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Operators finally capitulate to third parties for content future

The struggle between operators and companies that are trying to loosen operators' relationship with end-users intensified this month. Nokia and Google both unveiled significant initiatives that on the face of it present a major threat to operators' attempts to retain their exclusive relationship with their customers.

But what is of most interest is that, unlike in the past, mobile operators are now embracing attempts by companies to cement relationships with end-users. Last week, Google announced its long-awaited mobile initiative, Android, with backing from major operators.

Android is a complete "stack" of software for mobile devices, including operating system, middleware, interface and applications. Android will involve alliances with more than 30 vendors and operators worldwide. China Mobile, KDDI, NTT DoCoMo, Sprint Nextel, Telecom Italia, Telefonica and T-Mobile have all announced support for Android, as have a collection of vendors.

Android is the centerpiece of Google's Open Handset Alliance, which will aim to develop technologies that will lower the cost of developing and distributing mobile devices and services. The first Android device is expected to go on sale in 2H08.

Meanwhile, Vodafone and Nokia teamed up last week to push Nokia's Ovi mobile internet platform in an astonishing move that indicates that operators have all but given up trying to unilaterally develop end-user applications.

Nokia and Vodafone plan to launch a range of 3G handsets with integrated Vodafone and Ovi content and data services, several of which will be exclusive to Vodafone and carry the Vodafone brand. The two groups have also agreed to carry both Vodafone's Music Station and the Nokia Music Store on Nokia's 2008 handsets.

The significance of the move can be seen by looking back at Vodafone and Nokia's often prickly relationship. The companies had a major falling out over Nokia's Club Nokia initiative at the start of the decade. Operators - particularly Vodafone - saw Club Nokia as an unwelcome attempt by Nokia to forge a direct relationship with end-users at the expense of operators.

Ovi is for all intents and purposes Club Nokia reinvented, this time in the guise of a Web 2.0 suite of services. Ovi includes the Nokia Music Store, Nokia Maps and other mobile content. So what has changed in the last few years for Vodafone to embrace rather than undermine Nokia's latest foray into services?

In a word, failure. Since rolling out 3G networks, Vodafone, along with the majority of operators in Europe, has spent a lot of energy trying to find a service or suite of services that will capture end-users' imagination as much as those accessed via the fixed internet have.

Although mobile data usage has steadily increased, it remains anemic compared with how much revenue operators need to generate to continue the strong growth that the explosion in mobile voice usage has brought.

Alas, mobile operators have struggled with all aspects of offering compelling content to end-users. Perhaps their biggest mistake has been to pursue unilateral deals with third parties for content: Doing so has always led to a lack of interoperability among subscribers on different networks.

For Web 2.0 services, inter-network operability is crucial, and the lack of interoperability that still besets different operators' multimedia messaging services (MMS) shows just how incapable operators have been to make services function across networks. The list doesn't stop at MMS: Look at the GSM Association's ill-fated initiative to develop globally interoperable instant messaging, announced with full fanfare by the mobile industry at the 3GSM World Congress in 2006.

Operators have proved that they need outside help to overcome an entrenched strategic outlook that prevents them from working with each other well enough to provide mobile users with genuinely interoperable services.

Over and above problems with interoperability, operators have also failed to overcome the lack of awareness among end-users that an operator brand stands for services as much as it does for enabling basic telephony. Arising from these deficiencies, most mobile operators have launched poor imitations of Web 2.0 services this year, though few subscribers use them.

Operators have therefore been forced to look to other companies to solve the problems of interoperability and brand association for compelling content. This year, we've seen operators first try to replicate the unilateral-deal model with major content companies, such as Vodafone's announcement with Google at this year's 3GSM World Congress. That deal was made with Vodafone's feet firmly in the old world, where operators kept third parties at arm's length while they developed their own services.

But in the space of eight months, we've seen Vodafone capitulate and hitch almost its entire service strategy to Nokia's Ovi initiative.

This is a remarkable about-face, not just because it has been made by the largest operator in the world, but also because it was the operator that most jealously guarded its relationship with end-users. While other major operators, such as France Telecom, make noises expressing their wariness of Ovi, Vodafone's acceptance of it, following as it does Telefonica's, makes it highly likely that many more operators will accept it as well.

It is at the same time a remarkable achievement for Nokia, whose latest push into services was perfectly timed. All the underlying technology for Web 2.0 services is in place in the mobile ecosystem, and users of Web 2.0 services via the fixed internet have reached huge numbers. Moreover, these users are now eager to mobile-enable their Web 2.0 lives, just as the companies behind them are eyeing mobile as their next major strategy push.

But the question remains as to whether companies such as Nokia and Google - and let's not forget Apple, which is showing the way for all the mobile industry to follow - will succeed where mobile operators have failed. Although the answer might not be a resounding "yes," it is likely that companies such as Apple, Nokia and Google will ensure that 2008 will finally be the year for widespread consumption of internet services from mobile devices.

Paul Lambert is editor of telecoms.com sister publication Global Mobile

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