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Quality, revenue models, over-regulation and trust: Issues discussed at Shanghai Public Policy Forum

These were framing comments I made at the Panel discussion on “Regulatory challenges arising from the new mobile ecosystem,” GSMA Public Policy Forum at the Mobile Asia Expo 2013, Shanghai, 27 June 2013.

The keywords are ecosystem and regulatory. It is widely recognized that the emerging Internet-centric communication system is far more complex than the old voice-centric one and that many more actors are involved, beyond the telecom operators, their vendors, regulators and policy makers. In particular, content and applications providers play an increasingly important role. Unfortunately, they are not represented on this panel, a shortcoming that I hope will be remedied in future episodes of what has to be a continuing conversation. The complexity of the eco-system and the lack of settled knowledge require that we continue talking and that the conversation includes all the players.

In the limited time that we have, we cannot cover all the key regulatory issues, let alone the larger policy issues. I have decided to focus our conversation on three specific areas that fit the expertise and interests of the panelists and which I consider to be of high salience.

• As networks capable of carrying large data volumes such as 3G and 4G are rolled out and smartphone and devices such as tablets are used by more and more people, data traffic on mobile networks will spike. When smartphones first hit the Hong Kong market a few years back, there was a 19 times increase is data traffic on the mobile networks within a 24 month period, according to the Office of the Communication Authority of Hong Kong. Increased demand is good, but we know what happens to networks when capacity is inadequate to respond to that demand. The quality of the user’s experience degrades. The long-term solution is investment. That depends on general investment conditions, including good regulation, but also on the appropriate revenue models being identified. This is an issue that was debated in the context of the WCIT with European operators seeing the additional traffic as a burden and wanting the help of governments to negotiate more favorable terms from the OTT [Over the Top] players. Other operators see the demand generated by the OTT players as a benefit, perhaps because they have already implemented appropriate revenue models. While these issues are being resolved and the investments needed to yield adequate quality are made (as was the case in Hong Kong), there will be demands for immediate remedial action from regulators and operators. The conversation about quality revenue models will have to continue, with multiple stakeholders and viewpoints.

• The claim of a tilted playing field, where some players are heavily regulated and others are not, is an important part of the larger debate about the shape and form of the emerging ecosystem. Is the solution the extension of licensing and regulation to currently unregulated OTT players and regulatory intervention in the terms of how they interact with access-network operators? This was the case last year in Bangladesh where a proposal was floated to license all value-added service (VAS) operators, to remove the authorizations included in the existing licenses operator of the network operators to offer services (thereby compelling them to divest) and to set the terms of arrangements for carrying VAS. Luckily, this proposal, which by the way did not address the problem of how to practically license and regulate entities that had no commercial presence in Bangladesh, appears to have been suspended, if not withdrawn. The question of appropriate policy and regulatory responses to the demand by incumbents for protection or a level playing field require discussion.

• Some components of the ecosystem such as literate and skilled users, attractive content and useful applications are well known. But one key element that is perhaps not adequately paid attention to is that of trust. This will become increasingly important as the value of the interactions and transactions to the user increases. Trust is not solely dependent on the engineering of security into the design of the platform or systems, but it is a necessary condition. It is important that this essential component is part of any conversation, especially one that involves vendors.

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