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Three ways for telecoms to jump-start 3G profits

3G is here to stay, so wireless carriers need to find the best strategies to maximize their profits.

As voice minutes become commoditized and 4G services are years away from mainstream adoption, telecoms must focus on maximizing 3G profits to make money in the wireless market. has brought together three industry veterans to share their thoughts on how to make the most out of today's wireless networks.

Tom Nolle: Get ready to go open

"[Telecoms] have to be prepared to partner with somebody who's better able to deal with the market rather than trying to deal with it themselves," said Tom Nolle, president of CIMI Corp. "This is not going to be the operators coming up with killer applications, but they're going to develop APIs and partnerships with third-party developers."

Carriers are reconsidering their long-held insistence on calling the shots, Nolle said, because when it comes to consumer trends, they are just not very good at it.

"One thing about the mobile market is that it's driven by younger consumers who are more fad driven," he said. The typical mobile product cycle is six months, while telecoms operate on seven-year investment cycles incompatible with the unpredictable sink-or-swim market of consumer technology.

And so carriers must step back – while making sure to keep a cut of the revenue. Nolle said wireless carriers can do this by letting third-party providers tap into their rich sets of customer data -- everything from friends to location to demographics -- and charging for a piece of the action.

The era of provider-exclusive services may be ending, but providers don't have to be completely cut off if they can create developer-friendly APIs that make it easy for everyone to profit.

Dan Warren: Prepare for vertical adventures

As consumers become more price conscious and consumer markets become saturated, vast opportunities for data usage – and new monthly revenue -- remain in untapped vertical markets.

"With 2G networks, data services were awful," said Dan Warren, director of technology for GSMA. "We now find there are applications that absolutely use the available 3G bandwidth to the maximum capacity, but I don't believe that's everything you can do with an HSDPA connection."

Warren pointed to a variety of emerging usages in the transportation industry as a way to find new customers, even if consumer saturation hits a peak in many markets.

In Australia, for example, Vodafone has worked with Monash University to outfit inter-campus buses with HSDPA-powered Wi-Fi for students, who can then log in and download lectures or Facebook updates on their way to class.

In a more profit-minded deployment, SmarTone Vodaphone, in Hong Kong, has begun equipping taxis with Ethernet jacks that feed into the company's wireless networks. The service has been quite popular with business users.

"People often stay in the taxis after the ride … and are obviously still being billed," Warren said.

Other examples abound in the transportation industry, such as outfitting trains with wireless Internet access over mobile networks, and these specialized solutions can often draw a higher premium than the more consumer-centric services that carriers offer.

Craig Mathias: Wait it out

Not every analyst is overly concerned about the fate of wireless providers. Yes, voice revenues are declining somewhat, but on the bright side, people are getting rid of their landlines, not their mobile connections, according to Craig Mathias, founder and principal of the Farpoint Group.

"Carriers are going to be scrambling," he said. "There's going to be consolidation in the wireless world. Right now, we have four major wireless carriers. We'll go down to three in the next six months to a year."

But the overall picture for the survivors is not too bad, particularly when the rest of the world's economy is taken into account.

"It's ugly everywhere now. It doesn't matter what industry you're in," Mathias said. "In the long run, there's no decline in voice usage or data services.… Wireless isn't going away."

Instead, carriers should accept that they are destined to serve as dumb pipes through which third-party vendors will sell services, Mathias said. "[Carriers] have no skills in value-added services."

Carriers should be prepared to get creative with pricing schemes.

"There's a carrier strategy of unbundling," he said. "Consumers don't like being nickel-and-dimed, and this bodes well for the all-you-can-eat, one-price-for-everything plans."

If carriers can hang on to those customers and make it easy for them to justify what Mathias called currently over-priced data, then they could gain market share and be in a better position when the recession ends.

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