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Friday, April 25, 2014

Telecoms regulators should encourage multiple access, not just competitive access

Much of the regulatory debate around telecoms competition (fixed or mobile) involves consideration of investment in networks. 

Broadly, this centres on two or three dimensions:

  • Investment in adding capacity, coverage & capability to existing networks, eg fibre deployment, or upgrading to 4G mobile networks
  • Ensuring adequate facilities-based competition between (retail) access networks, eg cable vs. telco
  • And also where retail competition is difficult, enabling wholesale competition, such as by unbundling of local loops, or allowing MVNOs
The general idea is that consumers should have access to alternative suppliers for connectivity, especially broadband. Some regulators also try to ensure that switching/churn is made quick and easy.

At the same time, a reverse trend is occurring with network consolidation (mobile/mobile, mobile/fixed & fixed/fixed) as a result of declining profitability. We also see an ongoing trend towards network-sharing in order to reduce costs, although that is still only patchily-accepted.

I am increasingly of the opinion that regulators need to shift stance a bit.

Rather than focusing on competition at a national level and assessing the ability for consumers to switch access providers, I think an alternative approach is warranted.

Regulators should look to make it easier for users to access *multiple* networks dynamically, rather than necessarily switch from one primary provider to another. New devices and applications now make it much easier for users to exploit several routes to obtain data or content, either switching on short time-scales, or even connecting to multiple sources simultaneously.

Most obviously, smartphones are typically able to connect to both a cellular network, and the user's choice of WiFi in a given venue. Less obviously & commonly, they can also be "tethered" together, to use another phone's cellular connection by proxy. In the fixed broadband world, we sometimes see mobile broadband used as a backup - or in the business space, perhaps multiple redundant fibre connections into the same building.

Where customers are able to choose and switch in (near) realtime  between different connectivity options, they (or apps working on their behalf) can minimise costs, maximise up-time, arbitrage around "neutrality" issues, and perhaps bond together multiple connections for highest speeds.

In particular, users are then not locked into a single business model - such as monthly ongoing "subscription", but can benefit from alternatives such as one-off payments, sponsored or "free" access, amenity or utility provision, bundling with other goods or services and so on.

The key here is to ensure that customers have access to multiple independent networks, and not just some form of centrally-controlled "HetNet" with converged billing and policy (and business model) functions.

There are a number of further ways that "multiple access" can be fostered:

  • Encouragement of dual-SIM (& dual-standby) mobile devices
  • Fostering of alternative / overlay infrastructure in both fixed and wireless broadband, such as new generations of LEO/MEO broadband satellites, or more "far-out" options such as Internet-based drones and balloons
  • Allowing pole-mounted fibre to be deployed more easily
  • Reducing any onerous limitations on public/amenity WiFi (such as user registration)
  • Controversially, perhaps limiting the ability of cross-ownership or forced-offload between cellular & WiFi providers (ie ensuring that users have "WiFi neutrality" and are able to select a network of their choice)
  • Removing limits or blocking of tethering or other device-to-device connectivity and access-sharing
  • Looking at mechanisms to encourage households to obtain and manage two fixed-broadband connections, eg cable+fibre. This could involve promotion of "dual-homing" broadband gateways or set-top boxes
  • Examination of ways to encourage new entrants into domains such as white-space wireless, mesh networks and so forth
  • Consideration that many users will have several devices - and perhaps several different access providers - that can substitute for each other, in many cases.
  • Encouraging the adoption of third-party network monitoring software and reporting - allowing users to make informed decisions about their network choices (speed, neutrality, cost etc) at any location and time
The point here is that there does not need to be "monolithic" competition - ie nationwide networks. Neither does it need "seamlessness". Users and (increasingly) devices and apps are capable of switching networks very quickly, if perhaps not always fast enough or easily-enough for cases like inbound phone calls. That is a "nice-to-have" which can be added later, if and only if it doesn't impact users' ability to choose and arbitrage across multiple providers' networks.

To a first approximation and for an early regulatory goal, it is sufficient for there to be multiple independent ways for most users to access a basic set of Internet services such as email, social networks, e-commerce, messaging and voice communications, at the majority of locations and majority of the time. This might involve using a phone instead of a PC, or a tablet instead of a TV. But people are quite flexible in achieving their real goals, such as "being entertained for 30 minutes" or "arranging to meet a friend", and cheaper devices and better software/apps allow tasks to be substituted easily.

On the other hand, it is unreasonable to expect full "access redundancy" to 4K video-streams ubiquitously.

If regulators focus on "temporary switching" power of end-users, they reduce the potential for abusive market practices, irrespective of Net Neutrality position. If a customer's mobile operator tries to block Skype, but it is available instead via a neighbour's shared-access WiFi with minimal hassle, that both mitigates the harm to the user, and incentivises the original cellular operator to adopt more reasonable network policies. If an ISP tries to extort unreasonable paid-peering or transit fees from a CDN or content provider, then perhaps a 3rd-party Internet drone or satellite connection can step in, and in the process act to "keep honest" the interconnection fees.

This is a theme that I will come back to in various other guises. But the bottom line is that operators should consider the ability for users to exploit *multiple* independent network connections and business models on a dynamic basis, not just choose occasionally between primary providers when contracts are up for renewal.

1 comment:

Pal Zarandy said...

In other words, as opposed to the telco lobby's and EU Commission's mantra, not less, but much much more fragmentation is needed on the access infrastructure level.

Ideally, anybody should be able to set up its own small mobile internet access network, e.g. a municipality, or even smaller entities, and buy spectrum capacity on demand on a dynamic exchange, brokerage.

Current European Connected Continent proposal takes the exact opposite root. Cements incumbents spectrum positions, increase min license durations to min 25 years, rules favour bigger, multi-member state operator against small independent operators, when it comes to allocating spectrum.

Kroes is even trying to kill the roaming decoupling regulation - which would at least let consumers chose directly their operators in the visited countries, without swapping SIM.

Essentially, the new rules will allow operators to buy (and divide among themselves) markets as opposed to resources.

Increasing competition would accelerate the transition from centralised telecoms to distributed internet centric business models. This would hurt a lot of incumbent economic and political interests.

The case is similar to the Energy markets. Distributed renewable energies - i.e. more fragmentation - would hurt a lot of incumbent interests linked to the current centralised, oligopolistic power plat businesses.