LONDON -- Ovum Digital Futures 2017 -- Europe's strict regulation of network operators stops them from launching the same services that Internet giants such as Google and Facebook can provide, a senior executive for the region's biggest cable operator told attendees at a conference in London on Tuesday.
Stringent oversight of the region's operators means they cannot use the data they store about customers in the same way as Google (Nasdaq: GOOG) and Facebook, said Jim Ryan, the chief strategy officer for Liberty Global, during a panel discussion at the Digital Futures 2017 conference hosted by analyst firm Ovum.
"One frustration that network operators have is that services are increasingly about big data, and regulation will have a massive impact on how quickly that develops," Ryan told conference attendees. "We get frustrated as network infrastructure players because we can't mine the same data as Google and Facebook."
The remarks from the Liberty Global Inc. (Nasdaq: LBTY) executive reflect growing irritation among European telcos and cable operators that Internet companies are not bound by the same rules as the region's infrastructure players.
Having already seen Internet companies chew into revenues from voice calls and text messaging, operators such as Liberty Global -- which owns the UK's Virgin Media Inc. (Nasdaq: VMED) along with a number of other European cable companies -- fear missing out on lucrative new service opportunities due to adverse regulation.
Both Google and Facebook hold vast repositories of customer data, which they have turned to their commercial advantage through online advertising deals.
By similarly "mining" data about customer behavior, an operator could provide more tailored recommendations to individual customers and also pursue deals with advertising companies.
Yet the current regulatory environment leaves the network operators at a distinct disadvantage in the market for new digital offerings based on such "big data," says James Crawshaw, a senior analyst with the Heavy Reading market research group.
Richard Mahony, the Ovum Ltd. research director, is in broad agreement: "We heard this morning that operators are regulated very differently from Internet players and that doesn't seem to be a balanced relationship," he said during an afternoon panel session at the Ovum event. "
Mahony said there is growing pressure on regulatory authorities to address this issue and ensure there is a "level playing field" between network operators and Internet companies.
Rob Gallagher, who leads Ovum's research on digital consumer services, believes Europe's regulators may have some wariness about regulating Internet companies as strictly as network operators while they try to foster a climate of technology innovation in the absence of home-grown digital champions.
"Europe is suffering in terms of innovation, which is migrating to the US and China, and governments want to stimulate investment," he said on the same panel session as Mahoney.
Players such as Google and Facebook have previously been able to evade regulation by presenting themselves as mere information conduits, arguing they cannot police and act on the abuse of the digital tools they provide, said Gallagher.
But their expertise in designing algorithms for mining data means this argument is wearing thin, according to Gallagher, who says there is a growing recognition among Internet companies of the need for change.
"Platforms realize they have to do something about this because if they let the world burn around them they will just be kings of the ashes," he said.
Liberty Global's Ryan also expressed some optimism that conditions will become fairer. "Technology firms will have to take more responsibility for what they are allowing people to access and that could have an impact on how advertising gets traded," he said.
Along with other network operators in the region, Liberty Global generates the bulk of its revenues from subscriptions to its broadband and TV services, but Ryan hints that advertisers are queuing up to sign deals with it.
"We have a strong relationship with households and there are so many advertisers that would love to get into our subscription model," he said.
— Iain Morris, News Editor, Light Reading