Home EuropeEurope I 2012 Developing the mobile Internet

Developing the mobile Internet

by david.nunes
Franco Bernabè Issue:Europe I 2012
Article no.:7
Topic:Developing the mobile Internet
Author:Franco Bernabè
Title:Chairman and CEO
Organisation:Telecom Italia
PDF size:271KB

About author

Franco Bernabè is the Chairman and CEO of Telecom Italia. Mr Bernabè is currently Chairman of the Board of GSMA, member of the Board of Directors of PetroChina, and member of the European Roundtable.

Article abstract

The Internet has outgrown its original purpose: quality, security and privacy issues now need to be addressed. The telco industry, mobile operators in particular, can play an important role by defining and developing a new and more customer oriented way of enjoying the (mobile) Internet. But there must be a balance in the whole ecosystem in order to allow all the players to have a role and, most importantly, a sustainable business.

Full Article

The Internet has changed the world, opening up a virtual and limitless universe to people across different generations. It has changed the notion of time allowing more and more people to be informed in real time, strengthening private and business relationships while helping to push democracy in totalitarian regimes as recent Middle East protests have shown. Nowadays, two billion people are connected to the Internet and this number is growing by 200 million every year.

The Internet is also a powerful tool to improve productivity across a wide range of sectors thanks to its ability to reduce transaction costs and simplify procedures – 75 per cent of the value added created by the Internet is actually in traditional industries.

The telecommunication sector has been a main booster of this virtuous economic phenomenon. The OECD has estimated that an eight per cent increase in telecommunication investments corresponds roughly to a one per cent growth in GDP.

But all that glitters is not gold. The Internet has probably outgrown its original purpose. It had such an unpredictable success and diffusion that there has been no time to stop for a while, reconsider its architecture, its ‘physical limits’ (e.g. the number of IP addresses) and, above all, the issues that the total openness of the Internet creates in terms of quality, security and privacy for the whole community of users.

From this point of view, referring to mobile Internet, as we will see hereinafter, the telco industry and in particular mobile operators, can play an important role, defining and developing a new and more customer oriented way of enjoying the (mobile) Internet.

Internet is going mobile

Smartphones, and recently tablets, have become very popular devices, being an intuitive gateway to the Internet not only for digital native users, but also for less digital literate consumers, thanks to intuitive interfaces and smart apps. In the 2011- 2014 timeframe more than 2.5 billion smartphones will be shipped worldwide (45 per cent of global phone shipments). According to the GSMA (GSM Association), in the next three years traffic generated by smartphones will increase by a factor four. Globally smartphones and tablet shipments worldwide have already overtaken PC shipments and in 2011 they will access approximately 17 billion apps. Also, smartphones are used for search and browsing in the same way as PCs: mobile searches and mobile access to social networking have gone up 64 per cent and 57 per cent since 2009. Around 59 per cent of adults now access the Internet wirelessly using a laptop or smartphone. Some 300 million users of the most important social network access the site through mobile phones and this trend will grow in the next years faster than the web.

But, as we outlined before, this incredible growth in social network usage has a downside: social networks (and generally speaking, all Over the Top(OTT) players) deliver their services unburdened by any meaningful constraint or regulation.

They earn their core base of users by offering them simple and powerful controls over their personal information. But once they grow larger and become more important, users lose control of their personal information and the social network uses its status and success to gather and exploit more and more information for its commercial purposes.

This is possible because the ‘rules of the game’ for OTT players seem different from those of telecommunications operators.

For example, the principles established within the European Data Protection Framework Directive apply exclusively to firms whose equipment is ‘based’ within the EU borders territory. The Directive thus does not explicitly grant immunity to firms providing services from abroad, but it doesn’t either clearly state the opposite. As a matter of fact OTT players purportedly exploited the Directive’s lack of clarity and derived their immunity by claiming that the core of their services (i.e. data storage and processing) takes place outside European territory.

It is pretty obvious that if this asymmetry continues, European players and especially European start-ups will be tempted to set up ‘ad hoc’ enterprises abroad following the OTT example, so that they too will be freed from the burden of complying to the tight European legislation on privacy. This will strip Europe of the innovation and infrastructure investments it desperately needs and will hurt consumers and the Internet system as a whole.

Nevertheless, mobile broadband access will contribute to turn traditional economies into digital economies. Mobility is the real game changer, since a timely and ubiquitous access to content is as important as the content itself. Mobile technologies are bridging the gap in Digital Divide areas, where fixed technologies are not effective to provide access to the Internet. The mobile sector is able to literate people; it is a positive force for change and transformation of civil groups. For people living in developing countries, the mobile Internet often represents the only way to be connected and the most cost-effective chance to bolster the provision of education, banking, healthcare and government services.

The mobile industry has created many thousands of jobs in developing countries: more than 100,000 in Bangladesh, about 250,000in Pakistan and almost 150,000 in Thailand. Today, according to the GSMA, there are more than five billion mobile connections and about one billion broadband mobile lines.

Mobile data traffic is exploding – which model for a sustainable ecosystem?

The mobile traffic explosion is being supported by network operators at the cost of adding capacity to live networks or upgrading their network technologies (e.g. 4G / LTE networks are under deployment in different countries). Even though mobile operators can reap the benefits of a growing market, they have to invest considerable resources upgrading their networks and buying new spectrum to serve very dense urban hotspots or digital divide areas. To make new investments sustainable, mobile operators must be able to keep revenues at an adequate level, playing a tough game in a very competitive market not only with traditional players, but also facing new ‘rule changer’ players.

But, as we described previously, there must be a balance in the whole ecosystem in order to allow all the players to have a role and, most importantly, a sustainable business. OTT players have done a great job introducing a new way of bringing innovation to the customer, but this turned out to be not ‘for free’ as the Internet community believes. The cost we are all paying is the lack of control of our data and of our privacy. Telco operators can create secure platforms and dedicated networks for crucial services, be it for governments or corporates, and also for all the customers that want to regain an appropriate level of privacy while keeping using the important and nowadays indispensable capabilities of the Internet.

Innovation will be keyin this respect. The mobile industry as a whole is engaged in paving the way to new services based on new generation mobile networks and devices – the GSMA is producing a global effort to support usability and interoperability of new mobile services on a global scale, creating the most efficient business and technological ecosystem for market take off. The mobile operator community is working hard to bring already existing or innovative services to a new scale: embedded mobile, m-banking, m-payments or m-government will have a bigger impact for the Telco business and the whole economy thanks to global standards, enhanced usability, global interoperability and, most important, improved security and privacy.

Mobile transactions, for example, will enter into a new era with Near Field Communication (NFC) technology – transactional business will leverage the security provided by the SIM card and the trust that users have in mobile operators’ security platforms to boost mobile transactions with a normal mobile phone. M-payment and m-ticketing will consent to use smartphones for economic transactions instead of credit cards by simply approaching a Point of Sale (POS) and ‘tapping’ the phone.


In the next 15 years, the GSMA has predicted 20 billion devices connected directly to mobile networks, companies and people across the world will harness mobile connectivity to develop innovative healthcare solutions, lower carbon emissions and substantially improve energy efficiency.

Mobile broadband is becoming mainstream for Internet access and thus will support world economic growth – EU and other digital agendas have mobile broadband as a key driver to reduce the digital divide and support job creation.

In a fairly and proportionately constrained economic environment players are able to find solutions even to the most intricate issues such as the broadband and ultra-broadband network investment challenge.

At the end of the day all players have something to gain from a dynamic and fair communication market where new bandwidth and quality of service needs are met with an adequate level of investments.

This nonetheless requires bold actions by governments, regulators and industry players. It requires will, determination and engagement by all players across the Internet ecosystem.

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