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Content is still king

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Mobile companies across the globe have spent billions of dollars creating networks that essentially all offer the same services. It’s been a huge investment just to get to the starting line. But the real challenge is in providing something that is different from the competition.

Of course, the pace of innovation in mobile network technology is unlikely to diminish – if anything, it will accelerate. Research teams all around the world – including 100 engineers at NEC Australia’s Mobile Research and Development in Melbourne – are working on new technologies that will deliver mobile data transmission speeds more than 10 times faster than existing 3G networks.

So how can carriers use that data capability to differentiate themselves?

It is the answer to this question that is very likely to lead to the next great wave of innovation.

From here forward, content is definitely king. Technological development will continue on, but as the internet goes increasingly wireless, finding new services and content to engage consumers is top of mind for carriers. Optus, for instance, has been investing heavily in a new digital content management system to give customers better access and choice in terms of the content they can receive.

As a whole, content is huge, and is going to get bigger. In its recent Digital Content Industry Action Agenda report the Australian government noted that the digital content industry is growing faster worldwide than other economic sectors, with significant economic multipliers. Today the Australian industry is worth $21 billion, and contributes 3.5 percent of the nation’s GDP, employing 300,000 people. The annual contribution is expected to reach $29 billion by 2015.

The industry also presents strong export opportunities. At the time, of writing I’m in the ICT Pavilion at the Hong Kong Electronics Fair. Nestled among the thousands of USB devices, iPod accessories and no-name mobile phones is a smattering of wireless content providers, including a handful from Australia, all looking to take advantage of burgeoning opportunities for sales into Asia. Hong Kong itself already has four 3G networks in development through PCCW, Hutchison, SmarTone and CSL, and is a gateway to even greater opportunities in Asia.

Australia has repeatedly dropped the ball in terms of building a strong IT export industry, despite the best efforts of many. Those companies that are making strong sales – and their numbers are growing – are overshadowed by a massive trade imbalance on imported technology. With content, new opportunities exists for Australia to demonstrate its capabilities in high-value innovation.

According to the chairman of the Hong Kong Wireless Technology Industry Association (WTIA), John Chiu, it is barriers of innovation in services and packaging- not culture – that stand in the way of successful content sales into his home market.

“The technology we’ve got is sufficient to change our lifestyle for the next ten years,” Chiu says. “Content development is going to be big next up-and-coming success.”

In 2005, the WTIA signed a memorandum of understanding with the Australian Interactive Media Industry Association (AIMIA), helping to provide a conduit for Australian mobile developers into Hong Kong.

ICT Pavilion attendees such as the Australian companies Kukan Studios and the People’s Republic of Animation (PRA) are moving quickly to take advantage of Asian opportunities. Kukan is already working with a Chinese wireless portal, MoConDi, to sell its mobile games in China, Hong Kong and Taiwan, and is hopeful of cutting deals directly with Asian carriers.

The PRA is chasing similar opportunities for its short-form animation skills. According to company co-founder Hugh Nguyen: “With a lot of these countries launching their 3G networks soon, there is going to be some demand for content. They will all want their own content, and they need to get it from somewhere, so this is the best time to jump in.”

The Chinese industrial base has been brilliant at cranking out low-cost electronics for domestic consumption and export. It will be interesting to see whether they can parlay that proficiency in low-cost production into the world of original content.

The answer is probably yes. But there just may be a big enough crack in the door for Australian content companies to get their foot in too.

* Disclosure: In addition to his work as a freelance journalist, Brad Howarth is also a member of the national executive of AIMIA.

Brad Howarth is a journalist and author of Innovation and the Emerging Markets: Where the Next Bulls Will Run, a study on the challenges facing small Australian technology companies. You can read his blog at lagrangepoint.typepad.com

CEO of San Francisco and New York-based Double Impact, a leading venture catalyst.

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