Speaking at the Wired 2011 event in London, Key said mobile operators must “change the business model” otherwise they will soon become “irrelevant” as customers increasingly use services such as Skype, BlackBerry Messenger and WhatsApp, which allow them to communicate without spending money on texts or voice calls.
He adds: “The ecosystem is changing, our relevance to customers is decreasing, we have to admit that…we have to move into the future…and change our whole raison d’être.”
In response to the “changing ecosystem”, Telefónica, which owns O2, set up the Digital division in September to develop new products and services to add customer value beyond its traditional offerings.
Recent developments from Telefónica Digital and O2, which have been designed to address the company’s “irrelevance” to consumers include its Priority Moments location based deals service and the trial of O2 Connect, which will allow users to make calls over the internet.
The division is currently working on its mobile-commerce service, O2 Wallet, which is set to launch by the end of the year and has already been trialled with Tesco and WH Smith in the London Docklands area. O2 Wallet will allow users to search or scan to buy items using their mobiles and receive information about offers or recommended items based on their shopping habits.
Telefónica Digital is also looking to invest and partner with start-ups and other technology in order to grow the division and release relevant products.
Key said: “We can’t operate in a walled garden environment, we have to open up.”