Carriers bash regulators at MWC

As featured on TM Forum's the Insider blog

You know it’s a ‘slow news’ year at the Mobile World Congress when the operators start ganging up on the regulators. Oh yes, regulator bashing reached new heights in Barcelona with almost every CEO, whether in keynote or panel sessions, dropping hints and more, that life would be a lot easier if one of the world’s most regulated industries was given a lot more slack.

There is some merit to the argument when you consider that regulation stemmed from the old PSTN days when telecommunications was a national security asset operated by a government-owned monopoly. Regulation was established mainly to protect it. But when markets were eventually allowed to open up and ‘deregulation’ did take place, the regulator’s tack changed to protect the new players from unfair competition emanating from the monopolies they were trying to establish a beachhead against.

Now that most markets have multiple established fixed line, ISP and mobile operators competing on more even ground, the need for anti-competitive regulation and even universal service fund obligations are probably no longer viable or required. This alone should have been a fair enough argument by the operators, but they took it one step further in Barcelona.

Franco Bernabè, CEO of Telecom Italia, complained that regulation and taxation in the industry harked back to days of high margins from a decade back, saying that the mobile industry was burdened by a ‘dated’ regime while struggling to compete. Vittorio Colao, CEO of Vodafone, said that the telecom groups would talk to the European regulator in Barcelona and that he favored an approach that factors in pan-European scale, rather than one based on a single country. He also backed proposals for a single European regulator to help this happen and, when you take into account the inconsistencies across Europe, that argument makes eminent sense.

Surprise, surprise even AT&T’s CEO, Randall Stephenson, said he was “in violent agreement’ with his European counterparts, and that alone has to be a first! The conspiracy theorists are, no doubt, thinking all the CEO comments are a pre-meditated attack on the regulators, but the fact remains that all of them really do believe that it’s time to change the playing field.

CSPs are no longer competing just with each other; they are fighting a new battle for revenue from everyone that uses their network resources, not just their customers. This is the real world. They might believe that everyone that uses the digital highway should pay the toll, but that is simply not viable, at least for now. The big traffic comes from the OTT players like YouTube and Netflix, and the guys appearing to be making the most money are Google and, to lesser but growing extent, Facebook.

Turk Telekom Group CEO, Hakam Kanafani, held back no punches when he suggested on the TM Forum’s Business Transformation Panel that the very same regulation that CSPs had to abide by should be extended to everyone that used their networks, i.e. the OTT players. He felt clearly disadvantaged that his company was regulated, yet those using his network were free to do whatever they liked, especially with regard to capturing personal information. Is that a fair point?

The digital services players, however, are not only not hindered by regulation, they are also not hindered by all those legacy systems that burden CSPs. They live in an all-IP world. What do they care for the differences between copper, fiber, 2G, 3G and 4G mobile networks. They have less business processes to worry about, less delivery platforms and very simple subscriber and unit pricing models when delivering content or apps. They give voice away simply because the cost of billing it exceeds the margins earned and most only sell to customers that have bought pre-paid cards in shops or have credit/debit cards.

They don’t have extensive customer care operations, in many cases none. They run lean and mean – so should they be penalized for their efficiency just because their CSO counterparts are stuck suffering because everything they implement has to ‘backward compatible’?

Come on CEOs, stop griping and start fighting back. Maybe it’s time to dump the legacy and meet the challenge of the new competition on an even footing or, better still, start acting like OTT players yourselves.
 

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