Walled Gardens Opened For Business !

Cingular announced that its customers can now transfer music from thier PCs to Mobile phones for free. And Sprint announced that it will provide a direct link on its browser to access Gmail on mobile phones.

Cingular will allow people to download music to compatible phones for free, although consumers will pay a monthly charge in the range of $15 for the ability to download songs from those services to a portable music player. "Right now, we're focused on getting people to view mobile music as something that's interesting and exciting. You've got to build a base. Once you do that, there are all sorts of ways to drive revenue from it," says Jim Ryan, vice-president of consumer data services at Cingular. (Source)

Immedialy whole media buzz began, assuming that some thing great has happened. For a moment, I thought the Walled Gardens are being opened up. But I immediatly realized that The Walled Gardens are still fastened securely. Cingular only allows music bought at Yahoo and Real Rhapsody to be transferred to mobile phones. And Sprint announcement does not mean anything, as any Sprint customer with internet access can access Gmail even now. They are only adding a link to their browser.

Then what is this fuss and buzz is all about? And why?

Because, many did not understand it fully and we are not used to such announcements from the owners of The Walled Gardens. Read on.

Mobile operators in particular, limit the content available to consumers on a mobile device such that only the Mobile Operators and its partners can provide content, often at a premium price. For example, you  can only buy a ringtone either from your mobile carrier or a partner website. But you can not buy or transfer a ringtone from elsewhere. That gives the ability to  put premium price for each of their offerings. For example, you can buy any song available on iTunes for $0.99. But you can not transfer that music to your Verizon mobile phone. You must pay a fee of $2.50 to Verizon for each such transfer or download directly on to your mobile phone.

This is commonly referred to as 'Walled Gardens', where Carrier decides what content is available to consumers. Consumer can not access content from anywhere else.

The term's creation is attributed to John Malone, former owner of Tele-Communications Inc. AT&T, who purchased Malone's company, compares the walled garden to a magazine, in which a compilation of various types of content is made available to the reader.

Revenue generated from this premium priced content used to be a bonus to Mobile operators, as revenue generated from traditional voice revenues alone used to support their entire opertaional expenses and still reap profits. However, as many people started using VOIP calling (Skype, Google Talk, Yahoo and MSN messengers, Vonage etc), the operators were forced to reduce their voice pricing and offer more and more minutes. That drained their profit margins from Voice revenues. So, these days Carriers have been increasingly depending on Data services like SMS, ringtones, wallpapers and internet access to charge customers and stay profitable. They have also achieved a considerable success in selling ringtones and wallpapers at premium prices.

Everything they could offer to customer, they could reap the benefits. Except one. The internet. So far they could only charge for internet access. Not for what the users are actually browsing. There were desperate attempts to leverage thier Walled Garden architecture to charge customers. Most mobile operators are spending billions of dollars to expand their networks and service creation capabilities via IMS technology, dreaming that they can offer everything (atleast things they can charge) that is currently available on internet, to its users on mobile and charge for it. And eventually block all other websites on the internet and allow only their own content sites and partner sites.

Carriers like Verizon have already embarked on the journey by offering its own music download service and blocking users to transfer music bought on iTunes to their mobile phones. Sprint followed the suite.

Today, Cingular announced that they will allow its customers to transfer the music freely from Yahoo and Real Rhapsody. Everybody thought the Walled Gardens are being opened for the first time. But it is not true. The service is restricted to Yahoo and Real Rhapsody subscribers only. iTunes subscribers are still blocked from doing so.  (And starting next year, Cingular will allow consumers to download songs over the air at no charge. Users will still have to pay for data services rateplan and the original Music library from which they are buying the content from)

So the Walled Gardens are still fastened securely. Cingular just allowed Yahoo and Real as its partners, and kicking everybody else away from its gardens.

[tags]mobile-music, mobile-applications, cingular, sprint, gmail, mobile-life-style[/tags]

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