The biggest challenger to operators is a practice known as "side-loading," which is the loading of content in phones via PCs or other devices. The practice essentially bypasses premium services sold by mobile communication providers, iSuppli said.
"Side-loading is really coming into its own because of the proliferation of local interface choices in mobile handsets," iSuppli analyst Frank Dickson said in a statement.
By 2010, the number of phones that include USB ports is expected to number 764 million units, making the wired connection to a PC or other device the most ubiquitous interface in the industry, iSuppli said. Also gaining ground fast is the wireless alternative Bluetooth. By 2010, nearly every new handset is expected to be available with Bluetooth and USB.
Consumers' preference to tap multiple content sources for mobile devices has already been established. For example, most of the music played on the highly successful Apple iPod are ripped from CDs, not bought from Apple's tightly integrated online music store iTunes, analysts say.
As mobile handsets evolve from simple communication devices to full-fledged computing platforms with enough power and memory to run video, high-quality audio and sophisticated games, the practice of side-loading is sure to accelerate, iSuppli said. As a result, wireless carriers will most likely become a part of the overall market created by content providers.
Alltel, for example, is an example of a carrier that's participating in the trend, rather than try to fight it, iSuppli said. The carrier recently launched a service called Jump Music, a free software package that enables subscribes to find, manage, and easily transfer music files.
Jump Music also links to the eMusic Internet site, where subscribers can buy tracks in an MP3 format free of digital rights management restrictions. Jump Music users get the first 35 eMusic tracks at no charge.