Tune into 3G Mobile Radio

3g Mobile radio offers both wireless carriers and content providers a potential new revenue stream. Pursuing the opportunity separately is one option. But we think tuning in together through partnerships is the better pathway to high performance.

If television can be broadcast to mobile phones, then why not radio? Third-generation (3G) mobile radio—defined as the ability for 3G mobile phone users to receive streaming radio content through wireless providers’ 3G networks—is an emerging opportunity for wireless providers to offer value-added services to subscribers and begin collecting ongoing subscription revenue.

Content companies should have a vested interest in mobile radio, too, as it presents yet another mechanism for reaching subscribers with unique content offerings while supporting subscribers’ preference for a unified device. In March, Virgin Radio UK put this interest into action when it began globally broadcasting Virgin Radio and two new digital stations using Sydus mobile streaming services software. The service is compatible on thirty 2.5G and 3G phones currently on the market.

Although first to offer this mobile radio service, at this point, Virgin Radio is using a delivery model that bypasses both wireless carriers and handset manufacturers. This decision makes the company dependent on the intelligence of handset operating systems on the market and assumes that wireless providers have kept their 3G networks open enough for users to access anything on the Internet.

An alternative to the “go-it-alone” route Virgin Radio has chosen could be for wireless providers and content companies to work together. In fact, we think that partnerships may be the best way to achieve high performance in this emerging market.

By working together to deliver mobile radio, wireless providers and content companies can compete with music on demand services or satellite radio offerings. For example, content providers that establish a unique relationship with a wireless carrier can ensure higher quality streaming radio content via that carrier’s 3G network.

Wireless carriers also can give content providers direct access to existing and upcoming handsets to make sure that the streaming audio service works without a hitch. Likewise, by partnering with content companies, wireless providers can benefit from assembling premium content that will likely sell for a higher subscription fee.

Not surprisingly, wireless providers and content companies considering the mobile radio market must move quickly. The trick will be to create a better service that outperforms the competition. Already Sprint PCS is offering menu-navigated music on demand via Music Choice and mobile music startup MSpot. Music on demand services also recently became available in Korea with the introduction of a new Samsung phone.

In addition, satellite radio providers are responding to mobile radio advancements, although companies such as XM are using a different device and different technology to deliver streaming audio content. But that may be about to change, too. In mid-June, Sirius announced it will provide streaming audio access to some of its music channels to Sprint PCS subscribers. And software provider Calypso has announced it is working on technology to enable satellite radio access from either satellite transmitters or wireless LAN access points, such as WiFi.

Yes, the competition is steep, but not impossible. To meet it, wireless carriers and content providers must begin now to develop a business model, fine-tune a solution model and consider the technology implications for bringing the mobile radio service to the mainstream.

To implement mobile radio on a broad scale, wireless providers must start with a viable business model. We suggest beginning with a business case that outlines the cost to implement mobile radio, the business relationship with the content provider and the revenue sharing arrangement.

For the solution model, wireless providers must consider which type of content will derive the most subscription revenue from subscribers, the amount of content to provide to be competitive with satellite radio providers and whether the 3G network will handle the volume.

Content providers face similar decisions for the solution model, starting with which type of content is most valuable to subscribers. The options, of course, are to provide access to existing live radio content, similar to what is available on the Internet, or to develop programmed genre content that is updated at regular intervals. To further ensure a viable and compelling offering, content providers must make sure that the wireless provider partner has enough technology advancement to target a mass market.

On the technology side, both wireless providers and content companies must address a number of technology considerations to make sure that the mobile radio service meets customer expectations. This includes defining the technical architecture that will enable a highly reliable mobile radio offering that a wireless provider can deploy in its 3G network. As mentioned above, there is a delicate balance between ensuring that the content offering is rich enough for a quality user experience but not so rich that the streaming audio traffic overloads the 3G network.

Lastly, wireless providers and content companies must consider the delivery and customer care model for mobile radio, namely how to bill and collect for the service and how to address customer issues and questions.

Shahid Ahmed is a senior executive in Accenture’s wireless practice.

Vaibhav Parmar is a manager in Accenture’s wireless practice.