MSPs towards Mobile Connectivity Service Providers

Nokia N81 ovi

In the past, Mobile Service Providers (MSPs) have successfully managed to keep full control -and get a share of revenue- over the premium content delivered over their networks. MSPs were determined to retain customer ownership, and so MSPs created walled gardens under their control.

Thanks to that model, MSPs have been enjoying good revenues from premium content downloads -ringtones, ring-back tones, logos, games, songs or videos-, premium SMSs and premium rate voice services (80x numbers). To get these revenues, MSPs have not invested much in promotion, advertisement or improvement of the premium services. So far, MSPs owned the customer billing relationship, and simply taxed content providers to reach the mobile operators customers, leaving many times the promotion on the content provider side.

As mobile data bitrates increase with 3G (UMTS, HSDPA or EVDO), and as handsets become more intelligent – iPhone, Android, Windows Mobile or Symbian-, MSPs premium content model is under threat.

MSPs does not seem to realize that if they do not invest in improving and promoting their own value added content services, they will be bypassed by Content Providers, and will be relegated to Mobile Connectivity Service Providers (MCSPs), or in short dumb pipes.

Recent news about Ovi (Nokia’s content services venture) rolling our N-Gage games confirm the threat. iPhone will kill any music download service an MSPs could have, to be swapped by iTunes. Google already has applications like Gmail and Google Maps, that can be installed in most smartphones. Unlike with RIM, operators do not get any revenues from the Gmail in mobile phones. This will not improve with Android.

Data usage is the only revenue MCSPs will be able to retain, but with the move to data flat rates, MCSPs will not even benefit from the growth in these services.

4 thoughts on “MSPs towards Mobile Connectivity Service Providers

  1. Allen Taylor

    I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.

    Allen Taylor

  2. Jose Miguel Cansado Post author

    Thanks Allen for your kind words.

    By the way, I received some comments off-line of painting a too dark picture for MSPs.

    In fact, the picture is not a prediction, but rather a threat of what will happen if operators do nothing.

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