The M-Commerce Horizon

In late May, the Wireless Data Forum (WDF) announced plans to work with the University of Texas' Center for Research in Electronic Commerce (CREC) on a mobile-commerce (m-commerce) program.

At the WDF's Wireless Agenda 2000 later that month, Andrew Whinston, Ph.D., professor and director of CREC at the University of Texas-Austin, gave a presentation on m-commerce called "Wireless Meets the Internet Economy." Wireless Review recently discussed m-commerce's potential with Dr. Whinston:

WR: What do you see on the m-commerce horizon in the next few years?

Whinston: To understand what's going to happen and what is happening is to understand the economics of what's going on. The economics is that major wireless carriers have got to build value-added business. They, I think, have a concern that in the wireless area, because of competition, you'll move to a very unattractive rate framework for them as just pure carriers. (With m-commerce), they can then get incremental revenue from, in effect, competing with credit-card companies. You could see a world where you go to a Coke machine and use a smart card by Visa, or you just use your wireless phone and pay a monthly charge. There may be other such developments that put (carriers) into this value-added-service area.

The challenge and what will push it forward in the United States is to get value-added revenue from these services. Otherwise, they're just selling a commodity, which is connect time.

Whinston said other value-added services could include entertainment, interactive games and market research. M-commerce also could include car-repair information, traffic directions and stock trades.

WR: What will determine which ideas succeed in the m-commerce marketplace?

Whinston: My feeling is that entertainment will be extremely profitable because it will allow (carriers) to provide value-added services in terms of all sorts of games, educational and entertaining. People will pay to get access to these interactive games. Companies will be paying the carriers to do market research. It is basically instant customer feedback in a locational situation. Instead of my calling you and asking you if you've bought a Coke in the last 30 days and what you think of it, it's a locational situation, and the feedback is much more valuable to market-research people. People will respond if there is enough of an incentive.

WR: Will this trend continue to larger ticket items, or is it likely to remain at the level of vending-machine purchases?

Whinston: I think people will be buying and selling stocks (wirelessly). I think it's the nature of the transaction and the information that you need. In the short term, you are going to have a relatively impoverished Web site on your WAP phone compared with sitting in front of your computer. We have to recognize that. It may be that you're going to buy a large item, but you sat in front of a computer screen to look at visuals before you do (buy it with your phone). So, certainly big-ticket items will be purchased as long as the information you need is available. People will be buying plane tickets (with their phones). I was in Japan a few weeks ago, and people were doing that.

WR: What are the main factors that will prompt m-commerce in North America?

Whinston: The recognition of the carriers that they have to aggressively pursue value-added services. Then the carriers need to go to these more entrepreneurial companies that have the products and capability to get them integrated and delivered to handsets and other wireless devices.