Peter Griffin: We're talking sex, not machines

Those crazy Italians, how differently they do things to us. Apparently they hate talking to machines so only 9 per cent of Italian mobile subscribers - and there are tens of millions of them - have voicemail set up.

In contrast, about a dozen 025 subscribers in New Zealand are holding out against voicemail.

Then there's the fact that a whopping 96 per cent of Italians are on pre-paid mobile accounts. Even businesses are using pre-paid cards to top up their accounts. Apparently it's better for tax purposes.

Pre-pay is big here but a fair chunk of us get stung after the fact each month, and a company on pre-pay? It's unthinkable.

But there's a universal trend in the take-up of new mobile services that the two countries may have in common. Sex on the mobile seems to be selling quite nicely.

Take Italian mobile operator Wind, for example. It claims 14 per cent of its average revenue per user is generated by mobile data. About 12 per cent is generated by SMS text messaging and 2 per cent by other data services such as its recently launched i-mode services.

Of the SMS content revenue - separate to the euros derived from people texting each other - 70 to 80 per cent comes from soccer alerts, horoscopes, ringtones and sex, with a good weighting to the latter.

"The killer app is there. It's sex and it's making money," says Paolo Baldriga, Wind's head of marketing for consumer data and multimedia services.

As we sat in a stuffy office at Wind's ageing headquarters in Rome a couple of weeks back, the straight-talking former pay TV executive made one thing clear: for the small slice of the pie so far made up by mobile data, it's "soccer and sex" making up the numbers.

He's tried valiantly to get subscribers interested in other things. Wind has introduced mobile maps, weather forecast and balance checking services. You can even pray via SMS, getting the reflections of Padre Pio straight to your phone every day. But take-up is disappointing.

Juventus soccer updates, Kamasutra sex tips and SMS-based chat and dating services are all the rage.

For i-mode, which Wind has licensed from NTT DoCoMo and adapted for GPRS, the trend is similar. The i-mode portal is crammed with hundreds of services but for the moment Miss Bikini, Spicy and girl of the day rule.

Baldriga can't wait for Wind to roll out 3G, which is being tested. That will enable decent streaming video and high-quality images to be sent to subscribers. Mobile data will be smut heaven and a goldmine for Wind.

Hutchison's "3" is the first 3G player in the Italian market offering video streams of the Italian version of Big Brother to the handset. Users pay 90c for a five-minute feed.

In New Zealand, on the surface anyway, the sex isn't obvious. Adult content doesn't rear its head in either Vodafone Live or Xtra Mobile's offerings. But the unknown quantity is the surfing of Wap sites beyond the ring-fenced portals.

According to local developers and content providers such as Wap specialist WordDial, a heck of a lot of adult content is accessed that way here as well.

But get this: the most popular service on Vodafone Live is chat, the New Age version of the bar-room trawl for dates.

Not all users are getting hot and heavy via chat but if the internet's anything to go by, plenty are.

But, says Vodafone, ringtones and colour background downloads come after chat. Around 100,000 ringtones are downloaded each month. Email, downloadable Pxt images and games are the other hot picks.

For Xtra Mobile it's ringtones, email and sport - the virtual Super 12 at the moment. Outside the portal, usage is harder to track.

Whatever the content patterns, Italy and it neighbours in Europe are emerging as interesting test-beds for the Westernised version of i-mode and its rival Vodafone Live.

The former has around two million subscribers, the latter five million. The name of the game in mobile data is attractive content and there's nothing like the global weight of a Vodafone behind you when you're negotiating for content, whether it be the rights to Big Brother feeds or Manchester United trivia.

But Baldriga is sceptical about the value of the global portal model.

"I do not believe in being global. On the entertainment side it's not really an advantage."

That's because entertainment demands vary by country. Still, scale has its advantages.

"The big advantage is when you buy five million handsets and you get a discount," he says.

On the local front, Vodafone has increased its pool of content partners from 39 to 55. But it can tap into the worldwide Live pool of resources for content.

That would appear to give it the upper hand on Xtra Mobile, which has around 100,000 users. Vodafone won't release Live user numbers.

Still, Telecom has alliances with a couple of global heavyweights it is counting on to keep it competitive when Vodafone brings out the big guns of mobile data.

That 19.9 per cent stake in Hutchison's 3G network hasn't shown any return yet, but Telecom is counting on Hutchison content for the future and the fact Hutchison has hammered out exclusive deals with the likes of Playboy.

However, Telecom will be hamstrung in leveraging off Hutchison as long as it continues down the CDMA mobile path.

Who builds and maintains the new services offered by mobile operators is under contention at the moment?

Swedish telecoms equipment maker Ericsson, for example, works with Wind, Telecom Italia, Vodafone Omnitel and 3 in Italy providing chunks of the "service layer" that delivers the new data services subscribers are increasingly using.

Traditionally, the equipment vendors stuck to building networks while IT companies came into the picture later on to build the mobile services for the operators.

Ericsson says A$800 million ($899 million) is spent on system integration in Australasia each year, and it wants more of the business at the expense of other IT integrators.

System integration accounts for 17 per cent of Ericsson's revenue and is expected to grow to 33 per cent this year.

Telecom sees the future playing out slightly differently. It expects traditional IT and software companies to continue to take care of the mobile services layer while equipment makers stick to what they're good at - building networks.

Telecom's MMS, mail and Wap platforms are all supplied by Openwave, with the relationship managed by Lucent.

All that stuff is merely nuts and bolts. Telecom with its virtual Super 12 and Vodafone to a lesser extent seem to understand the value of sports content, but they're less willing than the Italians to talk about the seamier side of mobile.

Which means we're either prudish or prefer to fumble around in the dark.

* Email Peter Griffin

* Peter Griffin visited Wind as Ericsson Communications' guest.