Music to operators’ ears

One of the most successful mobile data applications, to date,
has been the ringtone service. Even in these times when most handsets support
only monophonic sound, many people actually pay for low-quality audio clips just
because they are a fad.

Riding on the back of the enormous success story of ringtones is
the new successor–ringback tones. It is the reverse of a ringtone; catering
to, why listen to the boring switchboard ‘ring-ring’ sound while waiting for
the call to be connected. The caller can choose to hear music, voice/subscriber
selected sound clips while waiting for the call to be answered.

Korean mobile operator SK Telecom first introduced this new
concept in May 2002. It immediately captured subscriber imagination and reached
an amazing one million-subscriber mark within three months of the launch and
within six months of introduction, it surpassed the marketsize of ringtone
downloads which had led the industry’s value-added services revenue in 2002.
The service, widely known as COLORing, is currently enjoyed by over 6.5 million
SK Telecom subscribers and generating an average of US$ 8 million per month with
an increased ARPU of $2—3.

The attractive aspect of COLORing is that it is independent of
handsets. Because is it loaded onto the network, it does not require
complications such as handset upgrade or advanced feature integration–allowing
any user, regardless of the age and make of a handset, to enjoy this service.

Another appealing aspect is that the ringback tone market
capitalizes on the existing ringtone market. This reduces the financial burden
and risk for mobile operators for launching an entirely new and unfamiliar
service, resulting in fast market reception.

The quantity, quality, and types music for the ringback-tone
service has also been an important aspect. At the launch of the service, SK
Telecom started with a wide range of songs from classical, traditional, and the
hottest pop as well as different genres such as comedy clips, sound effects, and
drama/movie sound tracks that totaled about 900 types. Currently SK Telecom
services over 92,000 types of contents with local pop being the most popular
downloads. Its subscribers aged between 20s to 30s contribute over 60 percent of
the sales. But, service operation experience shows that 1,000 types, including
the latest local pop, is sufficient for a successful service delivery.

Above all, personalization has been the core aspect behind the
popularity of the ringback tone service. According to a study conducted by the
UMTS forum, handsets have become an essential part of the process of intensified
personal social relations, so that users have a greater emotional relationship
with their mobile phones than they do with any other device. This emotional
attachment naturally increases the desire to personalize and the ringback tone
has been perceived as a new and different way to fulfill this.

The ringback tone service supports many innovative features
including: caller/group-based services where different music clips can be
assigned to differently categorized groups such as family, friends or business
associates; time-based where different music can be played depending on the time
of day or day of the week; and special occasions-based where special occasion
music can be played on specific days such as Christmas, wedding anniversary, or
birthdays.

Optional features include a copying service where the caller can
copy the same sound clip while listening to one, a gift service where a
subscriber can select a sound clip and send it to someone as a gift through SMS,
and an album service where the subscriber can add a new sound clip to his/her
personal album. These features can be supported and customized depending on
mobile operator’s requirements.

Personalized ringback-tone services have achieved a remarkable
level of market acceptance across Asia. In Korea, the ringback-tone market has
exceeded the market size of ringtones by almost two folds. Mobile operators in
USA and Europe are eyeing this application very carefully in hopes of
replicating its success from Asian countries. Analysts and industry sources
alike forecast that the ringback-tone application will be adopted by mobile
operators in USA and Europe during the first half of 2004.

In spite of its wide popularity in Asia operators in USA and
Europe, who are looking to deploy the ringback-tone service, will need to
combine initial marketing efforts with educating the as callers as they may be a
bit disconcerted at first, on hearing music clips instead of the usual ringing
sound they are accustomed to. Callers may not realize they have made a
connection and are likely to hang-up at first. But, once they catch on to the
idea, the usual response is very positive and the viral effect is quite
contagious.

The ringback-tone service has been a validated service with real
revenue generation in one of the world’s most advanced mobile networks. This
service presents an opportunity for mobile operators to build revenues while
offering customers an exciting new personalized service option. The ringback
tone is currently popular amongst the consumer users but is expected to spread
within the business community especially in regions where B2B markets are mature
and active.

Kevin Kim Director, Global
Business Development