Looking at the current product and service portfolios of mobile operators, it is extremely difficult to find much in the way of innovation. Most offer a similar handset portfolio, and voice, SMS, MMS and mobile data allowances tend to be standardised based on what rivals offer, and the prices others are charging. There are some differences on a regional basis, reflecting local market needs, but again, within this there is little to split the players.

The unfortunate effect of this is that operators are faced with the problem of negative competitive differentiation: rather than standing out because of what they do offer, they risk standing out for what they do not. While not wanting to be seen as lacking when compared to one’s rivals is natural, this type of approach does not drive innovation in the same way that trying to lead the market with the introduction of new products does.

There are already several clear examples of this. In emerging markets, mobile money services are no longer something that only a few operators offer: they are now something that only a few operators do not. And in developed markets, a portfolio of content and apps is essential for a competitive operator, rather than a way to stand out from the crowd.

Perhaps the last obvious example of a positive differentiator was Apple’s iPhone, when it was only available through a limited number of operators, in a limited number of markets. Here was a real product that could lead customers to change operator, while availability remained controlled. However, this quickly changed once Apple’s model changed and it began supporting multiple operators in each country, with it then being the ones that had not inked the deal which stood out.

Of course, some applications and services need broad adoption in order to make sense both commercially and to consumers. NFC mobile commerce services, for example, need broad support from handset vendors, operators, banks and payment networks, and retailers before they can become ubiquitous, and it is ubiquity that makes the whole proposition viable. And with the growth of social networking and content sharing, customers also expect to be able to communicate seamlessly with their friends, regardless of the network they subscribe to, or the devices that they use.

Where operators do stick their heads above the parapet and break from the norm, it is not a guarantee of success. For example, those supporting mobile broadcast services worldwide have so far failed to generate much in the way of notable success, with services being especially difficult to monetise, against a backdrop of heavy costs associated with launches. Other “next big things” have also come and gone; push-to-talk over cellular, video telephony, and MMS have all under-delivered when compared to their promise.

Of course, the uncertain economic environment over the last couple of years has not helped the situation: shareholders are looking for solid returns and steady investment strategies from operators, not wild innovation and heavy investment in new services. In this light, remaining on-a-par with rivals is perhaps an obvious default position, which should not generate the ire of angry investors.

Which leads to the question: where will the next big innovation come from? At least operators are now beginning to embrace the wider internet service community – albeit not with fully open arms – paving the way for new products and services to be created outside of the R&D labs. But this community approach again indicates that it is not supporting a service that will make an operator stand out, rather than vice-versa.

Perhaps the days of “big bang” new services have gone, replaced by widely available products and services enabled by the new mantra of “openness.” But this does create the potential of a rather bland set of operator choices, where price is perhaps the significant differentiator.

Steve Costello

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members