Towards 4G environment_regulatory challenges for content provision_Fre

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ADVANCEMENTSTOWARDS 4G::

ADVANCEMENTSTOWARDS 4G:

Content:

Content Introduction 2. 3. 1. Regulatory challenges in a 4G market environment Regulating content provision on 4G markets ? 4. Conclusion

Slide 3:

Introduction 1.

1. Introdution:

1. Introdution

1. Introdution:

tech focus market strategy focus 1. Introdution Seamless mobility ? user focus 6 telco & regulator focus datacom & tech focus 3G bashing focus

Slide 6:

4G 3G 2,5 1. Characteristics of future 4G markets 1.2 From 2G to 4G 2000 today 2005 2010 Customer value Mobile voice communication worldwide SMS First multimedia services (MMS) Mobile Internet-access Digital ckt. Switched + packet switched voice+data+video Multimedia broadband multimedia applications Interoperability and integration Technology independent platform Digital all IP Voice+data + video Mobile multimedia 2G Public W-LAN

Slide 7:

1. Characteristics of future 4G markets 1.3 Developments worldwide WWRF (Wireless World Research Forum): interest group founded by Alcatel, Ericsson, Nokia, Siemens and leading research centres ITU-T/-R Working Group : follow-up technologies of IMT-2000 Other working groups, i.e. 4GMF (4G Mobile Forum), 3GPP, IETF and MWIF/OMA USA 4G developments 4G In North America 4G development is driven by W-LAN. Worldwide 4G Developments 4G-notion as an evolutionary system of integrative technologies EU 4G developments Japan focuses on a new mobile 4G standard and not on integration of existing technologies Japan & Asia 4G developments Depending on the technological / historical background the term 4G has different meanings in different regions

Slide 8:

TD-SCDMA MC-CDMA Multi-Carrier CDMA Bluetooth WAP A number of technologies (apart from 3G) will have an impact on wireless development this decade. Market winners will become part of a 4G architecture Optical Wireless BLAST (Bell Lab Layered Space-Time) Software radio OFDM WLAN Smart antennas DVB-T (digital terrestrial TV) Satellites UWB (Ultra Wide Band) Micro-fuel cells all-IP Ad-hoc networks Turbo-code LAS-CDMA Large Area Synchronized CDMA MDMA Multi-dimensional multiple access 1. Characteristics of future 4G markets 1.4 Technologies

Slide 9:

Convergence of fixed, mobile satellite and broadcast Support of terminal and personal mobility Global seamless support of wide range of services User data rates from 2Mb/s to 20Mb/s or more support of broadband mobile multimedia support of high definition moving pictures Support of broadcast and distribution services Reconfigurability of networks and terminals Coverage : Pico, micro, macro and broadcast Software Defined Radio Technology IP Technology Dynamic Spectrum Allocation Efficient Energy Use Optimum Routing Global Roaming More Services than 3G Guaranteed QOS Support of Variety of Terminals Heterogeneous standards Users Information Rates >2 Mb/s may be 20 Mb/s Key Features 1. Characteristics of future 4G markets 1.5 Key features

Slide 10:

Networks: Several competing infrastructures (GPRS, WLANs, 3G + dark-horses) Terminals: Adaptive instead of single mode A continuous suite of terminals from voice-only ear-phones, wearables, handsets, handhelds, goggles with screens, lap-tops to wireless cars etc. Applications: High Speed Multimedia instead of voice, data 1. Characteristics of future 4G markets 1.6 Summery: the wireless landscape in 2010 Seamless Services and Intersystem Roaming Emerging new technologies with potential for breakthrough after 2010

Slide 11:

Regulatory challenges in a 4G market environment 2.

Slide 12:

Regulating Mobile Communications will undergo a transition in a 4G environment less regulations and regulatory intervention for mobile operators compared with fixed-network providers limited competition /closed market mobile-specific licences issued (typically less than 5) No content regulation on mobile telecom markets More regulation for mobile providers Distinctions between fixed and mobile sectors will diminish as a greater separation between „services“ and „networks“ is made: network provision will increasingly become technology-neutral (subject to resource-availability, e.g. spectrum) 2 regimes will in the future regulate operators and providers. Sector Regulation & Competition Law Content regulation is likely to become an issue in the future Traditional Future Changes Restructuring of regulator to adopt to new tasks 2. Regulatory challenges in a 4G market environment 2.1 Key changes of a future regulatory framework

2. Regulatory challenges in a 4G market environment 2.2 Regulatory challenges in a 4G environment:

regulatory concerns will shift upwards to the higher layers of the network hierarchy integration of communications and content markets traditional regulatory requirements may become less relevant with 4G other requirements will remain but change character technologies In the long run legacy networks will continue to exist, but over time they will be transformed and upgraded to enable additional types of services focus on the category of service to be interconnected, rather than on the origin of the network interconnection With 4G, market dominance may also be derived from controlling more limited sets of functions and capabilities that are necessary for the provision of services to end users implications of regulatory action in cases where some form of dominance over control points occurs understand sources of market power and its abuse in the 4G environment 2. Regulatory challenges in a 4G market environment 2.2 Regulatory challenges in a 4G environment New technologies and the integration of communications and content markets set the framework for regulation in a 4G environment. Both of them are likely to change market power of undertakings in the market.

2. Regulatory challenges in a 4G market environment 2.3 Regulatory Implications of IP-based Service Provision (1):

In the Future Circuit Switched technology will be substituted by IP technology. This will have impacts on competition and regulatory intervention: More opportunities for open interfaces: potential for wider participation and more competition in advanced communications services Interoperability and open interfaces will become important issues as there will be many more forms of interconnection and access More potential for more geographic independence as a s erver can be located anywhere Declining importance of national Numbering 2. Regulatory challenges in a 4G market environment 2.3 Regulatory Implications of IP-based Service Provision (1) Move from SS7 Signalling to IP Addressing leads to….

2. Regulatory challenges in a 4G market environment 2.4 Regulatory Implications of IP-based Service Provision (2):

Regulators will have to assess whether open interfaces to service components are necessary or if there will be sufficient interoperability being implemented through gateways that perform conversion between interfaces International competition increases as IP networks make service creation independent from user location. This will in turn change market definitions As terminal equipment becomes increasingly intelligent new criteria for determining whether a given function belongs to a network and is covered by its regulations are necessary Time based tariffs will become more and more inappropriate where cost orientation is a regulatory requirement as no clear start and end signal is transmitted 1 2 3 4 As a consequence…. 2. Regulatory challenges in a 4G market environment 2.4 Regulatory Implications of IP-based Service Provision (2)

2. Regulatory challenges in a 4G market environment 2.5 More Control Points on 4G Markets:

2. Regulatory challenges in a 4G market environment 2.5 More Control Points on 4G Markets Control Points on 4G markets will to a large extend determine if an operator or Service Provider has Significant Market Power. Example today: Local Loop Possible Control Points in the future: Network Control of Inter-connect and QoS Determines whether/at which quality servi c e are offered Control of Routing Tables Control of network related functions via standards Services Content User Information These potential bottlenecks may enable operators / providers to exercise market dominance by imposing unfavourable access conditions upon other market players Control of service related functions via standards Interoperability of Transport and Service Walled Gardens Enable operator to restrict access to content Control of Content provided exclusive ly to selected network/service providers Customer Billing Information Access to customer Information Systems Control of location based services

2. Regulatory challenges in a 4G market environment 2.6 Increased complexity of regulatory interventions:

2. Regulatory challenges in a 4G market environment 2.6 Increased complexity of regulatory interventions Existence of Control Points might lead to serious barriers to market entry which in turn might call for regulatory intervention. A careful review of the situation is however necessary: Assess whether potential control points create market power sufficient to justify regulatory intervention Increased Complexity and analytical challenges Inappropriate regulatory requirements would in affect mean that the regulator would pick winners and losers The importance of Control Points might diminish as new technologies other service alternatives If network access and content platforms are unrestrictedly opened, operators will no longer be able to ensure end user quality and security Regulatory Task Inappropriate intervention could freeze commercial arrangements and market structures that are not efficient or viable in the long term

Slide 18:

Regulatory rules for the provision of content on 4G mobile markets 3.

Slide 19:

“ Walled garden ” is a term applied to a service package that provides customers access to certain pre-determined functions and content It is a branded service and is actively promoted by the service provider and its partners, and contains high quality content that is intended to enrich the users experience and thereby increase their service loyalty and reduce churn Entry is normally open only to those users who have subscribed to the service Describes a business strategy designed to attract and retain customers Network operators or service providers choose to control the content and services that can be accessed by a customer Could become an important bottleneck in differentiating the availability of services and contents Examples have already emerged, where mobile operators are seeking to create a walled garden for a selection of services Characteristics Consequences 3. Regulatory rules for the provision of content on 4G mobile markets 3. 1 Walled gardens as potential bottlenecks Under semi-walled garden ” (open garden) portals owned by network operators or service providers enable access to the public Internet, but only through a number of menu choices

3. Regulatory rules for the provision of content on 4G mobile markets 3.2 (Semi-)Walled gardens gardens as a business model:

Insufficient supply in the garden The vast majority of access providers will be unable to provide the breadth and depth of quality services/content needed to fulfil subscribers’ demand Competition btw. portal providers There are strong incentives for especially smaller operators/service providers to move beyond the walled garden approach, if that is what end-users want Promoting destination sites Increased promotion of destination sites from traditional media, portals, and start-ups will drive experienced users beyond the walled garden Access portals to widen target group With insufficient growth in access subscribers, access portals have an incentive to expand their target group for future 4G services beyond their own access subscribers For several reasons (semi-)walled gardens may not be a successful business strategy of mobile network operators in the long run 3. Regulatory rules for the provision of content on 4G mobile markets 3. 2 (Semi-) Walled gardens gardens as a business model

3. Regulatory rules for the provision of content on 4G mobile markets 3.3 Arguments against regulating (semi-)walled gardens :

Regulatory intervention may be detrimental (Semi-)walled gardens could provide a good starting point for many users first entering a new service space Network operators / service providers can make sure that walled gardens services are easy to use, offer predictable prices and minimise the risk of fraud Functions for managing / protecting digital rights are crucial for successful distribution of content The lack of Digital Rights Management is a barrier to many applications involving copyright media. As long as no standard approach for digital rights management has been identified, (semi-)walled gardens may provide the best channel for content delivery and payment Choosing a less interventionist approach by reducing market entry barriers for 4G providers adopting a light-handed licensing regime which allows new companies to avoid burdensome application procedures. stimulating the market entry of service providers If (semi-)walled gardens constitute a significant bottleneck on future 4G markets, there are other arguments against regulating them 3. Regulatory rules for the provision of content on 4G mobile markets 3. 3 Arguments against regulating (semi-)walled gardens

3. Regulatory rules for the provision of content on 4G mobile markets 3.4 The mobile service i-mode by NTT DoCoMo :

Absence of regulatory intervention Service concept being important than technical standards Micro-payment system profitable for both DoCoMo and content providers Success factors of mobile Internet in Japan Despite dominance DoCoMo was able to exercise influence over standards for the services, thus being able to able to control the development and delivery of fully functional solutions Competitors have been almost as successful as i-mode, although they are built on different networks have chosen similar solutions for providing service, billing customers, sharing revenues, setting content prices and signing up for services DoCoMo allows content p roviders to charge btw. 1 and 3 € for contents Only 9% of this charge is kept by DoCoMo as a handling charge Official content providers had an incentive to develop content 3. Regulatory rules for the provision of content on 4G mobile markets 3. 4 The mobile service i-mode by NTT DoCoMo

3. Regulatory rules for the provision of content on 4G mobile markets 3.5 Korean mobile Internet services :

Business strategy chosen by mobile operators in Korea has been to achieve high volume of data traffic and to differentiate from other mobile operators Walled Garden Apporach control quality and number of mobile services/contents control over prices of services/contents distinguished offerings via exclusive agreements with content providers Success : Just one year after the launch of 2.5G more than 9 million out of 36 million mobile customers have been using the service But : Korean Regulator has obliged mobile operators to keep only 10% of the revenue from premium priced content - giving 90% to the content owners Operators offered contents at very low cost, generating revenues mainly from the data traffic, meaning that content providers were getting 90% of very little 3. Regulatory rules for the provision of content on 4G mobile markets 3. 5 Korean mobile Internet services

Slide 24:

Conclusion 4.

4. Conclusion 4.1 Recommendations on regulating content provision on future 4G markets :

Abstain from requiring non-dominant operators/providers to provide open and non-discriminatory access at any level of 4G markets Be cautious when putting in place ex-ante measures, and apply instead ex-post tools which are sufficient for large parts of the 4G market Distinguishing between potential bottlenecks that promote normal competitive activity, and those that may harm competitive activity Be careful of not regulating too early and take into account “long-term risks and reward aspect 1 2 3 4 Guidelines for regulatory action on 4G markets 4. Conclusion 4. 1 Recommendations on regulating content provision on future 4G markets

4. Conclusion 4.2 Recommendations on regulating access on future 4G markets:

Network operators The principles of open and non-discriminatory access (as well as other remedies if necessary) should only apply to 4G networks of dominant operators and not to all network operators Service Providers Mandated open access to services where a “dominant service provider” exists. Only when he can prove that he cannot provide unlimited access due to capacity constraints, he may be allowed to restrict access Exclusive agreements between service- and content providers should be monitored closely by regulators in view of their competitive effects User access Subject to competition provisions, access to content should be a matter for commercial agreement regulatory provisions shall prevent the abuse of market power of dominant content suppliers Open network access for users should always be mandatory 4. Conclusion 4. 2 Recommendations on regulating access on future 4G markets Regulatory action against operators and providers on future 4G markets may be guided by the following principles:

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