Wireless show to push mobile ads, shopping

March 23 , 2007
The Washington post

By Sinead Carew

NEW YORK (Reuters) - After cramming Web browsers, e-mail and music and video players into cell phones, the wireless industry is now trying to make more money by adding mobile advertising and credit-card shopping to handsets.

Fancier handsets with clearer video displays, local store and restaurant locaters and new music services are also expected to jostle for attention at CTIA, the annual wireless technology showcase in Orlando, Florida, next week.

Even as most U.S. consumers have yet to use their phones for anything more than talking, the show's themes will likely cover mobile advertisements and on-the-go commerce -- spurred by a combination of wireless carriers looking for new revenue and advertisers looking for new audiences.

But because of concerns about customer privacy, service providers like Verizon Wireless and Sprint Nextel Corp. will likely talk more about letting consumers control which ads hit their screens than the pursuit of ad dollars.
"They don't tend to want to advertise that they're advertising," said Yankee Group analyst Linda Barrabee.

She expects the mobile advertising market to more than quadruple to $275 million in 2007 and reach $2.2 billion in 2010. The market was $60 million in 2006.

Several privately held companies including Third Screen Media, Enpocket, Medio Systems and iLoop Mobile are all expected to vaunt technologies and services for mobile ads at CTIA.

Also at the show will be proponents of the mobile wallet, which includes the use of phones to replace bank and credit cards, and even cash.

While the concept, which has gained ground in Asia, has been slow to take off in the United States, some wireless and financial companies say this could change in coming years.

Visa USA Inc., which has tested wireless payments in the United States and plans a commercial service in South Korea in April, is sending top executive John Philip Coghlan to explain its plans in his keynote speech.

Attendees will also include privately held wireless card reader and payment software firm Vivotech Inc., which with HSBC bank is testing a service that enables the consumer to wave a Nokia phone with short-range wireless links at check-out card readers in place of a credit card.

MOBILE WALLET
Once wireless-enabled credit cards, which consumers can wave at a reader instead of swiping, are more widely used, U.S. mobile companies will start putting credit cards into their phones, Vivotech Chief Executive Mohammad Khan said.

"Once you get to 10 to 15 percent of active cards, you're getting to the tipping point for growth at a much faster speed," said Khan. "In 2008 we're going to see faster growth."

About 5 percent of the 400 million frequently used U.S. credit cards are wirelessly enabled today, according to Khan.

Mobile music and video, which were hot topics in the past, will also be featured at CTIA this year as operators and programmers look for ways to compete with Apple Inc.'s music-playing iPhone, set to go on sale in June at Cingular, which is being rebranded AT&T Inc.

Verizon Wireless is expected to demonstrate a real-time mobile TV service with improved picture quality based on a network run by MediaFlo USA, a unit of Qualcomm Inc.

"It does feel more like TV," said Barrabee.

Less than 3 percent of U.S. mobile subscribers watch video on their phones, according to analysts, who say usage has been stunted by high prices and poor picture quality.

"It will never be as popular as SMS (text messaging) or (music) ringtones," said IDC analyst Lewis Ward.

Ward said about 17 percent of U.S. mobile subscribers bought ringtones and 40 percent sent or received a text message in the fourth quarter.

While Ed Zander, chief executive of Motorola Inc., caused a stir among investors by canceling his keynote speech at CTIA, other top speakers still on the slate include former U.S. presidents Bill Clinton and George H. W. Bush.

Clinton signed in a law in 1993 requiring national regulation of wireless communications. He and Bush have worked together on fund-raising in the wake of natural disasters.