MWC 2015: Operator vs OTT row remains in spotlight

MWC 2015: Operator vs OTT row remains in spotlight: Page 2 of 2

By Edwin Yapp March 12, 2015

MWC 2015: Operator vs OTT row remains in spotlight: Page 2 of 2

Telcos remain sceptical

Certainly Zuckerberg (pic above) can’t be faulted for attempting to be much more reconciliatory at MWC 2015 in a bid to bridge the chasm between telco operators and Internet companies.

But critics still slammed his arguments as ‘sugar coating’ the issue, with Digicel’s O’Brien saying that free “Facebook [access] won’t be enough to get more people online.”

To do so would require billions of dollars in investments, which Facebook seems ambivalent to committing, he added.

Another unhappy executive was Nasser Marafih, the chief executive of Ooredoo, who was quoted in The Journal as saying that if Internet companies don’t start paying carriers directly, investments will hit a ceiling.

“The question is, who is going to build that infrastructure?” Marafih said in an interview in September. “We build the network, and unfortunately it has been utilised by Internet players who do not share the revenues.”

Other telco stalwarts such as Vodafone CEO Vittorio Colao also chipped in, reportedly saying that he felt that Zuckerberg was “doing philanthropy, but with my money,” The Times of India reported.

“Why do we have Facebook for free, and why not Google for free, or TV for free, or education for free, or health for free?” he said.

“Who has said that Facebook is more important than learning English, for example? We have to be careful,” Colao was quoted as saying.

“I think Zuckerberg is doing a brilliant job, but for Facebook. We need to do a brilliant job for everybody,” he added.

A long and winding road

MWC 2015: Operator vs OTT row remains in spotlight: Page 2 of 2 It would seem that while Zuckerberg made attempts to appease the many telco executives who attended MWC 2015, the core issue of who pays for building the network and whether or not revenue should be shared isn’t a straightforward one.

As Telenor’s Baksaas (pic), also the current chairman of MWC organiser the GSM Association (GSMA), put it, “There’s a perception of the Internet being free, but as Mark [Zuckerberg] said, it doesn’t happen for free.”

“The connectivity part is expensive … . There’s lot of hardware and software, taxes, and spectrum fees that in total establish a cost structure. So those investments won’t happen, unless the longer term business proposition holds.”

Critics of Facebook’s Internet.org initiative include David Talbot, an independent journalist who wrote a detailed article for MIT Technology Review entitled Facebook’s Two Faces: Facebook and Google Aim to Fix Global Connectivity, But For Whom?; and Asif Imtiaz, a freelance financial consultant who also criticised Internet.org as not being as altruistic as Facebook makes it out to be.

Ovum analyst Paul Lambert believes that although it is clear that the cost of services is a major barrier to a broad segment of users’ being able to access the mobile Internet, especially in developing markets, Zuckerberg must convince operators that Internet.org represents the best way to connect them.

“Operators will question whether they can gain more by partnering with Facebook to provide free or low-cost access to a range of popular services, or simply by pricing and marketing their services in ways that resonate with low-ARPU (average revenue per user) customers,” he said in a statement.

Lambert pointed out that Zuckerberg’s case rests on the argument that Internet.org’s business model will be lucrative for operators because it leads to paid-for data usage.

At the same time, he noted that Zuckerberg’s proposition goes to the heart of a major question facing operators: Where do they sit in the digital service value chain and in what ways do they need to partner to take advantage of the new opportunities it offers?

“Whether Facebook can prove that it has operators’ best interests at heart will largely depend on how successful Internet.org is compared to operators’ own strategies to connect the unconnected.”