Content producers must pay some network costs, mobile executives claim

Telefonica chief executive César Alierta told the Mobile World Congress that content companies must contribute to network costs if current upward trends in mobile data use are to continue.

"New business models are needed to finance network investments that will make sustainable the whole internet ecosystem based on a virtuous circle of growth," said Alierta's presentation (19-page / 2.4MB PDF) to the Congress. "Cooperation within the industry is essential to get the most of the digital world."

"Telecommunications operators are now the main contributors to investment and employment in the industry," said Alierta, according to a company statement. "The new challenges must be assumed via a strategy of alliances and cooperation with other sector agents to ensure that the full potential of digital services is unlocked."

“A new engagement with content providers is needed to deliver content with quality requirements,” he said, according to the Bloomberg news agency. "Regulators should allow operators to recover the costs of network investment."

Other executives have echoed Alierta's concerns. The Independent newspaper reported that France Télécom chief executive Stéphane Richard told a French newspaper that his company "decided to go on the offensive" and demand that content producers contribute to network costs.

The comments raise the same issues that have dominated the net neutrality debate in the US, which has focused principally on land line connections.

Telecoms executives there claim that companies such as Apple and YouTube should contribute to the cost of delivering their material to subscribers. Others argue that the network should be 'neutral' in delivering all content equally, regardless of which company has paid telecoms firms.

Telefonica said that analysts estimated that telecoms companies will spend €90 billion between 2010 and 2014 on networks, and that another €150bn will be needed to improve networks enough to handle the volumes of content that users expect.

That was why "new business models" were needed, Alierta said. He also said that the way that telecoms and content firms are regulated must change if investment was to be forthcoming.

"Regulation should allow the recovery of network costs, promoting investment, traffic efficiency and fostering new services development," said his presentation.