Portal Combat

Another visit from an Internet portal, another pitch about carrying its content on your network. Now for the decision: Will you make the most money from the wireless Internet by allowing portals to deliver their branded content to your customers? Or should you develop your own portal and brand your customers' entire wireless experience to ensure that you own them?

The answer could determine your share of an estimated $3 trillion e-commerce market by 2003. Some analysts argue that there are millions of dollars to be made by simply siphoning from the e-commerce revenue streams that will flow through your pipes. At the very least, offering brand-name content helps the business case for Internet-ready phones.

"The content provider is looking for another distribution channel, but even they aren't sure what proportion of the content they offer is going to be attractive and applicable to the mobileuser," said Zaiba Nanji, J.D. Power and Associates partner & telecommunications head. "As a pipe, wireless data offers carriers a great opportunity. So partnering with a portal company could make for a much better service for both sides. It's like most technologies: If you're good at one thing, you should probably stick with it."

Jane Zweig, Herschel Shosteck Associates executive vice president, agrees.

"Carriers are not going to make any money off content," she said. "The model in the United States is free. People are used to free, and so content will hold no value. But carriers will make money off enabling content."

Others counter that "pipe" carriers will be reduced to commodity providers of minutes. They fear that portals eventually will offer carriers' subscribers free airtime to stimulate e-commerce. Worse, portals are moving into a position to demand ever-decreasing rates to access the network -- or else simply take customers to another carrier.

"What's going to happen is data, all forms of access, will become a commodity," said Andrew Cole, Renaissance Worldwide wireless-practice head. "Thus, this massive market that the Yahoo!s are going to be pursuing, the e-commerce market, will require carriers to own their own portal, host applications and aggregate content themselves."

Others disagree.

"I think everybody can win in this," said Ken Woo, AT&T Wireless spokesperson. "There's a place for people building and maintaining pipes, and there's a place for those doing the content through those pipes. It draws those portal customers over to our side, but at the same time it gives a revenue stream going back their way."

AT&T Wireless' subscribers are encouraged to use the AT&T portal, but they can access other portals, too. Likewise, Sprint PCS boasts access to Yahoo! as part of its national ad campaign for its new Wireless Web service. Even so, Sprint PCS reserves the right to change its mind about using branded portals.

"These are brand-new business models, so no one has actually proved any of it," said Jim Ryan, Sprint PCS director of data applications and content. "One thing we are sure about is that we have to have a number of models working. Airtime revenue from usage is only one segment within this whole wireless Internet world."

Ryan said enabling access appeals to Sprint PCS because it's similar to Amazon.com's approach.

"They're seeing the Internet as just a vehicle for them to carry out business, and that business has the value," Ryan said. "So we think that delivering that kind of value to a mobile environment over our handsets and services has a lot of incremental value to these players."

But the potential for direct marketing to subscribers also has Sprint PCS' attention, Ryan said. With the aid of location-finding technologies and geocoded databases, a bookstore, for example, could use wireless to send electronic coupons for 20% off a best seller to all subscribers in downtown Kansas City.

"There's tremendous value there as opposed to putting an ad on TV or throwing something on the radio and hoping that people catch it," Ryan said.

DOES BRANDING ALWAYS LEAVE A MARK? Nextel entered the Internet-access game in grand fashion last year by agreeing to offer Microsoft's MSN portal. As part of the deal, Microsoft invested $600 million in Nextel's network.

But the logic behind Nextel's decision is lost on Renaissance Worldwide's Cole and others who believe that branding subscribers' entire wireless-Internet experience -- from first accessing the Web to the content appearing on their carrier-branded handsets -- is the only way carriers can continue to own the customer.

"We absolutely think, from a carriers' perspective, that it's almost suicide to allow another entity, particularly one of the Internet portals, to intermediate between you and your customer," said Cole, referring to the Nextel/Microsoft agreement.

Nextel believes it made the right choice by teaming with a portal because the arrangement allows it to focus on its core business.

"We're a wireless provider and not an Internet company, so we're kind of sticking to the business that we know," said Kara Palamaras, Nextel director of corporate communications.

By contrast, simply providing access to portals' content was never the sole focus of SouthernLINC's wireless-Internet strategy, said Amanda Cancel, spokesperson.

"From the very beginning, we wanted to offer our customers real wireless-data solutions (and) not just access to something," Cancel said.

Instead, SouthernLINC created its own portal called MyLINC to brand the wireless-data experience of its 150,000 business users. Phone.com provides the aggregated content, but the only clue to users is a button on the MyLINC home page.

DO-IT-YOURSELF PORTALS Phone.com is just one of several companies offering carriers portals that they can brand as their own. Another, InfoSpace.com, provides several solutions, including an end-to-end portal that carriers can brand for their networks and more than 70 content feeds. Its platform allows the carrier portal to offer content from any Web site and deliver it to any wireless device.

"Carriers are wising up, and they're saying to the brand-name content guys: 'Wait a minute. Why do I want to provide you with my customers?'" said Steve Shivers, InfoSpace.com general manager. "At the end of the day, if AT&T's got Yahoo!, then Sprint's not going to be able to protect against churn."

Smaller and regional carriers likely will turn to content aggregators, said Ken Hyers, Cahner's In-Stat industry analyst.

"You get to go in and say: 'This is what I want my site to look like. This is the content I think my customers want,' without competing with content provider itself," Hyers said.

Shivers agreed.

"As a wireless carrier, you need tools available to compete effectively, and that's what we're providing," he said. "The carrier owns that data on the customer. We don't try to interfere in that relationship in any way. The carrier owns the customer."