Smartphone boom could result in operator losses within three years

A new report from US network company Tellabs suggests an increased boom in smartphone use could result in mobile operators posting significant losses within three years unless the companies involved start to adopt technology that can increase revenue from their data services.

Operators are increasingly investing in their mobile architecture, upgrading cell towers and rolling out improved data services on their networks, driving up investment costs as a result. An increase in smartphone use and the explosion of data consumption has left these companies with lower revenue per unit of data, meaning operators could soon be sent into the red.

To reverse the trend, carriers “must being intelligence to their networks”, adapting how data is consumed by customers instead of blindly adding additional capacity. With it expected that mobile data traffic will double each year for the next few years, operators may have introduce solutions to manage network traffic or roll out priority services that can capture additional revenue.

“Mobile carriers face a stark choice about their business models: it’s either the smart mobile Internet or an unsustainable dumb-pipe business,” said Vikram Saksena, Tellabs’ chief technology officer.

The report suggests North American operators are most vulnerable to the increase in mobile data use, plunging them into profitability by 2013, with Asia-Pacific operators facing the same fate in by 2014.