European Carriers Claim Apple Should Pay for Network Infrastructure

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Bloomberg reports that European carriers are looking to band together in an effort to demand that companies such as Apple and Google offering data-intensive smartphones make specific contributions to network infrastructure according to their usage. The move comes as carriers struggle to handle the rapidly-growing demands on their networks as customers increasingly turn to smartphones and consume increasing amounts of data for purposes such as video streaming.

As mobile and Web companies add videos, music and games, operators including France Telecom SA, Telecom Italia SpA and Vodafone Group Plc want a new deal that would require content providers like Apple and Google to pay fees linked to usage.

"Service providers are flooding networks with no incentive" to cut costs, France Telecom Chief Executive Officer Stephane Richard said last month. "It's necessary to put in place a system of payments by service providers as a function of their use."

The carriers claim that the current business model for data usage is economically unsustainable given the billions of dollars worth of infrastructure spending needed just to keep pace with growth in demand. Those infrastructure needs come as revenue from customers has flattened amid stiff competition. Many carriers have already moved to limit unbridled data usage by doing away with unlimited data plans for customers and moving to tiered pricing with various monthly data limits.

Carriers have also pushed back against Apple's rumored plans for an embedded SIM card that would make it easier for customers to activate service and change carriers, with carriers threatening to withhold handset subsidies paid to Apple over fears that the moves would limit their ability to lock in customers to lucrative long-term contracts.

For their part, companies serving the network-intensive content to smartphones note that they do not share in revenues collected by the carriers and thus fail to see why they should have to contribute to building out the carriers' own infrastructure.

Related Forum: iPhone

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