Mobile operators have threatened that VoIP applications such as Skype will be resisted on mobile phones "at all costs." Telecoms.com reports one anonymous vendor at MEM2006 telling them "do you really believe dual-mode phones that allow people to cannibalise operator revenues are going to arrive? They may well do but no operator is going to subsidise that phone so if you want one, you'll have to pay £450 for one."

New mobile phones, such as Nokia's N92, have built-in WiFi support, enabling users to make phone calls over a normal mobile network or over their broadband connection via WiFi using a VoIP application such as Skype. Every time a user uses Skype on a mobile phone, the mobile operator loses out: the voice call is carried over the user's home network (and ultimately the Internet), and not carried over their network, so they can't charge for it.

If Skype increases into the mobile space, it will be at the expense of the mobile operators' profits.

Mobile operators as eCommerce companies

Andrew Bud, executive chairman at aggregator mBlox, argues that a new business model is needed by the operators in order for them to adapt to this threat. He believes that instead of charging per MB for data services, mobile operators should be selling content as individual products, such as albums or episodes of TV programmes. This would make sense if the mobile operator's primary business was selling products. But it's not; as far as data services are concerned, a mobile operator is a wireless bit pipe - everything else is secondary to their profits. Vodafone selling you the latest album from Coldplay is equivalent to your ISP pretending to be Amazon. Sure, your ISP could sell products to you, but not as well (or as cheap) as Amazon does.

The need for a new business model

A new business model is clearly needed. WiFi on mobile phones is a very recent thing, and so mobile operators are still in a position to sulk and say "well, we just won't subsidise handsets with WiFi." But in a year or two, WiFi will be as ubiquitous on mobile phones as Bluetooth currently is. The operators can't refuse to subsidise them all.

The mobile operators need to open up their data services to content providers who specialize in providing content. They need to see themselves as the bit-pipes they are in order to foster the type of competition so evident on the (open) Web. They can't defend against every new mobile application that threatens their current business model. As new Internet applications increasingly find their way on mobile phones, the mobile operators' rearguard defence against Internet apps such as Skype looks increasingly futile.

[Source: Telecoms.com]