With a brand new 400 MHz version of CNI's superbly designed TWM3 handheld, opening a mass market for mobile Internet services in the UK seemed like a no brainer. In what managing director Andrew Fitton describes as a voyage of discovery, UK Mobitex operator Transcomm learned a number of valuable lessons and discovered that creating a market for mobile Internet services involves several significant challenges.

A voyage of discovery

Seeking strong partners
"Our initial vision was based on gradual penetration of wireless data and mobile Internet services in the business and consumer horizontal markets over the period from 1999 to 2002, with a target of 250,000 subscribers by 2005," notes Andrew Fitton, CEO at Transcomm. "Our business plan was well conceived. We felt that we had the network, the devices and the content and applications required for a very competitive offering. However, we did not realize at that point that there were storm clouds ahead."

The first difficulties that the UK operator experienced related to distribution for horizontal markets. For retail sales to consumers and mobile professionals, Transcomm sought a partner that could contribute branding, distribution, logistics and warehousing, as well as customer care and billing. Although discussions continue with several possible partners, Transcomm still has not solved this problem.

"Although we have a very strong offering, trends are converging, particularly in the consumer market, that constitute significant barriers," continues Andrew Fitton. "Obviously the consumer market is extremely competitive, with downward price trends and substantial operator subsidies for devices. The PDA market, which was empty when Palm, Psion and others arrived on the scene, is now overcrowded. At the same time, the initial WAP experience has been negative, leading to a slowing in sales of both handsets and PDAs."


Adapting to market changes
Continued market research revealed some disturbing trends. For example, a comparison of forecasts for UK mobile data penetration published by Strategy Analytics in 1999 and by the ARC Group in 2001, revealed that the projected market growth was delayed by about two years and that the expected penetration by 2005 would be lower than originally esti- mated. In addition, the rapid changes taking place in the market forced Transcomm to refocus on somewhat different market segments with greater potential for Mobitex.

"Without the support of a strong retail partner able to help us address the issues of branding, pricing and distribution, we had to conclude that the consumer and mobile professional markets would be difficult to penetrate. While we certainly are not giving up these markets, our research indicates that there are significant opportunities over the short term in what can be described as the white collar corporate and corporate vertical segments," reveals Andrew Fitton.

These are segments in which the perceived value of wireless messaging and mobile Internet access is very high. Examples include financial workers, such as stockbrokers and insurance agents, white-collar professionals, particularly in such areas as real estate and law, and sales representatives for pharmaceutical manufacturers and other companies involved in business-to-business marketing.

"Our research indicates that the business market will still account for about 40 percent of the mobile data market by 2005 and that the white collar corporate and corporate vertical segments in turn will account for about 40 percent of that market," says Andrew Fitton. "What makes them particularly attractive for

Transcomm is that they play to our strengths. We have a network that provides the coverage that these groups demand, and we have devices that will support the applications they need to work more effectively.Ó

In addition to a 400 MHz version of the TWM3 handheld, which Transcomm commissioned from Korean manufacturer CNI, the UK operator is planning to market a wireless cradle for Palm PDAs being produced by Maxon and an as-yet-unannounced handheld messaging device that will compete directly with RIMÕs BlackBerry device for GPRS.


Moving closer to launch
"Just when we thought that we had weathered all the storms and finally had all the pieces in place, lightening struck again," says Andrew Fitton. "The telecom market collapse in 2000 was a severe blow for everyone, and even today its effects remain evident. Investor funding has dried up. The mobile voice market has become saturated. The hype surrounding 3G and GPRS is deafening."

"Nonetheless, it is worth noting that no one has successfully launched a mobile Internet service in the UK to date. We therefore remain confident that we will get there in the end. Transcomm still has time to build the customer proposition, and I see an expanding window of opportunity over the next 12 to 24 months," concludes Andrew Fitton.

The mobile Internet revolution is thus just beginning in the UK, and Transcomm's voyage of discovery indicates that it will be a different experience for British users. As Transcomm begins pilot tests of its services prior to launch, the first mobile Internet users are likely to be traders on the floor of the London Stock Exchange or estate agents showing country houses to prospective buyers.