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Vodafone CEO sticks head in sand, goes 'La la la'

'No one can take our customers'

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Arun Sarin has told the FT that he has nothing to fear from Apple's iPhone/iTunes combination, or Google's Android, or even Nokia's Ovi, as no one can ever take their customers' billing relationship away from them.

Network operators have long felt no one could compete in providing services to their customers - they have the billing relationship, so they control how much their customers are charged, and for what.

For many years that was the case, but since failing entirely to take advantage of that relationship they have allowed a raft of competitors to create their own connections to customers - something Mr. Sarin appears not to have noticed.

"The simple fact that we have the customer and billing relationship is a hugely powerful thing that nobody can take away from us," he says, describing this as a "unique gift".

But Truphone (VoIP) customers have a billing relationship with Truphone, as well as their network operator, and should anyone decide to buy content from Nokia's Ovi portal then they too will have established a relationship directly with the customer - or at least the customer's credit card. Smartphone users are buying games from Handango, books from Amazon and maps from Nokia, all without recourse to the "unique gift" of operator-control.

He also argues that only Vodafone knows where their customers are, giving them a unique ability to target searches and advertising. But Nokia's A-GPS-equipped handsets communicate with Nokia's servers when getting a location fix, thanks to European operators' reluctance to deploy A-GPS, and any handset with GPS can share its location with the online world, so that location information isn't as privileged as Mr. Sarin thinks.

Five years ago these statements might have made sense, but the CEO of Vodafone should be better informed. Operators may have had exclusive access to their customers once, but those times are swiftly passing.

"Whoever comes into the marketplace is going to have to work through us," predicts Mr Sarin in the FT. Luckily Vodafone do appear to be trying to compete in providing services to their customers, rather than relying on the outdated understanding business architecture espoused by their CEO to the FT. ®

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