Digitalwall: 3G Time Comes (5) Content - Killer App of Video Phone

Don’t jump to the conclusion that you don’t need it.

Before the opening of the GSM market in Taiwan, many new companies were incorporated to compete for the licenses. In order to have a more accurate estimate toward the market potential for the service, they did a lot of market evaluations and surveys through professional consultancy service providers to learn consumers' opinions on the mobile communication.

To their surprise, a large portion of consumers said that they did not need the mobile communication service, as "there were public phone booths everywhere, why would they spend additional money on mobile phones?" Consumers thought there could not possibly be a need to make phone calls outside their homes or offices or, even if they did have such a need, they could use a public phone.

However, it only takes five years for the market to get saturated since the first appearance of the mobile phone in Taiwan. 24 million mobile phone numbers are sold in Taiwan, which is an island with a population of 23 million people. Marketing wars among mobile operators get white hot, while on the other hand, with fewer and fewer users, public telephone booths get eventually washed out of the market.

In addition to surprising all telecom experts recruited from the overseas market in the first years, the story also tells us that consumers often don't know what they really want. Particularly, when it comes to a new, intangible service, few consumers could tell why they would need it. Therefore, we need to be extra-careful when considering abut the video phone market.

Although the video telephony has been available for fixed telephone sets for a long time and there are very mature products (some depend on the Internet for the video data transmission, and others need nothing more than the access to conventional telephone sets), the application is used mostly in special occasions, for example, the video conference of transnational companies and communication with family members or relatives in other countries. General consumers rarely have such a requirement.

The 3G mobile communication, however, will bring the video phone into the life of ordinary people. For the first time, operators will have to develop a price structure suitable for the mass market. On March 3, Hutchison Telecommunications launched its 3G service in nine countries around the world. Its rate plan reveals that the rate of video phone calls is twice as much as that of voice calls.

But is the video phone service really needed? Will experts drop their jaws again?

The conventional telephone has been used for over a century, and people have been quite used to putting receivers on their ears to make phone calls. The pleasure of making phone calls often lies on the invisibility of the other party you are talking to. People want to have distance between one another. Before going to see each other face to face, we usually dress ourselves up and get a cleaner look and appoint a specific location for the meeting. That is for the sake of having distance.

However, the existence of the telephone has eliminated that distance. Whenever a phone rings, another person gets into your life immediately, interrupting what you are doing. Fortunately, that person cannot see you, so the call can proceed. Invisibility, it seems, is the last defense line for keeping distance between people.

Presumably, in this case, the application of video call is still limited. The video phone communication with intimate people (family members, friends, lovers, etc.) occurs randomly. On the other hand, in official occasions (video conference of corporations), a specific time will have to be set for any such communication in advance; otherwise it will be considered an impolite behavior to make a video phone call.

Therefore, at the beginning of the video phone service, or even in the majority time of its lifespan, the main application will be the human-to-machine communication, instead of the communication between people. It means that, for most people, the object of a video phone call is not a person, but the content of a video program.

For example, during the Iraq War, anyone who is concerned about the situation in the front might dial a video phone number with his/her 3G handset to watch news episodes rolling on the screen while waiting for an express train. If you want to be updated on your stock investment, you can dial a video phone number to watch the program of an analyst.

Pop star fans can watch the latest MV of their idols through the video phone, or maybe even talk face to face with the latter. While starting your car, you can dial a video phone number to have a look at the traffic flow on the highway. You will be able to do all these so long as you know how to dial a call - no need to know what the Internet is.

What should be clarified here is that the video phone is totally different from the video streaming. At the present time, most video applications being talked about in the industry are based on the video steaming. To be more specific, consumers will have to access and browse the Internet with their handsets and select their favorite movie contents to get the video programs transmitted onto their handsets.

In other words, the video streaming is an Internet application. As I mentioned in my first article, the video phone service adopts the circuit switch mode, which charges subscribers in accordance with the time length of their calls, while the mobile Internet access and video streaming are of the packet switch mode, which charges subscribers in accordance with the packets of transmitted data.

While trying desperately to move their technologies onto the Internet platform, most system developers and handset manufacturers forget that by nature, handsets are phones, not computers. Compare the user experience of both modes: watching video programs, which only requires the knowledge of how to dial a call versus doing the same but having to know how to access the Internet. Which one do you think most people will choose?

In addition, with the current price structure, a 64k, 1-minute video program transmitted to a handset through the video streaming (with the packet-based billing) would be 60 times as expensive as that through the video phone (with the time length-based billing). Who will use such expensive service like video streaming?

In the next article, I will talk about 3G handsets: "handsets need not to be smart". You may want to get warm up with the following two websites: http://www.three.co.uk, which is the website of the first 3G service provider in the world; and http://www.3g.co.uk, where a large amount of 3G information and news are available. (
2003/04/13 - By Digitalwall.com - Way to
China Internet/Telecom )