Decade Review 2000-2009: Rise of the mobile internet

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The UK 3G licence auctions at the start of the decade netted then-chancellor Gordon Brown a staggering £22.47 billion. The winning parties – BT Cellnet, Orange, One2One, Vodafone Airtouch and Hong Kong conglomerate Hutchison Whampoa – bid such sums on the promise of super-fast airwaves and new revenues precipitated by setting up as media companies.

The Nasdaq had peaked six months earlier on the back of the dotcom bubble. Its bursting, in 2002, made the money splashed out by telcos on 3G licences look absurd, and its promised land was a long and difficult trip.

Hutchison’s 3 debuted as the first 3G network in 2003, but made its way as a challenger brand with cheap rates and chunky handsets. And video calling. The rest eventually stuttered into life, even as then-Orange boss Sanjiv Ahuja said in 2004 3G handsets got hot enough to fry an egg on.

It was a Gerald Ratner moment, and the mobile establishment ultimately failed to deliver the ‘killer application’ until nearer the end of the decade. Walled gardens penned users in to buggy and limited new mobile ecosystems, while network operators spoke of their search for the ‘killer application’ at Mobile World Congress (then called ‘3GSM’) through the middle of the decade.

In the meantime, regulation and intense competition, particularly from upstart 3, drove down voice and text revenues at an alarming rate. Data took off significantly only as Canadian Research in Motion, out of nowhere, tore into Microsoft’s corporate heartland and installed BlackBerry software on office servers, and compressed and pushed emails to handsets over 2G networks instead.

It took an outsider, in the form of Cupertino-based maker Apple, to make proper sense of the consumer mobile internet. But even its first arrival in 2007, in a ground-breaking two-year deal with O2, was on traditional infrastructure.

Its first iPhone device ran off 2G and neat Wi-Fi connectivity. Its immediate mad success was in the technical presentation and the branding, shaking industry incumbents to their foundations. Until the iPhone, the most important mobile phone had been the Motorola V3, which was only a very slick manufacturing job.

The iPhone demonstrated what a hoot the industry’s jargon-filled attempts to foist technology on the public was. Its 3G version, only just over a year old, made a decent data-hungry proposition even more compelling for consumers, in the same way the Bold in 2008 added 3G functionality to BlackBerry for the first time and made a unique business proposition more effective.

The ‘killer applications’ the industry had searched after for seven years turned out to be, yes, the internet and email afterall. The introduction of flat-rate mobile internet tariffs, embedded fast links to addictive new web 2.0 programmes like Facebook and YouTube, and bite-sized web tools and amusements have seen data traffic jump in the past 12 months.

Full article in Mobile News issue 453 (December 14, 2009).

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