SEARCH

Vodafone wants revenue share from Google, Facebook

Thomas K. Thomas
Comment (2)   ·   print   ·  
Marten Pieters, CEO, Vodafone India
Marten Pieters, CEO, Vodafone India

“It’s a strange business model at present where telcos invest huge amounts of money to upgrade data networks and players like YouTube, who gets the revenue, don’t pay anything.”

Vodafone India has joined other telecom companies, including Airtel and Aircel, to demand revenue share from Internet service firms like Google and Facebook.

Vodafone India’s Managing Director and Chief Executive Officer Marten Pieters told Business Line that the company would like to have a regulation in place that would make it mandatory for over-the-top players such as Google to pay connectivity charges to telecom companies.

“It’s a strange business model at present where telecom operators invest huge amounts of money to upgrade data networks and players like YouTube, who gets the revenue, don’t pay anything,” Pieters said.

Globally, telecom companies have been putting pressure on regulators to find a resolution to this issue. The main grouse is while telcos invest billions of dollars in setting up telecom networks, over-the-top service providers ride on these networks to make billions of dollars in revenue.

Content providers such as Google have been endorsing network neutrality on grounds that the Internet is free, hence should not be controlled by regulation. Supporters of this view argue that telecom companies’ data networks are being consumed because of services offered by the likes of YouTube.

One the other hand, telecom companies are finding it difficult to keep investing on network upgradation to meet rising data demands. In India, Airtel and Aircel have made similar demands.

According to Marten, the worry for Indian telecom players is not as much as European players. “I am less worried here because the average revenue per user from voice is lower than data whereas in Europe voice pricing was high and data was low.”

Speakers at the ongoing Mobile World Congress in Barcelona also echoed this issue. Telecom Italia CEO Franco Bernabe led the charge and his view was reiterated by Cesar Alierta of Telefonica, Randall Stephenson of AT&T, Xi Guohua of China Mobile, and Vittorio Colao of Vodafone.

“Colao disclosed how the threat from over-the-top players encouraged Vodafone to create the Vodafone red tariff, which offers unlimited voice minutes and eliminates price arbitrage. He also wants regulators to cease regulation of retail and wholesale mobile traffic and stop favouring new entrants that cannot stand on their own. It is a theme he began last year, but now his view is gaining support,” said Emeka Obiodu, telco strategy analyst, Ovum.

thomas.thomas@thehindu.co.in

(This article was published on February 25, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.

Comments:

Telecom operators lead by the biggies mentioned in this write up have
fought a price war so bitterly that their PL's are deep in the red
with no profitability, forget in the short run but also in the medium
5-6 yrs range.

If this argument is to be held true then ISP's/telecom operators
should also share their subscription revenues based on the fact that a
lot of people use the internet to use services like facebook, twitter
and also the fact that nine out of 10 people think of Google as their
gateway to the internet.

I think instead of trying to force rev share from the likes of Google,
it would be a good idea to see if subscription rates can move north.
Asking for revenue shares from biggies will only complicate the entire
business model as it would be an easy way out for ISP/Telco's. Does
that also mean that the smaller aggregators would get a free ride?

from:  Pradeep Prabhu
Posted on: Feb 26, 2013 at 11:21 IST

Vodafone complaining about Google ! Good joke ! What about the profits
you make by TAX PLANNING in various countries!

from:  Sridharan
Posted on: Feb 26, 2013 at 18:06 IST
This article is closed for comments.
Please Email the Editor

Comments to: web.businessline@thehindu.co.in. Copyright © 2014, The Hindu Business Line.