Europe's biggest telecoms groups are aiming to create a mobile phone search engine that could challenge Yahoo! and Google, the US giants.
Vodafone, France Telecom, Telefonica, Deutsche Telekom, Hutchison Whampoa, Telecom Italia and one American network, Cingular, are among the companies that will come together for secret, high-level talks at the mobile industry's biggest annual trade show in Barcelona next week.
Declining call revenues are driving network operators together to compete against Google and Yahoo! search engines
Faced with declining revenues as calls become cheaper, network operators are determined to secure a large slice of the lucrative search advertising market.
In the UK alone, more than 20 per cent of subscribers are expected to have access to mobile internet at broadband speeds by the end of 2007, which should prompt a dramatic increase in the use of search engines via mobile phones.
The initiative will come as a surprise to Google and Yahoo!, which have lost no time in striking deals with mobile operators and handset makers. But the mobile industry believes it can retain a greater share of advertising revenues by developing its own service.
A joint approach is essential, because mobile networks will need to offer advertisers a large audience if they are to challenge the US search giants. The four big operators in Britain - Orange, owned by France Telecom, O2, part of Spain's Telefonica, Deutsche Telekom's T-Mobile and Vodafone - will all be represented at the meeting next week. The groups involved have a combined customer base of 600m mobile phone users worldwide.
The networks may decide to go with an existing search engine and use their combined might to secure a majority slice of the income. Another idea up for discussion is the creation of a white label service, with a single advertising sales house and technical team, to which mobile networks could then apply their own brand.
A UK executive at one of the companies involved said: "There is a big play in mobile search that we need to be part of, and we are exploring those options at a very high level."
It is not clear what the implications are for existing deals between networks and the big US search companies. Google has already signed up Vodafone and T-Mobile, as well as Hutchison's 3 and China Mobile. Its service also comes pre-loaded on handsets made by companies including Samsung. The Google mobile search engine does not make money because it hasn't started selling sponsored links to advertisers. However, trials are underway and the service should become fully commercial this year.
Yahoo! has so far signed up Vodafone and 3, and is already featuring sponsored links. Mobile search is seen as potentially more valuable to users and advertisers than the service currently provided to desktop computers because results can be made geographically relevant.
On Yahoo!'s service, for example, users can type in their location and receive local information on weather, travel or entertainment.
Mobile internet will be given a further boost at Barcelona when Far Eastern manufacturer LG Electronics is announced as the winner of a competition to produce an affordable, mass-market handset capable of accessing the web.
Twelve of the leading mobile operators spanning six continents and more than 620m subscribers have agreed to sell the 3G (third generation) phone to their customers. This will allow economies of scale sufficient to bring its price in well below existing 3G handsets.
The deal will also be a massive boost for LG, allowing it to challenge the dominance of the four largest handset makers: Nokia, Sony Ericsson, Siemens and Motorola.
By: Juliette Garside
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