Vodafone CEO attacks Google domination

Vodafone CEO Vittorio Colao has warned fellow telecom executives that Google — and other companies that dominate parts of the mobile ecosystem — could be getting too powerful and suggested regulators need to get involved.

Vodafone CEO Vittorio Colao
(Credit: Marguerite Reardon/CNET News.com)

Speaking at the GSM Association's Mobile World Congress, Colao urged European and US regulators to help ensure more competition at all levels.

Showing a slide of competitors throughout the mobile market, Colao indicated that Google and Yahoo alone control search and advertising. He asserted that "70 per cent to 80 per cent, maybe more" concentration of control in any market should be scrutinised more intensely by policymakers.

By contrast, Colao said, the wireless network business is very competitive.

"In the mobile corner, we have demonstrated real competition," he said. "In most markets we have three, four, five, six and up to 12 real competitors in some cases. And we also give open access to MVNOs [mobile virtual network operators], like Virgin Mobile, which have become real competitors, too."

Google has been adding more sophisticated and data-intensive applications to its cache of products, and has garnered suspicion among mobile operators as it moves further into the industry, not only with search applications but also with its focus on the Android mobile operating system and on hardware such as the Nexus One smartphone.

Google also raised eyebrows years ago when it bid on wireless spectrum in the United States. Ultimately, Google did not win wireless-spectrum licences and admitted, once the auction was over, that it had only bid so that the price of the wireless licences reached a point where a special open-access provision was triggered in the rules.

Google surprised once again last week, announcing that it was going to launch an experimental fibre broadband network capable of delivering 1 gigabit of data per second.

But during the question-and-answer period of his own presentation, Google CEO Eric Schmidt assured Mobile World Congress attendees that Google came in peace. He said he disagreed with one audience member's assertion that Google is trying to make wireless operators "dumb pipe providers".

"We feel very strongly that we depend on the success of the carrier business," Schmidt said. "We need a sophisticated network for security and load balancing."

Schmidt explained that carriers' sophisticated billing relationships with customers was key. He also emphasised that carriers would offer support and education, serving as a basic platform for mobile services. Google will also serve customers, he said, but it will rely on customers sharing their information with Google to get better search results, more accurate location data, and more relevant applications.

Another point the Google CEO tried to get across was that Google is not looking to compete with wireless operators.

"We are not going to be investing in broad-scale [communications] infrastructure," he said, adding that Google's fibre network trial and the company's investment in WiMax 4G wireless provider Clearwire were designed to help advance high-speed networks.

He also addressed concerns that Google is trying to limit how operators can manage their networks through its efforts to lobby for net neutrality regulation in the United States.

"We understand at a fundamental level [that] wireless networks have constraints," he said. He went on to explain that wireless operators should not be choosing winners and losers when services are offered, and he conceded that current bandwidth constraints may require operators to move to a tiered pricing model.

"As people consume massive amounts of data, operators will be forced to tiered pricing to deal with the top 1 [per cent] to 5 per cent of users consuming 70 per cent of the bandwidth," he said.

Even though Schmidt acknowledged that operators need to figure out ways to better manage their networks, he made it clear that they should not deny network access to bandwidth-intensive applications, point blank. Instead, he said operators need to find ways to accommodate user demand on their networks.

"We should embrace [changes in end-user behaviour]," he said. "And we should figure out a way to make money from it together, instead of blocking it."

Via CNET.com