Demand for Mobile File-Sharing May Trump Carriers’ Copyright Fears

Nokia last month acquired Twango and announced plans to integrate its P2P file-sharing service into Nokia phones starting with Nokia’s Nseries in the first half of 2008. The service will let users upload and share music, video and audio direct from their cellphone. The capability could conflict with carriers’ copyright and decency enforcement, such as AT&T’s plan to build a network-wide copyright filter (CD June 18 p4). AT&T didn’t comment.

Twango’s terms of service include bans on copyrighted and sexually explicit material. Twango abides by the Digital Millennium Copyright Act procedure to stop copyright violation, said Serena Glover, Nokia service operations director and Twango co-founder. Users with copyright complaints can file them to Twango, which will look into their merit, she said. Twango uses a community flagging system to remove explicit content. The site automatically deletes a posting that receives a certain number of flags, said Glover.

AT&T and other carriers could decide not to support or promote Twango on their Nokia phones, a Nokia spokeswoman said. But Glover said she’s hopeful that carriers will accept the new capability. “Nokia works closely with its carrier partners,” she said. Carriers are open to consumer choice, and there should be “room for everybody to play,” she said. Nokia and Twango will work to iron out any copyright questions as they develop the integration, she added.

It’s not unprecedented for a carrier to remove features from cellphones. In Europe, Vodafone and Orange blocked a TruPhone VoIP capability on the Nokia N95. And before becoming AT&T, Cingular stripped Wi-Fi functionality from the Nokia E61, rebranding it Nokia E62 for sale in the United States. That kind of behavior is not unusual, Skype said in a February Carterfone filing (CD Feb 22 p6): “Unfortunately all carriers appear to engage in such restrictive practices to varying degrees.” In a filed response, AT&T argued that Skype ignored “that AT&T sells several handsets with Wi-Fi capability, and that the Nokia handset Skype identifies was designed for a market segment that would not need and thus would not want to pay for Wi-Fi.”

But consumer demand could trump any carrier copyright worries prompted by Twango, Greengart said. Nokia has been successful at creating “device centricity” for its Nseries, selling most of the high-priced devices without carrier subsidies, he said. “If Nokia can create a compelling set of integrated experiences” on its phones, “it will attract consumers.” And carriers may not want to miss that market, he said.

Manufacturers may have a better shot at selling carriers their higher end handsets now that Apple’s iPhone has succeeded, Greengart said. Carriers have historically shied away from selling consumer phones priced higher than $500, he said. The only U.S. carrier-sold, subsidized Nokia Nseries model is the N75 from AT&T. The N75, designed for AT&T’s 3G network, is one of Nokia’s less expensive models at $349.99 before rebates and a 2-year contract subsidy. It focuses on a balance of features rather than the 5 mega-pixel camera or other highlights of Nokia’s higher-end N90 phones, Greengart said.

High iPhone sales validate many manufacturers’ position that consumers will pay for high-end phones, he said. AT&T has activated 146,000 iPhones and store traffic remains high, AT&T said in its Q2 call last month (CD July 25 p7). “Many carriers may do the same calculus AT&T did with the iPhone,” he said.