Vodafone, Telefónica CEOs explain OTT responses, lambaste regulatory stipulations

BARCELONA, Spain--The CEOs of two of the world's largest mobile operators explained how they have been responding to the threat of over-the-top service providers like Skype, WhatsApp and others. They also bemoaned regulatory rules they said have hindered their ability to quickly respond to market changes and build lasting business models.

Vodafone CEO Vittorio Colao said the carrier discovered that users were moving to OTT services like Skype not because the experience was better or that the user interface was more polished but because the services are free.

"Skype is not a fantastic experience but it's free," Colao explained during a keynote speech here at the Mobile World Congress trade show.

As a result, he said Vodafone last year introduced its "Red" plans, which provide unlimited calling and messaging and an allotment of data. He said more than 2.5 million customers have flocked to the plans in the months since the Red plans were introduced. "Red is about freeing up the experience," he said.

In a separate keynote presentation, Telefónica Chairman and CEO Cesar Alierta argued that OTT vendors and other Internet companies that have built their business on telecom operators' networks should do more to pay for the infrastructure they use. "The other players in the value chain don't pay anything at all," he said, arguing that regulators should spread some of the burden of network investment to the other players profiting from the network.

"This is not a level playing field," Alierta said.

Alierta argued that Telefónica supports the ideals of net neutrality and fair and reasonable access to networks, but said that regulators are overly burdening telecom providers with rules and regulations on investment. As a result, he said companies like Facebook and Google are obtaining more than their fair share of the revenues from the digital revolution.

Alierta said that part of Telefónica's response to the situation is its support of Mozilla's Firefox OS smartphone platform. He said the Firefox OS "makes the Web the platform" and could "bring balance back to the sector."

Mozilla, the company behind the Firefox OS, recently announced that it has support from 17 global operators, including América Móvil, China Unicom, Deutsche Telekom, Etisalat, Hutchison Whampoa's Three Group, KDDI, KT, MegaFon, Qtel, SingTel, Smart, Sprint Nextel, Telecom Italia, Telefónica, Telenor, TMN and VimpelCom. Telstra indicated it is open to the initiative. Mozilla is offering Firefox OS as a response to Apple's iOS and Google's Android, and argues it allows operators to more carefully control and tailor the user experience.

Telefónica's Alierta and Vodafone's Colao also discussed the rise of Near Field Communications technology, specifically as a way to allow users to pay for goods and services with their phones. Colao expressed concern over the fragmentation in the NFC payments market, and argued that telecom operators need to band together to present a unified way for financial companies to enter the NFC space. "I hope that we can agree on a common face" to present to financial companies, Colao said.

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