Operators give Comes With Music the cold shoulder

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Operators give Comes With Music the cold shoulder

By CAROLINE GABRIEL

Published: 8 October, 2008

Since Nokia decided its future lay with being a mobile internet services provider, it has had an uneasy relationship with its key channel, the European operators. While they cannot ignore Nokia's handsets, they are uncomfortable at the Finnish giant's intention of preloading applications within its Ovi portal, and marketing its smartphones around Ovi, since this conflicts with cellcos' own efforts to run and brand software stores. Some have spurned phones with Ovi services to the fore, while others have come to compromises where Ovi is just one option alongside the carrier's own portals. Comes With Music has reignited the debate and in the UK launch territory, it is going live without a carrier partner.

O2, which of course has the added conflict of interest of having the iPhone exclusive, has expressed grave doubts about Nokia's latest move though, along with its counterparts, it says it will continue to monitor the progress of the free download offering. Apart from the branding issue, the UK cellcos are expressing doubts over two main issues, which will also affect their mainland counterparts.

First is that Nokia is insisting on a profit sharing deal even though operators subsidize the handsets and often see little margin, turning to apps and content to make the profit. Second is that cellcos complain they will be carrying much increased network traffic by supporting unlimited downloads, which could cripple networks for little significant extra revenue.

Nokia claims to be negotiating with several operators in the hope it can sign several deals in time for Christmas but it will probably need to prove Comes With Music's popularity in the market first, before many carriers sign up. A recent study by market researchers at TNS Technology revealed that people aged 16 to 64 want to download 64 music tracks a month, which in conventional stores would cost about £600, making the £130-a-year fee for Nokia's offering very competitive.