Europe's Wireless Future

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Dean Bubley, founder of Disruptive Analysis, a London technology consulting firm

I have long thought that the sort of walled-garden approach from operators is unlikely to succeed. In particular, I have huge doubts that operators should get directly involved in content, for the most part. There's this fear of what is rather crudely referred to as becoming a "dumb pipe," and my view is there is far too much of a polar distinction of being a full content service provider or dumb pipe.

I think there is a much more realistic, obtainable, and potentially profitable "smart pipe" middle ground, where the operator is providing not just connectivity and access but other services around that. Those may be services they provide to the end user, such as guarantees of a particular quality of bandwidth or speed, or services provided to third parties in terms of location and billing support and various other program interfaces.

In terms of business models, clearly the various levels of advertising support…seem to be gaining a lot of currency. Clearly, there is an awful lot that still needs to be done, though, in making sure that the user experience is acceptable.

I don't see mobile advertising in the short run making a huge contribution—it won't grow as fast as, say, Google has in terms of the PC-based Web simply because Google took a relatively understood format and just tweaked it. Here, it may be back to square one.

And while clearly the upside is that it's got a lot of creative people, all the creativity in the world doesn't solve things like designing handset user interfaces. People always underestimate how difficult it is to get software to work on a good range of mobile phones, whereas most software will work on most PCs and virtually all Web browsers.

John Strand, CEO, Strand Consult, a wireless consultancy in Copenhagen

If you remove [short messaging] from data, data accounts for 2%-3% of operators' revenues. So, even if data explodes dramatically, it will never be able to compensate for the revenue [that] voice is generating today. More and more operators in Europe are offering flat-rate calls on your mobile phone. In the U.S., you have the buckets with 1,000 or 2,000 minutes.

The profit for the operators is that you can't use the minutes, so from that perspective the future of the mobile operator is simple: He will be lean. For an operator, it's about driving down his costs, ensuring his fixed costs are very low, scaling down his business, reducing subsidies, outsourcing a good part of his business; he will not develop mobile services like you do today.

I see the future mobile-operator business model as more like a supermarket. What is a supermarket? A logistic point, with a cash register and a customer base. All those products are put into the supermarket; they do the marketing so there's traffic into the store. You go into the store, pick up a product, and then you go to the cashier and you pay for it. Then the supermarket shares the revenue with the supplier.

The winning business model in the future is not the one that Vodafone is using. It's not the one that 3 is using. If you look across Europe, the most successful operators are the ones focused on driving down fixed costs, ensuring customers are paying as much as possible flat rate and then having some product on top of that they can add some extra revenue on. And those services, they will not buy them in the future, they will get them from the service providers on a pure revenue-sharing model.

Norton is a BusinessWeek.com correspondent in London.