Personalized services for mobile customers are on the brink of providing a rich new revenue stream for carriers, and ramping up mobile advertising is not priority No. 1.

Last year service customization returned only about $806 million to carriers, but by the end of 2011 it will deliver about $2.9 billion in annual operator revenue, and this market will continue to grow strongly in the following years, according to ABI Research.

"Mobile marketing is the key issue people have talked about, but the study found that almost all the revenue we're attributing to carriers going forward is from services they can offer their subscribers that are non-advertiser-related," said Mark Beccue, Tampa, FL-based senior analyst of consumer mobility for ABI Research. "I think the real challenge there has been the privacy issue, which is pervasive worldwide and is something that carriers and advertisers have to get a grip on.

"At end of the day, there is no easy way to get mass acceptance without the subscribers having a say, and whereas the ad industry wants a blanket approach, carriers are ambivalent," he said. "I don't see this issue with privacy getting solved any time soon -- it's not going to get solved in the next couple of years.

"A lot of discussion is around contextual advertising, which has to be opt in, because mobile marketing is not mass marketing in the general sense, and I don't see the contextual personalized advertising equation getting solved until 2012."

There is a product out now leveraging LBS and presence that allows carriers to offer subscribers configurability for revealing location availability, where each consumer can designate certain groups that can see their location and availability.

"This will come more into play as more social networks come on to mobile," Mr. Beccue said. "For mobile advertising, this is one of the ways to defeat the privacy issue, because it's opt in -- subscribers control who talks to them and when."

While mobile advertising is on their radar screen, for now, carriers are focusing on services that they can control completely.

Personalized mobile phone services are made possible by the technical evolution of real-time charging and subscriber profiling tools. But the business case is made by carrier and customer demand.

To grow, carriers must take away subscribers from competitors or find ways to increase the ARPU of the subscribers they have.

What applications are leading the personalization charge?

According to ABI, one of the first areas of personalization isn't particularly dramatic: It's real-time charging for multimedia content and mobile Internet services.

The majority of mobile phone users worldwide pre-pay for their service. Previously, it was difficult for carriers to charge such customers for non-voice, non-text purchases such as music and video downloads.

With an increasing introduction of real-time charging capabilities for these services, customers can do it by topping up their prepaid accounts or using a credit card.

"Prepaid customers are the low-hanging fruit," Mr. Beccue said. "They want to buy multimedia content just as much as post-paid subscribers -- it's a huge opportunity.

"However, in the U.S. prepaid is very miniscule at this point -- there are not a lot of prepaid subscribers overall in U.S.," he said. "Growth is predicated on the ability for carriers to have real-time billing for IT services, anything related to the mobile Internet -- that's the trigger, and it's coming."

MVNOs and prepaid divisions of carriers such as Sprint's Boost Mobile have benefited from the economic downturn

Mr. Beccue cited Virgin Mobile USA as an MVNO that has benefited from real-time mobile billing of prepaid customers.

According to ABI, perhaps the greatest growth opportunity for personalized services comes from metered broadband, the ability to access the Internet on an ad-hoc basis or to extend in real time the access bundled in a subscriber's plan.

To the chagrin of marketers, this model could come at the expense of all-you-can-eat data plans, which are more conducive to Web advertising. However, more consumers surfing the mobile Internet, whether on a metered or unlimited basis, can't be a bad thing.

"I feel strongly that metered broadband is how we're going to see this go, because there's a lot of flavor to that," Mr. Beccue said. "Carriers are expecting that their revenue sources or their activity to things related to the mobile Internet will to continue to just grow and grow and grow, and we're really seeing that in Europe.

"With metered broadband, prepaid subs can pick and choose what they want, where they want it, and top off their account with a credit card, things like that," he said. "When a consumer's funds are getting close to running out, with subscriber data management, carriers will be able to see that and say: ?Here's a couple of options: extend your plan for a day, up your plan or buy by the byte.'

"There are a lot of options, and the ability to do that will help carriers manage their network services and create more revenue opportunities."

Other personalized services include customized mobile Web browsing, parental controls and enhanced control of text messaging, which will enable users to block certain numbers, set some automated forwarding rules and otherwise configure their SMS.

The new "Service Personalization" report outlines the key elements carriers must use to develop successful personalized services.

It identifies and forecasts the services that are and will be successful today and in the future, and includes profiles and critiques of 23 vendors that provide solutions for personalized services.

Many mobile content providers are wondering where carriers stand on mobile commerce.

"Mobile commerce, the ability to buy things with your phone, is not here yet, and in fact, is pretty far removed, because carriers have to enable it first," Mr. Beccue said. "What you'll see first, carriers will charge for services they can control, whereas with mobile commerce, the carriers have been a third party to that -- they're not an active partner at this point.

"They're making investments so they can sell their own stuff," he said. "There are revenue-share models in place, but other than ringtones and stuff like that, other types of mobile commerce like buying physical goods with your handset, we don't even know if it is in the works yet.

"Content providers want to go to a credit card charging model so they're not dependent on the carriers, because carriers taking are 20-to-30 percent, whereas credit cards are taking 2 percent."