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Wednesday, November 21, 2012

Some quick thoughts on Ericsson's new mobility & mobile traffic report

Ericsson has just published its Q3 report on mobile usage and mobile data traffic. It's here with background, PR and previous studies here. I generally give it considerably higher credibility than Cisco's VNI study, which is a lot "deeper", but isn't based on as much real-world exposure to operator networks as Ericsson's. I also feel that Cisco's is more politicised - as evidenced by its head of government affairs moderating a panel of (mostly) policy-type people at its most recent Mobile VNI launch in London.

Some highights from Ericsson's report:


  • 6.4bn mobile subscriptions at end-Q3, but 4.3bn "real subscribers" after taking out multiple SIM ownership, M2M etc. (Interestingly, GSMA and its statistical sister Wireless Intelligence recently put the "real" individual-user number at just 3.2bn - see here)
  • 55% growth year-on-year of mobile broadband subscriptions to 1.4bn (this presumably excludes 2G-only data users). Not clear to me how this translates to number of "real subscribers", eg taking out people with multiple 3G/4G SIMs or devices, but I guess it probably reduces it to about 1bn in total.
  • Forecasting mobile broadband subscription numbers to rise from 1.5bn at year-end 2012 to 6.5bn at year-end 2018, although only 4bn of those will be for "devices with large data volumes, eg PCs, smartphones". I guess it's excluding low-use data-capable featurephones. What's less clear is its treatment of cheap Androids which may also be low-use
  • Expects a continued low-end base of c5bn low-end feature/basic phones - ie bottom of pyramid grows, even as many users "graduate" to smarter devices. That sounds a lot more rational than the "everything will be smart" story I hear from some quarters.
  • Big regional differences on various key metrics. I definitely agree with this.
  • Expecting 1.6bn LTE subs by end-2018. My problem with this is that it's still very "subscription-centric", while I feel that by 2018 we'll have all sorts of more complex & ephemeral business models. eg I might have an LTE tablet which I only use in places which advertise "free 4G" the same way I use "free WiFi" today. Am I subscriber, or a "user" in that scenario?
  • "The number of fixed broadband users is at least three times the number of fixed broadband connections, due to multiple usage in households, enterprises and public access spots" - Bravo Ericsson, good that you recognise the essential difference here & don't succumb to the easy "more mobile subs than fixed" soundbites
  • Reports doubling of mobile data traffic Q3'11 to Q3'12, including a 16% increase quarter-on-quarter from Q2'12 to Q3'12. Not surprising given its previous updates, or also its 55% growth in MBB subscribers. Worth noting that in some countries, data usage is still predominantly on 2G networks/devices so it'll show up in traffic stats but not user numbers, if they're strictly "MBB". I'm a little suspicious of "doubled" without a number - is that 9X% or 10Y%? I'll guess a couple of points under 100% but "doubled" sounds better for PR. But then I'm a cynic. EDIT - the table at the end says monthly traffic has gone from 600PB to 1100PB/month, so "doubled" is indeed slightly PR-friendly than the real (undisclosed) number. I might be able to back it out of the stats if I have time
  • Expecting 12x mobile data traffic growth 2012-2018. I reckoned 7x, although it's 12x if I started from 2011 as a base year instead (Ericsson previously had 15x for 2011-2017). In other words, I think Ericsson is being over-bullish, but by less than a factor of 2 
  • Ericsson is expecting smartphone data use to go from 450MB/mo today to 2GB in 2018. This is where we differ. I am expecting the average to flatten and then actually maybe fall, as lots of lower-end smartphone users start skewing the stats. sub-$50 Android + $1-2 prepay data ARPU users will be unlikely to get anywhere close to 2GB, even in 2018.
  • Mobile data will grow from 4% to 9% of overall (fixed+mobile) data on networks. That's an interesting number (and it classifies WiFi into fixed), and points to the "LTE will kill DSL & fibre" rhetoric being nonsense, even with the (to my mind) overgrown mobile forecast.
  • To Ericsson's credit it includes a call-out box with "Note that a large part of data traffic is generated by a limited number of users in each device category. These users may considerably change their usage if operators implement data volume caps or other traffic management schemes. Measures like this could significantly impact the traffic forecast.". My predictions assume that this will occur, and as we've seen in Europe, it's quite possible for operators to fine-tune their traffic patterns to match their billing, for optimising the "yield curve"
  • A bunch of good stuff in there about network coverage and speed. All the talk about QoS is irrelevant, unless you've got a decent signal to begin with. I wish more vendors would highlight this - but then I guess that few policy/core network companies also understand the realities of RF propagation.
  • Interesting analysis of traffic & signalling patterns for "freemium" apps - the free version usually fires up the network to download ads more often, and can actually have higher network impact than the paid version. Good to see Ericsson talking about this - in my view, NSN stole a march on them on the signalling issue a couple of years ago with its Smart Labs work.
  • About 3% of Androids and iPhones are used as tethers. Tethering users tend to be those with higher usage on their smartphone anyway (ie more sophisticated users).
Overall, some really good data & some (relatively) believable forecasts. I think Ericsson is overdoing the smartphone average data consumption, which drags the overall 2018 figure up too high - it needs to factor in the weighted-average effect of billions of lower-end users, mostly on PAYG prepay and lower-end devices, plus increasing use of free WiFi everywhere.
 

Monday, November 19, 2012

Thoughts on Windows 8 and the risk of "Ecosystem Creep"

I've just bought myself one of the new breed of convertible tablet/laptop things (A Sony Duo 11), running full-spec Windows 8. After dropping my mid-sized laptop & cracking the screen a few weeks ago, I'd been thinking through my personal "device strategy". I concluded that I needed something powerful but travel-suitable: I need MS Office, but I also wanted to have a tablet-style form for reading documents or doing email in economy seats on planes. (I'm not really bothered about "consuming content" generally, which is why a normal iPad or Android tablet has been unappealing). Hence the choice of a convertible - further constrained by what's available right now, as I'm going on a multi-stop trip on Thursday and didn't feel like lugging 3kg of "home laptop" around with me.

It's been an interesting experience that's given me a few insights into current trends in OS's, device form factors, computing use-cases and the evolution of technology "ecosystems".

Let's start with a controversial and far-too-sweeping generalisation: "Ecosystems suck". They're just another flavour of the age-old technology strategy of user lock-in, which almost always fails (in the end) when it competes with genuine user loyalty.

Looking around the industry, we see a number of such ecosystems - Apple, Microsoft, Google, plus arguably Facebook and Amazon, with Samsung, Sony and others looking tentatively at the space. I'm not going to rehash a million articles & analyst pieces, but they all have some combination of devices, appstores, messaging/email, content offers, maps, commerce engines, identity services and APIs. The business models vary, but the general idea is to get more of your overall online/computing/comms/content activities - and, critically, make it harder for you to churn to another ecosystem in future, typically by "cloudifying" a lot of this, or working on a rent-not-buy approach to apps and media.

Then there are telco efforts, which are generally fragmented, slow and bureaucratic - and undermined by the dying federation-type interconnection/interop model. Some specific operators - or perhaps smaller groups - might create local ecosystems in future (my money would be on DoCoMo, Verizon Wireless, China Mobile or perhaps Telefonica). But at the moment, I see less risk of being "owned" by Vodafone than by any of the IT/Internet players. There are pitches by the Mozilla team to allow operators to do "deep customisation" of Firefox OS handsets, but even there I doubt they would allow that much user control, and would give (probably) broad access to web resources.

The tendency to "ecosystem creep" is everywhere in the industry at the moment. I'm still using a clunky iPhone 3GS with iOS5 to avoid upgrading to Apple Maps rather than Google. I use a Nokia Lumia with WP7.5 for data as well, but because I had to register it with an MS Account, I don't use it for phone calls or SMS (and I certainly haven't entered a payment method for apps/content). I eschew Android because I use Google for search & this blog, and don't want my business life cross-linked to my personal existence in any major fashion. I still use Yahoo! for personal email (and I even pay for Mail Plus) - I'm not intending to switch to Gmail or Hotmail (or whatever it's called these days).

The most irritating aspect of all this is what I'll call "cloudification" - something that was drilled home my the Microsoft speaker at today's Guardian Mobile Business conference in London. This is the assumption that you want to have some form of cloud-based storage and identity, so you can have a consistent "multi-screen" experience.

That is the last thing I want.

If I want consistency, I'll use a browser & go on the web.

I don't want contacts, music, themes, apps or anything else magically interconnected between my various devices, especially by whoever is supplying the device or its OS (or the network connection). In particular I want my phone kept a million miles away from my computer. I don't have a game console or Internet TV but I wouldn't want them attached to each other, or my other products, either.

I've had to do a lot of work de-cloudifying Windows 8, and I'm now wondering if I would have been better off getting a cheap, remaindered Win7 ultrabook & forgoing the tablet experience. Let's leave aside the cludgy nature of Win8 & convertibles - I knew that the Metro/Desktop duality would be odd, and I've got the added UI fun of a touchscreen stylus, a weird touchpoint thingy instead of a pad, and a super-high resolution screen that makes icons in Office almost invisibly small.

The thing which annoyed me most was switching it on and being asked to register for an MS Account again. (Obviously I'm not going to use the same one as the one I was forced into for my Lumia). Apparently, it's needed to access the Windows Store for the Win8-specific apps that work with the Metro tiled UI.

Er, no thanks.

I want applications on my computer, not apps.

I don't want a curated appstore for my PC, and I certainly don't want ads or other forms of "brand engagement" on my device's home screen. (As threatened by the MS speaker at the Guardian event). I've had to get rid of all the useless icons for other MS functions & cloud services I don't want or need, and it's nigh-on impossible to get Firefox bookmarks pinned as tiles without some hacking around. (I don't care how good IE10 is, I'm not using it for now. When 10 or 20 non-techy friend extol its virtues, I might switch in a year or two).

In short, it's pretty irritating. I feel that I'm having ecosystems being forced down my throat, despite being the paying customer. Having chaired the ITU World panel session about "Battle of the Ecosystems" a few weeks ago, I think I'll suggest that next year's event changes it to "Battle against the Ecosystems".

I've had enough of my personal privacy and choice being collateral damage as Microsoft, Apple and Google slug it out.

What's the solution? I actually think that there are two paths that are less-intrusive:

a) The niche, vertically-integrated solution. Amazon does this well. I buy books, they send them to my Kindle. I could also do it for video or music. Fine - the Kindle isn't setting itself up as a general-purpose computer.
b) Samsung, Sony and to an extent Nokia seem to tread the fine line between helpful integration/compatibility and tyrannical ecosystemism quite well. I've had a variety of Samsung devices, and while they definitely play nicely with each other if you want them to, you're not strong-armed into it. Sony, too politely asks me to register the Viao, but doesn't make a big deal of it.

I'm wondering what the outcome of all this is with the wider population. For sure, some people will either be apathetic or enthusiastic fanboys, and will embrace one ecosystem with open arms. But the rest of the market is either going to end up as unhappy prisoners, or have to deal with multiple worlds and all the cost that entails.

As for Windows 8, I can understand why Microsoft wants/needs to extend its tentacles into the "app" space. But I don't want any part of it - I'll be mostly using my new device in Win7 desktop mode, as I found that you could register as a "local account" for the PC rather than setting up a Microsoft ID. It means you lose access to the Windows Store, but that's a small price to pay to escape from Ecosystem Hell.

Friday, November 16, 2012

Looking for telecoms industry advice, research or a stimulus speaker? Employ Disruptive Analysis & Dean Bubley



A word from our sponsor....

I will be upfront & unapologetic: this blog post is an unashamed sales pitch for Disruptive Analysis & myself, Dean Bubley. I would like a couple of minutes of your time, to suggest ways we might work together to mutual benefit, on advisory work, research or speaking engagements.

At this time of year, many companies will be finalising budgets and plans for 2013. As well as general strategy, staffing, sales targets and product development/launch schedules, they will also be looking at arranging customer-facing events, or finalising attendance at trade fairs and conferences.

As you should be aware, my company Disruptive Analysis assists and advises operators, vendors, regulators and investors. In some cases I work on a solo basis, while for other engagements I have a network of associates and partners I can call upon.


Multiple engagement models

There are various delivery formats for my analysis and advisory services:

  • Internal strategy workshops, training courses & brainstorm sessions
  • Custom research & consulting projects, spanning market analysis, strategy/product development, product due-diligence and marketing/PR messaging, typically under NDA
  • Stimulus speaker or moderator at internal or external events, such as management retreats, customer conferences, webinars and sales kick-offs. (In recent months, these have included companies such as Acme Packet, CSG, InterDigital, Metaswitch & several that are under NDA)
  • Participation on corporate advisory boards, or as a retained advisor
  • Public workshops, such as the Future of Voice& Telco-OTT series I run with Martin Geddes
  • Private, sponsored or custom workshops, for example closed-audience versions of Future of Voice
  • Published research reports such as those I’ve written this year, on Telco-OTT Strategies, and 1-800 Data Plans
  • Sponsored white papers or roadshows, where vendors’ pitch and vision fits well with that of Disruptive Analysis
  • The @DApremium exclusive private Twitter feed


What's different about Disruptive?
 
While many analysts and consultants offer similar services, Disruptive Analysis has certain clear differentiators:
  • An uncompromisingly independent, and often contrarian stance. I don’t mince my words, and I’m not afraid to criticise even the most sacred of cows – or my clients, if I see them making expensive mistakes.
  • An enviable track record of being right with my forecasts and predictions (see below)
  • A huge network of contacts, that can be leveraged either for highly efficient research, or mutual introductions
  • Cross-silo research that brings together insight from diverse areas of technology business – networks, devices, applications, the Internet, regulation, user behaviour, partnerships & organisational dynamics. A full list of coverage topics is given below.
  • Name recognition and reach. As @disruptivedean I have around 4000 followers on Twitter, while this blog is among the most widely read in the industry.
  • Understanding of external adjacent worlds, such as finance (I am a former equity analyst), regulation & politics
  • Commercial flexibility and value. While Disruptive Analysis’ services are not cheap, time-effectiveness on consulting projects is very high. For events, it is possible to work to tight schedules or complex travel routings.
  • Being "out there". I attend 30+ conferences per year, from small and specialised events, to those run by standards bodies, through major trade shows. I do 100's of phone briefings and face-to-face meetings, and interact with countless groups via Twitter and LinkedIn.

"I told you so"

Disruptive Analysis has an enviable reputation and 10-year track record for making the right calls & predictions, early. This includes:
  • Identifying new and unexpected trends and innovations, months or even years in advance of the crowd (eg femtocells, WebRTC, Telco-OTT services),
  • Dismissing technology losers at the peak of their hype or before (eg UMA, RCS, NFC payments, embedded-3G laptops)
  • Simply pointing out “naked emperors” like 1-800 models for data charging, which are unworkable, or which are logically inconsistent or mischievous, such as ETNO’s proposals to ITU, or the notion of “seamless WiFi connection”. A classic example was my 2006 prediction that mobile IMS would fail as nobody had bothered to think about IMS-capable phones.
  • Numerical forecasts, such as the growth profile of Mobile VoIP to 250m users by 2012. (Although admittedly I expected VoLTE or its equivalent to have overtaken OTT options by now).
For example, back in 2007 I said that making VoIPo3G/4G work was going to be difficult, and that if the telecoms industry wants to lead 4G VoIP rather than OTT players, they would need to start "practising" early and (for a period) look to partner with Skype and others for applications other than "primary telephony".

That’s not to say that I haven’t made a few bad calls as well. I underestimated the success of both Android and the iPad, for example. And I thought Vodafone 360 was going to be a winner.

But on balance, I like to think that I’ve helped companies avoid some expensive mistakes, make the right investment choices, or “fix” deficiencies in new technologies or business models.

I’m particularly proud of accurate “anti-forecasting” – predicting which technologies won’t be a success. My belief is that many industry analysts are too fond of “hockey-stick” growth curves. It reminds me of investment banking analysts in the 1998-2000 dotcom bubble, when 90% of recommendations were “Buy”. I feel that analysts of all kinds should be prepared to write “Sell” research – even if it risks offending clients or close contacts.

(The dynamics of the analysis market mean that “Buy” research is more profitable to write – reports are often purchased by people wanting support & validation for ongoing projects and investments. Fewer people will pay money for bad news, even if it’s true).


Coverage topics

Disruptive Analysis covers numerous sectors and themes within the telecoms industry, and is always looking for new “hot topics” that are emerging (and also “cold topics” that will fail). While the title of this blog is wireless-focused, the wider telecoms industry including fixed-line and cable is also covered.

Recent focus has been on:


  • The Future of Voice & Messaging, including next-generation voice services beyond “peak telephony”, VoIP, WebRTC, user psychology, hypervoice, IMS/RCS/VoLTE & social networking & future messaging services.
  • Telco-OTT services, ie Fixed or mobile operators’ own Internet applications (eg in-house VoIP). This covers business models, organisational issues and technology enablers/infrastructure
  • Carrier WiFi, including new standards & business models
  • Mobile broadband business models & technology, including 3G/4G networks, small cells, policy & optimisation, pricing
  • Mobile devices & semiconductors, such as smartphone market dynamics, hardware components, OS direction, architectural considerations & fit with trends in operator needs & user behaviour
  • Telecoms policy & regulation including Net Neutrality, spectrum policy, national broadband initiatives, regional technology development zones and standards bodies.
  • Mobile commerce & applications, including appstores, HTML5, M2M, NFC mobile payments and others
  • Cloud, APIs and SDN
  • OSS/BSS systems including billing, policy, charging, interconnect, application enablement etc.

In addition, Disruptive Analysis has a strong heritage of researching unusual or specialised niches that lie well outside the normal coverage of industry analysis - please inquire.

Get in touch

Hopefully, this has given you food for thought about why you should be using Disruptive Analysis and myself, as part of your 2013 planning, operational and marketing agenda.

Please get in touch via email (information AT disruptive-analysis DOT com) or Twitter (@disruptivedean) or LinkedIn. Sign up to receive this blog by email here. I am happy to provide references, sign NDAs, write proposals or just discuss how we can work together profitably over the next year and beyond.

(I will also be at a few more events this year in person, including the Guardian Mobile Business Summit in London on Nov 19, the WebRTC Expo in San Francisco on Nov 28-29, and Telco 2.0’s Digital Asia in Singapore on Dec 4-5. Come and say hello).

Wednesday, November 07, 2012

Why ETNO's proposals to ITU for Internet regulation & Non-Neutrality are flawed & duplicitous

Over recent months, I have engaged with Luigi Gambardella, the outspoken head of the European Telecom Network Operators' association, ETNO, primarily via Twitter. He is currently on a mission to persuade the ITU to change its regulatory stance on the Internet, ostensibly in the name of creating a "level playing field" or to enable a "sustainable Internet value chain". Other terms that often crop up involve applying a telecom-style model of "cascading payments" to the Internet, and enshrining some form of "sender pays" principle.

The Devil, as always, is in the detail. 

My contention is that ETNO is being duplicitous, and that its proposals are flawed, ignorant and dangerous to the Internet, telecoms and the wider global economy. I believe that the hidden agenda is to perpetuate legacy telecom-industry business models, and to inhibit consumer choice, despite claiming the exact opposite.

My hope is that ITU delegates at the upcoming WCIT conference in Dubai see through this organisation's transparent lobbying, get past the hypocritical soundbites, and recognise the true implications of what is being promoted and kick it firmly into touch. (As I write this, another related event called the Internet Governance Forum, IGF, is ongoing in Azerbaijan, with ETNO and EU participation)

Firstly, it is important to recognise that ETNO persists in promoting a "them and us" philosophy, dividing the world between so-called "OTTs" and telcos, ignoring the 130+ Telco-OTT initiatives and other evidence to suggest that they are (or should be) all mutual peers. It apparently seeks to maintain the 100-year legacy of access/service integration. Such a polarising view, while making good headlines, is woefully inaccurate. It also propounds the very old-fashioned view that the telecoms industry is only made up of "services" based on "subscriptions", rather than applications, features and functions with a multiplicity of business models.

A good example of our exchanges is here . It's worth going through it (use the "read next page" buttons) to get a feeling for the style of discussion. When pushed on precisely which "rules" or which "we" his referring to (eg access vs. services side of telcos' businesses), he typically fails to give coherent answers.

ETNO has been doing something of a roadshow of its opinions in an effort to drum up support. For example, a September presentation to African WCIT participants referenced "creating the best enabling environment to foster commercial agreements based on Quality of Service delivery and to avoid any regulations that can hamper the development of these agreements."

In some of our exchanges, Gambardella has tried to imply or accuse me of representing US-based Internet interests. In return, I have called him out on his blatant obfuscation and soundbite-ridden lobbying stance, as well as various inconsistences and logical fallacies such as straw-man arguments. More recently, ETNO appears to have backed off from engaging me in Twitter debates, perhaps after realising that my clients are actually predominantly its own members and others from the telco/vendor establishment. (Unfortunately, I've never been able to convince Apple, Google or Facebook to pay me for anything. Lobbyists can't quite manage to get their heads around the fact that I'll happily bite the hand that feeds me, if they're making a mistake).

My professional opinion is that many of its proposals need to be ignored - and to understand why, regulators and ministers need to understand much better how the Internet and applications work - and more widely, how the telecoms industry will likely function in the future .

I am not averse to QoS - far from it - but based on my observations and analysis, I think that applying differential QoS to the Public Internet is an extremely harmful concept. I am a believer in Internet Neutrality, but not overall Network Neutrality.

(I will note upfront that a few ETNO ideas - for example around privacy and data protection - are much more reasonable than its muddle-headed stance on Net Neutrality and interconnect. I strongly agree that Internet companies need to have much more stringent controls on their ability to collect, store, use & abuse personal data).

Much of ETNO's argument concerns a rather vague concept of open and unregulated "commercial agreements" between multiple parties in the Internet value chain. While in principle, it is clearly good to have more flexibility in terms of connectivity and application business models, there need to be safeguards where significant asymmetry exists. There also needs to be an awareness of the consumer benefits of the current Internet model, and ensure that those are not threatened.

What is entirely absent from ETNO's proposition is a clear distinction between "public Internet access" and other managed Internet-like access services. As I have argued in the past - and as Ofcom and European regulatory bodies have recognised, there is clear blue water between what users perceive as the "open Internet" (ie neutral), and other broadband services, which include differentially QoS-managed offers such as carrier VoIP, IPTV, eHealth, smart metering and so on which do not transit the public Internet.

It is absolutely critical that ITU and WCIT enshrine that difference in global telecoms regulation, and that the current shape of the Internet value chain, accessed via public Internet access services is not mistakenly conflated with other broadband connectivity and services. In most countries it is still up to the individual operator whether or not to offer Internet access: it is not forced to, except in Finland where it is now a human right. The important factor here is that Internet users buy access, not end-to-end "quality".

Despite the telecom industry's heritage and vendor rhetoric, it appears that end-users are much less concerned with quality and ubiquity than has previously been assumed. 

The success - and economic and social contributions - of the Internet to date suggests that this "best efforts" and net-neutral model is valuable and important to protect. That does not preclude *other* non-Internet broadband services being offered on a QoS-managed basis, and indeed there are many attempts to create the necessary platforms to do so. It is also wrong to conflate "middle mile" technologies such as CDNs with access neutrality. It has also been possible for certain app/content providers to offer "differential quality" simply by buying more/bigger servers, or better access connections from those servers to the public Internet in their data centres. They also have differential quality through use of better codecs or application design That is entirely different to active discrimination by the user's own access provider in the network.

(Note that this is also an area where I disagree with collaborator Martin Geddes. My view is that the quality-unmanaged Internet ain't broken in general, so don't fix it. Hundreds of millions of new people are year wouldn't be buying Internet access if it was useless. If bufferbloat or other issues become critically problematic, fix them in isolation and attempt to otherwise keep the Internet structure & model as close as possible to today's. If something else radically different to the Public Internet is better, let it succeed on its own, and take over disruptively from adjacency)

The ITU and national regulators need to ensure that any new regulations do not incur opportunity costs - or disadvantage citizens and consumers - by allowing non-competitive or non-transparent broadband and Internet access markets to inhibit "Real Internet" application usage or innovation. In particular, the experimental / "freemium" model of the Internet, which allows a "million flowers to bloom" has self-evidently been successful in allowing a huge variety of new and useful applications and services to evolve. It has generated billions - perhaps trillions - in value (either revenue, consumer welfare or shareholder value).

Successful Internet companies have emerged from all parts of the world, not just the US and China. More importantly, the more forward-thinking telecom operators are finally embracing the open Internet through their various Telco-OTT initiatives. However, some Internet-based offers compete or substitute with other services offered by telcos and access providers (eg VoIP), and have provided incentives for these to be blocked or commercially inhibited, either implicitly or explicitly.

The fear is that the ETNO proposals for ITU WCIT will be implicit inhibitors of this type of innovation in future. Certain providers may be more capable of paying for quality than others (eg startups), while operators may choose to offer enhanced quality on a discriminatory basis. It is incumbent on all regulators to do thorough due diligence on the likely impact and implications and come to their own decisions.

In my view, ETNO is clearly self-interested, because of the other business activities of its members beyond Internet access, such as legacy telephony - and it has some highly questionable external support from consultants ATKearney, who had previously published a laughably-inaccurate and unbalanced report on Internet economics. (Note to ATK's lawyers: a) I laughed personally & so did others, b) happy to point out the inaccuracies for an appropriate fee).

A particularly specious strand of argument is that "investment costs" need to be shared beyond the telecoms industry - in other words, ETNO is suggesting that Internet content and application companies directly pay for "sending" data, irrespective of the fact that they already pay for access for their data centres and servers, and that users also pay access fees. This hackneyed topic is regularly trotted out by operator executives, aggrieved that their access networks are being used by their paying customers for valuable third-party services. There is a sense that they should be paid double, and extract some sort of "tax" from so-called "OTT players", despite the fact that is why customers are buying Internet access in the first place.

This argument is wrong in multiple ways, but three in particular stand out:

1) The concept of the "sender" is obsolete in modern telecoms and Internet usage. It is the wrong metaphor, rooted in a medieval view of sending parcels by donkey or messenger. If you look at the way that the web and broader Internet works, there is a complex mix of sending, fetching, requesting, distribution, delivery, subscription, caching, signalling, re-sending, broadcast, multicast, P2P and many other methods for data to get from point A to point B. Increasingly, applications and browsers "fetch" data in the background. Users themselves "send" a lot of data (eg email attachments, video uploads, browser-to-browser comms). Often, the process is automated and unpredictable. The concept of sender-pays is unfair, unmeasurable and unworkable, especially as we move to HTML5. It is one of the many reasons why 1-800 "Tollfree Data" concept doesn't work in general, except in a couple of isolated exceptions like the Kindle.

2) The argument that Internet companies must "share the investment costs" for building networks is only reasonable if those same companies have a direct involvement in determining the investment direction and priorities. At the moment, many telecoms companies invest in over-expensive and over-complex infrastructure (eg IMS, unnecessary levels of QoS, roaming platforms). If the ITU expects Google, Apple & co to somehow pay for those investments, it also needs to ensure that they are able to help direct them technically too. That means direct participation in bodies such as GSMA and 3GPP and the ITU's own standards committees, rights of veto over unnecessary equipment used solely to prop up vendors' margins and so forth. Otherwise, it will be in operators' interests to over-invest in infrastructure, knowing that it will be subsidised by Internet/content firms. It will be interesting to see if Google's work on Kansas City fibre build-out allows it to suggest changes to the more broadly-accepted economics of infrastructure build-out.

3) Internet companies have their own infrastucture costs and R&D (data centres, dark fibre, power plants etc). Applying the same logic, it would be entirely reasonable for this to be part-funded by operators whose customers "consume" those resources. "You can't use my pipes for free" translates directly to "You can't use my servers for free". I suspect that telcos would end up on the wrong side of a "balance of payments" negotiation, especially as Internet players start to explore alternative access methods such as WiFi more.

In my view some simpler rules and premises will suffice for ITU and WCIT when considering Internet governance and regulation:

  • Branded "Internet access" should be as neutral as possible, barring local legal requirements such as illegal content, or "in extremis" management of threats such as denial-of-service or damaging levels of P2P traffic. Any management techniques should be "de minimis" and transparent. Covert management should be a criminal offence roughly equivalent to fraud.
  • Managed or "other" broadband access can be non-neutral, as long as it is not branded as "Internet". This is already practised widely for both consumers and businesses. There may need to be safeguards to ensure that managed access does not reduce Internet access on shared networks to unusable performance levels.
  • Certain hybrids are possible but must be closely watched for anti-competitive behaviour.  For example, some Internet-centric services may in fact be delivered through parallel non-Internet mechanisms, and prioritised / QoS-managed. For example, web video could be "on-boarded" and delivered via a telco's IPTV platform. There needs to be as great-as-possible physical and logical isolation vs. real Internet access to ensure that positive discrimination / QoS does not squeeze open-Internet connectivity unduly.

One possible compromise is to suggest that WCIT adopts the premises that:

  • Basic, open, neutral-as-possible Internet access is enshrined a human right. It is left up to local regulators to determine appropriate minimum parameters of quality, performance & availability. A good recommendation would be for this to be sold (and monitored) on the basis of average achieved throughputs and latencies.
  • Operators are free to offer separate non-Internet managed services using any business model, as long as they are clearly distinguished from Internet Access in terms of branding and marketing.
  • Any mechanisms to optimise/accelerate Internet-based services via parallel "non-Internet access" must be made available on a totally non-discriminatory basis, in a similar fashion to other wholesale telecoms businesses such as local loop unbundling. 
  • Wherever possible, regulators examine the option for full structural separation of access and service provision, both for fixed and mobile operators. This would reduce the risk of anti-competitive behaviour and lead to the generation of multiple new (and fair) business models.
  • Encourage lower-cost and more open/flexible telecoms infrastructure investment and standards, rather than those which perpetuate old business models and concepts of telecoms. 
Overall, it is important that ITU delegates to WCIT drill more deeply into the ETNO proposals and understand better the motivation. The superficial soundbites are compelling, but they mask worrying undertones that will harm the Internet - and, indirectly, citizens and Internet users around the world. Quality-of-service is of much lower importance than "quality of experience" - and overwhelming evidence suggests that end-users are much more tolerant of variable-quality / higher-choice options than the telecom industry would prefer. It is incumbent on Telecoms Ministers, and the regulators they influence, to recognise this and enshrine user-friendly policies in future ITRs.