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Mobile consumers are still buying mobile phones on their brand name and price and walking out of shops with a new 2G phone according to a new report from Danish market researchers Strand Consult, How to make money on mobile services.

The problem is that many of those phones are still 2G phones. In Europe most of them are Nokia, Siemens, Motorola and Ericsson phones and few of them support any of the new services like GPRS and MMS - services that are essential for mobile operators' future existence.

The report argues that operators need to stop this trend now - but are uncertain as to how they can break the terminal manufactures strong influence on the mobile customers' purchase decision for new mobile phones. Until they do, they can wave goodbye to any 2.5G mobile services revenue from customers who have signed a 12 or 24-month subscription contract for a new Nokia 3310, which has no 2.5G capabilities at all.

With still so many European customers continuing to buy 2G phones, the 2.5G services that many operators hope will bring in 30 per cent of their revenue in a few years time are threatened.

Nokia on the other hand are very happy indeed, having sold over 80 million 3310s. The more Nokia 3310s they can sell, the longer lifespan the mobile phone has and the more money they can make for themselves and their shareholders.It is not Nokia's fault that the mobile operators do not have a strategy for how to sell 2.5G mobile phones to their customers or that the mobile operators are binding customers to their new Nokia 3310 with a 12 or 24-month subscription.

The biggest challenge for the mobile operators is to give the customer a reason not to buy a 2G phone. The most logical way of doing that is by creating a demand for services that simply do not work on a 2G phone. You can compare it to buying a PC, nobody today would want to buy a cheap PC if there was no way at all it could connect to the Internet - it would be worthless. People want access to all the content on the internet from their PC, and the PC needs to have some way of connecting to the Internet.

In the same way, if customers went in to mobile phone retailers and ask for a services package consisting of, for example, an email application, traffic application and a games deal - all new 2.5G services - the shop would have a difficult time trying to sell them Nokia 3310s at the same time.

In the above scenario, the phone becomes secondary as the customer first chooses a services package to suit her needs and then can choose between the 2.5G mobile phones that support the services the customer wishes to use. This is how it works in Korea and in under a year, 25 per cent of the mobile users (9m out of 36m subscribers) bought new 2.5G mobile phones and started using 2.5G services on them.

A few mobile operators are starting to understand that the services must come first and then the mobile phones will follow suit. Vodafone in the UK will be launching its own brand of mobile phones, with colour screens and built in services that will not be found on the terminal manufactures phones. By doing this Vodafone stands a much better chance of breaking the hold that the terminal manufactures have on the mobile customers - and at the same time can market new services on its own new 2.5G mobile phones, thereby differentiating themselves from the competition and getting the 2.5G mobile service market in gear.((Distributed via M2 Communications Ltd - http://www.m2.com))