When will the mobile operators work out that they are just wireless data providers?

When will the mobile operators work out that they are just wireless data providers? A commodity place with what needs to be commodity pricing? The likes of Vodafone and O2 desperately cling on to the hope that their value add is in reception, availability and price of their calls; when most people don’t want these things, they expect them as basic parts of the service.

Mobile operators have started to feel the data provider pinch – data based mobile messaging is killing the text message scam that the operators have enjoyed for so long. SMS messages costing up to 20p each have been a great source of income, but iMessage and Blackberry Messenger run over the internet and sip very lightly on internet bandwidth. They are cost effective and they are a sign of things to come.

The ingress of IP phones have also crept onto the smart phone. Skype, SIP phones and similar all use tiny amounts of data traffic whilst providing a good enough service. Apples own Facetime seems at this point to be banned on the data networks – not for any good reason that I can see other than quality of the connection may be too variable; but again this is a case of waiting for the mobile operators to work out that they are just a wireless data shop.

So where do they need to go? Three to some extent has the right idea – it’s all about data. Virgin Mobile in the UK are also getting there, with trials of 4G starting connected directly into Virgin’s fibre network.

But there is a problem. Mobile operators have been making a lot of cash out of basic services, long contracts and hardware lock-in. They lock people into two year contracts for whilst offering discounts on handset hardware costs. This is massively attractive for some as they pay over time and not up front. Whilst those that can afford it and are the most savy are likely to just buy their phone and take the cheapest ‘Internet’ tariff, the majority will look to continue this buying behaviour.

You can’t expect 3rd party resellers of mobile services such as Car Phone Warehouse to start selling mobile phones at a fair price and separate to a contract – it would destroy their revenue stream; but there is an opportunity out there for a companies to start selling the hardware at a fair price without a contract. A contract free phone would give the consumer the ultimate choice of provider based on real performance and not perceived value of discounted hardware.

If we want consumer choice at a fair price, we must look to break the cycle of contract based on hardware discounts. It’s time for the mobile operators to realise that they are just a wireless BT and, as BT have tried to do, they need to reinvent themselves around the highest quality of internet service and drive the cost of their core services (calls) to commodity prices.