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Regulation of N-Play Bundling of Services: Proposing a Concept of Regulation

Regulation of N-Play Bundling of Services: Proposing a Concept of Regulation. Tomas Lamanauskas Deputy Director Communications Regulatory Authority LITHUANIA. CONTENT. Historic overview or where do we come from? Drivers for change Convergence: the concept

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Regulation of N-Play Bundling of Services: Proposing a Concept of Regulation

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  1. Regulation of N-Play Bundling of Services:Proposing a Concept of Regulation Tomas Lamanauskas Deputy Director Communications Regulatory Authority LITHUANIA What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  2. CONTENT • Historic overviewor where do we come from? • Drivers for change • Convergence: the concept • NGN within converged environment • Business models in converged environment • Impact of convergence • Convergence & regulation: revision needed? • Conclusions What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  3. Historic overview or where do we come from? Historic variety of networks • Voice optimized • eg. PSTN, GSM • Main features – two way, low capacity, real time • Optimized for audiovisual content • eg. Terrestrial TV/Radio broadcasting networks, CaTV • Main features – one way, high capacity, real time • Emerging data optimized • eg. Ethernet, Frame Relay, RPR • Main features – two way, low but increasing capacity, not real time • Completely separate fixed and mobile networks • GSM v. PSTN What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  4. Historic overview or where do we come from? Historic variety of devices • Intended for reception of one type of services: • Simple phones • Wired • Wireless-mobile • Simple radios • Simple TV sets • Earlier generation of personal computers What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  5. Historic overview or where do we come from? Historic variety of services • Subsequent diversity of clear distinct services: • Voice calls at fixed location • Voice calls mobile • Radio listening • TV watching • Text typing, calculation What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  6. Drivers for change • DIVERSE DEVELOPMENT IN TECHNOLOGIES • Increasing computing capacity • Miniaturisation of chips • Innovations in computing and transmission technologies, incl.: • Digitalisation of all types of signals • Innovative compression techniques • More efficient use of older technologies (copper wire, coaxial cables etc.) • Decreasing costs • for computing capacity and transmission links • of infrastructure • Subsequent: • Digitalization & computerization of various devices (incl. phones, TV-sets) • Increasing speed of data networks • Decreasing cost of data networks What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  7. Drivers for change • GENERAL MARKET TRENDS • decreasing revenue from traditional services • significantly shortened product life cycle • innovative materials and applications • economic globalization • concentration of players • economy of scale • MANAGERIAL CREATIVITY • unconventional ways to create innovative products for niche markets applied by small start-up companies • enhanced service intelligence • reduced time to market for new services • option for consumers to customise their services • GOVERNMENTAL LIBERALIZATION AND DEREGULATION • 1984 in USA, a decade later in EU So, where are we by now? The answer is… What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  8. Convergence: the concept • The technologic convergence could be understood as: • a process by which the telecommunications, broadcasting and information technologies merge, including the merge of fixed, mobile, terrestrial and satellite communications and including the merge of location systems and systems of establishment of places and liaisons –technology convergence; • Is it only technology ? • Technological convergence from the other sideis meant that any type of terminal can access any type of data (which in turn can be transmitted through any kind of a pipe), and this side of technological convergence might be called a terminal equipment convergence orconvergence of devicesand • while an existing network, one optimized to provide a single service, can now be upgraded to carry multiple services, there isconvergence of networks. • … if the same services are delivered, transmitted and so on over the any of networks – mobile, fixed, telecommunications lines, cable TV networks, terrestrial and satellite networks and the same devices, we should talk aboutservice convergence; • …if any of the existing networks could provide any of the information and communication services, that are not within limits of one separate traditional market or a distinct industry of an economy, we are talking aboutconvergence of markets. What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  9. Convergence: the concept The system of convergence areas Convergence of technologies Convergence of devices Convergence of services Convergence of networks Convergence of markets What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  10. Convergence of devices …the most visible… • Mobile phones turn into mobile multifunctional devices: • Integrated FM radio • Camera • DVB-H on mobile phones • Integrated WiFi • PCMCIA and other devices for computers • TV cards • Interactive TV-sets • display a TV signal & computer data simultaneously, watching TV and surfing Internet at the same time • Final stage – service / network neutral devices • Emphasis on programming equipment What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  11. Convergence of networks …as a prerequisite… • More efficient use and evolution of traditional service-optimized networks: • Voice optimized • xDSL on non-voice band on PSTN networks besides voice • GPRS/EDGE on GSM networks besides voice • Optimized for audiovisual content • Broadband data on coaxial Cable-TV besides TVR services • Data on DVB-T networks besides TV services What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  12. Convergence of networks …as a prerequisite… • Service-neutral networks • Fast broadband data networks … • eg., Data networks on FTTx, WiMAX, Satellite, etc. • … characterized as • Efficient in terms of bandwidth • Designed for multiple services provision while increase of number of services is easy • Easily managed • High resilient • Well scalable • Different access capabilities to essentially the same networks What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  13. Implications of network convergence • The same network is used to provide various services • Voice • Audiovisual • Data • Original service is provided separately • in case of voice optimized networks • in case of audiovisual optimized networks • Additional services are provided over service neutral part • Neutral part is data part of the network What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  14. Implications of network convergence • Additional services compete against original ones • VoIP over xDSL • TV over Broadband via Cable Modem • Truly converged services • New interactive content, combining real-time video with real time interactivity and two-way communication • Enabled by service-neutral broadband networks • Could be achieved using combination of different networks (e.g., one way TV broadcasting + reverse communication over voice or data networks) • Networks, using different access modes interoperate and compete • UMTS v. VoWiFi on WiFi enabled handset What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  15. Services and applications New radio interface Packet based Core network Wire-based xDSL, PLC,etc Digital broadcast WLAN type Cellular 2nd gen 3G Short range connectivity What is NGN within converged environment A Next Generation Network (NGN) is a packet-based network able to provide services including Telecommunication Services and able to make use of multiple broadband, QoS-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. It supports generalized mobility which will allow consistent and ubiquitous provision of services to users. What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  16. What is NGN within converged environment NGN's architecture allows decoupling the network's transport and service layers. This means that whenever a provider wants to enable a new service, they can do so by defining it directly at the service layer without considering the transport layer - i.e. services are independent of transport details. What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  17. Network – Application relationship • Blurring distinct boundaries separating transport and content related services: • Transport related • Voice-over-IP • Electronic mail • Content related • Audiovisual services • Information society services • Internet banking, information services (e-newspapers etc.) • All of them - on the same technical level Layers of converged networks Application level (voice, video, banking, e-government) Access operators or Independent Service Providers Network level (bulk transport) Access and server-router operators What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  18. Business models in converged environment Device integration -> full user control • Integration of various services on devices • Integrated FM/T-DAB receiver v. • audio streaming on mobile device • audio streaming via Internet • Integrated DVB-H receiver v. • video streaming on mobile device • Internet applications integrated to TV-set v. • Internet over DVB-T network • Full mobility of GSM/UMTS v. • WiFi nomadic use (or future WiMax mobility) What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  19. Business models in converged environment Telco -> full operator control • Network centric model • Integration of access, network services and services (content) provided over networks • Services provided are controlled by the access operator • Means of access are controlled by the operator • Operator controlled hand-over • Better quality control • Use of managed IP services • Less choice of services • Bundled “n-play” from one hands • “One-stop-shopping” for consumer • single contracting, settling of the accounts etc. What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  20. Business models in converged environment Internet ->nobody’s control + unlimited choice • Application centric model • Free environment where access, network services and content are freely mixed and could be freely separated • Different access operators provides various modes of bulk access without services • Services could be chosen freely from Independent Service Providers • Territorial networks v. global services • Less possibilities of quality-control • Importance of this factor is diminishing with the development of technologies • More control and choice together with more confusion for a customer What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  21. Business models in converged environment Which business model will dominate? • Most likely all models will cohabitate • Access operators naturally try to increase ARPU through bundle of services • Benefits for the user: • higher quality of real time services (audiovisual, voice) • “one-stop-shopping” (incl. Integrated billing) • Better customer care – less skills required • Innovation brings better quality unmanaged IP services; that makes it difficult to exercise control over the user and provides possibilities for Independent Service Providers • eg. Skype, Net2phone, Google, Yahoo • Brings more choice but also requires more skills • Therefore it will not inhibit bundled service business model in the near future but will have a significant impact in a longer term What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  22. Business models in converged environment Which business model will dominate? • Devices integrate services of various providers • Of different nature • Audiovisual, voice, other data services • Of the same nature • eg., GSM and VoIP over WiFi possibilities in PDA (esp. with user controlled handover) What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  23. Impact of convergence Impact on markets… • Convergence brings intermodal competition that I characterize as: • Various networks, devices and services compete in horizontal direction as successfully as in vertical one • Strong potential to leverage end-user (“last mile”) control in access services to provision of new services in the mean time • therefore initial market position is important… • PSTN (xDSL) and CableTV operators have the strongest position • … but cooperation among transport and content industries is essential in order to employ the best expertise • The “last mile” control will become less relevant, as technologies develop and users acquire more skills • … and they are to receive services from different providers onto the same device • …so, more space is unclosing for Independent Service (content) providers and start-ups • Specialization, expertise & innovation are vitally important (Skype – $4,1billion total value) • … but the “first mover advantage” does not disappear (or the position gained at the initial stage of market cycle is important due to inertia of consumers) • Competition of content providers increases • Content, incl. audiovisual, could be provided by different networks What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  24. Impact of convergence Impact on consumer interests… • Network reliability • Emergency services • Continuous use of services v. • handover between different modes of access • Management of end-to-end QoS over interconnected NGNs • Number portability -> Personal addressability • ENUM etc. • Ubiquitous availability and presence management v. • Privacy issues • Jurisdictional issues • Service provider could increasingly be located in different jurisdiction than user What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  25. Convergence & regulation: revision needed? Challenges for regulatory regimes • Regulatory regimes shall be reviewed in order to: • Remove provisions directly hindering convergence • eg., network specific broadcasting licences • Streamline other provisions to reflect convergence • and it is happening… • …sufficiently? What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  26. Convergence & regulation: revision needed? Global level review • ITU Radio Regulations: • Review of traditionally distinct allocation of radio spectrum to different radio services is needed: • Broadcasting • Mobile • Fixed • Etc… • Global protection of user rights • Harmonization of frameworks • Jurisdictional issues • Increased importance of self/co-regulation What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  27. Convergence & regulation: revision needed? EU level review • Convergence of devices • Radio and telecommunications terminal equipment directive (99/5/EC) should be reviewed • Coherent market entry conditions to be applicable to all e-comm. devices • Convergence of networks and services • Review of Television without Frontiers Directive (97/36/EC) • TV broadcasting services -> technology & network neutral audiovisual services What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  28. Convergence & regulation: revision needed? EU level review • Convergence of networks and services • Started review of E-communications regulatory framework in 2006 • Technologically neutral harmonisation of spectrum rights and coordinated introduction of flexibility in spectrum management and use (two EC Communicates) • Emphasis on technologically & service neutral radio spectrum management • Remove of artificial restrictions in spectrum allocation (mobile, broadcasting) • “Pooling” frequencies together • Evolving concept of universal services • Emphasis on access capable for delivery of certain services rather than services themselves • Directory services • Telephone numbers only? • Emergency services in new environments • Empowering costumer with an informed right to choose • Reinforcing transparency of usage conditions What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  29. Convergence & regulation: revision needed? EU level review • Convergence of markets • Reconsidering market definitions • Short-run and long-run implications should be taken into account • Reconsidering inclusion of services markets into regulated markets • These should be periodically reassessed - to reflect realistic but perspective view on the present status of convergence and its’ impact on markets • Reinforcing prevention of negative effects of vertical integration • Prevention of leveraging of market power into new markets (e.g., content) • Wider effect of remedies applied to undertakings with significant market power • Fair balance of “walled gardens” and open business models What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  30. Convergence & regulation: revision needed? National level review • Improvements in management of radio spectrum in order to allow for more flexibility in use of spectrum • More flexible allocation of radio spectrum • More flexible rules and permits on use of radio spectrum • “Spectrum trading” • Review of licensing system • Right to broadcast should not be tied to specific broadcasting media but rather to specific content that could be transmitted over any electronic network • Review of rigid licensing rules for audiovisual media • General authorisation could be considered • Generally use of individual licenses if it is really necessary; otherwise application of general authorization principle and activities’ monitoring approach • Institutional regulatory systems should reflect converged environment • Information Society and Media Directorate (EC) • OfCom, Ficora, RTR, AGCOM, MTC, etc. What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  31. Conclusions • Convergence brings intermodal competition where different networks and devices are able to compete for being the provider of the whole variety of services. Regulator’s role should encompass extension of core network. • Despite “last mile” control remains important in a short-run, access operators should not overestimate their abilities to retain user control. Widening and innovating the package of services’ offerings is their chance to stay competitive. Modernisation of access network could be supervised by regulators. • Impact of competition will increase over time with technological development and improved user skills. However, we should stay realistic about users – skills are not build in one night time. • Technological development and its outcome on markets’ shifts require adaptation of regulatory system on global, regional as well as national levels so as resulting: - regulatory framework to be even more technologically neutral, transparent, predictable, flexible and capable to integrate ongoing developments of the markets, - institutional system to incorporate the tremendous variety of changing electronic reality in non-discriminate manner and with high profile expertise. 5. Despite changes in regulatory regimes required, some basic regulatory principles will remain valid and should be reinforced. What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  32. Questions? What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

  33. Tomas Lamanauskas Communications Regulatory Authority, Algirdo 27, Vilnius, Lithuania Phone: +370 5 210 5627 e-mail: tlamanauskas@rrt.lt What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva

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