Telcos could miss out on mobile Web 2.0 opportunities

Stuart Corner
Friday, 09 March 2007 02:08

IT Industry - Deals

Mobile telecommunications operators face a dilemma of whether to co-operate or compete as leading 'web 2.0' companies like Google, MySpace and Flickr move into the mobile space, according to new research by global consultancy Arthur D Little.

"The telecoms industry is now faced with the dilemma of whether to collaborate or compete with the newly emerged yet de facto web 2.0 leaders and face the long haul choice of building competing communities or take the reduced margin implied from partnerships with existing players," the research firm claims.

It suggests that many organisations have already chosen the latter course, as demonstrated by Vodafone's partnership with MySpace and 3's X-series portfolio deals with Skype, Google and YouTube. And it warns that "Telecommunications organisations which play in the service oriented space will need to be wise in their choice of partners, selecting companies who can successfully grow profitably as the models develop from pure advertising into more mature, and in the long term, sustainable revenue streams."

"The key drivers of today's Internet growth are the users, who through web 2.0 can now create and distribute content instantaneously and globally in a manner not previously envisaged,' says Richard Swinford, a senior manager in the Arthur D Little Telecoms team.

"In order to harness and monetise Web 2.0 the telcos will have to rapidly address the needs of this community...Younger Europeans are already showing their readiness to interact on the move, with 38 percent of them accessing email from mobile devices. Telecommunications businesses now need to offer access to the established web 2.0 services, for both communication and for the fulfilment of their wider social needs whilst on the move."

According to Arthur D Little, "The challenge for the telcos is to support these needs in the mobile environment whilst overcoming previous barriers such as sharing across companies and territories and high mobile data prices, walled gardens around content and exclusive proprietary formats."

The research firm warns that: "Telecom companies' unreadiness to satisfy this new demand comes at the expense of future revenues and will urgently need to be addressed."

It adds that: "A final more stable but less growth-oriented option is to opt out of the fiercely competitive service centric world and focus on pure bandwidth delivery, the so-called 'bit pipe' solution." However few telcos see this as a realistic option because of the diminishing margins attached to simple carriage.