Operators blast heavy handed regulation

Top cellco leaders kicked off this year’s Mobile World Congress by extolling the promise of 4G and cloud to fuel a mobile ecosystem of digital services – and blasting heavy-handed and lopsided regulatory policies that stand in their way.
At the opening keynote session of MWC 2013 in Barcelona, Telefonica executive chairman Cesar Alierta complained that telcos and over the top (OTT) players are regulated differently at the expense of the former, which is unfair because cellcos are the ones investing all the money in spectrum and infrastructure, yet are more heavily regulated than the OTT players that use that network.
“It is difficult to innovate when you have to follow regulations that other players don’t have to follow,” he said.
Alierta was particularly critical of “new monopolies” in the digital world from the likes of Google, Apple, Facebook and WhatsApp that negatively impact the customer experience. He demanded a “level playing field” via transparency and non-discrimination in the new ecosystem that will make the internet open, private, and secure.
He also voiced support for open ecosystems like Mozilla’s Firefox OS. “The answer is to make the Web the platform and break monopolies.”
Xi Guohua, chairman of China Mobile, agreed that OTT service providers are the bigger threat to telcos, especially in markets where penetration is saturated. “In China, mobile penetration will reach an estimated 120% this year. The growth model driven by customer net ads cannot be sustained under this.”
Randall Stephenson, chief executive of AT&T, described LTE and the cloud as “the next exponential leap for the mobile sector” to an era where “connectivity is assumed, content is in the cloud, and the network is at the center of everything the customer does.”
But to achieve that, he said, regulators need to implement spectrum policies that encourage high usage and robust growth, not focus solely on driving prices down to the point where mobile is a commodity service.
Stephenson pointed to the US spectrum model of allocating big blocks of spectrum with perpetual licenses as preferable to regulatory policies in other markets that allocate smaller blocks with a 10-15 year license, saying the former would attract far more investment.
“Also, when licenses are sold on a perpetual basis, it makes the secondary market more fluid, and what you see is the spectrum gets allocated more efficiently by the market into the right hands. That’s another variable to think about,” he said.
GSMA chair (and chairman/chief of Telecom Italia) Franco Bernabe said there was too much regulation in markets like the EU, where a focus on encouraging competition via MVNOs has saturated the market with over 190 operators.
“Regulatory policy in the EU is still based on the idea that mobile is a luxury item that generates high profit margins. They must understand that this has changed.”
Bernabe said he wasn’t against competition, but that regulators should take a light-touch approach that encourages free competition but “avoids excessive burdens on the market in the form of taxes and spectrum challenges.”
Vodafone chief Vittorio Colao agreed with Bernabe, saying that EU regulations on retail and wholesale mobile traffic should be eliminated, and regulators should stop encouraging new entrants that drive down prices but can’t stand on their own.
Meanwhile, Ovum wholesale analyst Catherine Haslam commented that the problem with wholesale in the EU isn't the regulators so much as operator attitudes to mobile wholesale. "The limitations of many mobile operators' wholesale services means that they are competing only on price and perpetuating a race to the bottom amongst budget MVNOs,” Haslam said in a research note.
“If mobile operators enable more niche and value-added MVNOs, they can build a more effective wholesale revenue stream. Many are currently leaving wholesale revenues on the table by failing to see it as a mainstream revenue stream," she said.