By Robert Osborn

Last quarter all four major U.S. wireless carriers reported a drop in growth in net subscriber additions compared to the year-ago period. Are we approaching the saturation level for mobile phones in the United States?

Probably not. More likely, the reasons to buy a mobile phone are changing, and the mobile industry is now going through a large-scale transition that will re-shape how carriers, content providers and advertisers make money.

There are three causes for this transition: the proliferation of smart phones, an explosion in growth of social networking services and changes in how applications are sold.

These forces are converging to create what Intel strategic advisor and former CEO Andy Grove calls a "Strategic Inflection Point."This occurs when changes in the market destroy the old ways of doing business and create new competition. Incumbent businesses are forced to change or die.

In the old days, operators made money from voice minutes, and those minutes meant revenue. With smartphones, which support both data and voice, the old model of minutes for money is increasingly at risk.

A large number of smartphones today support Skype, which is a free service that lets users make free calls over the Internet.

According to Gartner, by the end of 2011 more than one out of three mobile phones will be a smartphone.

A Tellabs survey announced at the GSMA's Mobile World Congress show in Barcelona, Spain, this week showed that 71 percent of consumers expect to use data services such as the mobile Internet during the next two years even though they are still concerned about the cost, speed and quality of service.

As the data throughput of smartphones increases, the Internet becomes more important to the functioning of the device. We have seen this in Japan with i-Mode and more recently with the iPhone.

Social networking is one of the largest drivers of Internet usage and that usage is spilling over into the mobile Internet.

According to comScore M:Metrics, the number of mobile social networking users is forecast to reach a half billion users by the end of 2011. Smartphones encourage this type of growth.

One of the key problems with social networking services, at least from a mobile operator's standpoint, is how to make money.

Most services -- Facebook, MySpace and the like -- are free. The PC versions of these services offer advertising, but the mobile versions do not.

To make matters worse, the small screen of a mobile phone makes it difficult to do much advertising. When MySpace first made its entry into mobile, operators tried to charge a subscription fee for using social networking applications, but it quickly found that subscription fees only kept users away.

Social networking applications are not the only ones driving mobile usage.

Roughly one-quarter of the 10,000 applications on the iPhone App Store are free. Moreover, the download ratio of free applications to paid applications is said to be as high as 10 to 1. And for paid applications, the revenue is shared between Apple and the application developer.

As is the case with social networking applications, the mobile operator does not get any revenue. This change in the distribution model, from the "walled garden"where the operator dictated what you could put on your phone to a direct-to-consumer model, is what we have come to expect with personal computers.

So, in essence, the mobile phone (specifically, the smartphone) is becoming more like a PC.

What does this mean for mobile operators? Voice revenues are at risk, and free applications are driving data usage without generating additional revenue.

At the very least, it means that mobile operators are going to have to come up with new ways to make money. They may choose to turn the clock back by adopting metered billing for data usage or by trying to fortify the remaining parts of their crumbling, "walled garden"content catalogs. But examples from other industries suggest that is a losing strategy.

What is certain is that we are heading toward an era of new and innovative applications and new ways to make money on the mobile phone. Whether mobile operators will profit from those innovations is at least partly up to them.

Robert Osborn is director of eXplo Global Product Management at Gemini Mobile Technologies, a mobile software company in San Mateo, CA. Reach him at .