A lack of scale
Asked what are the dangers in trying to mimic the internet players, Menon said players like Google operate on a global scale, serving some six billion customers.
Telcos are limited by the geography they provide the service in. "This is a big competitive disadvantage, and a telco would be foolhardy to try and mimic the global internet players. Telcos will never be able to keep pace with the innovation that is happening outside."
Murphy also said scale was the issue and such players have an internet culture by definition, which an operator does not. "It is unlikely operators can compete on equal footing here. But operators have other advantages like physical presence, trust and a billing relationship, so they need to ride on these advantages and compete less on things Google can do better. Finding this niche is the challenge."
Emeka Obiodu, a senior analyst for Ovum based in London, said the danger in trying to compete is they'll divert resources and capital from key projects, such as network upgrades and returning dividends to investors in the search of illusive revenue growth that they have little knowledge or perspective to really be able to capture.
"Return on investment will be poor at best, and all that money and effort could have been better spent transforming the network and corporate structure to better leverage their position in the future value chain," Obiodu noted.
Softbank Mobile's Matsumoto agreed. "We cannot beat Google if we fight in their field. We should seek synergies with them. However, we are a bit different from the other mobile operators. We came from internet world and own Yahoo! Japan."
Celcom's Dato' Sri Shazalii said Google's model is completely different from telcos'. "They are not encumbered by the large capital expenditure required to rollout physical network infrastructure.
"As an innovator at the application and interface layers, we see Google as very much complementary to our core business of providing mobile access. They provide the applications along with their global economies of scale while we provide efficient and affordable access to their applications for our domestic consumers."
Menon sees an opportunity for operators to leverage their infrastructure and grow by enabling applications like e-health and m-commerce. "The value a telco will play is in reducing the complexity and providing the integration capabilities of communication into the existing applications," he said.