Internet giants threaten mobile operators

Mobile operators need to evolve their business models to take account of disruptive technologies or they will sink, say experts

Mobile telephony companies need to adapt their business models to compete with major Internet players, analysts agreed this week.

Companies such as Google and Yahoo pose a risk to mobile operators, Gartner believes, as they develop mobile versions of their Internet services. This could encourage mobile users to turn to these companies for their mobile Internet services, making the mobile operators just a provider of connectivity and robbing them of crucial revenue in the future.

A key factor, according to Martin Gutberlet, a vice-president at Gartner, is that Internet companies are much better then mobile operators at creating communities.

"Disruptive players offer more. They create a community, the community becomes robust, then they start to charge. Mobile operators skip straight to the final stage, and then wonder why the community is not there," Gutberlet told ZDNet UK.

Earlier this week, Research in Motion signed a deal that will allow it to offer a range of Yahoo services on its BlackBerry devices.

Gartner argues that mobile operators should respond to this challenge by forming partnerships with Internet companies, so they can launch new services together. But this strategy may fail, if Internet companies decide to go it alone.

"Why should consumers go to operators for Internet services if they are already provided? I can have a Google Mail service on my mobile phone, so why should I go for an operator-offered service?" Gutberlet added.

Technology analyst Dean Bubley agreed that Internet companies pose a serious threat to mobile operators.

"Mobile operators like to think they own the customer. This might be true at the moment for voice telephony, but for interactive services they are very far behind," said Bubley, founder of Disruptive Analysis.

"The consumer interactive experience is owned by the Internet, mostly because of the provision of useful functionality. Internet companies start offering something useful for free to begin with, then charge for other services later," Bubley added.

And Internet telephony could be an even greater threat, warned Gartner.

"Let's look at voice. If I could run Skype on mobile phones, that would be very disruptive. We're not there yet, but could be in a few years. It depends how quickly the Internet guys push — and these guys are so quick at launching network-agnostic services," said Gutberlet.

Netgear and Skype announced in January this year that they were working together to develop a mobile phone that would support Skype over Wi-Fi.