A Grave of Their Own Making

There was an article in Le Monde yesterday called Les Opérateurs Confrontés à la Saturation des Réseaux (Operators Confronted to Network Saturation) which summarised some of the key thinking (or is it posturing) that came out at Idate's Digiworld conference last week. Nothing new there, the main thing is telco CEOs saying they are facing a revenue/cost squeeze on mobile broadband and that therefore the internet companies will need to / must pitch in.

I still can't wrap my head around that argument. The absurdity of it is staggering. These guys are selling mobile broadband access on the one hand, aggressively fighting on prices to acquire as many customers as possible. They are effectively creating the mobile broadband access market. And at the same time they're complaining that they need to upgrade their backhaul network to deliver on that very same product? Surely the solution to that is evident: the price is too low, or it's too flat. Easily fixed.

Is there any other industry where people sell services, have to invest to deliver them and then complain that another industry is not picthing in? I don't like analogies much, but that would be like highways asking car manufacturers for subsidies because the price of the highway tolls was too low. Just increase the bloody price!

I must say that I'm finding I have less and less patience for this constant posturing. Telcos should decide once and for all which business they want to be in and do it sensibly. How can these mobile operators state that they're not in the access business yet flood the market with access products and then complain that they're not cost effective?

The other absurdity here is that it seems the telcos believe that Google is making pots of money on each of their individual customers. I don't know if Google releases average "per user" revenues, but my suspiscion is that in relation to the say 35 EUR per month that telcos make on a mobile subscriber Google's revenue per user per month is probably around 1 EUR. Were they to share that, it wouldn't make a bleeding bit of difference to the telco's dilemna of their own making. Google's money comes from having hundreds of millions of customers, not from making a lot of money on each of them.

I keep going back and forth on this question of whether telcos as we know them can embrace change or will they have to go through near-death experiences or beyond to do so. This kind of declaration unfortunately leads me to believe that they will not be able to change significantly enough to avoid crashing.