BELTUG Update on Global Communications Issues 20 May 2011

Mobile communications continue to transform the world in many ways, not least in improving connection in poorer countries to improve levels of participation in society.
The so-called 'mobile miracle' continues to transform lives in the world's poorest nations.

Fibre communications are similarly transforming core, backhaul and now access networks as they replace copper and enable massive increases in bandwidth.  This gives a platform for major developments in new media content and on-line applications which can deliver acceptable performance to many more individuals, business users and new devices.
Surveys suggest the term ”broadband”, which has gradually edged from 64kbps through 2Mbps to 20/50Mbps as a headline downstream rate, is now headed for ubiquitous 1Gbps.

Many countries may, however, never have fixed networks and next generation mobile will need to provide an effective form of alternative access for most services in those locations.
But the characteristics of wireless communications are such that they can never be a full substitute for fixed communications.  One reason is that the investment profile required to grow network connectivity and capacity is different.  Fixed network upfront investment is mainly proportional to numbers of connections, whilst wireless upfront costs are mainly  proportional to traffic volume. 

For wireless, the allocation of frequencies and the design of target industry structures are big challenges.  The cost and technical constraints of migrating infrastructure and users to the next generation of technology is a headache for operators, customers and regulators.
Spectrum auctions and prescriptive frequency allocations will perpetuate inconsistent situations in different countries, even where there is an overseeing regulatory body pursuing harmonisation and consistency, such as the Radio Spectrum Policy Group (RSPG) in Europe with its Policy Programme, and at global level WARC.

For fixed networks, the challenge is how to establish and maintain an effective competitive market in wholesale and retail services for Next Generation Access, having acknowledged that in all but the densest populated areas, the infrastructure is likely to form a virtual or natural monopoly.  Even one infrastructure is proving to be a funding challenge in today’s economic climate.  Varying approaches, involving part or full state funding, drive further inconsistencies in service availability and price between countries.   The regulated price of unbundled copper loops (LLU) is proving to be a political challenge in this scenario, as incumbents claim high copper prices will enable fibre investment, whilst competitors and customers argue that it will deter migration and increase their current  cost of operations.

The whole roaming issue has become a bit of a nuisance to everyone. Business users are still angry.
The topic generates more and more conferences (INTUG has already presented at two this year), and more and more consultation documents, requiring more and more learned submissions.  Is the only way forward never ending regulation, irritated and defensive MNOs, regulator frustration, and ever more dissatisfied customers? Is there another way?
Is there a win-win-win solution which pleases everyone and, if so, how can we get there?

The economic benefits of a different situation are potentially huge, based on:
• Low cost profitable competitive continuously improving mobile services
• Low risk high return investment for mobile network operators
• Multinational spectrum licences with no coverage obligations 
• No wholesale or retail price regulation 
• No cross border trade barriers for multinational enterprise communications
• Rapid growth in cross border business processes using mobile data, eg M2M
• No handset restrictions and no bizarre avoidance behaviour needed to limit the pain
• No notspots, with data performance on average ten times faster 50% of the time
• Access to the best signal wherever you are from any operator at no extra charge

This could start with national roaming, which the FCC has mandated in the US.  If roll out costs are so great and extra capacity costs are volume related, why not share investment and only duplicate infrastructure where there is economic justification?  This might make a case for functionally separating access infrastructure for 4G.  By delinking SIM cards from the contracted operator, devices could lock on to other operators if the contracted operator signal is below a minimum level.  Anyone could use any 4G network, with the terminating charge being paid, not by the customer as a roaming charge, but as a service charge by the contracted operator to the serving operator.  Operators would be motivated to improve coverage and performance and capture notspot traffic, and service would be better.

12 years after INTUG and others exposed the whole roaming charge scandal, it still remains an active regulatory topic which is high on the agenda of users everywhere.
Europe is reviewing its current roaming regulation which expires in June 2012, and will shortly publish the results of its consultation which closed in February 2011.  INTUG’s submission  (available on the INTUG and European Commission InfoSoc web sites), stated continuing concerns about the unjustifiably high cost of roaming and welcomed the target set by Commissioner Kroes that roaming charges within the EU should be zero by 2015. 

INTUG said “the absence of effective competition for roaming charges has meant that wholesale and retail price regulation remain essential.  The behaviour of the market continues to prove this, as operators cluster together below the latest cap, whilst seeking to recover perceived lost revenue by pushing up roaming charges outside the EU, and for international calls from the home country, which sometimes exceed the roaming cap.

Until a different market structure evolves, enabling business customers to secure truly international contracts on a competitive basis, INTUG believes the roaming regulation in some form will continue to be necessary.  The efforts of other bodies on a broader basis than the EU, for example the OECD, and other regional initiatives, will help the process.”

The long-term approach described above was first proposed some years ago by Stephen Temple to the UK regulator OfCom. The roll out of the next generation of mobile services, through licences for 4G/LTE may provide an opportunity to resolve the roaming problem once and for all, based on an industry structure of a small number of major international MNOs, operating in every Member State, and ultimately globally, but it is a long way off. Meanwhile, business users continue to be dissatisfied with international mobile services.  

INTUG helped the Body of European Regulators of Electronic Communications (BEREC) conduct a survey to identify the justification for separate market analysis of business communications services.  This arose from a recognition that many market analyses were dominated by consideration of the mass consumer market, predominantly focused on national services, entertainment and single device contracts.  As a result, BEREC included this topic in their work programme for 2010 and 2011, but progress has been slow so far.

BEREC noted in its plan that, “Business communication services are increasingly offered on an international scale. Stakeholders claim to experience inefficiencies because of inconsistent regulation of building blocks to offer data communication services.  In 2009 and 2010 BEREC has inventoried the ways in which NRAs regulate these wholesale building blocks for the provision of communication services to business users.

BEREC understands that operators who provide transnational services may experience inefficiencies, even if remedies justifiably differ among Member States.  In 2011, BEREC will focus on the inefficiencies market players claim to experience, analyse the substance of these inefficiencies and if substantial, search for ways on how to resolve these. This work also includes an analysis of the remedies needed in the business segment.”

INTUG will continue to support BEREC in this work, which its members believe is vital in addressing an oversight in the overall judgement of the existence of competition in the EU.
Delivery of the Digital Agenda must include competition in international business services. 

Governments have a great opportunity to improve the efficiency of public services, reduce cost and advance participation in society by adopting a “joined up” approach to ICT by government departments, using shared broadband communications resources.  The USA and Australia are embracing this approach and the thinking is now being adopted more widely.   INTUG member Paul Budde is speaking about international national broadband network developments in Qatar, where their independent telecommunications regulator ictQATAR is aiming to accelerate Qatar’s transformation into an information-based society.
They are developing initiatives in e-education, e-business, e-health, e-government, ICT architecture, standards policy, integration, infrastructure and information security. 

Mobile penetration in Latin America and Caribbean is now over 94% (mostly prepaid), well above the world average of 76%.   Liberalisation of telecommunications has taken place in most Caribbean countries, with operators in these countries now being able to offer a full range of telecom services. Despite being relatively small markets by global standards, telecommunications has become one of the Caribbean’s major growth industries.  The success of mobile telephony in Latin America is due largely to the inadequacy of the basic telephone infrastructure.   Mountainous terrain and remote rural areas make the laying of cable uneconomic, and hurricanes and earthquakes often destroy fixed line networks.

The potentially fragile nature of some communications systems was highlighted when a 75-year-old woman damaged an optical fibre cable whilst digging for scrap metal and cut off two countries - Georgia and Armenia - from the Internet completely for some hours. Press reports said the woman had cut the cable in Georgia and was arrested for her deed, but she insisted she was innocent and that she had never heard of the Internet. Georgian Railway Telecom, the company that owns the 600km long cable system, said the damage was serious, causing 90% of private and corporate internet users in neighbouring Armenia to lose access for nearly 12 hours, while also hitting Georgian Internet service providers.

In Northern Africa and the Middle East, several countries are currently going through social and political upheaval. The Internet is playing a key role in these developments as it is enabling people to access independent information and to communicate with each other. Some countries have relatively free Internet and ISP markets while others exercise strict government control and in some cases censorship, but even in more liberalised markets governments have tried to cut international Internet connections during the current crisis.

This year sees INTUG return to Asia again for a meeting after several years’ absence.  The Hong Kong Management Association is kindly hosting the meeting from May 25-27 and the gathering will include sessions with a number of Hong Kong based businesses and consultancies, a visit to Huawei in the People’s Republic of China, and an exchange of views with the Hong Kong Regulatory Authority, OFTA. 

The Hong Kong meeting will provide an opportunity to review INTUG’s member priorities. Expressed in sound bite phrase for convenience, they include Business Services, Mobile Services Universal Broadband, Network Neutrality, Cloud Computing, Machine-to-machine communications, Roaming and Termination charges, Standards, Spectrum, Security
and perhaps most important of all for business users - Cost Reduction!

INTUG continues to participate in public events regularly and has submitted two papers for the ITU Global Telecom event in Geneva later in 2011.  Prior to that INTUG will be representing users at the OECD Communication Committee (CISP) in Paris in June and December, and maintain involvement in APECTel, CITEL, ICANN, EURIM and other international bodies considering communications service development and regulation.

Check INTUG’s web site regularly.  It is a valuable source of current information and activities.  All BELTUG members can sign up for access to the restricted area, and can receive an alert service based on selected topics.