Seeing a future of mobile telephony very definitely tied to advertising revenue, Google has developed an operating system of its own to rival the dominance of Microsoft’s Windows Mobile. The clever bit is that operators and handset manufacturers currently pay Microsoft for their software. And these operators will soon jump in with Google for something free, remaining largely unaware of the market dynamics tsunami that’s about to hit them.

Worldwide, mobile phone operators are experiencing declines in ARPU’s. That’s Average Revenue Per User to you and me. In fact, ARPUs have been pretty much in decline from the beginning. The mobile phone industry really believes that any time real soon they will turn a corner and make a ton of money with what they call data revenues. To you and me, that’s the internet on your mobile phone.

Problem is, it won’t happen. Well, not the way the mobile networks think it will anyhow. They think the income will come from subscriptions. It won’t. Mobile internet demand is definitely there, but at the right price. Users will not subscribe to mobile data costs that are unreasonably high versus their home or office access. Just like they won’t accept mobile call rates way out of line with landline call costs.

So, what’s the answer? Simple. Advertising. Mobile telephony, mobile internet, mobile tv will all be supported by advertising. It is the next big advertising medium. Within a few years, way more cash will be generated from mobile ad revenues than mobile voice calls. Right now, mobile network operators just don’t want to believe this inevitability. Do you understand what Google are doing now?