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Google CEO comes to Barcelona in peace

Eric Schmidt tells mobile operators at their biggest annual gathering, the Mobile World Congress, that he wants to partner (rather than compete) with them to find value for all.

Google CEO Eric Schmidt speaks at the Mobile World Congress.
Marguerite Reardon/CNET

BARCELONA, Spain--Google CEO Eric Schmidt extended an olive branch to wireless-network operators as he took the stage Tuesday afternoon here at the GSM Association's Mobile World Congress.

Schmidt delivered his speech hours after the CEO of the world's largest mobile operator, Vodafone, suggested in his own keynote address that Google was getting too powerful in the mobile value chain. Earlier in the day, Vittorio Colao warned the telecommunications industry that companies controlling 70 percent to 80 percent of a market, such as Google in mobile search, should raise the attention of regulators.

Schmidt, whose company has had a contentious relationship with some mobile operators, did not respond to fears of monopolistic behavior. Instead, he focused on how he saw Google and the wireless industry working together to deliver services to consumers. Google wants to partner with wireless operators and application developers to make sure that consumers get a good mobile Web experience, and all the partners involved make money, he said.

"Ultimately, these businesses will succeed to the degree that they stay end-user-focused," Schmidt said. "And the best partnerships start from that, and not from dividing the industry or restricting what people do." He added that the best partnerships are also the ones in which all parties involved make lots of money serving consumers.

Google, which has been adding more sophisticated and data-intensive applications to its cache of products, has often garnered suspicion among mobile operators, as it moves further into the industry, not only with search applications but also with its focus on the Android mobile operating system and on hardware such as the Nexus One smartphone.

Google also raised eyebrows a couple of years ago, when it bid on wireless spectrum in the United States. Ultimately, Google did not win wireless-spectrum licenses and admitted, once the auction was over, that it had only bid so that the price of the wireless licenses reached a point where a special open-access provision was triggered in the rules.

Eyebrows were raised once again last week, when Google announced that it was going to launch an experimental fiber broadband network capable of delivering 1 gigabit of data per second.

But during the question-and-answer period of the presentation, Schmidt assured worried Mobile World Congress attendees that Google comes in peace. He said he disagreed with one audience member's assertion that Google is trying to make wireless operators "dumb pipe providers."

"We feel very strongly that we depend on the success of the carrier business," Schmidt said. "We need a sophisticated network for security and load balancing."

Schmidt explained that carriers' sophisticated billing relationships with customers is key. He also emphasized that carriers would offer support and education, serving as a basic platform for mobile services. Google will also serve customers, he said, but it will rely on customers sharing their information with Google to get better search results, more accurate location data, and more relevant applications.

Another point the Google CEO tried to get across: Google is not looking to compete with wireless operators.

"We are not going to be investing in broad-scale (communications) infrastructure," he said, adding that Google's fiber network trial and the company's investment in WiMax 4G wireless provider Clearwire are designed to help advance high-speed networks.

He also addressed concerns that Google is trying to limit how operators can manage their networks through its efforts to lobby for Net neutrality regulation in the United States.

"We understand at a fundamental level [that] wireless networks have constraints," he said. He went onto explain that wireless operators should not be choosing winners and losers when services are offered, and he conceded that current bandwidth constraints may require operators to move to a tiered pricing model.

"As people consume massive amounts of data, operators will be forced to tiered pricing to deal with the top 1 [percent] to 5 percent of users consuming 70 percent of the bandwidth," he said.

Even though Schmidt acknowledged that operators need to figure out ways to better manage their networks, he made it clear that they should not deny network access to bandwidth-intensive applications, point blank. Instead, he said operators need to find ways to accommodate user demand on their networks.

"We should embrace [changes in end-user behavior]," he said. "And we should figure out a way to make money from it together, instead of blocking it."