Telefónica’s Alierta calls for revolution in the digital sector

Telefónica Executive Chairman César Alierta on Monday called for a new set of rules to stop the inroads made by what he described as the new monopolies being formed by technological and internet companies that take advantage of the networks of telecom operators without being submitted to regulation and whose investments are “absolutely irrelevant,” compared with the huge outlays made by telephone companies.

Alierta’s clearest dig yet at companies such as Google, Apple and social networks like Facebook, which he did not name directly in his speech, was conveyed at an address he made at the opening days of the Mobile World Congress being held in Barcelona. “The rules of the digital world are not yet written,” the Telefónica chairman said in a defiant tone. Google has a 90-percent share of the search engine market, while Android and iOS have over 90 percent of the smartphone market.

“The digital revolution has created an ecosystem whose current status quo has resulted in a decline in the freedom of choice of our customers who are locked into closed ecosystems whilst new non-regulated dominant positions have emerged, which is not good neither for customers nor the developers or for the sustainable development of the industry,” Alierta said in his speech.

Alierta complained particularly about the levels of regulation to which telecom operators are subjected to in Europe. “Something is not working in Europe,” he said. However, in a subsequent encounter with reporters after his speech, Alierta acknowledged that the European Commission had for the “first time” recognized that excessive regulation was leaving the continent behind the United States.

“Brussels appears to be changing,” he said. Since June of last year we have been working together, and they have asked us for proposals. But we’re behind. It’s not normal that the main concern is that there should be three or four operators in Austria, for example. In the United States, there are three big operators, the same as in China. Here in Europe we have 160.”

Alierta believes it is possible to create a single telecoms market in the euro zone, with a single regulator looking after competition, but without a priori regulations such as is the case at present.

“They demand that our offers be replicable by other operators, they charge us termination fees, they oblige us to they ask us to offer portability in a day, but nobody worries about the fact, for example, that you can’t take your applications with you when you change your terminal, because they are subject to a closed system (Android and iOS) or they don´t regulate against intrusive advertising or the invasion of privacy.”

The rules of the digital world are not yet written

The Telefónica chief calculated that telecom operators had invested 225 billion euros in Europe over the past five years, “compared to irrelevant figures of other agents in the value chain,” and called for a level playing field for all players. "It is not sustainable to invest more in handsets than in networks or to pay enormous amounts in taxes and spectrum whilst demanding quicker roll-out of new generation networks,” he said.

In this respect, he acknowledged a shift in regulatory policy in Europe toward a more positive scenario for fiber optic development and the recognition of the risks assumed by operators who invest, but called for the changes to be implemented faster.

Alierta noted that global cellphone penetration at the end of last year was 90 percent, while growth in smartphone use grew by 42 percent. “Despite the rapid growth, this figure only represents 17 percent of mobile subscribers, which shows the huge upside potential we have ahead of us and the opportunity to write the rules of the game and evolve towards a more open ecosystem.”