Embrace, collaborate and listen…
Regular readers will know that I often use this spot to allow those in the industry the chance to make a point, or raise an issue they think is important. Today’s article comes from Andreas Bernström, CEO at Rebtel, who argues that operators need to take a more open approach to those who they see as disruptive and threatening. Without second guessing Mr Bernström, I think there are operators with a more enlightened approach than he describes out there, but his views are definitely worth a read and should give pause for thought.
Andreas Bernström writes:
One of the fundamental governing principles of the Internet that ensures our freedom on the web is network neutrality.
The discussion about network neutrality and how it pertains to Wireless Networks has had a new lease of life recently due to the plethora of disruptive third-party VoIP services that are threatening operator’s revenue streams.
In Sweden, the debate has been particularly fierce with Telenor, the world’s sixth largest mobile phone operator with more than 203 million subscribers. Telenor has already given notice to Swedish consumers of its (self-proclaimed) right to cut off access to innovative calling apps such as Viber, Skype and Rebtel.
In Italy, matters have already taken a turn for the worst. Vodafone, the world’s largest mobile telecommunications company measured by revenues and the world’s second largest by subscribers, is already starting to enforce such restrictions to its network. Chances are the same treatment will be carried out across Vodafone’s remaining European markets.
Operators appear to be panicking.
Instead of embracing the technology and collaborating with innovative companies to overcome this market challenge they are blocking services and stifling consumer choice. This strategy is destined to fail and here are four reasons why:
Legislation
In China, the land of the great firewall, Skype is illegal. Government authorities in many European countries look, for all intents and purposes, to be reluctant to take a stand in the matter of network neutrality and seem to be convinced their respective markets will govern themselves without their intervention.
Is the type of development we have seen in Italy the kind of “self-governing” measure that authorities really want to see?
Some foresighted countries have taken action to legislate network neutrality rules, but the majority are yet to follow. The “traffic shaping” measures resorted to by Vodafone are just a glimpse of what’s to come with operators blocking services, then charging consumers premium for using them and rationalising the actions by claiming it’s in accordance with “Fair Use Policies”. Data is data. Bottom line. If you’ve paid for it, you should be at liberty to use it for whatever you want.
It’s time for government authorities in the respective European countries to work with the mobile industry to prevent operators, and the like, standing in the way of innovation. If authorities and industry don’t collaborate to address this issue, the EU is likely to step-in and legislate.
Lack of Substitute Services
Why is it that operators fail to commit to developing novel services that bring value to their subscribers, and instead focus on blocking third-party services that do? To prohibit something without offering an adequate alternative service reeks of desperation and is testament that the business model of operators is failing.
A relevant historical analogy is file sharing. In the absence of adequate substitute services, consumers were forced to look elsewhere. The computing capabilities Smartphones possess in this day and age are nothing short of amazing. They are competent enough to play host to an array of amazing services that create true value and open the door for incumbents to sell more data packages than ever before. Operators, seize this opportunity to help your customers discover the power of Smartphone technology and the utility it brings.
Consumer Hostility
To claim that VoIP services are a breach against the operator’s “Fair Use” policies of data services is solely a question of them not being unable to make as much money on data packages as they can of off their margins on voice. To even attempt making a case for calls over 3G putting more strain on an operator’s network is incomprehensible.
What’s next?
Blocking and charging users more for wanting to see what their friends are up to on Facebook or because they want to watch a clip on YouTube instead of on the operator’s video service? It’s almost humorous to hear operators systematically refer to the term “Fair Use” in their defence, while they charge their own users almost $20 per MB in data charges when travelling abroad.
Competing Forces
When it all comes down to it, what this “trend” amongst operators does more than anything is propel companies such as Rebtel, Skype and Viber to fight even harder for consumers’ rights worldwide. We’re committed to continuing pushing the envelope and develop new innovative services with the best technologies available that benefit consumers.
Incumbents are likely to keep clinging to diminishing margins, lock-in contracts, hidden fees, lavish offices, expensive TV commercials and obsolete technologies. Either way, they cannot stand in the way of what the future holds in store.
There’s an old proverb that reads, “If you can’t beat them, join them”, something that operators should take to heart and consider by embracing new services for increased data revenues. Ultimately, when the Internet converges with telecom, operators are forced to adapt or face a slow demise. The Internet stands for transparency, consumer value, openness and change, all values that clash with that of today’s operator’s.
