But mobile commerce is also now serving as a cash replacement in developed markets. Already, in Japan, more than 50 million people, or about half of all cellphone users, carry phones capable of serving as wallets.
More importantly, in a reversal of the traditional telecom paradigm, this service-led innovation is forcing equipment manufacturers to play catch up. Technology companies are now scrambling to develop the RFID readers and other equipment to facilitate paying with cellphones in stores or on public transport.
This exception to the rule demonstrates the potential for telecom operators to drive service innovation - and, in 2010, that is exactly where they need to focus. If they don't, there is a real danger they will fall two steps behind the technology companies, which are already beginning to encroach on operator territory.
This point is not lost on telecom executives. In Ernst & Young's soon to be published Asia CEO study, interviews with 18 industry leaders, from companies such as Bharti Airtel, BT Asia Pacific and Telstra, CEOs are highly aware of the need for service innovation. And they plan to start by innovating the customer experience.
In the face of increasing competition, operators recognize the need to develop more intimate relationships with customers. They plan to invest in customer care and develop long-term loyalty through an enriched user experience. They believe the battle for wallet share will not be won through a killer application, but by service quality and innovation. They don't intend to mimic Google - they plan to leverage their core asset: customer relationships.
As one integrated operator put it: "Telcos' niche is to provide services based on our better knowledge of local customers..."
To this end, the study found operators planning to invest in business intelligence and advanced analytics to profile end-users and uncover preferences and trends that will guide service innovation. In the future, the market can expect localized services and personalization, as operators seek to deliver a differentiated customer experience.
Clearly, if operators are to get into the driving seat with service innovation culture, we can expect substantial changes in terms of increased R&D investment and moves to attract innovators. Indeed, the study found many CEOs already concerned about finding the right talent.
As one interviewee admitted: "Talent is an issue. There are good IT people; technology skills are generally available. The real issues are more on the commercial side - marketing and retail."
Many CEOs also recognized the value of partnering closely with third parties, such as technology and internet companies, content providers, media companies or retail distributors. Operators are aware they face high barriers to entry in terms of the cost of content and competitive platforms to build non-traditional services. They need the agility to launch new services to capture shifting end-user trends to capture incremental revenue. Partnerships will help them to capture the window of opportunity available for service innovation.