FRANKFURT/LONDON Seeking to escape a cycle of falling prices and tight regulation, big telecom operators from Vimpelcom (VIP.O) to Telefonica (TEF.MC) are set to reinvent themselves as internet players to escape the industry’s straight-jacket of low growth.
Next week’s Mobile World Congress in Barcelona will feature phone companies in various stages of acceptance that the industry’s predictable, decades-old business model based on selling data packages by the millions is running out of steam.
Beneath the facade of shiny new phones and dusty debates over network technical implementations, Europe’s largest annual technology fair will see top phone companies parading far-reaching business makeovers.
Spain’s Telefonica (TEF.MC) is set to introduce a broad plan it calls the “4th Platform” to help both consumer and business customers keep greater control over their data rather than giving it away to web giants Google, Facebook and Amazon.
Russian and emerging markets operator Vimpelcom (VIP.O) is tearing up many parts of the telecom rule book to remake itself as a tech player in the fast-growing world of messaging apps.
U.S. telecom giant AT&T (T.N) has inked a series of huge deals to diversify by acquiring Direct TV for $67 billion and is awaiting approval to buy Time Warner for another $110 billion.
“Regulatory and pricing pressure on telecom operators forces them to look to adjacent areas for new sources of revenue and margins,” said attorney Tom Levine, head of Allen & Overy’s global telecoms practice.
“There isn’t a consensus on how to do this.”
It’s also an open question whether the industry is structurally capable of big change. Telcos have dreamed for decades of breaking free of the shackles of consumer regulation and branching out into Internet services in their local markets, only to be consistently beaten by newer, global upstarts.