M-commerce trials and tribulations: it may finally be time for mobile commerce to hit its stride

America's Network, Nov 1, 2003 by Ira Brodsky

Mobile commerce barely survived the Internet bubble. But some emerging niche applications could add up to something big.

One benefit of mobile commerce is bill consolidation. Both customers and merchants like the idea of putting small purchases, such as public transportation fares, on customers' phone bills. Mobile phone operators bill millions of subscribers in a timely and reliable fashion. These bills typically contain many small charges. It's less expensive and easier to add small purchases to existing bills than to incur the expense of computing, printing, and mailing separate invoices.

An obvious advantage of m-commerce is it makes it easy for busy people to make last-minute purchases. The classic example: sending flowers on a birthday or anniversary. Although the volume of such transactions probably won't make anyone rich, the average size of such transactions is respectable.

As mobile phone operators enhance their networks' data capabilities, opportunities to sell digital content will multiply. Today, some operators are doing a brisk business in delivery of ringtones and games over the air. As camera phones with video playback capability proliferate, sending picture mail and receiving video clips could generate much more business.

Solutions being introduced to let subscribers pay utility bills and redeem coupons with their mobile phones may have even wider appeal.

UNDERPINNING TECHNOLOGY

The key to paying bills and redeeming coupons via mobile handsets is the use of camera phones to read special bar codes. A handset with special software installed is required to read the bar codes. The coupon application illustrates the advantage: Instead of cutting out and hand-carrying coupons, customers will merely scan them. The merchant benefits from the ability to automate coupon redemption.

Still, mobile commerce faces a number of challenges--the biggest of which may be managing partnerships between mobile operators and banking and financial services vendors. Understandably, mobile operators believe they are an indispensable party in such arrangements. But the lesson learned in Korea is that mobile operators must let financial services partners retain control of financial services.

Since there is no single killer application, vendors must support a range of applications. These should include the ability to purchase digital content for over-the-air delivery, to conduct Internet-based e-commerce and banking transactions while mobile, and to use mobile handsets as an alternative to traditional credit cards and ATM cards.

One way to ensure mobile handsets can be used as an alternative to credit and ATM cards is to equip them with short-range communications capability such as Bluetooth or infrared. Instead of carrying around multiple magnetic swipe cards, the user carries just one instrument, the mobile phone. The phone never needs to be relinquished to complete transactions and, if stolen, can be remotely deactivated.

Admittedly, all of this requires handsets specially-equipped for mobile commerce, but this can be accomplished by installing a special chip or inserting a user identification module. It also requires merchants equipped with special readers that can communicate via Bluetooth or infrared. But making the case for deploying m-commerce infrastructure shouldn't be hard given how omnipresent mobile phones are.

Companies have been trying to promote smart cards as a replacement for traditional credit cards for years without success. Communications may turn out to be the missing ingredient.

Ira Brodsky is president of Datacomm Research Co. (http://www.datacommresearch.com) of Chesterfield, Mo. He can be reached at ibrodsky@ datacommresearch.com.