Mobile carriers face a difficult future

The mobile industry has to rethink its strategy if it is to remain profitable

Mobile network providers are facing an uncertain future and will have to change their business models dramatically, according to speakers at MobileBeat 2009 in San Francisco.

Carriers are getting increasingly concerned about their status in the mobile industry, delegates heard. Monitising their network infrastructure is proving a lengthy process, and there is disagreement on the level of control they can, or should, exert on customers.

"At Pandora, when we started talking to carriers about our service, eventually the finance people would come through and they looked at costs and how it would impact them," said Tom Conrad, chief technical officer at the internet radio provider.

"There are carriers in the US that have aspirations to control everything and be a media company. Some of it comes down to questions as to where carriers are in their business plans."

However, this opinion was strongly rebuffed by Peter Barry, head of venture capital and emerging technology at Vodafone.

"I don't think any carrier in the world believes they can control everything," he said. "We do have a little power in the marketplace because we subsidise phones. We'd be stupid not to exploit that."

Barry explained that most carriers had a wholesale division that was solely concerned with the network, and a retail division that faced customers, and that they both had different priorities.

Russ McGuire, vice president of strategy at Sprint, agreed that carriers could not control everything, but warned that the industry has to fundamentally rethink its strategy if it is to remain profitable.

"The nature of how we make money has changed," he said. "We don't have a clear view of what revenues will be in the new model. We need to work together to build a new model that is attractive to consumers and satisfies my shareholders."

One suggestion he gave was to shift data traffic to less costly means of transmission. In particular he said that moving some traffic to WiMax systems was proving a good fit, and that the increasing use of femtocells was another successful method.

The Femto Forum and the WiMax Forum are already working on a common set of specifications that would allow for much easier data transfer. However, analysts have warned that the technology has several hurdles to overcome first.