Telcos battle as Net brands go mobile

By Niclas Mika - Analysis

BARCELONA (Reuters) - Internet brands are eyeing the 3 billion mobile phone users worldwide as an audience and carriers must fight to get a slice of the profit, executives at the wireless industry's main trade show in Barcelona said.

The threat of Google (GOOG.O: Quote, Profile, Research, Stock Buzz), Yahoo (YHOO.O: Quote, Profile, Research, Stock Buzz), social networking site Facebook and other Internet brands going mobile looms large over telecoms operators, who want their customers to surf the Web on the go but also want to generate revenue beyond charging for voice and data.

Bit by bit, carriers are losing control.

Apple's (AAPL.O: Quote, Profile, Research, Stock Buzz) iPhone is so popular that operators have to surrender part of their revenue to be able to sell it, the world's top handset maker Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz) is pushing into music and gaming, and Internet access on phones gives customers options for finding free content, bypassing paid-for services.

Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz) Chief Executive Arun Sarin said carriers should not sit back and allow themselves to be reduced to mere transporters of data, "dumb pipes" in the industry jargon.

"Customers want social networking, email, SMS, instant messaging, voice -- you name it," Sarin said in a keynote address to the Mobile World Congress. "Communication is our core business. We have to be in all of these spaces."

Executives are keenly aware of the backlash that could follow any attempt to target subscribers too obviously or allow ads to become intrusive, but they argued that existing relationships mean they know a lot more about their customers than Internet companies do.

"They are constantly guessing, they are constantly sending you stuff, Internet advertising that is relevant part of the time and irrelevant most of the time," Sarin said.