Deutsche Telekom CEO tackles 'dumb pipe' worries

LAS VEGAS--Deutsche Telekom CEO Rene Obermann said operators in both the United States and Europe have the opportunity to avoid being "dumb bit pipes" by providing a higher quality mobile Internet experience for subscribers.

Deutsche Telekom CEO Rene Obermann discusses the company’s wireless efforts during his CTIA Wireless keynote."Customers have not bought into that," Obermann said of the notion that carriers are becoming dumb throughput pipes. Speaking at the keynote session of the CTIA Wireless 2010 conference here Wednesday, he said customers "expect us to be very fast and responsive in all service-related matters. That's not what a dumb bit pipe does."

Obermann has made the expansion of mobile broadband and smartphones a key action at T-Mobile USA, which has been struggling with sluggish subscriber growth. Deutsche Telekom is considering a potential initial public offering of T-Mobile, but recently said it has not made any final decision about the U.S. unit's fate.

Obermann pointed out some key differences between Europe and the United States in the mobile broadband market. He said U.S. data revenue grew 28 percent last year, year-over-year, while European data revenue grew only 11 percent. He also pointed out that data ARPU in the U.S. is nearly $15 per month, while in Europe it is less than $9. Despite the prodigious growth in the U.S. market relative to Europe, he said operators in both countries have the ability to become "smart pipes" by managing traffic more efficiently, and differentiating on the quality of service and the context they provide mobile Internet subscribers.

In addition to trumpeting T-Mobile's HSPA+ network deployment, which it plans to roll out to 185 million POPs by the end of the year, Obermann hailed the FCC's plan to release 500 MHz of spectrum for mobile broadband within the next 10 years. He said this should happen as quickly as possible, but like many of the wireless CEOs here, called for a light regulatory touch from regulators in Washington, D.C.In an interview with the Wall Street Journal, Obermann addressed speculation about T-Mobile's future, and said that he was not considering selling off or merging the carrier with a larger U.S. rival. "We aren't considering multi-billion dollar deals," he said.

Ultimately, Obermann said carriers need differentiate on quality of service, service management and price, and that they need to partner with a diverse set of companies in the wireless industry in order to do so.

For more:
- see this WSJ article (sub. req.)

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