BARCELONA // Emerging markets are lucrative and dangerous places for mobile operators, the Vodafone chief said yesterday, urging smarter, more standardised regulation by governments. Regulators in emerging markets have yet to create a stable framework that promotes innovation and growth, Vittorio Colao, who leads the largest global mobile operator, told the Mobile World Congress in Barcelona, which began on Monday.
Too many rules, often specific to small home markets, mean it is hard for companies such as the UK-based Vodafone to offer standard services and pricing approaches across the world, Mr Colao said. "In emerging markets, we will continue to see that accessing the mobile internet is growing, but this opportunity has not been fully exploited," he said. "These things are moving very slowly." Vodafone's only operation in the Gulf is in Qatar. It owns a stake in the Indian operator Hutchison Essar and operates Vodafone Egypt in a joint venture with Telecom Egypt, the government fixed-line monopoly. Mr Colao said that operating conditions in the company's emerging markets had been "difficult" and had led to the company investing more than it was prepared to spend. "We need to avoid market-specific rules on things like licences, M&A [mergers and acquisitions] and other things that make deployment of these services more complex and slower," he said.
Shifting focus to the state of the global industry, Mr Colao called for more openness on the part of mobile handset makers and application developers. Customers, he said, should have access to the same choice of applications and online services, regardless of the handset they own. He also waded into the controversial subject of network neutrality, a debate that has pitted network operators against Web companies such as Google and Yahoo. Internet companies are concerned that network operators such as Vodafone could charge premiums to customers for accessing certain sites, effectively creating a tiered internet.
Mr Colao echoed these concerns. "No discrimination should be allowed - for any application," he said, specifically mentioning browsers, search engines and mobile applications. "If Vodafone had a VoIP [internet calling] application, we should not be able to give better service on this application than for other VoIP applications - There should be no discrimination between similar conditions." While agreeing with their position on network neutrality, he had sharp words for the two internet giants, Google and Yahoo.
With control of about 80 per cent of the online search and advertising market, the two were a threat to the internet, he said. "I believe from a quality perspective, this is something that should be looked at. We need to ensure two things: choice, and avoiding concentration before it's too late." While rejecting the idea of discriminating between different Web services as a network operator, he called for a rethink of the unlimited download models that are increasingly common among mobile-internet providers. The companies should continue to offer unlimited downloads, he suggested, but should vary prices for different guaranteed download speeds.
In a separate keynote, the chief executive of the network equipment maker Alcatel-Lucent said if the telecoms industry did not begin to engage regulators and governments more directly, the sector would become a "source of taxation and probably, a force of limitation". "We haven't made the connection between what happens in the real world and what happens in our industry," said Ben Verwaayen, adding operators needed to change their offerings from "all you can eat" packages to initiatives such as tiered pricing structures, as 5 per cent of users now accounted for 80 per cent of all bandwidth. "We have to sit down with regulators to understand that in the new world, based on a very different concept of added value, we can only transform if we transform our business models."
The transformation will be necessary with the forthcoming launch of the next generation of high-speed wireless networks, Mr Verwaayen said. With all operators now agreeing to adopt the Long Term Evolution standard in the near future, operators must now differentiate themselves through service offerings, rather than speed. "This industry has to transform the way it thinks about consumers and what consumers are as citizens," he said. "It will be a powerful business model if we combine the interests of society with the interests of consumers."