"Most customers don't know what a megabyte is"

How mobile's price war is pitting web 2.0 addicts against the operators
Written by Natasha Lomas, Contributor

How mobile's price war is pitting web 2.0 addicts against the operators

Despite a lot of talk about the need for companies to collaborate and build partnerships at Mobile World Congress trade show in Barcelona this week, underlying tensions between operators and software companies are still evident.

Google's Vic Gundotra, VP of engineering, said "simple, clear and affordable" data plans are the key to encouraging consumers to embrace the mobile web.

"Every time I hit a web page it's a guessing game of how much it's going to cost me," he said.

Gundotra's call for operators to simplify costs for consumers was echoed by Josh Silverman, CEO of VoIP company Skype. "All we ask is transparency in pricing," he said.

"Most customers don't know what a megabyte is," Silverman added.

But according to Sol Trujillo, CEO of Australia's largest telco Telstra, the cost of carrying - and monetising - all that traffic is the big priority for operators.

"Customers understand free but the problem that we have is that in order to carry all the traffic it consumes a lot of infrastructure. At the end of the day we still have to figure out how to manage all that and generate revenues that are commensurate with environments," Trujillo said.

According to a recent report by analyst Strand Consult, many operators are selling mobile broadband for around 50 per cent less than it costs to produce such volumes of data.

While the Telstra CEO conceded it's now cheaper to carry traffic thanks to next generation mobile networks, he said operators will have to use traffic management to make sure revenue keeps pace with growing data volumes.

On the traffic management question, Skype's Silverman said he hopes operators will just be managing traffic not "picking the bits and bytes they prefer".

"There were some what we consider troubling announcements [this week] from some of the operators saying 'hey if you want to send an instant message via Skype… we're going to charge you extra for that particular bit and byte'," he said.

"We think that's very confusing for the consumer to understand."

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