While telcos in the US are starting to accept the principles of net neutrality, their European counterparts are taking a different approach. They’re asking for companies such as Facebook, Apple and Google to help pay for network investments as data usage soars.
According to Bloomberg, network operators have been lining up at the Le Web’10 conference this week, begging bowls in hand. They want service providers to fork out the cash to help them improve network infrastructure so that all those juicy recenues can really start rolling in.
France Telecom CEO Stephane Richard said the increase in data traffic caused by the massive increase in mobile usage was good news for the industry. But, he said, it “raises the question of the business model of mobile data”.
He’s called for the creation of a payment system from service providers. The demand has been echoed by France Telecom, Telecom Italia and Vodafone.
Indeed, Telecom Italia CEO Franco Bernabe claims that the current system “is set to compromise the economic sustainability of the current business model for telecom companies”.
The problem, say the network operators, is that there’s little incentive for service providers to keep bandwidth down, and the telcos can’t improve their networks fast enough to keep up. The number of mobile data connections in Europe is set to rise by around 15 percent a year, says IDC, hitting 270 million by 2014.
In essence, the telcos’ complaint is that they’re getting too many customers for their, let’s face it, very profitable services. It’s true that the explosion in data usage means they need to make some serious investment; analyst firm Canalyst says spenging on network equipement will need to rise by 28 percent by 2014 to keep pace.
But most organizations, particularly profitable ones, see investment as a necessary side-effect of a growing business rather than something that should be paid for by those associates who are actually putting business their way.
As Giuseppe de Martino, the legal and regulatory director of Paris-based online-video provider Dailymotion points out to Bloomberg: “If telecom operators want us to share in their expenses, perhaps we should talk about sharing subscription revenues as well.”