Operator CEOs warn of regulation threat

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Vodafone chief Colao says price-cutting rules pose risk to innovation, investment and jobs

CEOs of the world’s largest operators kicked off the 2012 Mobile World Congress warning future innovation, network investment and jobs will be at risk unless regulators cut them some slack.

The GSMA predicts operators will invest more than $800 billion (£512 billion) in capital and contribute around $2.3 trillion (£1.5 trillion) in public funding, as well as helping to provide 10 million jobs across the globe by 2015.

It also expects the number of mobile connections globally to increase from 6.6 billion to 10 billion by 2016 – equivalent to 1.3 connections per person and more than 2.3 billion M2M
connections.

Vodafone CEO Vittorio Colao and GSMA chairman and CEO of Telecom Italia Franco Bernabe agreed the opportunities ahead for mobile are vast.

But with mounting pressure to cut prices, which has seen ARPU across Europe drop from €26 to €20 in recent years, the reduction in mobile termination rates, and a multi-billion spend for spectrum for 4G technology imminent, return on investment is unclear.

Colao said: “Regulators should stop cutting mobile termination rates, pushing down roaming prices, building funny auctions which are designed to extract more money from existing operators, and resisting industry consolidation.

“This is not a request for a moratorium on competition but a much stronger request for a moratorium on regulation.

“The reality is, we have a heaven or hell scenario. The hell scenario is every year we lose hundreds of millions to MTRs and we reduce our investment. Investment means jobs not just in the telecoms sector, but in the media, entertainment and applications developer sectors.

“Does Europe need employment or does Europe need rate cuts? We should stop having this continuous intervention on prices and let the industry reinvest the money.”

Bernabe added the “burden” and the risks and rewards faced by operators should be shared across the whole connected “ecosystem”.

The networks are under  pressure from the rise in smartphones handsets resulting in increased reports of network outages caused by overuse.

Bernabe says smartphones currently represent 12 per cent of handsets sales globally and contribute 80 per cent of data used. This figure is expected to increase by 80 times in the next five years.

“I don’t want to say we are an industry with problems, because we still are one which is growing and has a lot of opportunities. But we have challenges we need to face. Mobile revenues are not growing, voice is worthless and data and SMS are contributing more. This imposes a big burden on network operators particularly when the quality of basic mobile service is jeopardised by network outages from over signalling  from smartphones. This is heavily unbalanced and needs to be revisited.

“We are ready to make the connected economy a reality and to create all the conditions to improve the way people live, communicate and socialise. We are seeing that mobile broadband will enable the connected economy across the globe. It’s creating jobs, contributing to public funding and indirectly transforming education, healthcare, payments transportation and so on. However, this opportunity will be lost if the total ecosystem does not work together, sharing both the risks and opportunities and rewards.”

Full report on Mobile World Congress in Mobile News issue 509 (March 12, 2012).

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