“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.