Ahhh operators, you gotta luv ‘em. Just as it seems consumer behavior is really benefiting from the introduction of true smartphones and cheap ‘all you can eat’ mobile tariffs, they go and throw a spanner in the works.

O2 have just announced the end of its ‘unlimited’ tariff for smartphone users, this follows Vodafone last month and no doubt Orange will follow suit soon enough. Any new or upgrading customers will be shoved onto the new plans, existing customers keep the same tariff, but hey, you gotta upgrade sometime right?

There are a number of reasons floating around as what caused this change, one of them involves Apple. They’ve basically said to operators (these are my words) “Stop fucking offering ‘unlimited’ tariffs with the iPhone when you write “subject to fair usage’ in small print at the bottom of contracts, you anti-innovation bastards”.

However the O2 Chief Executive Ronan Dunne has stated another reason – they are seeing data traffic doubling every four months, this means their ‘flat fee’ tariffs aren’t making them any money if everyone is canning it more and more. Dunne reveals some interesting results about how this consumption is happening,  apparently 97% of O2 smartphone users actually use less than 500MB per month and a tiny fraction use more than 1GB (0.1%). This means a small percentage of ‘super users’ are ruining it for everyone else by putting strain on the network, resulting in the new capped tariffs.

But wait! By the figures O2 reveal doesn’t that mean that someone who uses less than 500MB today, will in fact be way, way over that number by the end of their 12/18 month contract as usage is doubling every 4 months?

He had this to say:

“But at the same time, we’ll start to change customer perceptions about the value of the data they use; a vital part of ensuring that people share it responsibly and considerately.”

That is exactly the kind of attitude that stunts innovation, do you think we’d be in this great position today where people don’t second guess how much they pay to view a video or use an app if we still had limits and charged per megabyte? All these great things we’re seeing with apps, social networks, location etc would never of happened. I know operators are seeing very little return from the iPhone/Android eco-system, they make no money while developers and Apple make millions, but this is the wrong move. Changing customer perceptions back to the old days? Pssh.

Now back to the original point of this post, The Guardian writer Charles Arthur puts forward a really interesting argument to what the hell these 0.1% of super users could be doing to download gigabytes of data every month. He thinks it’s caused by P2P users who are worried about the new Digital Economy Act and have now switched their illegal downloading to their mobiles to avoid being tracked by the government/ISP and getting ‘three strikes’. Those users are supposedly taking the SIM out of their phones and sticking in a dongle to download their movies, albums and what not. As he says “the tiny number of P2P mobile downloaders are screwing it up for everyone else.”

Couple of things wrong with this argument, Arthur makes the assumption that these users are smart:

“someone who’s using their iPhone SIM as a dongle really isn’t worried about upgrading; they’ve probably got a PAYG SIM stuffed into their iPhone for their phone calls. They’re not stupid.”

If these guys aren’t stupid, why the hell would they using their phones for P2P downloads? Surely they would be using VPN’s, Proxies and dozens of other Digital Economy Act avoidance tricks are much less hassle than having your SIM out of your phone and actually cost a lot less than a dongle. Some methods here revealed by a 5 second Google search.

So now that we’ve established that anyone with a brain wouldn’t use their phone for trying to avoid the Digital Economy Act, what are these users doing? Oh, this is so easy …

PORN.

Come on now, had you forgotten about the old king of the internet before Facebook was around? What do you think happens when phones get bigger screens, faster internet and superior video-watching ability? Yes that’s right, people use them to watch porn from free online streaming sites like Xvideos, Redtube and probably a million more, aaand wouldn’t you know, the two I mentioned have mobile sites too, here and here (warning: porn). In fact just add ‘mobile’ or ‘m’ to any porn site, they’re probably mobile optimised.

I figured I better try and back up my argument with some facts:

An article from 2008 -

“In the last six months internet searches for iPhone porn have increased nearly fivefold according to Google Trends”

“It’s by far the porn-friendliest phone,” Devan Cypher, representative for San Francisco-based Sin City Entertainment, told Time magazine.

Tech Radar 2009 : Mobile porn slamming networks’ capacity

and those are out-dated! Think about where we are today.

So there you have it…my conclusion is that the 0.1% downloading over 1GB every month are simply….massive wankers.

This is some pretty big news for mobile that hasn’t got the reaction I think it deserves (or do I just play too much Playstation 3?). It looks like huge efforts are being made to make mobile, console and PC gaming completely compatible.

First up is Microsoft who recently demoed their Windows 7 Mobile playing Indiana Jones, then switching the game to PC, then onto the Xbox 360. Next is BigPoint and Unity Technologies who have developed browser based software that will enable iPhone (and eventually Android, iPad) gamers to play against PC, PS3 and Wii players.

On a basic level this means that you’ll be able to play multi-player games with people sat at their PCs at home whilst on your mobile. Also things like the ability to carry on your game where you left on the PC using your phone would be a typical feature.

But think about the possibilities this has for the actual games themselves; experiences have the potential to be completely immersive. What you do and where you go with your phone in real life can affect what happens to your character in a game using mobile technologies like GPS.

Imagine playing Grand Theft Auto where you could unlock parts of the game and collect bonuses by physically travelling around your own city. Or multi-platform versions of Second Life where you need to find other users around you to exchange goods.

At the very, very least it will enable mobiles to become an extension of your PC/Console gaming (I actually think this is where it works best). This means that there really are endless opportunities for developers not just to push the boundaries of their games, but mobile marketing too.

Interacting with brands in a game could push coupons/offers to your phone, get you mobile tickets for concerts or special events. Imagine winning the World Cup on Fifa 2010 and getting tickets to the tournament in real life.

It’s no secret that in-game advertising is going to be a massive industry, with revenues of $971 million predicted for 2011. Adding mobile into the mix suddenly makes those in-game brand advertisement/experiences actionable.

And with games like Call Of Duty: Modern Warfare 2 making $310 Million in a single day, the industry is only going to get bigger and better, looking for more avenues to make money through investment and innovation.

Mobile solutions company Incentivated power the new SMS flight info service for British Airways. Fantastic, SMS is easy peasy, so let’s hear more about it:

According to Mobile Marketing Watch:

The service, available for UK- and US-registered mobile phones, enables users to get up-to-the-minute flight information for yesterday, today and the next five days. Users text D for Departures or A for Arrivals followed by a space, the departure date of the flight (in the form DDMMYY or MMDDYY for the US) and the British Airways flight number (eg BAXXXX) to 60747 in the UK, 70615 in the US.

OOohh laawwd – how the hell is anyone meant to use this service again if they have to remember all that?

So I decided to give it a try and deliberately entered false details to see if I would get a error message back saying explaining how to do it correctly. I.e “Sorry that was wrong, please try again by entering D or A….”

Nope! If you get it wrong, well you better just remember the format and get it right.

How could this be improved:

• A good error text-back notifying the user that there has been a problem with their intial SMS due to typing incorrectly and tell them how to do it properly.

• Something this complicated would benefit from changing the user journey from one single message to three. Here’s how:

1. User texts in either D or A (or departures/arrivals) to shortcode
2. BA sends back message asking for departure date
3. User sends back departure date
4. BA sends back message asking for flight number
5. User sends back flight number
6. BA sends flight info. JOB DONE.

That way the user doesn’t need to remember how to correctly format the message because they get reminded at every stage. Yes it would cost BA more in SMS costs but repeat usage would increase.

Mobile banners haven’t really changed much in the last 4 years, however phones have improved beyond recognition with faster processors, 3G capabilities and better screens. However just as important is the improvement in handset targeting by advertising networks, this enables mobile websites to serve ads based on the capabilities of each phone model – so basically serving better ads to better phones.

As you know the mobile landscape is changing, Apple and Google both are now owners of the hardware, software and advertising networks. This means they completely control the mobile advertising eco-system for their handsets, free from the constraints that have handicapped creativity in this part of the industry for so long.

In the future advertising units & banners will have access to features on the phone, either through Flash, Flash Lite or HTML5. We’ve already seen Google’s ‘Near Me Now’ function on its website which directly accesses the phones GPS unit to provide shops and restaurants nearby. I think it’s only a matter of time before we see the accerometer used in the same way.

For those of you who don’t know, the accelerometer is the component in the phone which measures tilt, motion, shaking and swinging. It is responsible for sensing if the handset is portrait or landscape and switches the display accordingly. The iPhone was arguably the first real phone to ultilise it fully within its user interface and applications.

Aaaand did you know that Flash Lite 3.0 already has the power to access to data from the accelerometer on phones such as the Nokia 5800? Flash developers head here and here for example code. Oh and Flash Lite works WITHIN the browser so the following examples can be done today! (I’ll be covering this more in my next post)

Enough talking fool, show me some examples!

So what kind of unique, engaging, mobile-only experiences could you create using this technology?

Here are some examples of online banners that would fit perfectly with the accelerometer and the mobile web. These are a mixture of Flash banners and whole page takeovers, they inspired me and hopefully they’ll get your imagination and creative juices flowing about the possibilities of mobile advertising.

Wario Shake It

This is absolutely perfect for mobile, shaking your phone to set off all the elements falling. Plus Flash Lite has access to the vibration on the phone so this could shake the phone too!. Check it out here

Fiat ABS Banner

Imagine interacting with this by tilting your phone. Great Ad.

Fiat Engine Power Banner

Another great banner. Simple but effective, could be activated by tilting the phone.

Gulliver Used Car Banner

This banner advertises used car trading, hence the continuous swapping of drivers.  Imagine flipping your phone upside down to interact.

Burger King – Banner Of Doom

Probably the greatest banner of all time. As the screen begins to shake, so could the phone (this functionality is available in Flash Lite). Click here to view.

The functionality to create all this stuff is already available but nobody seems to be taking to first steps and putting cool stuff out there even at proof of concept stage. When I get some time I’ll throw together a few real life examples and get it on video to put on the site.

I’ve written about this before, but last week it resulted in me getting less food for my money – which my friends will tell you makes me very angry, so I’m bringing it up again.

I was meeting a mate after work for something to eat, the plan was to get onto Money Saving Expert and see what was on offer, print out the voucher and go munch. Giraffe had a 2 for 1 on main meals deal which fitted perfectly.

In the rush out of the office I forgot the voucher, because of this I changed my mind and we went next door to Wagamama instead. Why? Because paying full price for something when you know it’s on sale feels like a massive waste of money, you either can’t live with knowing that everyone else around you is probably eating for 50% less or you tell yourself that you’ll return another time with the voucher. Plus I like Wagamama that tiny bit more if paying full price but when it comes down to a good offer like 2-for-1, Giraffe would win every time.

If I could have sent that voucher to my phone rather than to a printer, Giraffe would have had my business. The same has happened in the past with vouchers from Gap, Urban Outfitters and plenty of others. It’s even more of a pain when you don’t have access to a printer.

How many times have you used a mobile SMS voucher compared to lets say, a printed email/pdf voucher? There is no comparison, how can the most commonly used mobile service in the world be overlooked for something you can only do if you have access to a printer? It makes no sense, ask any person who has used a printed voucher if they would rather use a text message instead, what do you think the answer would be?

The question is why hasn’t it happened yet?

Easy – there is absolutely nothing in it for agencies who advise brands by suggesting such a simple solution as it cannibalises their profits. Designing and managing online and email voucher marketing campaigns makes money, if that switches to mobile then someone loses revenue.

Setting up a standard SMS send is easy, cheap and quick, any extra costs will be made back instantly with higher conversion rates, ultimately making more money for the business overall.

All I keep hearing is “you need tracking” – No you clearly don’t, if brands were so hung up on tracking then printed vouchers wouldn’t exist simple as that. I’m not saying metrics aren’t important but why are we overlooking this opportunity based on something that no one is bothered about when it comes to the paper version? Anyway it’s not like you can’t measure uplift whilst the promotion is runnning and do smart stuff with the sales data.

The concept of vouchers on mobile is still new, the industry needs to help increase awareness and adoption by making it as simple as possible. New technologies like NFC payments will benefit immensely by preparing consumer mindset now. And what can be simpler than following the lessons learnt from paper vouchers? They are easy to use and successful. Show it, get your discount, leave happy. Done.

It seems like there are more and more  ’solutions’ companies are creating Java, iPhone and Android applications that need to be installed before getting discounts. We’re not even at the stage where SMS vouchers are commonplace yet we suddenly expect people to start using these fragmented services , each providing different brands and offers. We should mimic existing behaviour with printed vouchers until showing your phone to staff at Gap or GBK becomes the norm. But then of course all these voucher solution companies become unable to justify using their tech if actually all you need is a bog-standard SMS.

I’m going to make it my mission to convert a large brand from using email vouchers to SMS. Rant over.

Updated: Wrote this post last year before the iPhone 3GS launch, obviously that version didn’t have video calling or mobile tv as its core features but could that change this year? I was a thinking a bit too far ahead last year but now it seems other blogs are mentioning the same thing.

Rumours (and screenshots) are flying round featuring a front facing iPhone camera…9to5Mac has a post with all the theories. Remember the iPhone can’t save video calling on its own, operators will need to create unlimited bundles with standard tariffs otherwise it’s not going to be able to sustain the initial uplift. Maybe this is the kick start video calling needs to begin lowering prices?

Check out the new image and original post below:

The new iPhone is due to be announced soon and I have the feeling that it’s about to change the way people use (and perceive) Video Calling and mobile TV. The two services desperately need a jump start and have been poorly received by consumers for years.

As a consumer I know that Mobile TV is very appealing, I can’t tell you the amount of times I have been out and wanted to catch the football or a episode of Californication. Even at my desk, I can’t be bothered to keep turning my head to watch the plasma and would gladly have a phone in front of me with the TV on. The proposition isn’t hard for the consumer to understand, it’s TV that you love and know…on your phone. Simple.

However the price has always been far too high , I’ve found that most people don’t know that their operator offers TV and the ones that do think it’s too expensive to take up. Currently the price sits at around £3 per month on Vodafone to £8.99 per month on Orange…That’s 35% of my line rental!

Video Calling is just as expensive, on Orange it costs 50p per minute to call someone on another network. Video Calling is a service I would dip in and out of but why would I ever bother at those prices? I know many things have been listed on why video calling isn’t popular, everything from unflattering camera angles to human nature but lets face it, cost is usually king and if it was free people would use it more. Plus video calling is aching for a sprinkling of decent Apple-style user experience.

Apple certainly has the power to tell networks that it wants consumers to be given unlimited video calling and Mobile TV tariffs with new iPhones. It’s my belief  that when you take cost concerns out of the equation you can instantly change user behavior, that coupled with Apple user interface expertise could completely set a new standard for Mobile TV and Video Calling.

So would operators offer Mobile TV for free? Well we know that operators bend over backwards for Apple and news about the upgrades currently being done by networks is surfacing.

I once worked on a project which looked at inserting video ads inbetween Mobile TV programs which were different from what was being broadcast on actual TV. This meant that the ads could be more relevant for the mobile device and even use location. The ads can have mobile call to actions and click throughs which you can’t obviously do on a normal TV. Video ads generate a higher CPM than graphic and text ads so this could be the swaying point for operators.

Lets wait and see if Mobile TV and Video Calling appear on the new iPhone.

Samsung have started adding Wi-Fi to their LED range of televisions. Not only can you use Twitter and Flickr from the on-screen widgets but you can also watch YouTube (which brings up questions about the future of traditional broadcasting just by itself).

The reason why this is important is because the TV can now send and receive information via the internet.  Add a NFC chip onto the television/remote control it then becomes a portal of unlimited opportunities.

Compare the adverts you sit through on TV to on the internet, I barely notice the ones online but on TV brands have the chance to really grab my attention. My attention is on the screen, I’ve probably got a packet of Pickled Onion Monster Munch in hand (get in), I ain’t moving. Then…wow the new Adidas Predator advert comes on, jeez I sure would like a pair of them, move my phone over the remote and BEEP BEEP > coupons, nearest store, catalogues, competitions, apps, the list could go on. The same applies during programs.

NFC is the technology for the true couch potato.

We’re currently at the very beginning of NFC, the technology will start being seen in a few half-decent phones this year, even Apple might dip their toe in one day according to this patent (that will be when it goes crazy). And just like anything, as time goes on the technology will become cheaper and more common.

As you all probably know by now, Google are releasing their own phone called the Nexus One. The phone is nice, good features but definitely no iPhone killer. However as suggested by Mobile Industry Review it represents something much more than that.

About 6 years ago the first Nokia handsets shipped with Wi-Fi capabilities, there was a huge buzz about being able to make free calls over the Internet using your mobile, however operators put a stop to that by strong-arming the manufacturer by literally saying “Disable it or we won’t bulk buy your phones”.

Sure enough the Wi-Fi stayed but the phones never got VOIP calls until YEARS later. And when it did arrive they tried to charge for it. Operators want other stuff too like putting their own maps application on phones, app stores, and a whole bunch of extra crap they were never meant to do. If you’re trying to build something into the core user interface it’s probably better to let the people who made the rest of the phone do it.

This is typical of how things work in the mobile industry, manufacturers bend over backwards for operators because without them it’s extremely difficult to get your latest and greatest mobile into consumers hands.

But what if you’re the most visited company on the web?

Google have told Vodafone they won’t be able to retail the phone themselves. If a customer walks into the Vodafone store or goes online wanting a Nexus One, they will be pointed to the Google.com/phone website.

As Ewan at MIR says:

(yes, it’s powerful, yes it’s got some cool apps) but the real meat was in their strategy of breaking the operator stranglehold on the mobile industry.

Apple has already shown the kind of flex that giant, sought after brands can have on operators.

Of course you’ll still need an operator to get the phone working but that isn’t the point. This is the very, very beginning of a massive shift. This is the first time it’s been done this way and won’t be the last.

Two weeks ago, O2 launched their very own SMS advertising network called O2 More. The opt-in program aims to “deliver highly personalised campaigns for advertisers and give customers access to a wide range of exclusive and relevant offers from over 50 leading brands.”

It works by the O2 customer signing up and filling out their age and interests online (picture below), O2 will also use their location and usage data:

What other information will be used for O2 More?

Only things we know about how you use your phone since you’ve been on O2. For example, if we know you download music to your phone, we may send you details of a music offer. We want to make the messages you receive from us as relevant as possible.

I dug around and found the O2 Sim card I used for the AQA vs 118188 test and signed up for O2 More. Check out the registration screen below (click to enlarge).

This is the first time one of the big four operators has opened up their customer data to brands and it’s probably long overdue. There’s no reason this couldn’t have been done years ago so why now? Are brands and consumer attitudes changing?

Shaun Gregory, managing director of O2 Media said in a statement:

“Mobile advertising has been slow to deliver on its promise. Much of that has been down to a lack of understanding, limited opportunities and no real accountability or measurement. O2 More is about to change all that and will spearhead the UK’s first truly personalized media business.”

Why Now?

I personally think that operators are seeing power shift over to manufacturers and are making (slightly vain) attempts to combat this. For a long time operators have been holding all the cards for targeted mobile advertising, they have your location, personal details (when you sign the contract) and even your browsing habits. But now everything has changed, advances in technology means that the handset can do all of this and more, putting the manufacturers in pole position.

Phones can use GPS for your location, online accounts for your personal information (like Facebook, Google etc) and can track your browsing habits just as well as the operators. This poses a problem for mobile networks because they are moving out of the profit loop.

But the most important thing to remember is that manufacturers control the user interface and experience. This means that advertising doesn’t just have appear in the browser or Applications, completely new ad-units can be created. Imagine the things you could do if you got the chance to start mobile advertising from scratch, on your own terms. Imagine the brains behind Apple and Google creating new ways to advertise that aren’t restricted to SMS or banners.

In the past operators took a cut of your profits if you wanted to make some money using things like premium rate SMS, LBS lookups or reverse billing. These days you can take payments from within a iPhone/Android/Blackberry App and the operator doesn’t get a penny. Imagine the amount of money that goes around the iPhone eco-system without O2 getting a sniff.

And what about ad serving? It’s allowed developers and publishers to turn over millions in revenue by pulling ads into their apps/mobile sites without any profits going to the networks. After Google paid $750 million for Admob, a business that relies on advertising on mobile networks, I wonder if operators wondered why they weren’t getting a more of the pie.

This is blatantly obvious with app stores. Vodafone and Orange have just launched their own. Why? What do they believe they can offer the marketplace that the manufacturers cannot? The answer is – not much, apart from confusing consumers. It’s totally ‘me too!’ behaviour with the purpose of slowing domination by manufacturers.

Anyway back to O2 More, one thing O2 does have is reach, they can target people who have low end phones just as well as the super duper ones because everything is reliant on the network rather than phone hardware. But when recent studies show that iPhone users spend more money you often wonder where you’re likely to get a higher ROI.

I’ve been signed up for O2 More for 3 weeks and I have yet to receive a promotion. Not really a good start.

Shaun Gregory, head of O2 Media, said: ‘It’s not about bombarding customers; it’s about providing true relevancy. If we have [an offer you'll enjoy] we’ll send it. If we don’t, we won’t.’ Gregory also swears you won’t receive more than one a day”

Maybe the ad inventory doesn’t match up to my personal preferences yet? One I get a SMS ad i’ll screen grab it and post it on the blog.

In June last year, Apple released the 3.0 update which enabled long-awaited MMS functionality on the iPhone 3G. The newer iPhone 3GS shipped with MMS as standard. What affect will all these dormant iPhone have on

Lets take a look at the figures:

Video and Picture messages (MMS) usage stats for the last 3 years in the UK:

2008 total 553 million (+104 million from previous year)
2007 total 449 million (+113 million from previous year)
2006 total 336 million

These statistics can be broken down as follows in 2008:
Year on year growth (2008 vs 2007): 23% growth

As you can see the growth is pretty steady, which is great because it makes any spikes easier to spot. You would normally expect something in the region of +/- 10 million from 2008s figures for 2009.

I’ll check over the figures when they are released for any abnormalities, and do a bit of digging to see they can be attributed to the iPhone. The majority of the spike would need to be from O2 as they had exclusivity on the iPhone until late 2009.

A far cry from the MMS is dead talk hey?

What’s interesting is how much a phone with a great user experience can improve usage of traditional mobile services. If the iPhone can have a massive effect on MMS, imagine what it could do to Mobile TV and Video Calling?

Could one phone bring down the barriers that have held back these services in the past? I honestly think it can, we’ve seen how applications have been transformed with the iPhone.

In June I wrote about the potential of what the iPhone could do for video calling, although it never happened with the 3GS, the next update could prove different.

However it’s not just down to the iPhone to aid adoption of services, it’s down to operators too. Without unlimited data plans would iPhone applications have been so successful?

MMS, Mobile TV and Video Calling needs to be thrown into flat rate tariffs otherwise they will never succeed. The iPhone played a massive part in making flat rate data the norm, maybe it will have the same effect on other services.