Advertising key to putting internet in every cellphone

Rudolph Muller

Rudolph Muller is the editor at MyBroadband and covers telecoms and broadband news. Rudolph comes from an academic background, but left the University of...

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Cellphone makers and service providers meeting at the Mobile Internet World conference here picture a world five years from now where the consumers will be able to pay bills, read the news and communicate with their mobile devices.

Few cellphone owners are currently using their devices to access the Internet — nine percent, according to the Yankee Group, a technology consulting firm.

But the IDC research firm says that more than one in five cellphones sold in 2011 will be "smartphones," devices with Internet access that can also play videos and music.

Three billion cellphones circulate in the world, three times more than computers. While Internet connection over the cellphone is often slow, it is improving.

According to Kiyo Oishi, chief of the Japanese firm Access, one billion consumers will have access to high-speed Internet in 2013.

Consumers will need better services, including simpler websites and systems that are not limited to one operator or device.

But the market will need revenue.

"Advertising, commerce will be the economic engine that will drive everything," said Andrew Belt of the Monitor Group.

Currently operators make money through subscriptions to their services. For instance, some companies charge for email service, ringtone downloads or voting on television game shows.

But to get a slice of the mobile Internet age, companies will have to rely on advertising to get their products to consumers, analysts say.

"You have 110 billion dollars spent on TV (advertising). By 2008 you'll see big shifts, to mobile and social networks," said W2 Group chief executive Larry Weber.

According to the firm eMarketer, 16 billion dollars will be spent on advertising on cellphones in 2011, 10 times more than today.

"Most people would rather have free services with ads than paying subscriptions," said Andy Jedynak, co-chairman of the Interactive Advertising Bureau's (IAB) mobile committee.

Advertising will become the main source of revenue for mobile devices, but not before three to five years, he said.

IAB, which represents companies that sell interactive advertising, already wants to set standards for cellphone ads, including to limit their size to no more than a quarter the screen.

"All mass-media are financed by advertising," said Douglas Edwards, founder Handmark. "Advertising will inevitably" become the main source of revenue, he said.