Consumers are not getting the experience they deserve, handset manufacturers are losing customers and operators are missing out on new revenue streams, says a new report from indstry analysts Mformation.

"Usually, industry reports are questionable at best. But this one has a ring of authenticity about it," said one industry insider. "We're great at shooting ourselves in the foot in this business."

The researchers questioned 4000 people split between US and UK.

Their main finding was that complex handsets and new applications discouraged most consumers from spending more money with operators. Customers want to spend money, but they're being dissuaded. Applications are too prohibitive, and upgrades are a pain.

Over 45 per cent of respondents don't upgrade because of the complexities of setting up a new handset. Two-thirds said that setting up a new phone was as frustrating as changing bank accounts. Sixty one per cent of people said they stopped using mobile applications like e-mail or the internet because they cannot solve problems with them.

Meanwhile the operators are not making things easier. Software developer Synchronica offers an email service for mobile. You can effectively turn a normal handset into a Blackberry - without having to pay Blackberry level charges.

But, said CEO Carsten Brinkschulte, it takes up to a year to sell an application service into a UK operator. So he's taking his service off to India. Now the customers of Indian ISP SIFY will enjoy the benefits of this service. "It takes so long to sell applicatoins to european mobile operators. For the same effort, there's a lot more money to be made in India."

British companies could make a lot more money from their existing infrastructure if they simplified their offering, concluded the report.