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WAP: Solution in search of a problem
By Julian Matthews,
October 04, 2000

WAP is here. But the hype may have done it more harm than good. Analysts suggest operators partner quickly and get over "walled gardens" before the window of opportunity shuts for good.

KUALA LUMPUR - Wireless Application Protocol (WAP)-enabled handphones are already available in Asia but analysts are still skeptical whether operators will deliver on promises of their usefulness

Ovum consultant analyst Jeremy Matthews said the hype surrounding WAP may result in consumer backlash because the technology may fail to meet expectations.

"It really depends on how the operators in individual countries are marketing WAP - most have built it up to unsupportable levels at pre-launch and then scaled back when they realize that consumers are disappointed. This will result in some dissonance and invoke more 'wait-and-see' stances in the market," he said.

Bertrand Bidaud, Gartner Group director of telecommunications for Asia-Pacific, said managing expectation is key. "WAP is not surfing. The experience is different for sure, and may lead to disappointment by consumers expecting the same Web experience they get from PCs".

Bidaud said the use of the oft-cited NTT DoCoMo's i-mode service as a yardstick for wireless data success in Asia may not necessarily apply to rest of the region. "i-mode took off partly due to the low Internet penetration rate in Japan. Managing expectation was not a real issue there. Users quickly took to the best of i-mode, driven by messaging and entertainment applications. Other markets will need to readjust their approach for WAP," he said.

Despite a 12.3 million subscriber base, i-mode has yet to replicate its success beyond Japanese shores. WAP, on the other hand, is backed by powerful players from the WAP Forum whose goal is to make it a global de-facto standard. Forum members such as Motorola, Ericsson, Alcatel and Nokia already control a sizeable chunk of the switching and handphone market in Asia and Europe.

But WAP has come under fire in roll-outs throughout the region. Key issues highlighted by various detractors were lack of models, pricey services, slow data speeds of 9.6Kbps, security holes and the lack of useful applications and services.

Despite such misgivings, local telcos jumped on the bandwagon this year partly to exploit gadget-hungry early adopters, and perhaps out of fear of losing market share.

"Certainly there are first-to-market advantages and this is why most operators have launched WAP within a short period of each other. The operator that 'gets it right' early will naturally be well-positioned for the future. But it's debatable whether ordinary consumers are actually demanding mobile e-commerce services right now. It's more a case of suppliers sensing an opportunity to make money, and pushing the idea at them," said Matthews.

WAP needs a killer app
Analysts agree that WAP's popularity hinges on the development of a "killer app" that will make up for creaky GSM networks and the unfriendly tiny keypad as an input device.

Richard Jacobson, senior Internet analyst for IDC Asia-Pacific, said that although WAP-enabled phones will be widely available within a year, whether or not users will actually subscribe to the services is "left to be seen."

"WAP will not be the 'go-to' technology for every application or service out there in the market. It will only be suitable for specific types of apps or services. For example, people are more likely to be interested in being able to place stock market buy and sell instructions on their WAP phones, and less likely to be interested in browsing for the latest mutton vindaloo recipe," he said.

Matthews agreed that current content is not compelling enough. "It's really about WAP's lack of value-add - it is a poor substitute in most instances and unless it can offer true convenience then it is going to struggle. For example, it's easier and faster to order a pizza by voice, than tapping it in on current WAP phones."

Bidaud expects entertainment to be the first "killer app" as it is in Japan. "Remember, early technology adopters always use technology for fun. Only later, will business applications prevail. The main challenge for developers is to develop a micro-payment platform that can become popular," he said.

Bidaud added that the type of applications that will work differs from market to market in the region. "In Korea, stock-trading by phone is already very successful, yet this seems specific to Korean market. You can expect similar success in Taiwan and China, but not as much in other Asian markets."

Another inherent weakness of WAP is that each carrier is only touting access to its own content and websites. This 'walled garden' effect prevents users from surfing easily, with interoperability issues between carriers yet to be resolved.

Bidaud said the walled garden is not a technical issue but a business one. "On a wireless network, content will be more local than on the Internet. I can't see many operators with the scale to generate enough content to match the 'open space'. Scaling matters. The walled garden is not a sustainable business model," said Bidaud.

Ovum's Matthews advises operators and mobile e-commerce (m-commerce) players to partner sooner rather than later to avoid costly and time-wasting disputes. "It is all about facilitating open access and interoperability. The walled garden is only viable in the early trials and will not allow for mass take-up."

Bidaud is optimistic, however, that the applications will eventually grow as more Wireless Markup Language developers come on board. "We are in early stages yet. There is already strong momentum on WAP's side that will likely appear by the end of the year. WAP developers registered with, for instance, have doubled from March to June. That pace of growth is impressive."

GPRS may kickstart WAP
Both Bidaud and Matthews agree that the speedier General Packet Radio Service (GPRS) platform may kickstart WAP.

In Malaysia, at least five competing local mobile phone operators are racing to be the first to commercially launch GPRS networks by 2001, with the most ambitious timeframe set by TimedotCom, with a scheduled roll-out by December, 2000.

Operators are betting the transition from time-based, circuit-switched networks to always-on, packet-based networks will endear Internet users to WAP. But at least one recent report suggests the initial roll-out of GPRS networks will still fall far short of the promised data rates of 115Kbps, lingering closer to 20-40Kbps.

GPRS is also seen as just an interim step to much-vaunted third-generation (3G) technologies and consumers may need to upgrade their phones again to take advantage of newer services.

Ovum's Matthews suggests that that will be the pain for the later gain. "GPRS is still vital in educating the market about enhanced data usage. Even the coming of 'superior' wireless data access technologies needs WAP to be relatively successful or it will affect their roll-out and take-up rate," he said.

Gartner's Bidaud is hopeful that GPRS will give WAP the push it needs. "The real growth will come with GPRS, a much more appropriate way to handle data than circuit-switched networks. The tariff structure, by volume, rather than by the minute, will be more amenable to consumers."

IDC's Jacobson added that the key factor why telcos are pushing WAP is the need to reduce their operating costs. "WAP services will enable them to push out value-added services to their subscribers at a much lower cost than currently. Our US-based research suggests that every call a mobile phone subscriber makes to the operator's help desk/customer service center costs the operator between US$4 and US$5. Four or five such calls per month per customer will effectively wipe out all profits from that particular customer. Using WAP, the operator is able to provide 'canned' answers to the most commonly asked questions, thus reducing the cost per inquiry to around US$1-1.50."

For operators, the driving force for their wireless data experiments is the greater pay-offs expected when the fabled 3G services show up. Ovum projections indicate there will be one billion mobile subscribers by 2003 globally, a large portion of which will use microbrowser-enabled e-commerce services. By 2006, that figure is set to jump to 1.5 billion mobile subscribers of which 684 million will use microbrowser-enabled services. End-user spending on those services is projected to be more than US$200 billion in 2005.

Matthews said, however, the window of opportunity for WAP is closing as delivery and roll-outs are delayed and newer technologies edge closer.

"The Ovum scenario is that WAP services will peak by 2002 and fade gracefully off in the 2003-2005 timeframe, coinciding with 3G roll-out in individual countries," he said.

By then, one can only hope that consumers having suffered the ignominy of being guinea pigs to the whims of operators, albeit untethered ones, won't need to change their 3G phones every year.

Julian Matthews is ZDNetAsia's Malaysia correspondent.