More than one observer at the recent IP Possibilities meeting of rural and independent telcos pointed out that many in the industry are focused on lobbying efforts to preserve the existing pattern of inter-carrier compensation payments and universal service support, more than they are on finding new sources of revenue. That isn’t surprising. Executives in that segment of the business are well aware that in such sparsely-settled areas there actually are relatively few new opportunities, in part because there are few potential buyers, secondly because any investments can be spread over too small a base.

But small rural service providers are not alone in facing revenue challenges. Even mobility, again mentioned by more than one observer at the IP Possibilities meeting, is running into saturation issues elsewhere. Mobile broadband rightly is seen as providing the next, and immediate wave of growth for mobile service providers. That’s true. As the recent data from Western Europe shows, though, there are new costs as well, in particular smart phone subsidies.

The point is that a significant move by virtually all participants into new lines of business, providing new revenue, are essential, almost across the board.

Mobile operators in Western Europe, for example, recorded further revenue losses and earnings (earnings before interest, taxes, depreciation and amortization) erosion in the fourth quarter of 2010, according to new research from Strategy Analytics. Gains those operators had made in operating expenditures in the first half of 2010 were reversed by year-end.

Looking at financial data from 200 mobile operators serving over 77 percent of global subscribers, Strategy Analytics found found that mobile service revenues fell by 1.3 percent in the fourth quarter of 2010 in Western Europe. Meanwhile, mobile operators worldwide saw revenue grew by 6.1 percent.

“This weak performance is less about the after-shocks of the global recession and more about the changing data-centric market environment,” Strategy Analytics says.

Subsidies associated with smartphone sales and upgrades, and the relentless growth in data traffic from these devices, reversed the long-term trend of falling operating expenses per subscriber,” said Phil Kendall, Director, Wireless Operator Strategies. “For example, the average cost to retain a customer has increased for T-Mobile in several countries: Germany (26 percent), Austria (57 percent) and the Netherlands (12 percent). Orange customer retention costs have increased in France (11 percent) and Spain (14 percent).”

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