How to beat the downturn? Get on your mobile

Governments should look to the telecoms sector to help them through the recession, European mobile CEOs have urged.

Speaking at the Mobile World Congress conference in Barcelona this week, Rob Conway, CEO of wireless industry association the GSMA, highlighted how governments around the world are looking at investment in telecoms infrastructure as a means to stimulate their economies. "The communications sector is an engine for growth to shorten the downturn," he said.

CEO of O2 parent Telefonica, Cesar Alierta, said: "This sector is not part of the problem, it's part of the solution."

Alierta pointed to what he described as the "multiplier effect" of the telecoms sector on national economies - where increasing use of mobile phones in developing economies is linked to a corresponding growth in GDP.

"There is a clear underestimation of the potential of our industry… for the world economy," he told the conference.

However the mobile industry is by no means immune from the recession and Vodafone CEO, Vittorio Colao, warned that although "data is growing beautifully" there are "elements of risk" - from customers asking whether they can afford to buy a particular handset or data service to strong downward pressure on prices and "regulatory activism".

The news is not all bad for the operators, however. According to a report released this week by the International Telecommunications Union (ITU), mobile operators are better placed than fixed operators due to capital expenditure being a smaller proportion of their costs and network upgrades costing relatively little.

Nevertheless, operators will need to rethink their business models in the face of the recession as consumers take another look at their household budgets.

"Telcos need to be able to understand the spending behaviour of consumers in order to weather the recession and design packages that are closely tailored to consumer needs... More consumers are likely to opt for prepaid and flat-rate packages for telecom services to try and control their expenditure," the report said.

The ITU added that the telecoms industry should continue to invest in infrastructure and services, such as next generation networks, "which could help reverse the economic slowdown".

silicon.com's Tim Ferguson contributed to this report