Open-source mobile e-mail provider Funambol is working with advertising company Amobee to give network operators a way to offer free e-mail services to users.

The new mobile offering, which Funambol plans to announce on Tuesday and demonstrate in Barcelona next week at the Mobile World Congress, will display banner ads served up by Amobee on every page of the e-mail software. The banners take up about two lines of a mobile phone screen, leaving plenty of space for users to read their e-mails, said Hal Steger, vice president of marketing for Funambol.

Funambol must sell the idea to operators, which would then self-brand the e-mail service and offer it to end-users. Steger envisions that operators will let customers access the e-mail service for free, without requiring them to subscribe to a monthly data plan, because the operators will earn revenue from the advertisements.

But Funambol would have to convince operators that they’ll make as much or more in advertising than in their monthly data subscriptions before they'll want to offer mobile e-mail for free. “Unless there was considerable potential revenue, which I think is doubtful but who knows... operators won’t want to cannibalize their subscription model,” said Greg Sterling, an analyst following mobile search and advertising as part of a joint venture between Sterling Market Research and Opus Research

In the future, however, operators may feel forced to begin offering ad-supported data services, he said. For example, if a winner of the 700MHz licenses currently on auction by the U.S. Federal Communications Commission deploys a network and offers free ad-supported services, other operators may begin to follow suit, he said.

Funambol already offers its open-source push e-mail software to operators. The service supports the open SyncML standard so it’s compatible with Java and Windows Mobile phones, which Funambol estimates make up about half of all phones on the market.

So far, no operator offers Funambol’s open-source e-mail, but two are offering Funambol’s backup service for calendar and address book information. Those operators include one in South Africa, which Steger wasn’t allowed to name, and Comcel in Columbia. Both plan to begin offering the open-source e-mail service, he said.

Operators in less-developed regions like South America might be more likely to offer the ad-supported e-mail service. That's because in those regions, end-users are quite price-sensitive -- so operators have a harder time selling them data subscriptions, Steger said.