Phone Operators Warn against Apple, Google Dominance

Mobile carriers back open platforms for Internet applications to counter content providers

(Bloomberg) — European phone operators said Internet companies such as Google Inc. shouldn't be allowed to dominate content services and that platforms must be kept open for all companies.

Regulators are willing to step in for the sake of openness, Vodafone Group Plc Chief Executive Officer Vittorio Colao said today at the Mobile World Congress in Barcelona. Mobile carriers are returning to the idea of open platforms for Internet applications after previously being criticised for operating "walled gardens," he said.

"We are here making the case for openness," Colao said. "We welcome the importance of avoiding dominance in any step in the value chain."

Mobile-phone operators are trying to cope with the investment in high-speed networks to support the soaring growth in data services, including film and music downloads, offered by companies such as Apple Inc. and Google. Some carriers are demanding part of the revenue gained by content providers as fees for network use.

Google's Android operating system is the most popular smartphone platform, according to analysis of shipments by research firm IDC. Android is forecast to gain as much as 60 percent of the markets for smartphones and more basic phones in three to four years, according to IDC.

Application Platform

Operators including Vodafone, Telefonica SA and AT&T Inc. are working to produce an Internet applications platform for developers. The platform, which would be available across all networks is designed to counter the popularity of Apple's application store and Google's Android marketplace. The group has 12,000 applications currently available.

With Apple seeking to control application billing, operators are trying to avoid "closed systems," Colao said. "It's a bit ironic we have to raise this point, when operators are being accused of a being a walled garden."

Content providers such as Google are "invading our turf," Telecom Italia SpA CEO Franco Bernabe said today.

Phone operators currently get almost none of the revenue within what consulting firm Booz & Co. estimates will be a $40 billion market for mobile games, entertainment, and workplace tools by 2014.

Telefonica CEO Cesar Alierta today called for a new deal with content providers. "A new engagement with content providers is needed to deliver content with quality requirements," he said. Regulators should allow operators to recover the costs of network investment, he said.

In January, European Union antitrust regulators said they asked competitors and advertisers about Google's conduct in a probe into its search rankings.

Google is being investigated by the European Commission over claims it discriminated against competing services in its search results and for stopping some websites from accepting rival ads.

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