UK Wireless Usage Poised for ‘Hypergrowth’

All new mobile phones sold in the UK will be Internet-enabled by mid-2001, according to a report from Forrester Research.

The research firm projects that as the price of wireless application protocol (WAP) technology continues to fall, consumers will snap up the phones in a “two-year period of hypergrowth.”

“Customer uptake will increase rapidly, creating a market of 41 million mobile Internet users in the UK by 2005,” Forrester said.

Two Kinds of Users

Forrester analyst Caroline Sceats puts mobile users into two groups: those who use the handsets as an alternative method of accessing the Internet when they are away from their computers, and those for whom mobile phones provide a sole link to the Web.

By 2005, there will be 28 million “multi-device users” in the UK, according to Forrester. “Their expectations of WAP will be shaped by their experience of fixed-line Internet,” Sceats said. “These users will thrive on multi-channel integration, and to counter initial negative experiences of WAP, businesses must use mobile to give compelling customer service across all channels.”

“Single-device users” will top 4 million in the UK by 2002, and will rise to 12 million in 2005, Forrester said. According to Sceats, phone companies expect this group to become “mobile e-commerce enablers,” and the firms are likely to speed that process by joining with brick-and-mortar stores in promotions and co-ventures.

This dynamic will be an opportunity for incumbent retailers “to push back against pure-play Internet companies,” said Sceats.

Worldwide Growth

Although WAP technology is growing faster in Europe than it is in the U.S., analysts see more people worldwide warming to the idea of surfing the Web over their mobile phones. International Data Corp. (IDC) predicts that by mid-2001, all digital handsets in the world will be WAP-capable. In fact, IDC predicts that the devices will be the primary means of Internet access.

According to the Forrester analysis, many e-commerce companies will not see huge profits from purchases made over mobile devices “because consumers will be unwilling to make complex purchases over the mobile Internet.” By contrast, simpler transactions, such as ticket purchases or stock trades, are likely to grow in popularity.

Phone companies are not likely to benefit from increased airtime as users surf the Web, Sceats said, because “WAP users are unlikely to use their handsets to browse.” Instead, she said, the phone companies could do well to use their billing relationships with customers to steer customers to retailers via “trigger services” such as bill pay.

Driving Change

Many analysts believe that the phone companies and other service providers will help drive the shift to wireless by encouraging customers to use the Web for customer service, bill paying and account information. After consumers become more comfortable with the wireless Web for those transactions, it will be a natural next step for them to conduct wireless e-commerce transactions as well, analysts say. For example, Web purchases could be charged to a subscriber’s phone bill.

“The most appealing services link the intimacy of the mobile phone with the richness of the Web,” said Sceats. “Well-executed trigger services will build on existing channel strengths and bring new value to users.”