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Survey: U.S. Mobile-Phone Convergence a Challenge

23 Mar, 2006 By: Erik Gruenwedel

A global survey of nearly 3,600 mobile-phone users regarding media convergence on cellular phones indicated almost 40% of North American consumers aren't willing to pay for increased entertainment options.

The study about media convergence on cellular phones was released March 20 by research firm KPMG International. Among North American respondents, the study found that a lack of familiarity and experience with entertainment options, coupled with relatively short commute times (spent primarily in cars, not public transportation), contributed to the negative response.

The study found that 34% of North American respondents spend less than 15 minutes per day on a mobile phone, compared to 19% who spend up to one hour. By comparison, 78% of North American respondents spend at least an hour on the computer; 81% spend at least an hour watching TV.

Despite the success of Apple Computer's iPod, the study found that 85% of North American respondents had never listened to or downloaded music to their mobile phone. About 20% said they would never download music via their phone.

Interestingly, 50% of respondents said they would only be willing to pay half the iTune retail price (99 cents) for a song when downloading on their phone.

Among U.S. respondents indicating interest in mobile video options, the top three options included Internet access, taking photos and e-mail. A slight majority preferred news content to movies.

The study said service providers must move away from traditional subscription or pay-per-use models designed to extract more “wallet share” from each customer and instead increase ad-supported media applications.

“Service providers now need to rethink their business models quite substantially and quickly,” stated the report. “They need to exploit converged services not primarily as a revenue booster but as a churn reduction tool to present a stable, loyal subscriber base to advertisers and digital commerce partners.”

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