Mobile industry stimulus, strings attached
Some of the world’s biggest mobile operators say they can stimulate the global economy by luring $550 billion in new investment, but only with the implied trade-off that they retain their monopoly market powers.
AT&T, Deutsche Telekom, NTT DoCoMo, Telefonica and Vodafone are among the carriers who have called on national regulators to provide a “minimally intrusive” regulatory environment to encourage new investment.
In a letter to world leaders gathered at the G20 Summit in London, the industry is looking to showcase its power to create jobs and stoke business activity by arguing for rule-making that would ensure their ability to make decent monopoly profits on new networks.
A group of executives representing 24 of the world’s biggest carriers and phone equipment makers such as Alcatel-Lucent, Ericsson and Nokia also say regulators should free up more radio airwaves for their services.
The mobile industry is suggesting a lighter regulatory touch that would effectively end efforts to promote greater competition among smaller players and new market entrants.
It’s a self-serving argument, but they make strong points, worth considering.
The executives cite a study by consulting firm AT Kearney that suggests that 25 million jobs could be created and global gross domestic product (GDP) would increase by 3-4 percent over five years if upward of $500 billion in private capital is invested in new networks and services. They point to evidence that in emerging economies, a 10 percent rise in mobile subscribers boosts annual GDP growth by 1.2 percent.
Governments around the world are running up against limits to how much fiscal stimulus can be applied to get economies moving again without the money going to waste or reviving inflation. Once financial markets are stabilized and consumer confidence can be restored, it will be up to industries to drive the economy forward.
The mobile phone industry is presenting governments with a devil of a choice: Go light on our entrenched powers and efforts to reform the industry’s monopoly structure or carry on making it hard for us to invest in new businesses and do without our help in the next wave of recovery and economic stimulus.
These are just the sort of regulatory trade-offs that are an important part of what got us into the current economic mess. On the downside, the vast consolidation of the banking and financial services sector, along with steel and raw materials, have made economic recovery harder in these key sectors.
Don’t these hard lessons apply to the mobile phone industry? Economic stimulus benefits today could lead to more monopoly problems tomorrow.