There are two major conflicting trends in Telecommunications :
1) Internet driven: the intelligence and applications move to the end-devices (Smartphones, laptops, Servers…)
2) Telcos driven: Operators need to retain control of the Services delivered through their networks
On example of these two trends are: Skype vs IMS.
Skype corresponds to trend 1). The application is running on PCs or handsets, and the Service is offered directly by Skype, independently of the Operator that provides simply IP connectivity.
IMS (IP Multimedia Subsystem) is standardized by the telco industry – 3GPP and others-. It aims at providing multimedia services over an IP network, with the Service fully controlled by the network Operator that guarantees reliability, interoperability with other Operator’s networks and Quality of Service. Something that Skype can not offer, due to the nature of Internet.
So far, Mobile Service Providers (MSPs) have fought to retain control of their services and to own the customer, while opening their networks to Applications partners. MSPs have been relatively successful in monetizing all premium content services delivered through their networks, including: ring-tones, games, wallpapers, logos, videos, TV-shows televoting and other SMS premium services. This business model is based on revenue sharing with Application/content partners.
While MSPs have successfully keept Service control, the usage of mobile Data Services has not gone into mainstream yet, mainly because the data capacity offered by GPRS/EDGE was too limited and charges were too high.
With 3G and HSDPA widely commercial in many markets, MSPs re-position their Data Services as Mobile Broadband with flat fees, volume capped to avoid congested spectrum.
Some Operators see the increase in data capacity as an opportunity to sell more premium content than before, including bandwidth intensive video applications, or music -e.g. KDDI selling music, Testra launching a Rich Media video service for 3G-. But some other MSPs seem to be giving up, as they accept a mere Internet Pipe role and give away the applications to Internet players, losing any option to monetize those applications offered through their networks. e.g. MS messenger, mobile Gmail, Google maps or even Skype for VoIP… and iTunes for Music.
Mobile Operators have a trusted billing relationship with their clients which should enable them to easily monetize any Services accessible through the mobile to the clients they own.
That was the theory over the past years. In reality, today Internet players are also building a trusted relationship and do not need the Operator anymore.
MSPs worldwide rush to sign exclusivity agreements for iPhone launch, but apart for the short-term gain of signing-up the higher-ARPU subscribers that will own an iPhone, Operators are giving Apple the full control of the applications .
iTunes songs will be sold over the MSPs networks, same as it is in fixed broadband today. What revenues will the MSP get from those songs sold by Apple? Zero.
With iPhone, Windows Mobile and Android coming into the picture, the situation is not likely to improve for MSPs.
Mobile Operators will get a higher demand for flat fee Data Access, which is already good, but they can start forgetting about monetizing premium content, unless they seriously invest to reverse the trend.
Fixed Broadband operators with IPTV, are showing that the trend can be reversed. As Telefonica’s Imagenio IPTV Service illustrates, the Operator can play a key role in content distribution over their networks. Again, it requires vision and determination, as Telstra, KDDI or Telefonica have, to transform themselves and become a player in the entertainment industry.