EU: Network operators want mobile & web giants to share mobile data costs

European phone operators want a new deal that would make content providers like Apple and Google compensate for heavy network usage.

According to Bloomberg, Apple, Facebook and Google need to pitch in to help pay for the billions of dollars of network investments needed for their bandwidth-hogging services, European phone operators say.

As mobile and internet companies add videos, music and games, operators including France Telecom, Telecom Italia and Vodafone Group want a new deal that would require content providers such as Apple and Google to pay fees linked to usage.

“Service providers are flooding networks with no incentive” to cut costs, France Telecom chief executive Stephane Richard said.

“It’s necessary to put in place a system of payments by service providers as a function of their use…
We are progressively going to switch from the unlimited approach that has been the trademark of our industry to something which is more sophisticated”

Richard, who may address the issue at the “Le Web” conference in Paris, has joined Telecom Italia chief executive and Franco Bernabe and Telefonica chief executive Cesar Alierta in what could turn into a cold war with web companies.

As more consumers access the internet on mobile devices, the cost of building bigger networks may outstrip revenue growth for wireless operators, slicing their return on investment.

The mismatch between investments and revenue “is set to compromise the economic sustainability of the current business model for telecom companies”, Bernabe said.

Service providers, meanwhile, say they already pay enough. “Currently about 40 percent of our expenses go to networks anyway — servers, peering, our content delivery network, and other resources,” said Giuseppe de Martino, the legal and regulatory director of Paris-based online-video provider Dailymotion SA. “If telecom operators want us to share in their expenses, perhaps we should talk about sharing subscription revenues as well.”

While the number of mobile data connections in western Europe will rise by an average of 15 per cent a year to 270 million in 2014, overall end-user revenue will decline about 1 per cent a year, Interactive Data estimates.

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