BELTUG Update on Global Communications Issues 24 January 2011

INTUG had a busy end to the year, including a presentation to the Mobile Roaming World Summit in October, a submission to the European Commission protesting against Italian NRA AGCOM’s proposal for a large increase in Telecom Italia’s wholesale charges, and responses to BEREC’s consultations on its 2011 work programme and its next steps for analysis of the business market.  INTUG participated in ECTA’s regulatory conference in Brussels, ICANN in Colombia, OECD’s CISP meeting in Paris, and the year ended with INTUG’s own meeting in London, hosted by UK Member CMA.

Overall there is a sense that there is less competition, ex-incumbents are beginning to at least reduce market share loss, and in many cases to reverse the trend and regain losses.
With a growing acceptance that duplicate fibre infrastructure is unaffordable in the modern economic context, and hence infrastructure competition will be very limited except where it already exists, the next generation fixed networks may become a “natural monopoly”, thus requiring even stricter regulation to preserve service-based competition via open access.

Current debates over network neutrality are confused and working at cross-purposes. 
The debate is portrayed as a conflict between digital “rights” holders of intellectual property, and the basic user “right” of open access.  But the real issue is actually about traffic management and traffic prioritisation rules which will be needed if service providers are to be able to offer differentiated quality of service to different groups of customers, including the much more demanding high quality services needed by business customers.

The European Commission has said that network neutrality regulation is not yet needed. However, some prophets of doom say that without rules there is a risk that within 20 years that the Internet may be a pale imitation of its former self, dominated by media owners and their service providers, and by adverts.  Choice will be very limited, and little will be “free”.

INTUG’s submission to the European Commission said the key aspects of net neutrality were transparency, differentiation and discrimination.  Whilst network providers must be able to manage traffic in order to offer “guaranteed” levels of service, even if the guarantee is in practice limited to “best endeavours”, they must not be allowed to do so in a way that enables them to discriminate in favour of some customers, including their own subsidiaries or members of their own group, at the expense of their competitors.  Traffic prioritisation rules must therefore be transparent, and their use must be capable of NRA monitoring. 
The traffic rules must also be non-discriminatory with regard to applications and content, which therefore requires some form of standard classification, e.g. to determine whether an application fits into a category for which a rule applies. This is of particular concern where there is a dispute as the legitimacy of blocking traffic.  An example of this has been the classification by some mobile operators of Skype as VoIP, in order to justify blocking it, although INTUG does not support blocking of VoIP per se anyway.

ECTA’s annual regulatory conference had another strong line up of speakers and focused on the main themes of the Digital Agenda for 2015, which is driving ICT policy in Europe.
Commissioner Kroes spoke of her aims for the five year term, which include eliminating Roaming Charges in the EU as a building block for the Single Market (see para below).
Chris Fonteijn, the incoming BEREC Chair, outlined the work programme for this newly formed group of EU national regulators, and the Radio Spectrum Policy Group (RSPG), which may bring urgently needed progress in harmonisation and efficient of use of this precious resource.  There were presentations from the two Eastern European Member States, Hungary and Poland, who each hold the Presidency for six months in 2011. 

The landscape for next generation fibre networks promises to be very varied, ranging from State driven implementation, as in Australia with their NBN to a wide variety of approaches elsewhere including community networks, multi-fibre infrastructures and both point-to-point (P2P) and Gigabit Passive Optical Network (GPON) approaches.  Technology choice and topology both have a profound impact on the feasibility of sustaining effective competition, and on the need for regulatory intervention.  As interpretation of the NGA recommendation evolves by case law, it is imperative that users engage in the regulatory debate to ensure that choice is not constrained in the future.  In the short term, the regulated wholesale price for copper provides a dilemma for regulators, where too high a price may encourage incumbents to maintain copper-based legacy networks far longer, due to advantageous margins, whilst too low a price may limit their investment capacity for new fibre networks.

Delegates were forcefully reminded of the May 2011 deadline for transposition of the new Regulatory Framework.  Member States face a minimum fine of €11m if they miss the date, and business users are advised to watch carefully to see how their NRA apply the framework in their national context.  This should be linked very carefully to examination of the cost allocation principles being applied, and the risk adjusted rates of return allowed to incumbents.  One loophole in the NGA Recommendation worth watching is the wording for co-operative arrangements, which may provide an opportunity for discrimination.

Over 50 delegates attended the second of INTUG’s 2010 meetings, hosted by UK member CMA at the offices of BCS of which CMA is a part.   Both UK and international speakers addressed the meeting on the first day.  OECD gave an overview of fixed and mobile broadband developments around the world.  OfCom explored the regulatory challenge of encouraging BT fibre investment, whilst sustaining competition, with a combination of Virtual Unbundled Loop Access (VULA) and Passive Infrastructure Access (PIA).  They also reflected on the pros and cons of being a merged media/communications regulator.

There was an uplifting update on communications support for the 2012 Olympics, and on Government Broadband Policy, just as the UK Government’s new Strategy Document was released.  Vodafone gave a mobile operator’s view, which challenged the common drive for FTTH by asserting that the investment target for fibre roll out should be mobile access points and businesses, and not consumers who could be satisfied by mobile access. 
The Independent Networks Co-operative Association (INCA) gave an insight into regional and community network developments, and ThomsonReuters highlighted the challenging demands of meeting a major international organisation’s needs, where market revenue potential and access cost can be in inverse proportion.  Ovum gave a presentation on the challenges and benefits of the various flavours of Cloud Computing, known as PaaS, IaaS and SaaS - Platform, Infrastructure and Software as a Service. The general message is to proceed with caution and remain sceptical about the mathematics of benefit claims.

Concluding the first day, the meeting identified ten big issues which would face users in the coming years, acknowledging that some had been around for a long time.  These issues will drive INTUG future priorities and activities, recognising that there is overlap between them.  They are - Open universal access to broadband; Network Neutrality v transparent traffic prioritisation rules; business service competition; New approaches (cloud, smart grids, machine-to-machine - the internet of “things”); Seamless International Mobile Services (currently an unsatisfactory dysfunctional market); Roaming Charges and Termination Rates; Spectrum allocation/efficiency/harmonisation; Cyber security/Data Privacy and Protection; Regional and sub-national regulatory policy; leveraging all these to drive costs down and value up radically in a business world of market globalisation, supply chain collaboration, on-line processes, mobile and flexible working.  These issues are not the same as consumer issues, but the business market is largely ignored by NRAs today.

These remain topics considered by many as too arcane and esoteric to engage business users, but both are serious topics, which cannot be ignored.  Both are also potential time bombs, which are in danger of catching the customer unawares with a large bill for no perceived bottom line return.  And yet both could be used for competitive gain.

As the exhaustion of public IPv4 addresses approaches, businesses will need some plan for long term co-existence and for ensuring their own infrastructure is IPv6 ready.  ICANN continues to debate and has deferred the release of new general Top Level Domains (gTLDs) and web site addresses remain a competitive battleground in search engines.
Email address portability is a constraint on choice for Internet users. 

Number portability remains an essential building block for competition and is still not universally available, either for fixed or for mobile users.  Numbering harmonisation at international level for telephony has always proved to be hugely challenging.  Even numbers which are agreed, such as 112 for emergencies, are still little known or used.  The European Commission is consulting on two other examples of past failed attempts - the European Number Space (country code 3883) and International Freefone Numbers (00800).  INTUG will make a submission on this topic given expressed member interest.
 

The U.S. Federal Communications Commission (FCC) has voted to enact net neutrality rules focused on requiring network management transparency, while prohibiting outright blocking of legal websites. The rules won’t fully apply to wireless networks.  It remains unclear whether the FCC has the authority to implement and enforce the new rules.
The Commission insisted they have the right to promote and protect service competition over networks under Section 706 of the Telecommunications Act of 1996. This however might be tested by ISPs should the FCC do anything they don’t agree with.

The UN Commission on Science and Technology for Development (CSTD) has taken
a decision to limit the range of participants in the working group on improvements to the Internet Governance Forum (IGF) to government representatives of CSTD Member States and of previous IGF hosts (the UK is not a member of the CSTD).  This is contrary to the terms and spirit of the Economic and Social Council (ECOSOC) resolution that created this CSTD working group and a serious reversal on multi-stakeholder participation.  INTUG has supported the Internet Society (ISOC) in insisting on involvement of all stakeholders.

Telstra has launched a high definition video conferencing solution that could provide 6.5m regional and rural Australians with greater access to care from city health professionals.

Smart Meters will be one of the rapidly emerging participants in the “Internet of Things”.
The South American government has a mandate calling for the installation of about 62 million digital, networked electric meters by the end of the decade. Silver Spring Networks has announced it will work with Swiss metering company Landis and Gyr on a smart grid solution for Brazil.   Meanwhile the US is planning to spend big money on Smart Meters.  Pike Research estimates that 21 million smart meters will be installed in the U.S. by the end of 2010 with utilities already planning to triple this in the next few years.

Communications investment continues to be closely linked to economic growth, and is a good metric for a nation’s or region’s health. After years of solid growth, the mobile market in the Philippines slowed dramatically in 2009, reflecting a general economic downturn.
A study of the impact of mobile penetration in India showed that states with higher mobile penetration grew faster than low penetration states by 1.2% for every 10% penetration.

A trial LTE network in Wales is the latest by operators exploiting the 800MHz spectrum in a bid to close the UK’s digital divide in rural areas notoriously underserved by fixed lines. Arqiva and Alcatel-Lucent are using the 800MHz band released from the switchover from analogue to digital broadcasting, and aim to deliver a peak rate mobile broadband service of up to 50Mb/s – far higher than most local fixed-line broadband offers (though shared), yet still far below the data rates available commercially in Finland, Norway and Sweden.
The trial uses vehicles and temporary fixed antennae at not-spot locations to demonstrate broadband delivery, with a potential signal strength of up to 6km from antennae.

South Africa is another country where mobile broadband is taking a lead.  The telecom sector boasts the continent’s most advanced networks in terms of technology deployed and services provided.  In a virtually saturated voice market, four mobile networks are competing for market share in the next growth wave, which will be mobile broadband. 3G/HSPA mobile broadband services now rival available DSL fixed-line offerings in terms of speed and price, and consequently subscriber numbers. 2010 also saw the first trials of the next generation of mobile technology, LTE/4G in South Africa.  While emerging as the country’s leading broadband providers, the major mobile operators are also branching out into fixed-lines, fibre backbone networks, international fibre connectivity, mobile banking and entertainment in a rapidly converging environment.