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Vodafone CEO takes aim at Google

February 18, 2010 Leave a comment Go to comments

Vittorio Colao critical of Internet giant’s stranglehold over online advertising.

New revenue areas on networks need to be freed up to competition, particularly in segments such as advertising, said Vodafone Group PLC Chief Executive Vittorio Colao Tuesday, taking a swipe at Google Inc.’s stranglehold on digital search and calling on regulators to ensure a more even distribution of revenue.

Speaking to reporters at the Mobile World Congress in Barcelona, Colao said that with a new European Commission in place and ongoing debate at the U.S. Federal Communications Commission on net neutrality–the issue of removing restrictions on network applications and services–Colao said these two bodies should work to ensure open markets.

In particular, he said that from his viewpoint there is too much market concentration in search and advertising.

“With regards to Google, we need to be able to freely deal up and down the value chain. The fact that 80% of the advertising online goes down one funnel is something that should be looked at in the future debate on net neutrality,” he said, adding that the European Commission and FCC should ensure rules are put in place “to enable competition at all levels.”

The issue isn’t unique to Vodafone. Network operators are looking at new sources of revenue growth as regulation and intense competition crimp traditional sales from voice and messaging.

Spanish telecommunications giant Telefonica SA is looking into the possibility of charging Internet search engines for the use of its telecommunications network, its Chairman and CEO Cesar Alierta said at a conference broadcast by local television channel ETB earlier this month.

“Search engines use our networks without paying us anything. It’s a lucky break for them and bad luck for us,” he said.

Internet searches from Web sites such as Google and Yahoo! Inc. take up a big chunk of the bandwidth on telecoms operators’ networks, he said.

“We put up the network, we put the system there, we do customer care, installation service… This will change, I’m sure of that,” Alierta said.

Colao said Tuesday:”We need to look at the whole issue of application portability and who owns data once it has been paid for,” with a system in place by 2015, facilitated by competition authorities.

“We can’t have the same network being used for business data traffic and song downloading at the same time for the same price. We will have to segment the network in many ways, it could be a 15- or 20-tier system.”

Google CEO Eric Schmidt is set to make a keynote speech in Barcelona later Tuesday.

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