Mobile Airtime Providers Fight Back Over Data

Years after paying through the nose for 3G licences, the mobile phone companies are wanting smartphone manufacturers to help develop a new infrastructure to support that rapid growth of data over mobile networks by Smartphones.

Despite the management talk about business models and the like what it all boils down to is that the senior executives within the mobile network sector have been caught with their pants down and failed to spot opportunities to monetise the growth in smartphones and the services owners subscribe to.

“Service providers are flooding networks with no incentive [to limit bandwidth],” Stephane Richard, chief executive of France Telecom, told Bloomberg. “It’s necessary to put in place a system of payments by service providers as a function of their use.

Franco Bernabe, head of Telecom Italia, also warned that the expense of constantly improving networks to meet data demands could “compromise the economic sustainability of the current business model for telecom companies”.

In other words we screwed up and are not making as much money as we could have done because we didn’t spot the opportunities.

And Cesar Alierta, chief executive of Telefonica, complained that companies such as Google and Yahoo! used his company’s networks for free, “which is good news for them and a tragedy for us”.

Ditto!

Operators are keen to ensure their networks don’t simply become “dumb pipes”, while companies such as Apple and Facebook call the shots over pricing and services.

Consumers will also be expected to pay more for data services, with most telecoms operators already considering ending “unlimited” data plans and introducing a tiered pricing structure. It would mean that heavy data users will have to pay substantially more for their network use.

However, content creators have reacted angrily to the proposals. “If telecom operators want us to share in their expenses, perhaps we could talk about sharing subscription revenues as well,” Giuseppe de Martino, general counsel and head of public affairs at the Dailymotion video site.

My own take is that the end user will eventually have to pay for a tiered system of data flow because mobile access to the cloud and the web in general will become the de facto standard as landline systems become too expensive to upgrade, especially in so called first world which “enjoy” a legacy package of cotton wrapped copper wire.

Considering how much money they have made from SMS and roaming charges I won’t be crying any tears but the operators must realise that with the advance of mobile cloud computing if they start to stiff end users they will kill the goose that laid the golden egg.

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Kevin Tea is a journalist and marketing communications professional who has worked for some of the leading blue chip companies in the UK and Europe. In the 1990s he became interested in how emerging Internet-based technologies could change the way that people worked and became an administrator on the Telework Europa Forum on CompuServe. With other colleagues he took part in a four year European Commission sponsored project to look at the way that the Internet could benefit remote communities. His blog is a resource for SMEs who want to use cloud computing and Web 2.0 technologies.