Firefox OS welcomed as fresh competition in mobile market
BARCELONA—Telecom carriers continue to complain about taxes, regulation, and over-the-top competition, but Mozilla's Firefox OS provides a glimmer of hope to some executives speaking at the opening of Mobile World Congress.
Mobile operators are heavily regulated and taxed and make huge capital investments in networks, while other players in the mobile ecosystem face none of those costs, said Cesar Alierta, chairman and CEO of Telefonica, in the show's opening keynote.
"Something is not working in the value chain, and this is not a level playing field," Alierta said.
Alierta gave a vehement voice to the carrier view that Internet players make fortunes with free services on the backs of carriers' expensive infrastructure investments. Google has been a frequent target of those complaints, despite what the proliferation of Android handsets may have done to drive smartphone adoption and associated data service fees.
Even Xi Guohua, vice chairman and party secretary of China Mobile, said competition from over-the-top application providers might be greater than from other mobile operators.
Boosts mobile rivalry
The entry of the Firefox OS, which some of the carriers are helping to promote at this week's show, will bring much-needed competition to the mobile OS market, according to some of the executives who spoke on Monday morning.
"This is a major step to bring balance back to the sector," Alierta said. As a new, free mobile platform, the Firefox OS could break what he called monopolies in the mobile OS world, he said. Telefonica has co-developed two Firefox phones with Mozilla.
"We need a more balanced relationship with the OS owners," Vodafone Group chief executive Vittorio Colao said. "With more competition, the relationship will be more balanced, and eventually, the winners will be the ones who have the best products, the lowest prices, and the highest willingness to invest, with us, in the channels."
Spectrum is another common theme as carriers look for the capacity to carry the fast-growing volumes of data traffic they expect to see over the next few years. Vodafone's Colao complimented the U.S. approach to spectrum allocation, where carriers get essentially perpetual licenses for large blocks of spectrum. He compared it favorably with India, which he called the other extreme, with small slivers of frequencies licensed at a high price. Current European policy is closer to the Indian side, he said.
The carrier executives also called for spectrum harmonization across countries. Apple's iPhone 5 put the spotlight on spectrum fragmentation last year when it launched with support for just three LTE spectrum bands, said Franco Bernabe, chairman and CEO of Telecom Italia and chairman of GSMA, which puts on the show. The iPhone 5's limited LTE support meant buyers would be able to take advantage of LTE only in certain countries. As yet there is no single broadly accepted LTE band that would let international mobile users roam widely on the cutting-edge network system.
Several CEOs said they see great potential in NFC (near-field communication) for mobile commerce, even if it may not generate much carrier revenue.
"NFC is probably not going to be a huge amount of money for us, but it is a fantastic customer experience," saving consumers from having to carry several cards and letting them buy things just by tapping their phones near a seller's device, Vodafone's Colao said. Vodafone has sold 210,000 SmartPass NFC payment apps in Italy and plans to launch the system in five more countries before summer, according to Colao.
What may hold mobile commerce back is fragmentation, with different carriers as well as different banks taking their own approaches, Colao said.
AT&T Chairman and CEO Randall Stephenson held up the Isisprogram in the U.S., a joint venture between AT&T, Verizon Wireless, and T-Mobile USA, as an example of carrier coordination on mobile payments.
"I don't know exactly what the monetization model looks like for this thing," Stephenson said. "But I do think it's very, very important as an industry that we propagate this capability as quickly and as pervasively as we can."