BT Cellnet buys big for a mobile future

BT Cellnet brought wireless internet to the masses last week by announcing it has bought most of the world's supply of Wap-enabled phones, planning to sell half of them on a pre-paid basis.

The mobile operator said sales of Mitsubishi, Siemens and Alcatel handsets could top 500,000 between April and June, and that it expects to sell more Wap phones than traditional phones in that time. "The old mobile phone market has had its day," said Peter Erskine, managing director of BT Cellnet.

"We've sourced just about every Wap phone in the world," said Andy Green, BT director of strategy and development.

The pre-paid market is important for Wap, because the most enthusiastic users tend to be young subscribers, who prefer the pre-paid model. Other mobile operators are likely to follow BT Cellnet's lead by announcing pre-paid offerings.

On the up
The number of mobile subscribers is expected to grow by 200 per cent in the next five years, to more than a billion worldwide, and BT Internet's turnover is growing at 80 per cent a year. BT Cellnet argues that the convergence of the two markets presents a huge opportunity for it and its customers.

So far, BT Cellnet has sold about 20,000 Wap phones since it launched its services in January. Orange has sold about 30,000 handsets.

The pre-paid phones will be available from 3 April for £99.99, with internet calls charged at 10p a minute. BT Cellnet predicts that all new phones will be Wap-enabled within 18 months, and that 85 per cent of handsets in the UK will be Wap by 2003.

BT Cellnet Wap phones will give email access to Freeserve's two million subscribers as well as existing BT email customers. As a result, BT Cellnet claims 50 per cent of the UK's email addresses can now be accessed through a Wap phone.

A critical mass
Companies should consider Wap-enabling their websites and systems now, because BT Cellnet's push could give Wap a critical mass, argues Tim Sheedy, senior mobile analyst at researcher IDC. But to be a success, the Wap strategy has to be something that gives the mobile user something that can't already be delivered through simple messaging service (SMS).

For example, services such as banking or travel information, rather than converted web pages, will be a success for Wap, says Sheedy.

Subscribers are becoming more sophisticated and willing to use data services - even though they might not realise that is what they are. SMS messages are increasing in volume by 35 per cent a month. In January, subscribers sent 90 million, and carriers hope the public will take to Wap services in the same way.

BT Cellnet predicts that Wap will increase its average revenue per user by 35 per cent. This figure includes so-called m-commerce - doing business by mobile phone. According to BT Cellnet, the worldwide m-commerce market will be worth $200bn (£126bn) by 2004, with 14 billion transactions a year.

"It's a deliberate positioning of BT Cellnet as the mobile internet company," says Sheedy. But he adds: "It's unlikely BT will sell 500,000 handsets. I just don't think that the applications are there to make the content compelling enough at the moment." Most of what you can do at the moment with Wap you can already do with SMS, he believes.

However, BT Cellnet is confident it can make a profit from Wap by focusing on services that consumers can access rather than trying to sell the underlying technology. "Customers are happy to pay for value services," says Green. "For example, it's worth 20p to book a train ticket."

Winning over developers
The splash that BT will make with its £20m marketing campaign may be enough to create a critical mass among developers who have been holding back to see if there is a commitment to the market.

BT Cellnet also said that it is going to offer its Genie mobile portal to other carriers. In the UK, Genie has 600,000 customers, and is attracting an extra 4000 a day. BT will invest £160m in the new venture, which will also develop new applications for corporate customers. The company will take a share of the advertising and m-commerce revenues of its partners around the world.

In addition, BT said it will implement Europe's first third-generation network on the Isle of Man next year. The Manx Telecom network will be used as a test bed for the rollout of higher-speed third-generation services, which it hopes to offer in the UK by 2002 if it secures a licence in the government auction.

Five next-generation mobile phone licences are being auctioned. The licences will enable the writers to offer high-speed wireless connectivity. The auction is designed so that at least one new carrier enters the market. BT Cellnet is bidding against Vodafone, One2One and Orange.