Operators at #MWC13: the golden age of mobile faces challenges

25 Feb 2013

The leaders of some of the biggest mobile operators in the world agree that while the mobile industry worldwide is at a historic peak in terms of smartphone activations, technological innovation and the rise of mobile data, operators are under pressure due to falling revenues and are being stymied by out-of-touch regulation.

Addressing the Mobile World Congress today, the CEO of Telefónica César Alierta cited Europe as an example of regulation gone mad. “There are 190 operators,” he said. In the US there are only four operators.

“Operators are facing regulation and taxation based on the principle of mobile being a luxury industry with high margins. We are still burdened by outdated regulation and taxation in a challenging ecosystem.

“Change is sometimes hindered by overestimation of the value of the current situation and underestimation of the opportunities. The mobile industry contributes to the development of society, it enables services to improve people’s lives.”

Alierta said that the opportunities are vast in terms of connected living, mobile commerce, mobile money and future communications like joining voice and LTE.

“The mobile industry is contributing to an unprecedented transformation of our world, technology is enabling a massive number of new services that will improve the well being of everybody.”

Alierta pointed to the challenges presented by other platforms encroaching on their space, a prime example being Facebook, which is enabling free voice services.

“The central role of operators is challenged by new players from the software and hardware world. We are challenged to upgrade our networks to accommodate huge growth in traffic. But our revenues are not growing at the same speed.

“We need to see change in the regulatory and policy environment in order to allow the industry to reorganise to cope with the new environment.

“We are all living in a new world, full of opportunity but which is still largely unexplored in terms of the impact of new players. We need to find the right equilibrium in order to be sooner able to concentrate on delivering the promised connected world to ensure that nobody will be left behind,” Alierta said.

Get ready for what’s coming next

The CEO and chairman of AT&T Randall Stephenson summed up perfectly the speed of change the telecoms industry has delivered. He said that at the turn of the century the arrival of email on mobile devices and synchronisation of calendars contributed to a 75,000pc increase in data traffic by 2006.

He said that when the smartphone era kicked off in 2007 there was a 30,000pc increase in data traffic in the past six years.

“The entire ecosystem caught fire. Smartphones are outselling PCs, and tablets are on pace to do the same thing. The apps industry is attracting billions of dollars of capital – 2G, 3G, HSPA+ and now LTE – all of this happened in a five-year period. This is warp speed – the largest technology wave any of us has seen in our lifetime, requiring billions of dollars of investment.”

Stephenson said that combining 4G LTE with the cloud will be revolutionary. “What’s coming next is going to be more radical than what we’ve experienced so far.

“The past five years were about what’s on devices – but moving to the cloud era and one where connectivity is assumed there will be no part of the globe unaffected by this.”

But Stephenson echoed Alierta’s view on regulation. “What’s coming next has the potential to be the fastest and most powerful transformation of the world we’ve ever seen. But spectrum policy – the foundation of all of this – policy makers are going to have to be clear. There will be different outcomes requiring different approaches. A lot of capital investment will be required to make it a reality.

“We need the right spectrum polices, the right tax polices and predictable light touch regulation is critical. It all has to be in sync for these vast network builds.”

Stephenson challenged the world’s mobile operators to be more innovative and entrepreneurial.

“We have to take the initiative to accelerate the pace of innovation, not just caring about what’s happening in our proprietary labs. We need to start treating software developers as customers.

“We need a more entrepreneurial mindset – we need to get innovation in HTML 5 onto our networks. There is a new cycle of growth coming.

“No industry on earth has a greater opportunity than this one in terms of the order of magnitude it can make a contribution to society.

“We need to get the components right if we are to accelerate this. It’s about fostering innovation across the ecosystem. It’s all closely related. This is a three-legged stool. If we don’t get it right it will fall over.”

Pre-emptive action

The vice-chairman of China Mobile Xi Guohua said China Mobile serves more than 1bn mobile users in China and that the operator has seen a 187pc in data traffic in the past year.

“But mobile operators now face competition on two fronts. On the one hand, competition amongst the operators themselves has turned white hot,” Guohua said, adding that the operators are also facing competition from different platforms and ecosystems.

“If operators can’t efficiently consolidate their industrial resources and gain an advantageous position in the value chain, their situation will become more difficult.”

Guohua said telecoms operators face downward pressures on their revenue streams.

“The ICT revolution brings opportunities as well as challenges and operators will only survive if they embark on pre-emptive transformation strategies to adapt to the new environment,” he warned.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years