Just when the ‘magic of e’ seemed to have become so all pervasive it almost seems that the buzz of "e-commerce" may already be passé. In a sense this is representative of the warp speed at which the new "digital economy" is evolving. After all the "e" related and e-volving terms (e-mail to e-governance) along comes the letter "m" to centre stage!

M-commerce or mobile-commerce represents the fusion of mobile communications with electronic commerce. For some years now both the Internet and mobile telephony have witnessed dramatic improvements and proliferation. Now we are about to witness the convergence of these two into a new Internet standard for mobile phones. Voice and data services are already converging on cell phones. These data services, for everything from travel information to on-line banking, are attracting intense consumer interest in Japan, parts of Southeast Asia and Scandinavia. Analysys, a UK based telecommunications consultancy, projects that the market for mobile data services will explode from less than $1 billion today to $110 billion by 2010. Already, mobile-phone based "portals", offering specific services and links are appearing in Europe, such as Iobox of Finland that boasts of 600,000 users in Finland, Sweden, Germany and Britain. CNN, the TV news service, already delivers a news headline service to 15 mobile operators with 33 million subscribers in Europe, Asia and the United States. The spread of WAP will allow consumers to scroll through headlines and categories such as news, sports and weather. CNN is also testing a third-generation service with NTT in Japan that combines headlines with 20-second video clips.

For consumers, ''chatting'' - sending each other short, e-mail-like messages over their mobile handsets instead of actually talking - is fast emerging as one of the main applications. Finnish teenagers, for example, spend more time "chatting" with this messaging service (SMS or ‘short message service’) than on voice calls¹. And in the Philippines, consumers send 10 times as many text messages as Finns because they cost a small fraction of a voice call. In a sense this combines the benefit of the earlier pagers with that of mobile phones. For businesses, this type of communication is both useful and cheap. Several e-commerce type information services from stock quotes to travel offers are fast being replicated on this medium too.

Talking web-sites or voice-enabled mobile commerce is another rising reality that is being now referred to as "v-commerce". Such developments to meet the commercial needs of mobility, for example traffic or travel related information services, will demand newer and newer innovations.

Several application technologies, some rivalling each other, are fast appearing. WAP or Wireless Application Protocol, a standard to enable small-screen devices like mobile phones to view web pages; GRPS or general packet radio system, an improvement for WAP that ensures permanent connectivity to the Internet; Bluetooth, a standard for a wireless link between mobile phones and vending/ticket machines that converts the mobile phone into an electronic wallet. Rival operating systems for such mobile devices are also emerging². There are experts who believe that the WAP software is far from perfect and is likely to be superseded. It is still unclear what applications will dominate multimedia phones in the future.

Moreover, several networks transmit at the frustratingly low speed of 9.6 kilobits per second. New packet-switching equipment with data speeds of up to 115 kilobits per second will be introduced in Europe and the United States in the next few years but developing countries will be far behind. All this costs a lot of money and it is estimated that mobile operators will need to spend as much to upgrade their networks for data by 2002 as they spent building their voice-based networks over the past few years.

This wireless boom is being hailed as the second-generation Internet that will eventually outgrow the first. Predictions from a number of sources suggest sharp rises in number of hand-sets sold, number of mobile phone subscribers and number of mobile web-surfers, especially in Europeⁱ. Whereas the Internet evolved basically from academia and therefore relatively slowly, m-commerce has an array of market savvy telecomm big-guns pushing a technology that is digital, convergent, convenient and mobile. This ‘mobility factor’ will be a crucial input in its high growth.

In Japan where the Internet and e-commerce growth was behind the US and Europe, m-commerce has been chosen as the arena for success by industry and government. NTT DoCoMo Inc. of Japan, the first operator to offer mobile Internet access, has signed up 5.9 million subscribers to its I-mode service in the last 14 months. The service, based on NTT's own proprietary standards, contains around 8,500 sites offering everything from news and games to online banking and ticketing services, and it generates about 40 million hits a day³.

Whether m-commerce will be more than just the existing Internet or e-commerce (both B2B and B2C) over a different medium, i.e. the mobile phone, is not yet clear. While several commentators see it as an extension of the growing e-commerce-based economy and society, there are others who feel that an entirely new type of revolution is in the making – one where new technologies, ideas and businesses will emerge. Probably the answer lies somewhere in between as the new medium of the mobile Internet does offer unique opportunities that will result in some new and innovative technologies and services that will impact e-commerce as a whole. The final arbiter of success is likely to be the cost of service. Even though it is predicted that B2B will be the first to adapt to m-commerce, enterprise managers will hesitate to use the m-service unless it is unique to m-commerce or at least matches the cost of similar computer based e-commerce services.

In several developing countries, especially in Asia and South America, mobile per capita usage is higher than Internet access. This can be turned to advantage for business and development through m-commerce. Such communication advances that can help leap-frog stages of development towards ‘the mobile information society’ can be a major gain for the South. Even in countries where such services do not presently exist, serious thought must go into the possibility of developing such services in preference to traditional land-line based phone services as the technology is more advanced and wireless options offer much more flexibility. Of course, cost of networks (to the service provider) and cost of access (to the user) will continue to be major determinants. Like in other information technology-related areas, one might assume that for both network-building and access, the cost would go down as the technology advances and demand increases. Cheap mobile handheld devices accessing voice and data at a relatively reasonable price via the Internet are not just a dream and could be soon possible.

For developing country strategy-makers one of the main issues is infrastructure and establishment and the expansion of mobile networks. Bringing in competition and attracting investment (often foreign) into this capital and technology intensive area is a recommended formula. Several developed counties, especially in Europe have recently experienced financial windfalls in auctioning off mobile licences⁴. Though developing countries may also be tempted to do the same (in fact, several countries - India, for example - have already done so), the dilemma that arises is that of attracting market forces and benefits, but balancing this with the requirements of state run monopolies in this sensitive economic sector.

Besides the infrastructure, some of the other requirements as for e-commerce, will be needed here too: For example, ‘Wireless Data Providers’, as the Internet Service Providers for the mobile world. Developing country ‘portals’ will also have to emerge, as will specialised sites for the web-phones. And, of course, the legal and financial frameworks will need to be extended to this arena too. All these are areas for strategy-makers to consider in advance of the developments.

Some interesting examples of mobile phone-based services are already emerging in developing countrie. In Bangladesh, for example, the Grameen Bank has extended loans to women and youths to purchase mobile phones that they then offer out at fixed times in mostly rural locations that are unconnected by existing terrestrial phone links. Interestingly these mobile phone service providers are also establishing themselves as information providers and information banks for business and agricultural services - a relevant business model for many developing countries. They are, in addition, providing a promotional platform for other loan schemes offered by Grameen.

In several African countries, individuals are offering such phone services on foot-paths. In the Czech Republic, Eurotel Praha, a mobile phone service company, is overcoming the lack of a credit card culture by providing a prepaid service via their mobile phones for shopping on-line.

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