Tuesday | February 07, 2012
Let Freedom Ring
| Rate Center | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Today's Average Rates Across the Country* | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
By
Dave Mathews
19 November 2007
College students of 2007 take note: Many, many years ago, when I was in school, I had to pay for stuff. Today, this same stuff is frequently given to you for free. These "trends of free" started with newspapers, which were subscription based but are now readable online. Next, many magazines became blogs, again free. Cable and satellite "pay television" programs now can be found on YouTube and dozens of other websites spawned from its video portal concept.
Now your mobile phone, which is quite possibly your largest regular monthly payment, could too become free. Yes, you read that correctly, you won’t get just a no-cost cell phone, but potentially the monthly service to customers gratis as well.
How can an expensive cellular phone service be free you ask? Free cell service is possible for two reasons: the mobile phone has become an extension of our body as it is nearly always with us, and phones have become a valuable advertising medium because their screen displays are connected to a wireless network. Think of it as YouTube for your pocket, but replace the funny videos with probably not-so-funny commercials.
In 1975, American Express had an award-winning credit card campaign with "Don’t leave home without it!" Thirty-two years later with mobile phones, the mobile lifestyle is second nature and we need no advertisement reminding us of that.
Xero Mobile
Several companies around the world are trying to make money on this new service model. Xero Mobile aims to target the 17 million college students with a new cell phone at a competitive price while giving away minutes of airtime based upon watching video commercials several times per day. Details are still not announced on how many minutes of video equates to what amount time for calls or text messages. At the time of writing this story, Xero is in talks to be acquired by a company in the UK that specializes in delivering TV programming to a mobile phone. You can see how their expertise would fit nicely into this puzzle, as broadcast television is entirely advertiser supported and free to the end user.
Blyk
On the other side of the pond, another UK mobile provider is offering advertiser subsidized connectivity for the 16-24-year-old crowd. At the time of its service launch, Blyk offers 217 text messages and 43 minutes of voice in exchange for watching a three-minute advertisement. Don’t ask me how they came up with those two odd numbers. Companies such as Adidas, Borders, L’Oreal and Manchester United (the football, I mean, soccer team) have signed up to push ads on the network. The advertiser’s interest is due to the fact that the "college-aged generation" is hard to target with traditional media. Blogs have replaced magazines, television has gone from the living room to "video snacking" on sites like YouTube, and newspapers are unread by this young, yet important, demographic. The mobile phone, however, is a connectivity artery.
Finally, a major benefit to Blyk in the UK as compared to Xero attempting this in the United States, is that the company will only have to provide a SIM card to its users, which can be placed into any UK mobile phone. This is due to the fact that mobile phones in the UK are sold "unlocked," which means they will work with any phone carrier. In the United States, the hardware is subsidized or discounted at retail and therefore locked to specific carriers like the iPhone, which has been limited to AT&T for the first five years. Mobile phones in the UK also use a single protocol for communications, called GSM, where America has two major GSM providers (AT&T and T-Mobile) and two major networks which use a competing CDMA (Sprint and Verizon) standard, which complicates compatibility of communications further.
Google
One more major player hopes to launch an advertising-subsidized phone, just as it provides free Internet services such as search, blog hosting and email. Google is very tight lipped on any wireless services the company may offer, but its success in text ads and its new widget-based advertisements, you should take note. The widget ads would work well in the mobile space, as they could offer functionality of showing the closest retailer using Google Maps Mobile, a very popular downloadable application for phones.
Technology insiders say that HTC, a popular smart phone manufacturer, has produced 50,000 mobile phones running the Google operating system, which we can assume will include advertisements. Today, this phone would run over a WiFi or traditional cellular network, but in the future it could run on its own. HTC asked for some unique FCC provisions on competitive access, which could lead the company as a contender to buy the very valuable 700MHz frequency spectrum from auction early in 2008. This frequency becomes available for use in 2009 as old analog broadcast television is replaced by digital HDTV.
Your parents could even get in on the Google phone deal as HTC will most likely target all age groups due to the success of their AdWords product, which links relevant search or blog posts with advertising. This technology has become so successful that it is earning the company more than $4 billion in revenue at the time this story was written in the fall of 2007.
Now you have a better idea on how a company can afford to fully subsidize the cost of mobile phone service, but the complete deal terms are yet to be disclosed in the USA. Just hope that in the future, your phone does not hold some of its incoming text messages hostage and allow you to read them only after watching an advertisement!
Dave Mathews, "The Gadget Guy," pays more than $100 per month on his mobile phone service in San Francisco, Calif. More technology stories can be found on his website at www.davemathews.com.
© 2008, Young Money Media, LLC. All rights reserved.
Tag Cloud
Financial help Center
Newsletter Sign Up
Enter to win a Young Money Career Package by signing up for our newletter.
