European Carriers Demand Apple & Mobile Service Providers To Pay For Network Infrastructure

News | Wednesday December 8 2010 10:33 AM | Comments (0) Tags: , , , , , , , ,

has soared in recent times. This has subsequently led to an
as various studies conducted in the past couple of years have shown.
While this presents additional monetization opportunities for wireless carriers, the sudden surge has also meant an increased spending on building network infrastructure – something that drastically pulls down the margins for these carriers.
In a bid to counter shrinking margins,
in Europe are learned to have got into an alliance to persuade mobile web service providers like Apple , Google and Facebook to contribute towards building network infrastructure in the region. Network providers claim that these services have been responsible for a drastic rise in consumption of bandwidth hogging services like video streaming.
According to Telecom Italia CEO Franco Bernabe, there is a massive mismatch between the investments put in by network providers and the revenues they accrue. He has said that this disparity has made the current business model unsustainable for the networks. France Telecom CEO Stephane Richard, whose company is part of the coalition, had earlier noted:
“Service providers are flooding networks with no incentive. It’s necessary to put in place a system of payments by service providers as a function of their use.”
The proposal is likely to be rejected by Apple and other companies for more than one reason. Firstly, these mobile web service providers have argued that the rise in usage of bandwidth hogging services have also led to a corresponding increase in revenues to carriers. France Telecom for instance, has reported a domestic data revenue growth of 24% last quarter. Also, the proposal has called for contributions from service providers to be commensurate to their share of data growth. This could put companies in a dicey situation since this would effectively penalize them for gaining market share.
It will be interesting to see how Apple and other companies respond to the latest demands. It is likely that North American carriers like AT&T too could join the alliance considering that Ma Bell is
by the explosion in data usage over the past couple of years.
What do you think is the best solution to this issue? It sounds absurd but do you think companies like Apple and Google should pay network providers for building infrastructure? Tell us what you think in the comments below.

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