Digital Dreams Languish In Europe Phone Carriers’ Plans

By Cornelius Rahn & Manuel Baigorri – Feb 26, 2013 10:33 AM GMT+0200

“No more dumb pipes” has been European phone companies’ mantra for years as they pursued digital projects such as payment systems and Internet application stores to rival Google Inc. (GooG)  Many of these ventures are now taking a backseat to more basic tasks.

After years of declining revenue from phone calls,Telefonia SA (TEF), Vodafone Group Plc (VOD) and Deutsche Telekom AG (DTE) have been hunting for new data sources ranging from cars to refrigerators to fill their networks, while trying to pry loose content providers’ grip running high-margin programs over their infrastructure.

At the Mobile World Congress this week, over 70,000 are gathering to discuss the future of wireless communications. Photographer: Simon Dawson/Bloomberg

At the annual Mobile World Congress in Barcelona this week, carriers are still trying to show they’re as much into software development as managing telephone networks. Yet as the networks themselves come under assault from cable providers and as cash for side projects gets harder to come by during the debt crisis, the real battle is to keep customers using their infrastructure in the first place.

“The various innovations haven’t yet really made much of a difference to the top line,” said Heinrich Ey, who helps manage more than 250 billion euros ($326 billion) at Allianz Global Investors in Frankfurt. “The need to come up with funds for network upgrades and the headwind on the revenue and cash flow doesn’t leave much room to excel with new products and solutions.”

Source:Bloomberg