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2006: A mobile odyssey

The year your phone and your SIM get a divorce

Tags: mvno, france telecom, sky, sim

By Jo Best

Published: 24 November 2005 17:10 GMT

2006 will be a year of upheaval for the mobile industry in Europe, with IP and VoIP meaning leaner times for operators – and a rawer deal for mobile users.

A new report from analysts at Informa Telecoms and Media is predicting next year will see a number of factors that will see operators forced to tighten their belts on both the technology and user side.

There's an increasing number of customers who like the idea of keeping their old phone and getting cheaper airtime.

-- Mark Newman, chief research officer, Informa Telecoms and Media

Operators fear a continuing fall in the prices of voice minutes – 84 per cent of operators asked by Informa predicted voice revenues will drop by a quarter in 2006 – and high customer churn rates.

The overall result of increased pressure on operators' bottom lines will see customers hit directly in the pocket by lower handset subsidies. The end result, according to Informa Telecoms and Media's chief research officer, Mark Newman, could be a major overhaul of how consumers go mobile – turning to operators for airtime and retailers for handsets.

He said: "I think increasingly we'll see a separation of the handset and contract – we've not seen that til now. There's an increasing number of customers who like the idea of keeping their old phone and getting cheaper airtime."

Operators could also start to transform themselves from retailers to wholesalers in order to boost profits, the report said – meaning an increase in mobile virtual network operators, or MVNOs.

As well as new competition in the form of these MVNOs, such as easyMobile, traditional mobile companies may find themselves competing with more fixed line providers such as BT supplying converged fixed-to-mobile services, seeking to breathe life into declining traditional landline voice revenues.

Newman said: "I think we'll see more companies dabbling in mobile," picking France Telecom and Sky as two likely contenders. France Telecom, which owns Orange and ISP Wanadoo, could reposition itself as a one-stop shop for fixed and mobile telephony, while Sky may set up shop as an MVNO selling both voice minutes and sports-related content.

With so many threats facing the industry, operators are still keen to turn their customers' attention to data services, particularly mobile music and mobile email. Newman added: "In terms of growing ARPU [average revenue per user], operators are much more realistic. I think we're going to see a gradual movement [of mobile email] towards the consumer space. What's slowing operators down is fear of cannibalising their SMS strategy."

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