European telcos claim Apple, Google should pay for network improvements | iLounge News

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European telcos claim Apple, Google should pay for network improvements

A group of European carriers is arguing that companies such as Apple, Google, and Facebook should help pay for the multi-billion dollar network investments needed to support their bandwidth-intensive services, according to a Bloomberg report. “Service providers are flooding networks with no incentive” to cut costs, said France Telecom Chief Executive Officer Stephane Richard last month. “It’s necessary to put in place a system of payments by service providers as a function of their use.” Richard addressed the issue at the “Le Web” conference in Paris this week, and has joined with Telecom Italia CEO Franco Bernabe and Telefonica SA CEO Cesar Alierta in arguing for a new business model. Bernabe said that the disparity between investments and revenue “is set to compromise the economic sustainability of the current business model for telecom companies,” adding that Apple, Google, Facebook, and Skype “increasingly look like integrated operators in the telecom network sector.”

The article sites IDC as estimating that the number of mobile data connections in western Europe will rise by an average of 15 percent a year to 270 million in 2014, while overall end-user revenue will fall about 1 percent a year. Canalys adds that carriers’ average spending on network infrastructure over the same period will jump 28 percent to roughly $3.8 billion. Companies like Google and Yahoo! “use Telefonica’s networks for free, which is good news for them and a tragedy for us,” Alierta said in February. “That can’t continue.” Perhaps unsurprisingly, the service providers themselves don’t agree with the carriers’ position. “Currently about 40 percent of our expenses go to networks anyway—servers, peering, our content delivery network, and other resources,” said Giuseppe de Martino, legal and regulatory director for Paris-based online-video service Dailymotion SA. “If telecom operators want us to share in their expenses, perhaps we should talk about sharing subscription revenues as well.”

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Comments

1

Well said Guiseppe.
Telco’s are still so used to being Service Providers and Nickel-and-Diming their customers to death. When a Content provider comes along and blows away their crappy token content, they suddenly cry poor.
They have three choices;
1) Charge more from their customers.
2) Improve the efficiency of their networks.
3) Admit to their shareholders that their profits aren’t going to be as astronomically high as they they were in the 80’s and 90’s, open a can of “Harden The F. Up” and face reality.

Posted by Dan Woods on December 8, 2010 at 11:20 AM (PDT)

2

If I understand the article, the carriers are complaining because most of their customers’ data usage revolves around a limited number of providers? So they want to punish Apple and Google for giving wireless customers an incentive to subscribe to data plans?

Posted by Paul on December 10, 2010 at 7:29 PM (PDT)

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