Mobile content and applications (MCA) influences US$80 billion of mobile spending, according to the latest research from Analysys Mason. Their research estimates that US$27 billion in annual voice, SMS and data revenue will 'follow' subscribers that are likely to switch between mobile operators on the basis of an overall MCA proposition, explains Jim Morrish, the Principal Analyst who leads Analysys Mason's Mobile Content and Applications research programme.

"The total value of rich content belies the total value of a rich content proposition. We estimate that a mobile network operator (MNO) in a developed market that has a 35% market share of subscribers would lose 4% of its market share over the following five years if it halted investment in its MCA proposition," says Morrish.

The total revenue impact of halting investment in MCA will be in excess of nine times the loss of direct MCA revenue, because of the indirect revenue effects of losing market share and corresponding voice, SMS and other data service revenue. It is clear that investing to maintain a competitive MCA portfolio is significantly more important to MNOs than direct revenue suggests.

Opportunities for MNOs to develop MCA propositions that act as long-term competitive differentiators do exist. These primarily relate to multi-platform plays that either take the differentiating qualities of exclusive content in a fixed environment and apply them to a mobile environment, or that include the synchronisation and management of content and information across both fixed and mobile environments. The latter of these two opportunities is, in fact, under threat from over-the-top players such as Google. MNOs that are able to develop such long-term differentiating MCA services can expect to enjoy substantial indirect revenue benefits.

The implications for tariffing are profound: operators must carefully balance the need to generate direct revenue from MCA against the competitive benefits of offering a compelling service to the maximum number of customers.

"Some elements of an MCA proposition should potentially be regarded as loss leaders - 'super applications' that are core to engaging the consumer," said Morrish.