Mobile operators face an uphill battle to maintain revenues streams

Users search for content directly from the Internet

Mobile network operators face an uphill battle to protect their lucrative voice and proprietary short message services which together account for more than 90 percent of total mobile revenues, according to a report to be released next week by telecoms consultancy BuddeComm.

"After 10 years of hampering the growth in the mobile data market through business models based on exclusive content, open-ended charging and prices nobody could afford, the cards have fallen and the mobile network operators have lost the battle," the study has found.

Intense competition has forced the mobile companies to offer capped pricing plans with data access. But while operators have been quick to promote the new packages, they have been shy to tell customers what they can do, such as access e-mail and the Internet, for fear of cannibalising their existing revenue streams.

The BuddeComm study points out that the main mobile players are in danger of missing new revenue streams as data traffic quickly grows and users search for content directly from the Internet.

In such instances online content giants - such as Google, Amazon, YouTube and MSN - are planning to make services available to mobile users through mini browsing facilities on their Web sites.

"The study says network operators have failed to use their 10-year lead time to build a solid customer base around a suite of affordable value-added mobile services. This might reduce some operators to using their billing services to provide value-added network services to the new content kings," the study found.

The heat is likely to be turned up further on operators, too, if alternative wireless broadband technologies, such as WiMax, take off at the expense of their preferred 3G HSPA (high-speed packet access).

"As soon as the Internet-based broadband applications are unleashed, SMS will be the first to go, in favour of e-mail. That alone will wipe well over $1 billion from the balance sheets of mobile operators," the study says.

At the moment, the bulk of mobile content downloaded is limited to premium SMS services such as ringtones and wallpapers; and, to a lesser degree, music. For business, mobile e-mail is the runaway application due to new smart phones, like the Blackberry.

Beyond these main services, there is not a great deal. Many mobile content providers have walked away in frustration and mobile marketing is expected to decline in the absence of real business opportunities, a situation largely created by protective operators.

BuddeComm believes an environment with competing wireless technologies, such as 3G HSPA and WiMax, offers the best chance of encouraging innovative, affordable mobile data services.

OPEL, a joint venture between Optus and Elders, is building a regional network comprising 1361 WiMax sites and will give an early indication of its viability.

So what will mobile data services look like once wireless broadband has become established in the next few years?

According to the BuddeComm study, content that kills time will be popular, assuming they are not overpriced.

"If you can kill a few minutes of boredom with some video content, a cartoon that makes you laugh, or a quick game, and it only costs a few cents, we can plainly see a big market for that," the study states.

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