Networked Taiwan

1. Networked Taiwan H. T. Kung kung@harvard.edu July 22, 2003

2. Presentation Plan • Defining “Networked Taiwan” • Strategies and Opportunities • A National-level Focus: Integrated Beyond 3G (iB3G) or 雙網計畫 • Improve the System • Recap

3. “Networked Taiwan” Three levels of meaning: • Network level (“plumbing” level) • Network connectivity, broadband penetration, # wireless access points, etc. • Service level (“information systems”) • E-government, e-learning, e-healthcare, etc. • Society level (“social networking”) • Perhaps most interesting We elaborate on the 2nd and 3rd levelsin the next two slides

4. “Macro Computing” at Service Level • Service-level networking is “macro computing” for enterprises. It is large-scale integration of people, databases and services through computer and telecom networks, e.g., • Healthcare systems for the senior population • Entertainment • Distance learning These applications often have unlimited market demand • This is in contrast to traditional "micro computing" for individuals

5. "Social Capital“ at Society Level • Society-level networking is “social capital”, which refers to those stocks of social trust, norms and networks that people can draw upon to solve common problems“ "Bowling Alone: The Collapse and Revival of American Community" by Robert D. Putnam, New York: Simon & Schuster, 2000 • Social capital, beyond just physical capital, is essential in addressing challenges and making difficult decisions

6. The Current Status • Taiwan has been successful at the “Network Level”, E.g., • High ADSL and cellular phone penetration rates • 10% of world market in handset manufacturing, and growing • 80% of world market in WLAN manufacturing

7. “Service Level” Should Bethe Next Focus • Large-scale applications and services are where computing and communications converge • Computing is part of telecom services • Applications are where telecom’s future lies • We will illustrate a strategy in enhancing the service aspect of “Networked Taiwan”

8. A Principle: “Anticipate and Lead” • Anticipate future discontinuities in science, technology and business models • These discontinuities may be as varied as the end of current semiconductor device feature scaling or the emergence of XML Web services as the underpinning of all future e-commerce • Develop R&D policies on preparing for and leveraging emergent opportunities that these discontinuities represent

9. Some Technical Background • Cellular Phone Network • Mobility and wide-area coverage in voice services • Narrow-band data services • Standards: 1G (analog); 2G (digital); 2.5G/3G (packets) • Wireless Local Area Network (WLAN) • High-speed wireless but in specific locations • Low-cost and grassroots deployment • Standards: 802.11b (Wi-Fi) and Bluetooth

10. Rapid Growth of WLANs • WLAN users in North America will shoot from 4.2 million in 2003 to 31 million by 2007 (source: Gartner) • Taiwan produced 11 million 802.11 units in 2002, and 16 million expected in 2003 • By 2004, 60 or 70 million world wide installations (source: Intersil) • By 2005, over 80% professional notebook PCs will have WLAN interface (source: Gartner) • By 2007, revenue from WLAN hot-spot users will surpass US$9 billion (source: Gartner) Note that many ISPs are installing WLANs automatically as part of DSL or cable service package

11. “Parasitic Grid” of WLANs • Enterprises and end users make their own investment in WLANs • They have been aggressively installing wired Ethernets for the past dozen years • They have shown similar enthusiasm in installing WLANs • For WLANs, there is no need for carriers to gather millions of subscribers to justify deployment investment; things just happen automatically! • Need to reuse private WLANs (public WLANs have been insignificant and expect to remain so for the next several years)

12. New York City’s “Parasitic Grid” 12,647 Wi-Fi access points in New York City, Summer 2002 (WLANs must have been providing good value for users!)

13. Two Possible Responses to the Rapid WLAN Growth • To play safe: leave WLAN to computer industry • Like PDA, thin-client, etc. • To play big: integrate WLAN with telecom industry • In particular, work on large-volume handsets beyond traditional PDAs We argue that we should take the second approach

14. WLANs Will Affect Telephone Operators Business • Cellular phone subscribers will demand mobile access to WLAN-based services • E.g., make use of WLAN resources in servers, network bandwidth, etc. • Fixed-line phone subscribers will demand Wi-Fi portable access to phone lines or PBS systems as well as access to WLAN-based services

15. Cellular-WLAN Integration:Combining the Best of Both • Cellular • Coverage for voice and data services • Seamless roaming for wireless data services • Mobility • Billing • WLAN • Deployment in hotspots, homes, work places, etc. • High bandwidth and low cost • Multimedia services

16. A Telecom Strategy for Taiwan • We have launched a focused national-level initiative (雙網計畫or iB3G program) to prepare for and leverage emergent opportunities represented by WLANs • Within two years, attain a world leadership position in a dozen of key technology and service areas • Brand Taiwan as a powerhouse in creation of integrated WLAN and cellular technology and services • Start new business ventures in this area • Leverage existing strengths of Taiwan: • World-class manufacturing capability in WLAN and handset • Highly competitive mobile operators in Taiwan

17. Defining cellular-WLAN Integration • User perspective • Technology perspective

18. Cellular-WLAN Integration:User Perspective Integration means: • beyond cellular services, a subscriber may also access WLAN-based services when he is in WLAN areas

19. Cellular-WLAN Integration:Technology Perspective Integration means both: • handsets, called "integrated handsets“ here, can access WLANs as well as cellular phone networks and • interoperability of WLANs and cellular networks at some layers of networking

20. Two Integration Approaches • Tight coupling • Integration starting at a layer below the IP layer • Seamless voice handoff between cellular and WLAN • Loose coupling  More suitable at this time • Integration starting at the IP layer • Use of the existing phone authentication, authorization and accounting (AAA) systems in WLAN

21. Mobile Operators’ Possible Concerns & Proposed Responses • Public WLAN hotspots • They sometimes have low usage • Response: Offer billing and roaming services. Focus on subscriber's own private and enterprise WLANs • Voice over IP (VoIP) • Likely, VoIP will only shift business revenues rather than increasing total revenue • Response: Create other revenues, e.g., content • Small handsets • Can handsets with stringent size and battery power constraints make good use of WLAN? • Response: Yes, see the next slide

22. Use of Integrated Handsets for WLAN-based Services • A wide range of WLAN resources are available to handsets: • Access points, file system, mass storage, smart display, wall mounted display, entertainment center, etc.

23. Use of Integrated Handsets for WLAN-based Services (Cont.) • Handsets can use resource discovery protocols to find WLAN resources: • Universal Plug and Play (UPnP) • Zeroconf • XML Web services • Handsets can use powerful peripherals to work with these resources: • I/O: Wi-Fi, Bluetooth, etc. • Storage: Memory sticks (512MB), USB drive (2GB), 1.5in HD (5GB), etc.

24. Triangle Routing: An Example Problem Integration Can Solve Cellular Connection USB Drive Handset WLAN ISP FileServer E.g., download video to home entertainment center

25. Handover toHigh-bandwidth WLAN Shortcuts Cellular Connection USB Drive Handset High-speedWLAN Connection ISP AP FileServer

26. Handover toHigh-bandwidth Internet Connection Cellular Connection USB Drive Handset FileServer High-speedWLAN Connection AP High-speedInternet Connection

27. Examples of Integration Efforts • Avaya/Proxim/Motorola: Wi-Fi/cellular roaming • Nokia: Wi-Fi/GPRS integration • Cometa Networks: JV of AT&T, IBM, Intel to provide wholesale wireless broadband • T-Mobile: Starbucks, etc. hotspot services • Boingo: WLAN hotspots aggregator • Nextel: iDEN and private Wi-Fi for customers • Verizon & Sprint focus on 1XRTT for now • Lots of others: VoIP integration, security, etc. Source: William Lehr, March 2003

28. Further Integration Examples • British Telecom has committed to providing public WLAN services with 4,000 hotspots by 2005 • Texas Instruments has a 3-in-1 chip integrating cell phone networking, 802.11b and Bluetooth technologies • Toshiba will deploy 10,000 public access Wi-Fi hot spots in the US by the end of 2003 • Intel is working on public Wi-Fi access in Asia through an agreement with the Singapore government • Cisco has began to deliver Wi-Fi phones

29. Business Models

30. Examples of WLAN-enabled New Businesses for Mobile Operators • Billing and roaming services. Support WLAN hotspots and enterprises, possibly organized by aggregators such as Boingo • MMS with integrated WLAN. Provide high- bandwidth WLAN delivery of conferencing and multimedia messages, i.e., “MSN-Messenger-with-WMP using a handset” • Broadband content services. Consider NTT DoCoMo's i-mode as a model. • Because of their higher bandwidth and lower delivery cost, WLANs should actually do better than i-mode in content services

31. % of users paying for contents Average # of contents per paying subscriber More than $1 billion i-mode digital content market in 2002! (fiscal year) The Size of Digital Content Market on i-mode 立ち上がったデジタルコンテンツマーケット Excluding e-commerce and other payment method provided by third parties JAVA Launch 10 million subs ５０４ Launch (million Yen)

32. Mobile Operators' Advantages • Billing systems can handle new business models • Per-user, rather than per-household, billing • Roaming agreements with other operators • Payment collection enforceable by terminating voice service of non-paying user • SIM card based authentication • Location-based services can complement resource discovery on WLAN, e.g., scoping the broadcast domain • Handsets can support digital rights management (DRM) for content-based services. The DRM function of handsets is like that of cable set-top boxes

33. An Eco-system: All Parties in the Value Chain Must Win • Mobile operators: subscription fee, air time, roaming fee, authentication fee, content revenue sharing, advertisement, etc. (do not worry about content generation, WLAN deployment and operations, etc.) • Content providers: content income from mobile operators (do not worry about content delivery, billing, DRM, etc.) • WLAN operators and aggregators: service fee from mobile operators or enterprise owners (do not worry about billing, roaming, etc.) • Handset manufacturers: high-value-added handsets for content services

34. “Non-telecom Way of Thinking” Is Essential Key Words: Positive Feedback De Facto Standard Content Centric Business Model Consumer Oriented Marketing Digital Content Market Value Chain Eco System Seamless and Continuous Evolution Source: Takeshi Natsuno of imode, 2003

35. Action Items Cross-industry consortia Handsets Next-generation service trials Education programs Regulatory initiatives

36. Cross-industry Consortia • Type 1: collaboration between operators and content providers • Operator-independent content • Subscriber authentication to support content service • Competitive billing for content service • Type 2: collaboration between operators and handset manufacturers • Handsets supporting common content platforms and I/O interfaces • DRM support

37. Handsets • Multi-mode cellular/WLAN handsets • Low-power Wi-Fi radio and MAC • Handover to WLAN • Handsets with broadband peripheral interfaces • Wi-FI smart handsets, PBX, portable phones • VPN, audio and video streaming, WLAN resource discovery • DRM handsets • Separate ENUM numbers

38. Education Programs • NSC/MOE coordinates site licenses for acquiring cellular-WLAN systems and platforms developed by Taiwan R&D organizations to support teaching and research at universities • Deployment of these systems and platforms at universities and labs

39. Service Trials • Broadband content services over WLANs, such as those with DRM support • Integrated messaging services such as MMS over WLAN • Integrated billing and roaming services for WLANs • WLAN aggregators based on common hot spot platforms, realizing simplified Nx1, rather than NxN, business relationships

40. Principle for Regulatory Policies • Policies have industrial objectives of enhancing Taiwan’s competitiveness in technology, content and services • That is, policies need to be proactive in advancing manufacturing, content and service capabilities in Taiwan • Study regulatory advances in other countries, such as South Korea. If they can do it, Taiwan should try to do it too

41. Regulatory Initiatives • “Open menu” on subscriber handsets • Enforcement of local loop unbundling • WAN outdoor: extension to class 1 and to class 2 • EMI approval of equipment rather than their deployment (shouldn’t we be less paranoid about interference, given the Manhattan Wi-Fi map?)

42. Regulatory Initiatives (Cont.) • Reuse 3G TDD band in WLAN • Increase unlicensed band substantially • Allow liberal interpretation of “ISM” • Encourage transit and lower transit charge for WLAN traffic • Encourage WLAN antenna setting (e.g., access to roof, sharing power, and line-of-sight protection) • Privacy, universal access, etc.

43. Government Initiativesand Programs • Encourage services and applications using integrated cellular-WLAN systems • eTaiwan, etc. • Public WLANs • Broadband infrastructure deployment projects • Digital TV initiatives • Leverage national R&D programs such as NTPO, SOC and Digital Learning • Close collaboration among 經濟部, 交通部, 財政部 and 教育部

44. Recap • We need to anticipate and prepare for “discontinuities”, and develop control points • The phone-WLAN integration is inevitable • Ought to seize this discontinuity to secure a leadership position in telecom. Speedy execution is the issue • Manufacturers, operators and service providers must collaborate. How well we can collaborate will determine our competitiveness • Some changes in mindset and structure are necessary with “open style” thinking emphasized • Pay attention to new opportunity areas: discovery and use of WLAN resources, application-centric network systems, DRM handsets, etc.

45. Government LeadershipIs Extremely Important Here • Nurture cross-industry collaboration • Adopt forward-looking regulatory policies • Ensure highly competitive infrastructures and services. E.g., achieve the following by 2006: • A minimum of X=10 Mbit/s available to Y=80% of households and businesses in the whole of Taiwan at the cost of Z=US $40/months • A minimum of three broadband service operators available to A=80% of these users

46. Challenge Do we have the will and “social capital” to work together and lead?