Portability Said Helping Mobile Phones Enter Music Market

In Japan, Napster began an integrated subscription that includes unlimited downloads. “With Docomo, we started two and a half years ago and we made sure that the digital rights management would support that kind of service and made sure their manufacturers would support that,” Duea said. That was possible there thanks to access to the proper accessories, TV advertising, marketing and demo centers, he said.

But you can’t transplant the Japanese experience, Yankee Group analyst Mike Goodman said: “The U.S. society is very PC centric, while Japan is much more mobile centric. We also don’t want to be required to pay that monthly subscription in order to keep our library.”

The iPhone and iTunes interfaces offer a lesson, Goodman said: “Through iTunes, you can download, rip, sideload. It really integrates all of your acquisitions into one listening environment.” But the iPhone is the exception to the music- capable phone rule. There are over 30 million music-capable phones, only a fraction used for music.

Napster is trying to make the service more available, so it allows all manufacturers to access it, Duea said: “And we're trying to break into the living room, the hardest platform to get into… It’s about making your service available anywhere.” -- Kathy Tracy

CTIA Notebook…

The mobile space is underutilized for social networking because of fees and other costs, speakers said. Steve Jang, chief marketing officer and head of business development for Imeem, said it’s hard to establish a profitable business model for those consumer services in the wireless space. “First off, you are paying a server like Comcast 42 percent right out the door. Then you have salaries and start-up costs. For a social network, it’s a challenge to get a 50 percent online margin; for mobile it’s 10 percent.” In addition, Jang said there was a “gate-keeper” effect on mobile, which is why social networks focus on Web applications: “Everyday you're worried you're going to get turned off.” But Jang said there’s reason to be optimistic that mobile devices will become a prime conduit for social networks: “We have 25 million users worldwide that see cellphones as being an extension of a media device.” Carriers’ reluctance to use Flash is also a hindrance to using mobile phones for social networks. “Adobe needs to make friends with carriers,” Jang said. “Even if we can just get to the point of carriers using flash lite, then we'd have the opportunity to create something special.” -- KT

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FCC Chairman Kevin Martin told CTIA attendees that with the trend to open networks through the 700 MHz auction and otherwise, he’s circulating a petition dismissing the Skype petition. “More and more wireless providers, including T-Mobile and Sprint through their participation in the Open Handset Alliance, and AT&T, are also embracing more openness in terms of devices and applications,” Martin said. “In light of the industry’s embrace of a more open wireless platform, it would be premature to adopt any other requirements across the industry.” FCC Commissioner Michael Copps said the commission would be acting hastily if it dismisses the Skype petition. “This is not the time for the FCC to declare victory and withdraw from the fight for open wireless networks,” Copps said. “While we are all encouraged by preliminary commitments from some of the major carriers, we haven’t seen the details yet on how they are going to proceed -- and the devil is always in the details, isn’t it?.. I would be a lot happier if Chairman Martin had come out today in favor of a strong and unequivocal FCC commitment to non-discriminatory, pro-consumer conduct in the wireless world.” Markham Erickson, executive director of the Open Internet Coalition, agreed that dismissing the petition would be a mistake. “The Skype petition helped lay the foundation for the FCC’s recently concluded 700 MHz auction and has generated more industry discussion of greater openness,” he said. “It is important to recognize that despite the wireless carriers’ discussion of increasing openness, the existing wireless handset marketplace for all consumers still remains closed. It would be a serious mistake for the FCC to dismiss Skype’s petition before we've seen whether the telcos will follow through on their promise.” Public Knowledge and Free Press also disagreed with Martin’s justification for dismissing Skype’s petition. “The plans announced by one cellular company to be more open to devices and applications are just that -- plans,” said Public Knowledge President Gigi Sohn. “There are many details yet to be worked out, and consumers may not see the benefits of a fully opened equipment and application wireless service.” Open access rules on the 700 MHz C-Block aren’t a good reason either, she said. “There are no subscribers today in the 700 MHz spectrum block. Any benefits to subscribers in that one small slice of spectrum… won’t be known for many years.” Trusting carriers with the mobile Web is “short-sighted,” said Free Press Research Director Derek Turner. “The small handful of companies that dominate the wireless world have a track record of stifling competition and an aversion to innovation.”