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Colao: Reward operators for “massive” investment

Michael Garwood
March 9, 2016

Industry is helping to improve people’s lives, driving the economy and creating jobs

Vodafone Group CEO Vittorio Colao has called on regulators to stop treating them like a “lemon to be squeezed,” and instead help them in their pursuit to create a better world using connectivity.

Colao, a regular at Mobile World Congress (MWC), made the comment during a keynote discussion around building what he calls a “gigabit society”, which enables citizens and businesses to benefit, both practically and economically from widespread connectivity of one gigabit per second.

He said network operators around the world are gambling “massive” amounts of investment to facilitate this drive towards an increasingly connected world, to not only help drive connectivity to individuals, but also to support the Internet of Things (IoT) – predicted to take global connections above 50 billion by 2020. Vodafone has spent £19 billion upgrading its networks since 2013, including £7 billion in the UK.

“Very high speed, very low latency, and very secure exchange of data – this is the society we are building right now over the next five years,” said Colao. “Our £19 billion investment illustrates the huge amount of money the whole industry has to input for this gigabit society of the future.

Colao: regulators should be rewarded for investment in connectivity

Colao: regulators should be rewarded for investment in connectivity

“The question is what conditions are going to make this sustainable, and make it actually profitable and create an incentive to get there.

“We need to be rewarded for this massive bet that we are making on a transformation of society. It’s something we are very happy to make, but we need to be rewarded. The sector sometimes seems a little like a lemon to be squeezed – we need to be seen as a great engine for social development.”

Harmful regulation
The GSMA’s new director general Mats Granryd, who replaced Anne Bouverot last March, backed these comments, describing some elements of regulation as “harmful”.

In his MWC address, Granryd, making his debut at the event in his current role, revealed figures detailing the impact the mobile industry has and will continue to have on the planet.

These included that the industry as a whole contributed more than $3.2 trillion to the world economy last year, accounting for more than 4.2 per cent of global GDP. This is predicted to rise to $3.7 trillion by 2020. The industry was also responsible for the employment of more than 32 million jobs in 2015 – a figure set to rise above 36 million in 2020.

It also contributed $430 billion to public funding in the form of various types of taxation, a figure expected to grow to $480 billion in 2020 based on current levels.


Granryd said the industry as a whole contributed more than $3.1 trillion to the world economy

Pace of change
Like Colao, he believes the impact, influence and importance of the telecom industry, both locally and globally, needs to be backed to ensure progress is not slowed.

“The fast pace of change means regulation can quickly become obsolete, irrelevant or, in some cases, harmful – distorting competition, slowing innovation and ultimately depriving consumers of the benefits of technological progress,” added Granryd. “Recognising these challenges, the mobile industry is calling on policymakers worldwide to adapt outdated market regulations to reflect the new digital ecosystem.

He added: “We have made great progress no doubt, but we are challenged. I can safely say what has brought us here is not going to keep us here. We do need to be more innovative, more collaborative and redouble our efforts. By doing that, I’m 100 per cent we will be able to connect everyone and everything to a better future.”

Gigabit society
Colao noted the need for businesses to adopt to the changing markets and ecosystems available – noting half of the top Fortune 500 companies have disappeared over the past 25 years.

He said the gigabit society is providing substantial benefits to smaller businesses, such
as giving them instant global scale to trade and compete with larger companies.

Colao also highlighted a number of Vodafone business case studies, which have provided substantial savings to businesses, but also the creation of new innovative business models for customers – helping them stand out.

This includes saving the New Zealand police force more than €182 million a year, by digitising police patrols and vehicles using smart applications, creating a safer society.

Vodafone also works with Zenith Hygiene Group, using TomTom devices with its M2M SIM to help monitor driver performance of its 120 vehicles.

Granryd: policymakers must adapt outdated market regulations

Granryd: policymakers must adapt outdated market regulations

According to Vodafone, the initiative has cut driver accidents by 60 per cent a year, as well as £10,000 a month on fuel costs.

He also claims adoption of connectivity in health, such as patients being able to use technology to monitor their own conditions and self diagnose, could cut visits to A&E by up to 74 per cent, although he did not provide specifics to back his claim.

“Many businesses in the past year have digitised and introduced digital models,” said Colao. “The reality is now as we move into the gigabit society we are getting in a phase where companies can get instant scale. Scaling up is not a problem any more which means for smaller companies it’s a great opportunity to compete with the ones and, of course, they can do it with flexible costs.

With regard to health, Colao added: “Not only will three people out of four not go to an emergency admission, which is a very good thing, but also there is a lot of savings in it.”

Clear vision
Colao ended his keynote speech by reiterating the need for regulators to ensure the industry is not led by a single dominant provider, something which could cause irreparable harm to the ambitions of a gigabit society.

The Group chief has been vocal on his concerns over the widespread consolidation in the UK market, affecting every operator but itself.

He warned there must be a collective agreement to ensure ambitions for a “gigabit society” or “gigabit economy” as it’s often described, becomes a seamless transition for all.

“We need a thriving ecosystem of providers,” said Colao.

“There are a lot of changes in our sector and we need to ensure there is no dominant position that can really steer the gigabit society in one direction or another. There are market share tests, there are assessment of competition in some of the sectors near us. Some people have very high market share and this needs to be monitored because once we begin the gigabit society, it will be impossible to come back. We must have a clear vision of what a thriving ecosystem is and not allow dominance.

He concluded: “I’m very optimistic. The next five years will be in the gigabit society and will be a great environment for enterprise, consumers and the society to thrive.”

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