Qualcomm: Operators must have mobile device ownership

Mobile operators need to be involved in making handsets and apps or risk being totally cut off from opportunities to monetize 3G services, says exec.

Mobile operators need to "take control" of mobile devices, either by making devices for the low-end market or apps for smartphones to create and monetize 3G services. If not, they will risk becoming only just connectivity providers, said a Qualcomm executive.

Mantosh Malhotra, regional head for Malaysia, Philippines and Singapore at Qualcomm, noted that before 3G services gained in popularity, there was little incentive for mobile operators to be involved in the production of handsets as their services were only limited to 2G voice and SMS (short message service).

However, 3G changed the mobile landscape as users are able to have ubiquitous connectivity, said the Philippines-based executive during an interview with ZDNet Asia on Tuesday. Malhotra was referring to how the technology had made mobile Internet connectivity more accessible, opening up more affordable, and sometimes free, services for phone calls and message--in effect disrupting telcos' conventional business model.

Smartphone vendors such as Apple which "bypassed everyone" have taken advantage of the change, leaving mobile operators only a pipe for connectivity, he said.

Even non-mobile phone vendors have been cashing in on 3G. Malhotra pointed to Amazon's Kindle 3G as a device that has left operators "on the sidelines" as the e-reader provides free connectivity to users.

Instead of only selling handsets and providing access, the Qualcomm executive suggested two different routes for mobile operators depending on what markets they play in.

For operators in the emerging market, in which high-end devices have not made an impact, he said mobile operators can partner with OEMs (original equipment manufacturers) to build lower-end 3G devices which come bundled with their own apps and services to take advantage of their network. He highlighted how Philippines-based Smart Communications built its own Android device and brought 3G to the masses.

He noted it was more challenging for operators to take control of the devices in developed markets where high-end smartphones were popular. Instead, he said operators can build locally relevant apps that are not just a repetition of what is available in the appstores.

Smart Communication, for one, worked with fast-food chain Jollibee to provide an app for delivery service, he pointed out. Users could either pay using the telco's mobile wallet service Smart Money or via cash on delivery, according to tech news site Techie.com.ph.

While 3G is ubiquitous in Singapore, the executive noted the uptake of the wireless technology was not as fast in other Southeast Asian markets. This is because some people think 3G connection is only for high-end smartphones, but he debunked the idea citing how India's Tata Teleservices provides a service to local fishermen updating them on weather conditions and fish prices via 3G-based devices.

Steeper competition ahead
Asked how Intel's partnership with Motorola Mobility would affect Qualcomm's business, Malhotra said that competition in the mobile space was good and added the market for supplying chipsets for Android devices was currently dominated by the company.

He added that Qualcomm was the provider for all Windows Phone 7 devices when these were first launched.

However, according to a Reuters report last November, its monopoly over the Windows Phone device market was ended after rival ST-Ericsson announced that it, too, will be providing chips for future devices powered by Redmond's mobile operating system.