Mobile commerce still has a ways to go before it reaches the heights that its proponents have predicted. Consider the hype surrounding 3G, or third generation, technology. 3G companies have been promising that their technology will be able to transmit an unheard-of amount of data to its hand-held devices, enough to allow a mobile phone to stream full-motion video. The reality is that many critics are now questioning 3G's capacity. Some charge that 3G's connection speeds will hamstring that kind of data-intensive transmission and others are saying that even if it were capable of transmitting large amounts of data, the 3G devices would overheat from how hard their batteries would have to work. The devices, quite simply, would be too hot to hold and their batteries would need to be replaced every few minutes. Japanese telecom, NTT DoCoMo, recently recalled 1,600 handsets after customers complained that their phones were too hot. Despite their predictions, 3G companies still have a few basic problems with their products that they need to iron out.

Also generating its share of hype is NTT DoCoMo's I-Mode service. I-Mode boasts being able to break up and transmit information in electronic packets compatible with HTML, allowing users to surf the Internet with their device. To their credit, DoCoMo has found a way for users to actually pay for content by charging subscribers a monthly fee. The catch is that the monthly fee is between $1 and $3, meaning that I-Mode will need to significantly broaden their customer base in order to make a profit. In addition, the greater part of this content charge goes back to the content providers, who seem unwilling to share the wealth. Of course, by refusing to pony up cash to I-Mode, these content providers could be biting the hand that feeds them. If they are too stingy they risk losing the service that provides them with paying customers and if they agree to part with too much of their fee, they run the risk not making any money. How customer fees will be divided is an essential obstacle that needs to be cleared in order for this technology to progress.

Another technology that has received great fanfare is Bluetooth. It's basic selling point is that it enables communication between a wide variety of wireless devices, actively connecting mobile phones to the Internet, PCs, and electronic appliances, as well as connecting each of these to each other. Although Bluetooth is an impressive technology and is cheaper to implement than 3G, it does have hurdles to clear, the most serious of which is its lack of compatibility. Since there are already wireless networking technologies in use that are incompatible with Bluetooth, the Swedish technology will work with some protocols but not others. In addition to this disadvantage, Bluetooth communications are generally considered to have weaker security. According to one expert in the field, its transmissions can be intercepted and read by anyone with a scanner and a soldering iron. Bluetooth may have to pass some market tests before its security standards can get the green light.

According to m-commerce's advocates, the bulk of the world's population will soon be trading stocks, paying bills, and buying goods and services over their mobile phones. This ideal may one day come true, but first someone has to figure out a way to make money from it. Right now, consumers using their phones for these types of transactions are being charged for this opportunity – but only a few pennies at a time. Because the current user-ship of this technology is so small, telecom companies are a having a tough time making a profit from offering these services. Furthermore, most telecom companies are either inexperienced when it comes to the back end of mobile commerce or lack sufficient infrastructure. Once again there is also the security issue that needs to be resolved. In order for customers to adopt the technology wholeheartedly, telecom providers need to take extra steps to address their privacy concerns.

Finally, there are the predictions that the arrival of 3G phones will open up an enormous market for wireless data devices. The fact is that 3G, and its host of touted capabilities, are taking longer than expected to materialize, allowing other technologies such as 2.5G and 4G to spring up in its place. Optimistic estimates are now being revised, stating that by mid-decade only 15% of European subscribers will be using 3G. This does not bode well for 3G companies who are depending on rapid returns to pay off the debt they've accumulated acquiring spectrum licenses. In addition, the full roll-out of 3G requires the construction of a network of radio towers and base stations, an endeavor that could put 3G providers another $100 billion in the hole. In order to clear this substantial money hurdle, 3G companies will have to put together an effective business plan.

There is little doubt that 3G will eventually make it to market, the question is whether the technology will provide all of the capabilities that have been promised. If customers, as some have predicted, end up shifting the bulk of their Internet viewing to wireless, a windfall may be in store for 3G providers. The fact that 3G customers will be able to connect to the web without dialing-in certainly supports this notion. As of right now, however, predictions about the future of mobile commerce remain just that. The advent of mobile commerce may not turn out to be a sweeping revolution. Instead it may be a slow and gradual change that occurs one development at a time. In any case, the most realistic position a prospective wireless customer can take is to wait and see.

Source: Wireless Secrets and Lies
James Ledbetter
The Industry Standard, June 25, 2001
http://www.thestandard.com/article/0,1902,27206,00.html