Mobile broadband represents something of a conundrum for the world's mobile service providers. On one hand mobile data revenues are growing fast and represent the obvious replacement for voice revenues as the industry's strategic revenue driver.

On the other hand, mobile broadband--especially video--represents a key business model challenge.

Dramatically-higher consumer use of mobile bandwidth for applications such as streaming video has "no obvious incremental revenue upside to mobile service providers," says Dan Warren, GSMA (News - Alert) director of technology, despite the obvious cost of building new fourth-generation mobile networks.

"You can't justify massive amounts of new revenue to match the higher data rates" he says. In large part that is because competitive conditions in most markets will not allow large price increases, and in part because consumers simply will not tolerate such increases.

In fact, in some markets, such as Austria, mobile broadband is cheaper than fixed broadband, Warren notes, while in other markets mobile broadband is equivalent in price to digital subscriber line. So it might come as no surprise that "we are challenging operators on their business cases," Warren says.

New revenue sources are part of the long term solution.

Also, though, "if you can't increase price, you have to reduce your cost," says Warren. In the near term, automation, churn control and lower marketing costs are obvious avenues to explore.

Also, carriers can open up APIs to developer communities, add on new functional features to voice and add new device capabilities such as video telephony, Warren says.

Long term, there is a compelling answer to the question of "how" to reduce operating cost. Carriers can automate operations and collapse three or four networks into one service delivery core, he says. Ultimately, the ability to drive down cost means operators will not face so much pressure to grow revenue.

The obvious conclusion is that entirely-new revenue streams must be created. Some of those initiatives may require a completely different sort of business model as well, where revenues come from business partners, not from end users. That requires a mindset change, but likely will be necessary.

But Warren is confident any new Federal Communications Commission regulations on wireless "network neutrality" will not prevent prioritizing voice and other packets to preserve end user quality of experience.

"Some form of prioritization is going to be needed or quality of experience cannot be maintained" when voice and all other bits flow over a single IP network, he says. His reading of the FCC (News - Alert) requirements is that they seem not to conflict with that objective.

Application quality must be maintained as consumers now experience those apps, he points out, and that may well require prioritizing voice packets, for example.

Today that isn't an issue, as data and voice flow over separate networks. When voice is not supported on a completely-separate mobile network, real-time support will be required, he points out.

"You must be allowed to support it as it is required, when a primary line voice service has been purchased," he says. "VoIP has to work like TDM," even when delivered over a Long Term Evolution or other fourth-generation network, he says.

That shouldn't come as a surprise. Cable TV and voice services, plus business-oriented special access circuits, long have been regulated distinctly from best-effort Internet access, and many observers are banking on those distinctions remaining in place, even if rules regarding treatment of best-effort Internet packets are modified.