by Peter Svensson Associated Press Feb. 19, 2010 12:00 AM
BARCELONA, Spain - Silicon Valley is looking like a winner in the tug-of-war with wireless carriers over who will control the new world of Internet-connected phones.
The tension between the largely U.S.-based PC and Internet industry and the world's wireless carriers was palpable this week at the world's largest cellphone trade show, Mobile World Congress. Google Inc. was one of the headliners, and Apple Inc. was the ghost hovering over it all. While many wireless carriers are cooperating or working with Google and Apple, many are also signaling that they don't want to cede power and be reduced to simple utilities.
For consumers, the reduced power of wireless carriers could mean more choices. Traditionally the network operators tried to limit the content people could access on their devices, before the rise of "app stores" and Web-based services dramatically expanded ways to customize phones.
Phones are becoming more sophisticated and wireless intrnet access is spreading across the globe. These trends play to Silicon Valley's strengths in software and the Internet. Voice service, the mainstay of the wireless carriers, is becoming less lucrative and less important.
Advertising keyed to Web searches is a small but growing business, and one Google dominates, along with Yahoo Inc. and Microsoft Corp. This worries the CEO of British-based Vodafone Group PLC, part owner of Verizon Wireless and one of the largest carriers in the world. Vittorio Colao said in a speech at the show that regulators such as the U.S. Federal Communications Commission should examine Google's power over this market.
Sales of downloadable programs known as applications for smartphones are also growing - and forcing carriers to struggle to stay relevant. When Apple took skills honed in the computer industry to create the iconic iPhone, it also created an application store where it gets a 30 percent cut of the sales, and the carrier gets nothing. Google has followed the same path with its application store for phones that run the Android software it's created.
Two dozen of the world's largest wireless carriers struck back at the show, announcing that they would create a "Wholesale Applications Community." The idea is that software developers will write their applications once, following a standard set by the community, which can then distribute them to carrier-run applications stores.
U.S. carriers Verizon Wireless, AT&T Inc., Sprint Nextel Corp. and T-Mobile USA are part of the group, which has 3 billion customers globally. Phone makers LG Electronics Inc., Samsung Electronics Co. and Sony Ericsson also said they would support the group.
