9th IIR Digital Regulation Forum – Nick White (INTUG): ‘We want to ensure universal connectivity for businesses and citizens alike’

Transformed On-line International Business Processes for Global Economic Growth

by Nick White, Executive Vice president, INTUG INTUG was pleased to contribute again to the IIR Digital Regulation Forum in London at the end of April. This event always provides an excellent platform for exchanging views on strategy, policy and regulation of fixed and mobile communications infrastructure, and the services, which they enable. The change of title, from “Telecommunications” to “Digital”, correctly reflected an acknowledgement that the subject has broadened. Regulation that is based on market analysis must now address the big picture of the on-line economy as a whole, rather than a narrow sector view of telecommunications service provision alone. This year’s IIR event had a well-balanced programme including keynote speeches from senior industry figures, plus wide-ranging panel discussions on the European Commission’s Digital Single Market Strategy, Network Neutrality (Quality of Service), Regulatory Models, Emerging Technologies, Big Data, OTTs and Content Providers. Lively audience participation from the more outspoken attendees, and some innovative round tables for in-depth discussion on the main topics added colour to the event. There was even an illuminating session devoted to the impressive developments in China. A recurring theme in presentations and discussions was examining how to leverage all accelerators, including competition, regulation (or removal of same), and harmonisation to promote sufficient investment. The common aim of all is to ensure universal connectivity for businesses and citizens alike, wherever they are, with appropriate speed and quality of service, to allow full participation in society and transformation of the on-line economy with more efficient business processes. This article addresses all of these issues from the perspective of businesses, large and small, who seek to provide services internationally. So what do businesses require from their communications services, and why? The short answer would be to say that they need to able to communicate with all the other organisations in their extended supply chain with open access and free choice of device, application, data source and network supplier for each part of the ecosystem, whilst being able to obtain a guaranteed total quality of service appropriate to each business process. Additionally, this freedom and flexibility should encourage innovation and competition where this results in greater efficiency in provision of communications infrastructure. The benefits of such an environment are huge. Businesses can be motivated to invest in new online e-commerce applications and to innovate more using the latest technology. Currently this is not happening. Businesses remain locked in inefficient legacy systems. Businesses of all sizes ranging from global multinationals with major investments in private networks to start up SMEs seeking to expand their businesses across national borders are still trapped in national silos for their network services and contracts. Currently only 7% of SMEs in Europe trade cross-border despite a theoretical Single Market. This is costly, not only in terms of economies of scale for access, but also in terms of the administration of dozens if not hundreds of separate, often incompatible and inconsistent national contracts. More emphasis needs to be put on service-based competition, and less on infrastructure competition, with the proviso that mechanisms must exist to ensure adequate investment in fixed and wireless infrastructure, without forcing inefficient unnecessary duplication. Five major areas are dominating the ICT agenda of business users and all have an international dimension. These can be grouped as:  (i) access infrastructure, especially broadband; (ii) quality of service (QoS) in the context of network neutrality; (iii) cloud services and the associated data security issues; (iv) the Internet of Things and M2M Applications; and (v) software in the context of licensing and software defined networks. Each of these must influence the European Commission’s review of the Regulatory Framework and the associated Directives. The inclusion of a Specialised Services or Business Relevant Market will help to focus on the current lack of effective competition in business services, and should encourage a review of why there is inadequate competition in international services, for which no international market has been defined nor exists. i) access infrastructure Very high-speed broadband services in fixed and wireless/mobile access are an essential building block for business users. Focus has been almost entirely on the mass consumer market at national level, resulting in an over emphasis on headline downstream fixed broadband speeds, whilst neglecting business need, for example for symmetric bandwidth. Other measures, such as latency and availability, have also been overlooked. For fixed access, the dilemma over the regulated copper price has been partly addressed with greater consistency across EU Member States, but the risk of lack of motivation to replace the copper network, due to high profits from legacy networks, remains. Some Member States have considered or implemented some form of separation of the fixed access network from the incumbent in order to promote greater demand and take up, and more effective competition in the systems integrator market. In the future, there may be a case for considering some form of separation for mobile access. A Review of the Universal Service Directive is needed to ensure that the Digital Divide is not perpetuated with each upgrade of capability. Participation in society through public sector e-services demands that every single citizen must have fit-for-purpose broadband access, wherever they are, and the same need applies to all businesses. It is common today for more than half of businesses to be unable to obtain adequate broadband at all their desired locations. Mobile networks still remain as disconnected national silos resulting in a dysfunctional international ecosystem for businesses wishing to leverage on-line business processes using mobile device access. Evaluation of the market has focused on the consumer mass market and overlooked the more demanding and complex needs of businesses that often have to manage hundreds and for some thousands of mobile devices. Many of the offers, especially with regard to bundles and roaming regulations are inappropriate for managing fleets of devices. It is essential that the blight of roaming charges, especially for data, are eliminated entirely, not just within the EU but globally, if businesses are to fully roll out on-line international processes using mobile devices. Exclusive deals by device suppliers with specific operators must also be prevented, as businesses cannot control the network choice of their end customers or intermediaries in their supply chain. The most important long term issues, however, relate to spectrum in terms of its allocation and usage. As a scarce resource, it must be used optimally. This requires harmonisation of use across countries and maximum incentives and opportunities for sharing, and trading and reuse. The burden of auction licence fees, which inevitably increases the costs of all services, must be contained, focusing on auctions to optimise market conditions and maximised use, rather than for government fund raising. Of almost equal importance is the need to ensure effective sharing of civil engineering works, mast locations and backhaul capacity. Unlicensed spectrum continues to play a key role in connectivity and global networks of WiFi hot spots offer a valuable alternative resource for high-speed mobile connectivity. Satellite connectivity also provides a partial solution to low cost universal connectivity for some applications. Businesses can leverage all these alternatives to meet their needs. (ii) Quality of Service and Network Neutrality Deliberations within the EU arising over the Connected Continent proposals have reduced the outcome to just two areas – roaming charges and network neutrality. Assuming that roaming changes are finally eliminated, businesses remain concerned at the outcome for network neutrality. This has been heightened by the US FCC’s recent split ruling. Whilst the headline opposition to a “two-speed” Internet is understandable, the reality that some form of traffic management is essential must not be overlooked. Given the use of the Internet increasingly for mission critical and in some cases life-dependent applications, there must be mechanisms for guaranteeing a minimum quality of service for certain key applications. The era of connected things with latency demands, such as health monitors, vehicle control devices and public utility fail safe devices such as waste sluice gates, plus the sub microsecond demands of high value financial transactions, requires unavoidably different treatment of different types of traffic. The FCC’s three rules of no blocking, no throttling and no paid prioritisation are an oversimplification. Whilst they address the original concerns of IPR content owners, they ignore the real and practical necessities of traffic management, even in failure situations. “Differentiation without discrimination” should be the guideline with transparency obligations to ensure that any network traffic management that is practised is observable before, during and after, by competitors, customers and regulators alike. The foundation for any such traffic management must also be clear unambiguous service definition and an agreed form of classification. (iii) Cloud Services and Data Security/Privacy   Businesses continue to be hesitant about trusting their critical and proprietary information and applications to Cloud services, especially public cloud. Protection of personal data as required by the relevant Directives must be assured, with guaranteed privacy. In the absence of confidence in this area, opportunities for efficiency and economies scale offered by both public and private clouds services are not being fully exploited. One important prerequisite is adequately strong contractual terms and an appropriately designed service level agreement (SLA). The European Commission has been working on these areas and has drafted internal documents to address the issues. Once these have been made public, which is an important and necessary step, and are tested in the open market, this will lead to an uptake in business usage. Businesses need to retain the flexibility to switch supplier or component service or access device or application, without constraint. The lock-in risks of vertical integration implicit in some cloud services must also be eliminated, or at least subject to transparent controls. Protection of data and software in the event of cloud supplier failure must be enshrined in legal escrow rights. (iv) The Internet of Things (IoT) and Machine-to-Machine (M2M) Applications The public and private sector can both benefit enormously from the opportunities offered from connected objects, for example in the health, transport and education sectors. All industries and government administrations should be able to improve the service content and quality offered to citizens, customers and business partners. The underlying principles by which the Internet of Things operates must include openness, interoperability, standards, consistency and harmonisation, especially in communications networks used. Critical applications must not be invalidated by an inability to implement the necessary traffic management and prioritisation. M2M Devices must not be tied to specific networks or penalised for connecting when not in their home country or country of origin. For security of connection, devices should have the option of connecting to the strongest signal available. Given the need for such an arrangement for M2M devices, it would make sense to apply the same connectivity principles to all mobile devices. This needs a “soft SIM” approach and elimination of roaming charges. (v) Software Licensing and Software Defined Networks As businesses seek to build cross border ICT environments, whether within their own organisation or from systems integrators and cloud service providers, they are increasingly faced with a new generation of software licensing challenges. Software suppliers, perhaps concerned about the potential risk to their business of consolidation and sharing and economies of scale, are becoming more diligent in the allocation of software audits, which for many large software companies generates 25% or more of their revenue. Unclear rules about software licences and the implications of distributed networks and consolidation into data centres and larger servers can be a deterrent to business investment. The implications of employing software defined networks and the control implications and costs are also exercising ICT architects and business process designers. Although not specifically a communications issue, this important area must be addressed. So what does the future hold? International communications will play an increasingly vital role in the global economy and the global society in the future. The issues raised in this paper are just some of the topics which merit international dialogue, which must include all parties when any regulation, standards, strategies and policies are discussed and decided. In all these debates, the voice of the customer, both the individual citizen and the business of whatever size, must be involved at all stages. Source: INTUG

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