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
What Rules for IP-Enabled NGNs?, March 23-24 2006, Geneva Page 1
CONTENT
1. Historic overview or where do we come from?

2. Drivers for change
3. Convergence: the concept
4. NGN within converged environment
5. Business models in converged environment
6. Impact of convergence
7. Convergence & regulation: revision needed?
8. Conclusions
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
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
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
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
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…

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 side is 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 or convergence of devices and
– while an existing network, one optimized to provide a single service, can now be
upgraded to carry multiple services, there is convergence 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 about service
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 about convergence of markets.
Convergence: the concept
The system of convergence areas
Convergence of technologies
Convergence of Convergence of Convergence of

devices services networks
Convergence of markets
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
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
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
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
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 is NGN within converged environment
Services and
applications
New radio
interface
Wire-based
Digital Packet based xDSL, PLC,etc
broadcast
Core network WLAN
Cellular type
2nd gen 3G
Short range
connectivity
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
What Rules for IP-Enabled and
NGNs?, March ubiquitous
23-24 2006, Geneva provision of services to users. Page 15
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.
Network – Application relationship
• Blurring distinct boundaries separating transport

and content related services:
• Transport related
Layers of converged networks – Voice-over-IP
– Electronic mail
Application level • Content related
(voice, video, banking, e-government)
– Audiovisual services
Access operators or Independent Service Providers
– Information society
services
» Internet banking,
information services
Network level (bulk transport) (e-newspapers etc.)
Access and server-router operators • All of them - on the
same technical level
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)
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.
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
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
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)
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
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
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?
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
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
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
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
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.
Conclusions
1. 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.
2. 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.
3. 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.
4. 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.
Questions?
Tomas Lamanauskas
Communications Regulatory Authority,

Algirdo 27, Vilnius, Lithuania
Phone: +370 5 210 5627
e-mail: tlamanauskas@rrt.lt

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Regulation of N-Play Bundling of Services:

Proposing a Concept of Regulation

1. Historic overview or where do we come from?

Historic variety of networks

– Earlier generation of personal

Historic variety of services

• Subsequent diversity of clear distinct services:

• DIVERSE DEVELOPMENT IN TECHNOLOGIES

So, where are we by now? The answer is…

The system of convergence areas

Convergence of Convergence of Convergence of

…the most visible…

• PCMCIA and other devices for computers

• Final stage – service / network neutral devices

• The same network is used to provide various

• Additional services compete against original ones

A Next Generation Network (NGN) is a packet-based network able to provide services

• Blurring distinct boundaries separating transport

Device integration -> full user control

Telco -> full operator control

Internet -> nobody’s control + unlimited choice

• Application centric model

Which business model will dominate?

Which business model will dominate?

Impact on consumer interests…

Challenges for regulatory regimes

Global level review

• Convergence of networks and services

Communications Regulatory Authority,

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