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Mobile phones will become primary Internet appliance, VC firm says

M/C Venture Partners yesterday released its list of top Internet and communications trends to watch next year. On that list is a no-brainer for many: Mobile phones stand to become the primary Internet appliance for people worldwide.

Focusing on the communications, media and information technology sectors, the list includes input from M/C management and executives from many of its portfolio companies.

"Mobile services are finally penetrating deeper into society, as M/C portfolio companies Metro PCS, Revol, Mobi and Open Wireless profitably open up availability of wireless to new segments of the market that were previously underserved," said Matthew Rubins, general partner at M/C, Boston.

"At the same time devices that are capable of advanced graphics and sound are finally becoming available at attractive price points," he said. "Carriers are also rolling out high-speed data services with flat rate pricing.

"So the confluence of higher penetration, better devices and faster, cheaper data capabilities are finally driving mass adoption of mobile broadband services."

Other trends on the M/C list include consolidation and how it will continue to be a driving force in the telecommunications services industries.

Because of consumer demand for streaming video, premium bandwidth -- intensive wired and wireless services -- network service providers will be increasing their usage of fiber-based infrastructure, the venture capital firm said.

In another prediction, IP-based broadband last-mile solutions will replace T1 connections as the superior conduit for data communications. Because of fixed wireless and fiber offerings, the solutions are more flexible, affordable and available than ever, M/C said.

The square footage of quality network hub locations -- commercial data and collocations centers, Internet exchanges and proprietary hosting centers -- will increase sharply in 2008.

Another trend that M/C anticipates is that telephony solutions will transform into managed services for the enterprise. VoIP services helped to start this trend, which will get a lot of attention next year.

Based on investment trends and consumer demand, wireless broadband is doing today what DSL and cable broadband did for consumers five years ago, M/C said.

Consumers are increasingly valuing safety and security on their mobile devices, helping to support the carrier's "walled garden" for mobile media.

Still, new application and network devices will proliferate even as network service providers strive to innovate.

"Due to the highly personal nature of mobile communications, click-through rates on mobile can be an order of magnitude higher than on Internet search engines," Mr. Rubins said. "The iPhone has merely shown what is possible. Expect others to follow."

So what do M/C's predictions mean for marketers next year?

"Carriers have figured out how to make money in wireless data," Mr. Rubins said. "A few years ago the conventional wisdom was that carriers would become dump pipes. Carriers have evolved their walled gardens into carrier portals that can serve as launching points into the unmanaged Internet.

"Within the portal, carriers can serve up pre-screened content and manage the billing relationship with their customers," he said. "This is critical for payment-oriented applications such as ringtones, games and other high-valued content. Carriers can also now effectively sell ad space on their portals and show an ROI to their advertising customers."