Mobile operators warned of 'dumb pipes' ISP scenario

Recent research from analyst firm Ovum suggests that operators could bolster their revenues by leveraging subscriber information and network-based assets.

Melbourne-based Ovum analyst Nathan Burley likened the current mobile broadband market to last decade’s fixed broadband offerings that bundled access with services such as e-mail, hosting and content.

As consumers turned to other Web sites for their online activities, fixed broadband ISPs were muscled out of content revenue and into what analysts call a ‘dumb pipes’ scenario.

Mobile broadband operators such as Telstra currently support a bulk of their customer’s activities through services such as mobile TV, games and customised music sites.

But with the growing popularity of smartphones that feature more user-friendly Web browsers, mobile broadband operators may soon go in the way of their fixed-line counterparts, Ovum predicts.

“If you look at these smartphones, browsers on the phones are getting better and you are seeing users of these handsets use the phones for their own content on the Internet,” he said.

Burley named the Blackberry Bold, Nokia N96, HTC Touch Diamond and Apple’s iPhone as examples of game-changing devices.

“In terms of the iPhone, Apple’s strategy to some degree is to relegate the [mobile broadband] operator to offering access only,” he said.

“It’s a very open model for content providers,” he told iTnews.

While this open model could mean less content-based revenue for mobile operators, Burley points out that external content could bolster data access revenue.

Additionally, mobile operators could have a place in the value chain for supporting third-party content and other services by leveraging in-depth information about their customers and network-based assets such as location.

Areas such as social networking applications could benefit from customer metadata, Burley said, highlighting opportunities for advertising revenue.

“On the Internet, if you look at the people [companies] who have prevailed in terms of advertising revenue, it [their success] sits on a lot of information about their subscribers,” he said.

But not all operators will be successful in gaining a share of the advertising pot, analysts predict, due to the strong competition between broadcasters, Internet businesses and traditional media.

Ovum suggests that mobile broadband operators consider options such as: having their own paid-for content and service offerings; offering their own and third-party content on an ad-supported basis; and providing access to free Internet-based content to drive usage and hence access revenues.

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