Government must stop regulating on 'auto pilot'

Joseph Waring
28 Feb 2012

Governments need to stop the current "auto pilot" regulatory mentality that has been prevailing in many parts of the world in the past and stop the regulation of pricing and roaming and let the industry reinvest the money in infrastructure.

"It's an old regulatory approach that may have been justified 15 years ago, but it just keeps going and as a result our industry gets over regulated and loses resources," said Vodafone chief executive Vittorio Colao. He said "supportive regulations" were key to sustained growth for the industry, which currently isn't growing. In fact, across Europe, operators' revenues have dropped 10% over the past three years.

Speaking at the opening keynote on "Mobile Operator Strategies" at the Mobile World Congress yesterday, Colao argued that the telecom industry has to stop having continuous intervention on prices and it should become a legacy of the past.

Looking at the example of mobile termination rates, he said people think every time the rate is reduced it's more money in the pocket of consumers. "This is not entirely true. The European Commission has estimated that out of a 10-cent cut, only 2 cents end up in the pocket of the customers and 8 cents remain in the system."

He asked, what does Europe need? "Does it need investments? Does it need employment? Or does Europe need mobile termination rate cuts?" He said you just have to go into any shop in the US and see that prices in Europe are much lower for plans and devices.

With the support of the regulator, he believes the industry can once again move into the growth space.

In the same morning session, AT&T president and CEO Ralph de la Vega called on operators to evolve the business models so the industry can continue to drive the huge investments necessary to build advanced mobile networks.

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