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The growing convergence is already evident with the emergence of handsets that play MP3 and other audio files, and the mobile music market will continue to be fast-paced. This will be followed closely by gaming, says Elkin, but mobile TV remains the furthest in the distance. Although there is an abundance of content and the screen quality is reasonably good, the high monthly cost of contract service has severely limited its desirability. "Greater pricing flexibility—and simplicity—is warranted in the near term to drive up adoption," says Elkin. While wireless carriers will face challenges from other technologies, such as wireless Voice over IP, their biggest challenge will be in continuing to improve the user experience for data and entertainment applications.

Converging Communications

One phenomenon that has been noted is the growing number of "wireless-only" households. According to an April 2005 Harris Interactive survey of 1,088 U.S. adults ages 18 and over, a total of 9% of respondents had already switched exclusively to using their mobile phones, and another 5% planned on making the switch in the coming hear. In addition, nearly half said the they were "somewhat" considering the possibility, but not yet making a commitment. Translated into numbers, the number of households cutting the cord will rise from 6.2 million this year to 16.1 million 2009. "That’s pretty steep growth, and a trend worthwhile for traditional telcos to keep an eye on, but not one that will bring an end to their business as currently constituted," says Elkin. Landline services continue to provide service at lower cost, with better sound quality, and are used by many for Internet access.

While much of the rest of the world is opting for wireless-only service, North American consumers will likely look for a converged solution. "The moved toward fixed-mobile convergence will primarily benefit cable and fixed-line broadband providers looking to capitalize further on their existing in-building assets," says Elkin. The convergence of Wi-Fi, VoIP, and 3G mobile technologies is seen as inevitable by some, although potential conflicts between various stakeholders could affect the degree to which integration takes place.

Who are the users?

With overall wireless penetration nearing maturation in North America, mobile phone ownership is widespread in all age groups—although it is highest in the 28-39 and the 40-49 groups. "These tend to combine the type of tech-savvy consumers with financial means that make them so attractive to marketers," says Elkin. Even so, mobile phone ownership rates among all age groups have soared. Currently, some 44% of those between the ages of 10 to 18 own a mobile phone, which translates to a population of 16 million users. "[These users] are loyal to their carrier and deeply interested in multimedia functions," says Elkin. "The study showed that teens want to do far more than just talk on their mobiles."

At this stage mobile phone users in the U.S. tend to focus more on talking than using their mobile devices for anything else. Wireless carriers are making an effort to get their subscribers to adopt premium content and data services, however, because the voice market is suffering from continual price erosion. To counteract this, carriers are looking to mobile data to be their key revenue driver in the future—and currently, an estimated 36% of North American wireless subscribers are using some kind of mobile data application. "The most popular applications remain messaging, downloading music, and gaming," says Elkin.

Clearly, mobile content and data services are on the way to making their mark with wireless users. In their eagerness to roll out more bandwidth-intensive applications such as vide clips, streaming video and video calling, however, carriers should not lose sight of the importance of a quality customer experience, from the most basic voice call to the most advanced function. "In fact, it seems reasonable to conclude that bad experiences with dropped calls might make consumers skeptical of any more complicated activities, especially when these come with a price tag attached," says Elkin.

Mobile Marketing and M-Commerce

The current year has marked a breakout for mobile marketing, which many view as the next frontier. While everything is filled with speculation at this point, companies are beginning to experiment with mobile campaigns. "Much remains to be seen about the future shape and direction of mobile marketing," says Elkin. "Brands, particularly those in the media and entertainment, consumer packaged goods and travel industries, should begin to look closely at the potential that wireless marketing has to offer." While marketers may consider the Internet to be better for reaching their target audience, this may be shortsighted if wireless develops into the juggernaut that online marketing has now become.

"The time to start integrating mobile strategies into the marketing mix is now," says Elkin. "Wireless will be used to effectively reach, acquire and retain customers and ultimately generate sales by way of direct response consumer contests and promotions/ cross-promotions.

Many of the same principles critical for successful online marketing promotions also apply to the wireless channel, says Elkin. These include:

1) Be sure to get users’ permission. "This is especially important since wireless users pay to receive short and multimedia messages," says Elkin.

2) Make sure the messages they are sending are relevant and appropriate to users’ interests and tastes. "That is, target the right audience with the right offer," says Elkin.

3) Keep close tabs on both the ways consumers are using their wireless devices and the growing variety of devices and platforms.

4) Strive for synergy with other channels, such as putting a five-digit short code on a billboard right next to the company’s URL. "The key remains focusing on the types and formats of content that consumers want, and making it easy for them to opt in and/or out of campaigns," says Elkin.

The Future: M-Commerce

In addition, the use of mobile handsets a payment devices is already well established in Europe and Asia-Pacific markets, and the potential for the U.S. to catch up is imminent. "One key to growth in m-commerce and wireless handset-based micropayments is simplicity," says Elkin. "If mobile phones are to evolve into full-blown digital wallets—and the potential for that scenario certainly exists—using handsets to make purchases, whether for over-the-air content downloads or POS purchases, must be easy, convenient, cheap and seamless for consumers."

If m-commerce purchases are integrate into a consumer’s wireless bill, charges should be clear. "Poorly delineated transactions will do nothing but deter users from buying with their handsets a second time," says Elkin. "Likewise, fulfillment of the purchase, whether of digital content or hard goods, should be quick and painless for the consumer, the same as if he or she were buying online." To facilitate m-commerce, operators and merchants should insure that the necessary infrastructure is in place so that consumers can use their handsets to make a broad variety of purchases.

Geoff Ramsey is one of the Internet’s most exciting digital marketing visionaries. He’s also a dynamic and highly entertaining speaker who gives business leaders fresh perspective and critical data they need in order to successfully execute in today’s rapidly evolving e-business landscape.

As CEO and co-founder of New York-based eMarketer, Geoff is on the cutting edge of new research statistics, trends and best practices covering every aspect of the Internet, e-business and online marketing. eMarketer provides a wide range of information products - including e-business reports, daily research articles and the world's largest database of Internet statistics - that help Fortune 1000 executives make smarter online marketing and branding decisions.

Geoff has become a well-known expert on e-business trends, using statistics and analysis to drive home points about the Internet’s advertising and marketing potential for companies.

He is frequently quoted by the business and trade press, including The Wall Street Journal, Forbes, Fortune, BusinessWeek, CNN, Business 2.0 and Advertising Age, and has appeared as a commentator on radio and television programs across the country.

He is also a highly-regarded public speaker who frequently keynotes at major industry conferences, such as AD:TECH, Interactive Advertising Bureau (IAB), The Conference Board, Digital Marketing Expo, Online Media, Marketing and Advertising Conference ( OMMA) and Direct Marketing Association (DMA). Geoff has also presented at corporate events sponsored by IBM, American Express, the U.S. State Department and The Economist.