Focus
on mobile and next generation networks in Edinburgh
Presentations dealing with the general lack of price reduction
in mobile termination rates and the opportunities and challenges
associated with the introduction of Next Generation Networks
took centre stage at INTUG's Edinburgh, Scotland meeting in
November.
Reporting
on the event, INTUG's Treasurer, Nick White, says the spirits
of delegates from around the world were not dampened by the
traditionally unpredictable Scottish weather. The Point Hotel
with its skyline dominated by Edinburgh Castle hosted nine
INTUG representatives including Chairman Sergio Antocicco
(Italy), Allen Millar (USA), Paul Boutelant (France), Beth
Mackenzie (Australia), Danielle Jacobs (Belgium), Gustav Rickert
(Sweden), newly elected Executive Committee member Jacob van
Kokswijk (Netherlands) and Executive Director Ewan Sutherland.
While
proceedings were dominated by challenges relating to mobile
and next generation networks, there were also useful discussions
on the future of INTUG and plans specifically for 2006 were
discussed including events and meetings.
Much
to his relief as INTUG's treasurer, Nick White further reports
that important decisions regarding INTUG's finances were concluded
and subscription levels for 2006, as provisionally agreed
at the end of 2004, have been confirmed. Full member subscription
fees for 2006 will rise slightly to 3 000. Allowing for inflation
this increase restores parity with membership fees from the
late 1990s. Associate subscriptions will remain at 5 925 and
individual subscriptions remain at 200.
The
first INTUG meeting for 2006 will be hosted by ANUIT in Rome
on 24-25 January. This meeting will include the INTUG AGM
and will be an important opportunity to further address INTUG's
priorities going forward and identify ways in which value
between members can be shared more effectively. All members
are encouraged to attend this landmark occasion.
Danielle
Jacobs has offered to help organise a workshop-style discussion
on the subject of providing additional membership value. Members
are further encouraged to email her at danielle.jacobs@beltug.be
with suggestions on how membership value can be improved so
that these suggestions can be built into her planning.
A
second meeting for 2006 is planned for Dreibergen, Netherlands
and is to be hosted by BTG on September 13 and 14. It was
also noted that the 2006 ITU Telecom event, which is sometimes
described as the “Telecom Olympics” due to its
four year cycle, will not be held at its traditional Geneva
venue, but is to be held in Hong Kong from 4-8 December. It
is hoped that an additional INTUG meeting, for at least Asia
Pacific members, will be held to coincide with this event.
The
planned fixed/mobile convergence conference, which was deferred
until 2006 and expected to be held in Rome, is being reconsidered
given the challenges of running international conferences
at present. The event may be relaunched with a slightly broader
subject appeal which reflects a shift in focus of interest.
At the time of writing there is also intense interest in the
outcome of WTO discussions which are critically important
to the economic growth through the opening of trade barriers.
INTUG continues to maintain its pressure for countries to
honour their existing commitments in telecommunications and
for more offers to be made.
Despite advances,
the cost of mobile is still a burden
INTUG Executive Director, Ewan Sutherland, says that
although the general argument on the need to regulate international
mobile roaming rates has largely been won, the speed at which
such rates are declining internationally is, on average, very
slow and operators continue to apply unjustifiably high prices.
Speaking
at INTUG's Edinburgh, Scotland meeting in November, Sutherland
said mobile network operators in various countries have used
every conceivable means to deny and to delay the reductions
of these charges, because of the enormous amounts of money
at stake. They have made extensive filings with regulators
and have taken almost every decision to at least one level
of appeal. The operators have exerted considerable political
influence to discourage regulation or to divert the limited
resources of regulators to other areas, where the resistance
would be weaker. In many cases the political influence is
accentuated by the government being the owner of a substantial
holding of stock in one of the mobile network operators. Sutherland
further said that the need to regulate mobile termination
rates is seen as a priority and that INTUG would identify
countries where progress has been unacceptably slow.
Sutherland
further said that data reported by the European Commission
and the European Regulators Group are a good basis for the
comparison of European countries and it is generally considered
useful to compare national performances in the reduction of
mobile termination rates.
Sutherland
noted at the Edinburgh meeting that international user groups
dedicated to unraveling the devious ways in which operators
undertake to extract profit from business and consumers are
unlikely to become engaged in very technical discussions on
the construction or modification of Long Run Incremental Cost
(LRIC) models. Just one contentious issue has been the inclusion
of marketing costs which have sometimes been allowed in determining
termination fees.
In
the past, INTUG has pointed out that an increasing number
of mobile cellular operators are creating a separate tariff
for the completion of international calls to their networks.
These wholesale prices can be as much as 1500% more expensive
than calls to a fixed network in the same country and mobile
operators are leveraging their domestic power in the call
termination market into foreign markets for call origination.
With the growing importance of mobile networks, other operators
have no alternative but to connect, even when they are unable
to negotiate and must pay the price levied by the terminating
network and, consequently, retail prices to foreign mobile
networks can be higher by 10 to 30 cents (Euro or US) per
minute. Consumers are frequently unaware of these higher prices
and even if consumers do know that a call will be at a higher
price, they frequently have no obvious alternative.
Another
earlier statement released by INTUG points out that for several
years the comments received by the United States Trade Representative
(USTR) in preparation for the annual 1377 report on international
trade issues in telecommunications have highlighted the problem
of the high cost of termination of calls on mobile networks
in countries using the Called Party Pays (CPP) system. These
charges are a significant burden on individuals and on corporate
callers in the USA. At a time when prices for long distance
and international calls are falling, often to become flat-rate
plans, the rates for termination on foreign mobile networks
have grown ever more conspicuous and are a burden.
A
large and growing number of countries have mandated CPP and
have allowed operators to determine the price of termination
on their networks at levels unrelated to the costs and with
every incentive to charge high prices. In so doing, they have
ignored their WTO obligations.
On
a more encouraging note, Sutherland pointed out that in France
the regulator had found that having three operators was insufficient
to ensure competition and had threatened operators with forced
MVNO deals and national roaming. The mere threat of such deals,
Sutherland said, appears to have been sufficient with operators
now striking deals. Meanwhile, a separate investigation is
being conducted by the national competition authority into
accusations of collusion
and price fixing by mobile network operators.
More
of the same for Next Generation Networks?
If history is a fair judge of character, INTUG's Ewan Sutherland
warns that incumbent operators the world over will try to
monopolise the next big thing in voice and data connectivity
– Next Generation Networks.
Next
Generation Networks offering unprecedented bandwidth, multi-service,
multi-protocol and multi-access services all over Internet
Protocol (IP) are just over the horizon so, according to INTUG
Executive Director, Ewan Sutherland, few will be surprised
when incumbent operators leverage significant pressure to
deny, delay and degrade regulation and competition.
Speaking
at INTUG's Edinburgh, Scotland meeting in November, Sutherland
said Next Generation Network technology is “a packet-based
network able to provide telecommunication services, able to
make use of multiple broadband, quality of service-enabled
transport technologies and in which service-related functions
are independent from underlying transport-related technologies.
It
offers unrestricted access by users to different service providers
and supports generalised mobility which will allow consistent
and ubiquitous provision of services to users.”
In
short, Next Generation Networks are expected to unleash the
power of a mobile device such as a laptop or PDA and enable
it to operate not only as a cellphone, landline, email and
web device, but also connect to your fridge, open the garage
door and or track your RFID-enabled shipment anywhere in the
world. If that isn't enough, such a device would also facilitate
texting, instant on-network payment facilities, music, mini-television,
games, accessory applications and navigation.
Next
Generation Networks will form an important “middleware”
kind of function by supporting multiple services and multiple
protocols, enabling a single device to perform the function
of many in a secure, reliable and trusted environment. The
networks will enable service providers to offer:
Real-time communication services Peer-to-peer and client-server
communications Mobility of both users and devices Interoperability
between legacy and next generation services and networks.
However,
Sutherland warns that in practice various barriers to adoption
are present, including inadequate competition, lack of clarity
in the benefits of the service and excessive pricing. In addition,
there is a risk that service providers adopt a “walled
garden” approach – allowing their
users access only to services and content they deem as appropriate
or limiting access based on package options.
“Historically,
incumbent operators the world over have tried, and in many
cases successfully managed, to stifle regulation and competition
through economic, political and legislative pressure,”
says Sutherland. We feel that if history is a good judge of
character, incumbents will, once again, leverage all they
have at their disposal to control Next Generation Networks,”
he says.
“INTUG
is aiming to ensure an environment where real and effective
competition is allowed to thrive and one where there are genuine
choices for users. This inevitably results in lower prices,
higher quality and more innovative services,” Sutherland
says.
Regulation
is the most powerful tool governments have in terms of ensuring
effective competition. That said, ensuring efficient regulation
is not as simple as it appears. Documents like those which
have surfaced atthe European Competitive Telecommunications
Association (ECTA) state that “It could be very tricky
for policy makers and regulators to strike a balance between
allowing nascent markets to develop without interference and
ensuring that competition is able to develop in those new
markets. However, they can play an important role in removing
barriers to the effective deployment of NGN while encouraging
the development of NGN.”
Nevertheless,
the adoption of regulation in order to ensure competition
is largely seen as critically important to the successful
implementation of Next Generation Networks, as this comment
from www.ectaportal.com highlights: “Failure to act
will enable incumbent operators to build networks that foreclose
competition reducing choice and innovation for consumers and
businesses for years to come. Incumbents have argued that
NGN investment is risky and that regulation would deter them
from making this investment. However, the real risk is that
if incumbents can escape regulation by upgrading their core
networks to reflect efficient modern technology already used
by many other operators, competition will be irreparably damaged
and, as a result, future investment by both incumbents and
market entrants will be jeopardised.”
There
is no doubt that Next Generation Networks could offer an Internet
which is far superior to current connectivity options. These
networks will be able to leverage the power of corporate and
residential fixed broadband, Wi-Fi and WiMAX wireless networks,
cellular voice and data networks and digital broadcast networks,
including satellite.
In
addition, Next Generation Networks could also offer an “Internet
of things” - connecting inanimate objects to networks.
Electronic tags in the form or RFID and other sensors could
extend the communication and monitoring potential of the “network
of networks”.
Regulation of cellular
markets
United Kingdom regulator OfCom hosted a European Union telecom
meeting in Edinburgh recently. Speaking at the meeting, INTUG
Executive Director, Ewan Sutherland gave his personal views
and insight into the regulation of the cellular market from
an international perspective:
Japan
Japan and South Korea are the two main 3G mass markets in
the world with the former now boasting some 40-million subscribers.
The pace of change in Japan has been dramatic with operators
moving to both new networks and handsets in order to take
advantage of new technologies. This change has taken place
with little evidence of pain and suffering in a market which
is extremely demanding in terms of customer service. The Japanese,
on the whole, have a notion that telecommunications operators
should know what they are doing and get on with it. They do
not accept beta release hardware, bug-ridden software or pricing
by trial and error. All this only highlights the impressive
pace of change taking place in the country.
New
Zealand
By contrast, New Zealand appears to have made terrible mistakes
with UMTS, in which lessons from GSM were misunderstood, misapplied
or simply ignored. The decision to cast aside existing GSM
networks and to build 3G networks from scratch was a mistake
for which operators and therefore their users, will pay for
many years. It would seem that the networks incorrectly assumed
that revenues from 3G would be so great that they would be
able to justify almost any level
of investment.
New
Zealand is a small market located a great distance away from
other markets and by a quirk of fate, now finds itself with
one GSM and one CDMA operator – both of which are making
their way towards 3G. Until recently, the GSM operator has
been dominant but with CDSM more widely available in other
countries, Telecom New Zealand has now gained some traction
against its GSM rival. The introduction of cheap multi-mode
handsets has helped, but the lack of mobile number portability
continues to limit competition.
The
two operators are presently engaged in a robust exchange of
views on the capacity and merits of their respective networks
which is not pretty, but at least it has raised the competition
bar a notch. There is still no sign of the third New Zealand
operator which was issued a license some years ago but has
built nothing.
USA
The USA has competing cellular technologies, some operators
with CDMA and others using GSM or Nextel iDEN. The CDMA operators
quickly deployed cdma2000 1X and began to offer data services
at flat rate prices. The retail prices are around US$ 70 per
month for unlimited usage across the continent. The GSM operators
in the USA have, force majeure, had to respond with EDGE rather
than GPRS in order to try to match the speeds. They have also
had to offer flat rate prices.
Sprint
has signed agreements with cable operators to offer quadruple
play - Internet access, television, wireline and cellular.
There is also a strong consumer focus leading to the provision
of entertainment services including branded MVNOs such as
Disney.
Where
once the USA could be said to be behind Europe, the USA now
seems to be showing more and faster innovation and gives the
impression it has at least drawn level, albeit on a somewhat
different path.
South
Africa
There is presently a pitched battle in South Africa concerning
the affordability of mobile telecommunications. Dr Kelly of
the ITU and Dr Reynolds of the OECD recently made presentations
in Johannesburg which have emphasised the very high level
of prices there, arising from the lack of competition.
Markets
with only three mobile operators can be far from competitive.
The regulator should be advised to look closely at recent
developments in France and in Ireland.
The
introduction of Mobile Virtual Network Operators (MVNOs) and
national roaming deals, whether voluntarily or by obligation,
would do much to improve competition. Like many countries,
South Africa struggles to bring termination rates on mobile
networks down to acceptable levels. All the arguments used
in the United Kingdom have been recycled in South Africa,
sometimes by the same people. What is missing in the market
in South Africa, as in so many countries, is true competition,
measured in user benefits.
Europe
From a European perspective, competition so far has been insufficient
to achieve policy goals, principally the Lisbon agenda. Sadly,
the rhetoric of the “3GSM” operators has been
much stronger than their competition. They will happily assert
that there is competition when it is absent or so attenuated
as to be invisible to the naked eye.
There
is no single market for mobile telecommunications. At the
retail level it is entirely absent. Mobile telecommunications
lives in the world of Bismarck, Garibaldi and Woodrow Wilson.
It is a Europe of nation states. In terms of the n+1 policy,
Europe was to have one additional operator with 3G, one more
operator than 2G. Instead, there is more consolidation and
a number of licenses still unassigned. It must be accepted
now that the policy is misguided. Market entry was too expensive,
the combination of license fees and network construction cost
too much.
Despite
these challenges, regulation has worked despite strenuous
efforts by the operators to thwart it. Progress has been made
on call termination, on number portability and on call origination.
|
