* Micro-billing, differentiated services under consideration
* Expanding market is dominated by Google
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By Kate Holton
LONDON, Nov 19 (Reuters) - Britain’s Vodafone (VOD.L) is looking at new ways of making money from the mobile Internet, such as offering premium services, as the battle for control of an expanding market dominated by search engine Google (GOOG.O) hots up.
All the major mobile operators have suffered in the last year in mature markets such as Europe from falling voice revenues due to competition and the economic downturn.
In response, they have looked to the development of data offerings which allow customers to surf the Internet, send emails and share content such as music, to retain customers and diversify revenue streams.
Now, Vodafone Europe Chief Executive Michel Combes believes the group could go further, by starting a debate within the wider telecoms and media industries over how to secure enough revenue to continue investment in the data networks.
Vodafone has not cut its capital spending this year, despite introducing heavy cost cuts elsewhere within the business.
But operators are concerned about having to secure revenue for ongoing investment as the Internet goes mobile because so far the main winners in the Internet space have been Google and other big search engines.
Ideas that could be considered to boost revenues include content providers paying operators to guarantee their content is carried over the network without disruption. Operators receiving a fee from micro-billing and providing location services could also be an option.
Vodafone is also offering its business customers the chance to pay a premium fee to guarantee a better service.
“This is about unlocking additional value all along the chain and making sure that all the players can see the benefit,” Combes told reporters. “Some customers may be ready to pay more for a differentiated quality of service depending on their need.”
The suggestion follows a debate in the U.S. where regulators have said that telecom network operators cannot charge different prices for different levels of Internet traffic.
The growth in data services has helped to offset some of the falling voice revenues in Europe. For the region, Combes said he expected a recovery in GDP to pave the way for a recovery for operators, although there could be a lag due to unemployment.
Vodafone said in its first half results earlier this month that European organic service revenue was down by 4.5 percent due to the tough competition and economy.
Olaf Swantee, the global head of France Telecom’s Orange mobile business, told the same conference they too had seen a sudden drop in voice revenues but said they had seen huge demand for data offerings both from its most mature European markets and its eastern European divisions.
Swantee said the reduction in voice revenues, new regulation and the economic downturn had resulted in a “perfect storm” for operators and said the changes were structural and were unlikely to return once economies recover.
“There are only so many hours in the day that people can phone and we’re seeing voice ARPU (average revenue per use) decline quite significantly,” he said.
Reporting by Kate Holton; editing by John Stonestreet