European mobile operators seemingly divided over sanity of blocking ads

Several European telcos have come out against a scheme by their fellow operators to block advertising as a maneuver to force Google to share its revenue.

An executive at a European telecom operator has said it and others are planning to start blocking online ads this year in their respective mobile networks, the Financial Times reported on Thursday.

First, the unnamed operator will launch an advertising-free service for its subscribers on an opt-in basis. However, there are also plans to use the technology across its entire network. The plan is to specifically target Google, blocking ads on the company’s websites in an attempt to force the online giant to share its revenue, according to the Financial Times.

How many operators are backing the idea isn’t clear, but there are several that think it’s ill-conceived, including Deutsche Telekom and Swedish operator TeliaSonera, which has networks in the Nordics, Baltics and Spain. Neither has any plans to block advertising on their networks.

“Without having done a detailed analysis of the technology or its implications, we doubt this is something that would go down well with our customers,” said Nicholas Rundbom, director of communications for TeliaSonera, adding that it doesn’t make sense to get into a dispute with a company that drives a lot of traffic.

Deutsche Telekom didn’t elaborate on why it thought blocking ads was a bad idea, but two other operators that didn’t want to be named offered some thoughts.

“I don’t know where to begin, to be honest with you. Blocking ads opens a whole lot of questions, not only on the net neutrality side of things, but also whether it’s legal to do that,” said a representative for one operator. It’s a good thing for the operator to have subscribers who consume lots of data over its networks using ad-funded services or applications; they can decide for themselves whether they want to block ads.

“We don’t believe in blocking and working against the over-the-top app developers, be that Google or someone else. Finding ways to collaborate is a much better approach,” an executive at another operator said.

However, there is a concern about where revenue streams are going, and if a mobile operator did what Google and Facebook do with user data, the reaction would be one of outrage, according to the executive.

Google responded to the report by saying the reason people pay for mobile data is so they can access apps, video streaming, webmail and other services, many of which are funded by ads.

Operator interest in online advertising revenues was made clear this week when Verizon Communications announced its planned US$4.4 billion acquisition of AOL. Part of the motivation for the deal is to get access to AOL’s advertising technology.

The worries mobile operators have are easy to understand. Their voice and messaging revenue streams are under pressure from apps such as Skype and WhatsApp, and they have failed to develop new apps that are popular with their users. At the same time, aggressive price competition in many countries is putting pressure on revenue from data.