Telecom Exec is Frustrated by "Unfair" Competition: Get Over It

“Building networks is what we know how to do best: we’ll leave making apps and creating services to others,” said Timotheus Höttges, Deutsche Telekom CEO. Some might say that statement accurately reflects the fundamental role access providers play in the Internet ecosystem.


But Höttges also argues Facebook is a communications service that is not investing in telco infrastructure: this is unfair,” Höttges said.


It’s an odd pairing of statements, in many ways, and likely requires a bit of context. What Höttges is saying likely reflects a logical position, namely that providers of like services should be treated in a like manner.


The Deutsche Telekom CEO might also be saying that if Facebook were to become an actual access provider, it should be bound by the same rules that Deutsche Telekom is (consistent with the differences that often apply to former monopoly providers).


But Höttges also seems to argue that Facebook--as an app--not an Internet service provider, is providing services that are functionally equivalent to the services Deutsche Telekom provides, and should be regulated in the same way that DT is regulated.

Observers will vigorously debate whether that line of thinking is reasonable, or makes sense. It’s a complicated matter because many apps now feature “communications” as a core feature of the app, even when they do not directly use any “communications” network features.

The friction won't end any time soon, if ever. At some level, the issue really is that "apps" are providing substitute solutions for traditional "communications" products, and for that reason the economic and financial value of app firms often vastly outstrips the value of access firms.

Telco executives will be frustrated by that state of affairs. It is not a death spiral, but arguably is a value spiral. Value within the ecosystem has shifted.
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