What happens when you don't innovate, differentiate and let your strategy decay: mm02 is worried about price wars in the mobile market.

This is a classic example of destructive competition - a Red Queen race. For years, the mobile network operators have been concerned not with trying to innovate but with trying to outcompete each other in a tactical arms race of byzantine pricing plans and offering features that the market doesn't value. The outcome of industry dynamics like these is pretty clear - the market will be split between the lowest cost player and the radical innovator.

Why do I say no one is really innovating when everyone is concentrating on building 3G networks? 3G networks are white elephants :massively expensive investments in something that the market sees as an incremental improvement on a relatively price-sensitive durable good most people already own - a mobile handset and subscription. Incremental innovation has to add more value than the cost of the innovation - it is very dubious whether 3G does. It also leaves room for a radical innovator to disrupt this market, as I have argued before.