By Jennigay Coetzer – Business Day, 17 May 2011

There is great potential to bring internet access to the broader population in the developing world with mobile phones. Derek Wilcocks, MD of Internet Solutions says some progress is being made, for example with the price of smartphones dropping and the promise that the next generation mobile Long Term Evolution (LTE) technology will provide higher speeds.

But most of the focus has been on the technological aspects of the networks and devices, as opposed to content, says Wilcocks. He says there there is need for more innovative  content that consumers are willing to pay for, but the lack of a regulatory framework to govern the activity of the mobile networks is hindering progress with this.

In the fixed line regulatory environment operators and service providers have to provide free access to their networks to content providers, which encourages competition, says Wilcocks. “Content providers can pay for capacity and deliver any content they want to over any fixed line network, thanks to the internet.” he says.

But mobile operators can restrict access to their networks and bundle content in with their services at prices that make it difficult for anyone else to compete. “They are not obliged to provide access to their networks on a fair wholesale basis,” he says.

This means they can charge content providers the same price they are charging retail customers or even more, because there are no regulations to prevent them doing this. According to the terms of their contracts with subscribers, mobile operators are entitled to block certain types of content on their networks, such as Voice over IP (VoIP) calls, if it suits them.

While it is no good forcing operators to open up their networks to anyone because then nobody would be prepared to invest in the mobile industry, they should not be so heavily protected from competition, says Wilcocks. “There needs to be a balance between a free for all and too much protection,” he says.

A regulatory framework needs to be formulated that will provide an environment that will encourage the creation of innovative mobile services instead of stifling it, as is happening now, says Wilcocks. For example, about 18 different local entities are investing in mobile payment technologies.

But providers of capital funding are wary of backing projects like this because they are worried that the mobile operators will introduce their own mobile payment services and undercut prices. “The same issue will arise with other mobile content services unless there are regulations to distinguish between wholesale and retail prices,” says Wilcocks.

He says it is unlikely that one of the mobile operators will take the initiative to open up its network, because this would affect its revenues, which would not go down well with shareholders. “So it is unlikely to happen without regulatory reform.”

Jennigay Coetzer is a freelance business and technology journalist and she writes regularly for Business Day. She also runs media training and writing skills workshops, and is the author of A Perfect Press Release – or Not?, a guide to writing and distributing effective press releases, an electronic version of which can be downloaded free from her website: www.jennigay.co.za.

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