SAN FRANCISCO (CNN/Money) -
Much has been made recently of camera phones -- cell phones equipped with cameras that allow for near-instantaneous transmission of photos to friends and family.
The cell-phone makers and networks love them for two reasons. First, in the short term, the devices (with their additional monthly charges) offer a way to shore up declining voice revenue.
Second, the industry sees camera phones as the first wave in their battle to convince consumers that cell phones are for more than just talking; they're thinking of more lucrative activities like sending and receiving video and audio. A spokesperson for Sprint PCS (PCS: Research, Estimates), which debuted its camera-phone service in August 2002, says more than 2 million photos were shared in February and March through its networks.
Wireless investors should keep their eyes on the camera phones and the U.S. adoption rate: Research firm IDC predicts that 1.9 million camera phones will be sold in the United States this year, and that the number will rocket up to 4.9 million next year -- a 162 percent gain.
But investors -- and the cellular companies -- should gird themselves for an impending battle with consumers, courts, and possibly even Congress over questions of privacy and the proper and improper uses of these phones.
"It's inevitable in the short term that legislators will look at this issue," says Xeni Jardin, a writer who runs a camera-phone-related blog. "If you look overseas, when the device reaches a tipping point, you start to hear rumblings among legislators. Pretty soon we're going to hit that tipping point in North America."
Governments from Australia to Saudi Arabia are already grappling with the devices. In Australia, a regional court is considering banning them from courthouses, and in the United Kingdom, health clubs are considering banning them from their premises. Saudi Arabia banned camera phones after it was discovered that men were using them to surreptitiously photograph women.
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The use of camera phones in the United States is not yet widespread enough for these issues to reach legislators' desks. But how long will it be before clubs and concert halls seek to ban people from taking camera-phone photos of bands?
And it's one thing to tell people they can't bring cameras into gyms or nightclubs, but will people accept having to leave their cell phones at home?
A creepy underside to the movement recently emerged: Web sites on which camera-phone photos of unaware females walking down the street are posted and rated. It will take only a few breathless Fox News exposés about these sites before legislators get letters from concerned citizens.
And companies should begin preparing for the negative PR backlash the sites and stories will generate. Camera phones have plenty of socially beneficial uses, such as the ability to capture a crime in progress, and most people will use the devices for innocuous activities. It's not clear that companies are ready for the battle just yet.
Despite the Sprint PCS spokesperson's assertion that the company's camera-phone users are "sharing photos with friends and family" and that the spy sites "haven't been an issue for Sprint," a good number of the photos on the spy sites I observed were taken with camera phones made exclusively for Sprint.
"This issue needs to be on the companies' radar screen," says Neil Mawston, an analyst with Strategy Analytics. "They need to proactively prepare for this."
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