The current trend in Europe is for mobile operators to become internet service providers (ISP).  Recently, an Austrian operator told me that this year it has sold more ISP connections than mobile connections.  In Sweden, mobile broadband is being offered at a price similar to that of fixed broadband, suggesting that Austria is not unique.

Over the last decade, mobile operators have slowly but surely eroded the hold that fixed operators have had on the consumer.  First, it was voice, and now it seems the same is happening for the Internet — witness the exponential rise in the popularity of the USB dongle.  The attraction for the user is obvious: one relationship for all services, no installation charges and the ability to be truly mobile.  Today, many operators offer a free laptop in exchange for an 18-month commitment.  How can you lose?

How will fixed line operators respond to this threat?  They have already made their network investments, so all they need to do now is utilize their assets.  With multimedia rapidly becoming a pervasive force, network capacity and effective bandwidth will be critical factors.  In such circumstances, won’t the fixed line operator have the upper hand?

I’m not so sure.  Mobility is a key criterion.  Freedom is something that users will always want; once they have it, they will never give it up.  For the vast majority of consumers, mobile networks will impose no bandwidth restrictions.  Operators are constantly investing in their networks.  Thanks to data optimization and media transcoding, most users will be hard-pressed to discern the difference between a fixed network and a mobile network — nor will they even care.  For mobile operators, there is also an effective one-to-one brand relationship with end users.  Thus, they can deliver a truly personalized and relevant consumer service across an entire portfolio of offerings — something that fixed line operators will find difficult if not impossible to match.

Infrastructure providers offering service delivery platforms to the consumer will turn up the heat on the ISP market.  When that happens, we should all expect some dramatic changes in the road ahead.

- Graham Carey

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