Dear Telefonica: why can’t you keep it simple for once?
The up side of the announcement of Telefonica’s new fourth platform strategy, outlined by José María Álvarez Pallete at the 30th Telecommunications and Digital Economy Meeting in Santander, Spain, is that it brings an end to the absurd and unhealthy obsession of trying to charge companies based on the type of the data flowing through their cables (it wasn’t easy getting people to understand the concept of net neutrality, and it is by no means free from threats yet, but fortunately for everyone, we’re getting there). But the down side is that this is yet another attempt to gain a foothold in a non-existent, artificial market.
Javier Pastor explains the issue in a Spanish-language article in Xataka, as does Marimar Jiménez in her article in Spanish financial daily Cinco Días in which I participated, arguing that while management of user data and its use by companies is far from perfect, this does not mean that telecoms operators protecting us from this with a layer of software is a good thing. Also, Javier Recuenco shares his vision on the topic in English on LinkedIn.
Many companies take advantage of user data as part of a business model that involves trying to adapt the advertising you receive to your interests, preferences and characteristics. A business model based on free services in exchange for data has many problems, especially arising from advertisers’ obsession hassling users with intrusive formats, which has prompted many people to install ad blockers. But even if that business model has its problems, which are more to do with resistance to change from traditional players (advertisers and agencies) than anything else, that doesn’t mean that there is a market opportunity for mediating on behalf of data users… and even less so in the case of telecoms operators.
Let’s pretend for a moment that such an opportunity really exists. We’re talking here about an increasingly complex environment with millions of apps of all kinds struggling to gain data about users who will have agreed to allow all kinds of permissions during the installation process without bothering to check. But I repeat: the idea of a telecommunications company intermediating between applications and users by creating and additional layer does not seem like an adequate solution.
Telcos are unpopular just about everywhere, and are the subject of more complaints and claims than in any other sector. The idea that they are going to look out for our interests is, shall we say, unrealistic.
The problem, in my view, is the inability of telcos to accept that what users want from them is simply telecommunications: a pipe through which data passes, and the more data for less money, the better. The day a telecommunications company enters the market with a commitment to just creating and operating infrastructure at the lowest cost, it will clean up. Instead, these companies are determined to occupy other market segments: providing services, portals, news, content … and that time and again have been rejected by consumers.
What we want is a market for companies offering these services, rather than being grouped under the umbrella of one company. The idea of the road builder deciding who travels on it was never a good idea, as has been proven with the gradual acceptance of the principles of net neutrality. Electricity or water utilities do not sell dishwashers or radiators. Why? Because it would be an obvious conflict of interest.
But however simple the idea of telecoms operators sticking to what they know best, which is hooking us up to the internet, they seem bent on trying to access new areas in order to justify their bloated structures.
If Telefonica devoted itself to being the best company at building and maintaining telecommunications infrastructure in all its forms, the value it would generate would be much higher than the result of trying to do things that it always ends up doing worse than the competition a free market generates. The best operator is the simplest operator, but it seems such a concept is anathema within the sector, almost like insulting them.
Telefonica’s latest initiative means that we’re going to have to watch out as it attempts to gain a foothold in a market where there is no room. And like so many of its other initiatives, it will end up being stopped by the competition authorities, rejected by users, or simply falling along the wayside.
(En español, aquí)
