Waiting for the mobile web boom

Despite high levels of VC investment, mobile phone web surfing has yet to take off in the US, with just six percent of users regularly using the feature. Still, mobile web start-ups have high hopes for the future. Dave Keating reports.

There were many ideas batted about at the world’s top wireless trade show, 3GSM, in Barcelona last week. Some spoke of the enormous growth of the mobile market in developing economies, while others touted new digital TV tuners for phones. But the big talk was dominated by mobile web-surfing technologies, and the variety of ways to go forward with its improvement.

A number of start-ups have been attracting venture funding around new mobile web technologies. Flash Networks, which announced the launch of its Harmony mobile Internet platform at the trade show last week, has received investment from HarbourVest Partners, Evergreen Partners, T-Mobile Venture Fund and Giza Venture Capital. The company is developing a variety of plug-in services to enable mobile phone users to access the internet. Mobile internet advertising is another area where start-ups have attracted investment. San Mateo, California-based AdMob, launched last year, has attracted a number of big-named venture capital investments, including a reported $4 million investment from Sequoia Capital. The company acts as a middleman for ads displayed on mobile phone screens as users surf the web. Data research firm Informa Telecoms & Media estimates that mobile ad spending was $871 million worldwide last year.

Verizon’s self-contained web service has failed to attract many users

Recently a Boston-based start-up called SpotScout has attracted a good deal of press attention for its plan to devise a method for mobile phone users to reserve parking spaces through web access on their phone. The company is currently looking for venture investors, but considering the national press coverage its received, that may not be hard to find.

But some analysts are warning that all the hype around mobile internet may be premature considering the low level of current use, particularly in the United States, and the inability for service providers and the big internet browser companies to agree on a workable standard for accessing the Internet on a phone.

According to a survey by research firm The Yankee Group in April, only about 18 percent of wireless users in the US say they have even tried browsing the internet on their phone, and only six percent say they do so regularly. The level of penetration is considerably higher in Europe. According to a comScore Networks survey released in October, 29 percent of Europeans in France, Germany, Italy, Spain and the UK use their mobile phones to access the internet. Some point to the US’s initial resistance and eventual capitulation to SMS text messaging as an analogous situation, arguing that trends in mobile use usually take longer to reach America. Others say unless quality-of-use is significantly improved, Americans will not embrace mobile web surfing.

The resistance has a lot to do with the inability of content providers to develop a phone browser that would give users the same experience they would have surfing the web on their computer. Up till now the most common way of accessing the web via mobile in the US has been the wireless application protocol, or WAP, which offers stripped-down sites specifically designed to be viewed on phones. These sites tend to load very slowly and offer only text content with few graphics.

Users tend to prefer small mobile versions of sites they already use

Many ideas have been pitched for how to solve the problem. Some believe that an entirely new domain name, dotmobi, needs to be used for developing phone-specific sites. Others argue that browsers should be developed that can translate normal websites into a phone-friendly format. So far telecom providers have been resistant to the latter, fearing that they will become only a means of connectivity to the internet while big-name companies like Google and Yahoo rake in the profits. But historically, telecom efforts to develop their own self-contained web portals have failed.

Despite this confusion and uncertainly, talk was upbeat at the 3GSM summit. Mark Newman, chief research officer at market research group Informa, told media outlets at the trade show that he forecasts almost half of all mobile subscribers worldwide will use mobile web browsing by 2011, with revenues from mobile entertainment doubling between now and 2011 to an estimated $38.12 billion.

If his predictions are correct, there is certainly room for plenty of start-ups in the mobile web space. However it remains to be seen whether consumers will share the same enthusiasm for miniature internet on a phone.