CircleID

The success of smart phone, in particular the iPhone, is both a blessing and a curse for the mobile operators. On the one hand it has broken into the monopolistic business models used by most operators and has most certainly loosened part of their stranglehold; on the other, these phones have increased usage on their networks.

But these cracks are going to continue and will eventually lead to similar structural changes in the mobile industry to the ones we are currently experiencing in the fixed market.

While AT&T banned the Google phone from offering VoIP services over the network, this triggered the FCC to act, and the outcome will most likely be that mobile carriers in the USA will not be able to stop VoIP usage over their networks. This will very seriously undermine the lucrative voice call business models of the mobile operators and will eventually force them to open up their networks. This, in turn, will then completely transform the mobile market with an explosion in IP-based services.

But as the current networks would not be able to cope with such increased traffic we will have to wait till 2012-2015, until 4G services such as LTE can deliver a fully IP-based infrastructure that will allow for mass use of these applications over the network. By that time most of the mobile backbone networks will be linked to fibre optics as well and we could see the final arrival of the long promised fixed-mobile convergence.

Of course most mobile operators are in denial over these changes, as the fixed operators have been for a long time. However it will be interesting to see if the mobile operators are able to stall progress for as long as the fixed networks have been able to do so.

The question is also whether this ongoing stalling of these innovations will work in favour of the operators. While it will certainly provide them with a short-term advantage, change is inevitable in the longer term.

While mobile virtual network operators (MVNOs) are slowly becoming slightly more relaxed most of them are still using simple resale models with very low margins, which prevent any serious growth for these operators.

By Paul Budde, Managing Director of Paul Budde Communication. Paul is also a contributor of the Paul Budde Communication blog located here.

Related topics: Mobile, Telecom, Wireless