A Businessman’s Dream?

Normally one might expect businesses that have few competitors and high barriers to entry into their market to be delighted when demand for their main, and largely unregulated service was growing rapidly and expected to continue to do so for years to come.   One might also suppose that they might be grateful to the entrepreneurial businesses that are helping to generate this increasing demand.

But, I learned at the Mobile World Congress in Barcelona, this is not the case.  Mobile operators faced with ever growing demand for mobile data capacity complain that the investment required is very high, that the app and cloud services providers make profits at their expense, and that they are over regulated, with the regulators forcing down the price of their voice services.

In fairness, extra voice revenue could be the cash cow to help pay for the investment, but data traffic far exceeds voice traffic and has done so for several years now.   Operators need to rebalance their tariffs, as some are beginning to do, so that they better reflect the costs of providing the services.

Their other complaint is the cost of spectrum auctions – they would prefer a beauty contest.  Here they have a case.  Any sensible taxation system should provide incentives to invest and then tax the profits, not take a hefty slice of the investment capital before the business can start its investment programme.


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