services, the mobile operators have adopted a
business model that is very similar to the well-known business model of cable
TV. Whether this is a suitable business model for mobile content, and for whom,
is an open question.
There are different actors on the arena with respect to mobile content:
consumers, network operators, TV channels or other media corporations,
telephone manufacturers, and mobile content aggregators. Other relevant
actors could be independent programme producers and regulators, although we
have not observed these in this study.
In mobile telephony, voice and messaging will give larger revenues for many
years, if not for ever. While succeeding in generating switching costs, the
mobile operators risk giving users as strong reasons to go to another operator
as reasons to stay. With all likelihood the walled garden approach will reduce
the total volume of consumption compared to a situation where all attractive
content is available. In a regime of this kind there is little, if any, room for user-
generated content. In the long run this reduces traffic with detrimental effect
for content providers and for mobile operators. For the operators, this may be a
very high price to pay for increased switching costs, potentially moving
consumption away from mobile phones to other kinds of portable devices.
The results presented in this note are uncertain. More thorough analysis of the
same data, and data about use of these services, the contractual arrangements
between content providers and operators, and analysis of the actual content of
these services may reveal other patterns and strengthen or weaken our
conclusions.

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2 Lars Bo Eriksen and Pål Sørgaard. Organisational implementation of WWW


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3 Petter Nielsen and Ole Hanseth. Enabling an Operator-Independent


Transaction Model for Mobile Phone Content Service Provision through the
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4 Jonathan W. Palmer and Lars Bo Eriksen: Digital Newspapers Explore


Marketing on the Internet. Commun. ACM 42(9):32-40 (1999).

5 Tanja Storsul, 1999. Nye medier og ny politikk? – om eierskap og


mangfold i det nye mediebildet. Norsk medietidsskrift 1-1999:107-126.

22 - Telenor R&D N 12/2006


US Mobile Operators and their Content Services

Appendix: table of video content available


In the table below, we have used yellow to highlight channels provided by only
one operator and that did not appear on the list of channels provided by
MobiTV. In the list of channels from MobiTV we have used blue to highlight the
channels that MobiTV claimed it provided to Sprint and Cingular. Channels in
bold face are channels where we have found positive information about
exclusivity.

Telenor R&D N 12/2006 - 23


US Mobile Operators and their Content Services

Verizon V CAST Cingular Sprint MobiTV Global


A&E Network
ABC
ABC News Now ABC News Now ABC News Now
AccuWeather.com
Adult Swim
Animal Planet
Bloomberg Television
Bravo
Cartoon Network Cartoon Network Mobile Cartoon Network
CBC Newsworld
CBS and ET to Go
CBS News to Go
Channel 4
Chaos
CMT
CNBC
CNET
CNNtoGO CNN CNN to GO CNN
Comedy Central
Comedy Time Comedy Time
C-Span
C-SPAN2
Discovery Channel Discovery
Discovery en Espanol
Discovery Kids
Discovery Mobile
Disney Mobile Studios
E!
ESPN ESPN ESPN ESPN
Extreme
Fashion TV Fashion TV
FOX Mobile
Fox News FOX News Channel Fox News Channel
FOX Sports Fox Sports FOX Sports FOX Sports
FUSE
G4TechTV
GMTV
GoTV
HBO Mobile family
HBO Mobile
ifilm ifilm
ITN
ITN Weather
Just for Laughs
Kerrang
KISS
Living TV
Looney Tunes Looney Tunes

MarketWatch
MAXX Sports
Meteo Media
MLB.COM Mobile
Mobi Trailers
MSNBC
MTV, MTV2, mtvu
Music Choice Music Choice
Nano TV
NASCAR.COM to go
NBC Mobile NBC Mobile NBC NBC Mobile
NFL Network
Nickelodeon
RDI
Sesame Street
Shift
ShortsTV
ShortsTV Corto
Sirius Hits
Smash Hits
Sports Illustrated
Sprint TV
The History Channel
The Mic
The OC
The Shopping Channel
The Weather Channel The Weather Channel The Weather Channel The Weather Channel
The Weather network
TLC
Toon World Toon World
Treehouse
Univision
V CAST Ent News
V CAST Music Videos
V CAST Showcase
V CAST Sports
VH1
V40
YTV

24 - Telenor R&D N 12/2006

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