Mobile operators must adapt now to survive

Mobile operators need to seek out new revenue streams

Mobile operators around the world need to change their business models if they are to survive the rapid uptake of mobile data services.

The adoption of mobile data from phones, data cards and other devices is on the increase, and mobile operators are struggling to cope with the increased pressure on their networks.

Thomas Labarthe, vice president of advertising at Alcatel-Lucent in EMEA, told a recent roundtable event on the future of mobile access that steadily decreasing flat-rate plans mean that operators' revenues are declining as well.

The situation is untenable in the long term, according to Labarthe, and mobile operators that fail to address the problem face increasingly tough times ahead and may not survive.

"Operators need to act very quickly to avoid becoming dumb pipes," said Labarthe. "It's a Darwinian process: some will survive and some will not."

Furthermore, as the demand soars the need to move to next-generation mobile services such as Long Term Evolution will become more important, but this requires heavy investment from providers to upgrade the infrastructure.

Mobile operators need to seek out new revenue streams, explained Labarthe, and make the most of the close relationship most people have with their phones.

"The mobile phone is a very intimate device, always with us and containing a wealth of information about us, our friends, our habits and our location," he said. "Operators are in a uniquely privileged position to tap into that data to provide users with relevant marketing, information and advertising."

However, Labarthe warned that this position of trust needs to be very carefully balanced if the operators are not to upset users.

"These guys need to make sure they observe the three Ps: privacy, permission and preferences," he said. "This means that when they want to interact with an end user they make sure they have their permission, respect their privacy at all times and provide the most targeted advertising they can based on the individual's preferences."

A prime example of this is mobile payments, not necessarily items bought in a physical shop using Near Field Communication technology, but rather online transactions.

Most people today are wary of the security of mobile data access and are reluctant to enter payment card details into a mobile browser or application. Operators should instead work closely with service providers and developers to add these costs to the mobile phone bill, making use of the trusted billing relationship already in place between the provider and the customer.

Another potential revenue stream is to target vertical segments that will pay for specific applications that meet individual needs, in particular industries such as e-health and smart metering.

A third option is to take a page from the web services market, in which applications are free up to a certain point and premium functionality such as resources and/or quality of service is added for a fee. This could include everything from games to enterprise software.

Deals such as the recent networking sharing announcement between O2 and Vodafone will help ease the burden, but much still needs to be done, according to Labarthe.