Leader: Mobile unrest

This week mobile operators were singing about what sounded like good news.

Vodafone passed the 150-million customer mark, adding 5.4 million customers in the last quarter, and CEO Arun Sarin called the three-month period "the best quarter since December 2000".

mmO2 picked up 1.2 million customers, bringing the total to around 23 million, and remained chipper about the fact it's the only one among rivals Orange, T-Mobile and Vodafone not to have launched a commercial 3G service.

Yet analyst reports highlighted some unsettling facts - European mobile operators are losing billions of pounds a year in lost revenues due to high customer churn and poor business offerings.

Churn rates can be as high as 35 per cent, according to one report, because customers feel they can find better deals elsewhere.

On the business front, mobile operators need to beef up their offerings with IT services or be left to fight a price war over low-value mobile email deals.

The operators aren't blind to these challenges. mmO2, for one, admitted customer churn is a problem it intends to address.

Among the tactics we've seen are giving incentives - free phones, no sign-up fees - for signing contracts longer than a year.

That might work in the short term but handcuffing customers into a longer-term deal with the cheap fix of a low-cost phone that will cost them dear in the end won't generate loyalty, just bad feeling.

What's needed for the churn problem is either a bit more creativity or just a return to basics such as providing top-notch support. As for the business conundrum, the likely solution is acquisitions, which require both cash and commitment on the side of the mobile operators.

Let's just hope they can work it out soon - those billions in lost revenue add up quick and if customers smell a bad deal or sense a less than healthy operator, they'll be off before you can say push-to-talk.