No. 69 - The challenges and opportunities of Next Generation Networks
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Communications & Strategies - 31/03/2008
1st Quarter 2008
This dossier presents several papers offering an original view point on the various issues raised by Next Generation Networks. NGN is a term that is being increasingly used to describe the latest state-of-the-art networking platforms, which service providers are either developing or are using today. The industries have been riding the NGN wave, but at the same time have to square up some inescapable key issues, among them the evolution of the regulatory approaches, the adaptation of the business models, the effects on the competition patterns and the impact on the whole telecom industry.
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Dossier
The challenges and opportunities of Next Generation NetworksEdited by Brigitte PREISSL, Lorenzo PUPILLO & Jason WHALLEY
Introduction
Brigitte PREISSL & Jason WHALLEY
Regulatory Approaches to NGNs: An International Comparison
J. Scott MARCUS & Dieter ELIXMANN
NGA, IP-Interconnection and their Impact on Business Models and Competition
Wolfgang REICHL & Ernst-Olav RUHLE
Regulation of NGN: Structural Separation, Access Regulation, or No Regulation at All?
Fabian KIRSCH & Christian von HIRSCHHAUSEN
The Economics of Next Generation Access Networks and Regulatory Governance:
Towards Geographic Patterns of Regulation
Giovanni Battista AMENDOLA & Lorenzo Maria PUPILLO
Other papers
White Knight or Trojan Horse?
The Consequences of Digital Rights Managementfor Consumers, Firms and Society
Thierry RAYNA & Ludmila STRIUKOVA
Payment Card Systems in Europe: Convergence or Disappearance?
Marianne VERDIER
Features
Firms and Markets
• Network Saturation? Video's Impact on Operators' Strategy
Valérie CHAILLOU
• Highlights from the World Mobile Congress in Barcelona
Yves GASSOT et al.
• Satellite Communication in the Netherlands Market Structure, Innovation and Growth
Martijn POEL
Technical Innovations
• Video Games on Mobile Phones Challenges and Outlook
Laurent MICHAUD
Use Logics
• Content Exchange and Piracy - New Practices, New Tools
Laurent MICHAUD
Book Review
• Jörg KITTL, Ewald LICHTENBERGER, Ernst-Olav RUHLE & Claudia SCHLIPP (Eds),
Telecommunications Markets in Central and South Eastern Europe
by Martine GEORGES-NAÏM
• Gaby SADOWSKI-RASTERS, Geert DUYSTERS & Bert M. SADOWSKI,
Communication and Cooperation in the Virtual Workplace
- Teamwork in computer-Mediated-communication
by Jean-Gustave PADIOLEAU |
J. Scott MARCUS & Dieter ELIXMANN
Regulatory Approaches to NGNs: An International Comparison
Key words: Regulation; Next Generation Networks; access network; core network; all-IP; competition; market power; international comparison.
The emergence of Next Generation Networks (NGNs) raises profound challenges for regulators everywhere. Different regulatory authorities have approached these problems in strikingly different ways, depending in part on the overall regulatory milieu in which they operate, and in part on the nature of the NGN migration envisioned by major market players. Also, the NGN core network raises significantly different issues from those of the NGN access network. The migration to NGN raises many of the same issues that were already on the table as a result of the broader migration to IP-based services, notably in regard to the de-coupling of the service from the underlying network. To these concerns are added profound questions related to the nature of market power. Will NGNs enable new forms of competition? Will competitive bottlenecks remain, especially in the last mile? Will NGN enable new forms of bottlenecks to emerge, especially in the upper layers of the network, perhaps as a result of new IMS capabilities? Regulators in the UK, Netherlands, Germany, Japan and the United States have been forced to deal with these issues due to relatively rapid migration to NGNs proposed by their respective incumbent telecoms operators. Many of the same issues are also visible in the recommendations that the European Commission finalised on 13 November 2007 as part of the ongoing review of the European regulatory framework for electronic communications. In this paper, we compare and contrast the many regulatory proceedings that have been produced by these regulatory authorities.
Wolfgang REICHL & Ernst-Olav RUHLE
NGA, IP-Interconnection and their Impact on Business Models and Competition
Key words: NGN, business models, migration, competition, regulatory framework.
Developments towards Next Generation Networks (NGN) have a strong impact on the design of the markets for electronic communications in general, but specifically on intercarrier relations with respect to interconnection and access. Due to the fact that competition in the European telecommunications environment has brought about alternative providers and their business models it is an interesting area to investigate how these business models will develop in an NGN environment and which (additional) business models may emerge in the future. To that end, the current paper looks at the development of different business models in the PSTN world and likely developments in the NGN world. This leads to conclusions with respect to requirements of the future regulatory framework of next generation networks in order to maintain the achievements of competition in the telecommunications area.
Fabian KIRSCH & Christian von HIRSCHHAUSEN
Regulation of NGN: Structural Separation, Access Regulation, or No Regulation at All?
Key words: Next Generation Network, deregulation, access regulation, structural separation.
Since the introduction of Next Generation Networks (NGNs) by telecommunication network operators, national regulators have begun to adapt their access regulation regimes to the new technological conditions. The regulatory reactions gravitate towards three distinct regulatory trajectories: unregulated competition, access regulation, and structural separation. We first analyze the extent of market power in access Networks in NGNs from a technological perspective. Second, we use case studies to identify patterns between technological and market conditions and regulators' reactions in selected countries. We find that market power in the access network is likely to prevail. Regulatory reactions differ with the extent of infrastructure competition and the regulators position in the trade-off between promoting investment and protecting competition.
Giovanni Battista AMENDOLA & Lorenzo Maria PUPILLO
The Economics of Next Generation Access Networks and Regulatory Governance: Towards Geographic Patterns of Regulation
Key words: Next Generation Networks, geographic markets, geographic remedies, infrastructure sharing, market definition.
This paper examines the mix of technical, regulatory, and business strategy issues that arise in implementing next generation broadband platforms in Europe. Our review of some European studies on NGAN in Europe and our specific focus on the Italian situation, in particular on the competitive situation in Milano, shows the relevant flaw of continuing to advocate national patterns of regulation. In fact, the deployment of NGAN calls for a radical shift of regulation on a geographic level. The recognition that a NGAN business case does exist for OLO in a number of local areas, mainly metropolitan ones, has relevant regulatory implications.In the first place, since the conditions of competition differ significantly among local areas, regulation should promote both incumbents' and OLO's investments in NGAN by limiting ex ante interventions to those enduring economic bottlenecks found at a specific geographic markets level. In the second place, market definition is the most important step in the market analysis procedure to help decide whether to regulate a given service provided over a NGAN or not. We have proposed a taxonomy of local areas that may be adopted in a country like Italy for a correct geographic definition of markets 4 and 5 and, as a consequence, for the imposition of appropriate remedies.
Thierry RAYNA & Ludmila STRIUKOVA
White Knight or Trojan Horse? The Consequences of Digital Rights Management for Consumers, Firms and Society
Key words: Digital Rights Management, Digital Goods, Piracy, Excludability, Durability, Sampling.
Due to its ability to solve all main problems associated with digital goods, Digital Rights Management is the favourite option used by companies to tackle piracy. The aim of this article is to discuss the consequences of DRM for consumers, firms and society. The rationales of DRM are discussed and the expected benefits for firms are presented.. In contrast, consumers are shown to be likely to see few benefits in DRM. This article demonstrates that even a standard DRM system is unlikely to improve social welfare. The article concludes with some public policy recommendations.
Marianne VERDIER
Payment Card Systems in Europe: Convergence or Disappearance?
Key words: SEPA, payment cards, payment systems, banks, payment instruments.
This article provides a descriptive overview of the payment card industry in Europe and compares the various forms of organization of payment card systems in European countries. This synthesis helps to understand the paradoxes and the challenges entailed in the creation of the Single Euro Payments Area. |
Giovanni AMENDOLA is Head of Public Strategies at Telecom Italia. He designs and manages, at corporate level, regulatory and policy strategies on issues such as NGAN development, functional separation, and the European Review. Formerly, he was Head of International Regulatory Affairs at Telecom Italia. He supervised the regulatory positioning of Telecom Italia subsidiaries in France, Germany, The Netherlands and Latin America. Before joining Telecom Italia in 2006, he worked as Head of Regulatory Strategy and International Affairs for Wind Telecomunicazioni. He earned a Ph.D. in Science and Technology Policy Studies from the University of Sussex, and an M.A. in Statistics from Università La Sapienza of Rome. He has published extensively on issues related to technological change, industrial economics and regulatory policy.
Valérie CHAILLOU is Senior Consultant at IDATE. Valérie's prime areas of expertise are the Internet and broadband sectors, and access technologies in particular. She has been the Project Manager for several market reports, including: FTTH, World Internet Atlas, Wi-Fi, Powerline Carrier Systems and WiMAX. Before coming to IDATE, Valérie took part in a variety of computer science projects, working as a consulting engineer for Cap Gemini. She holds a Telecommunications Engineer degree from ENST Bretagne (Ecole Nationale Supérieure des Télécommunications de Bretagne, 1997) and a Master's Degree in Physics (Université II de Montpellier,1995).
v.chaillou@idate.org
Dieter ELIXMANN is head of Market Structure and Business Strategies Department at WIK. Having studied mathematics and economics, he has been with WIK Since 1985 and was appointed head of the department in 1994. He has conducted and managed numerous research and consulting projects. His activities focus on a broad scale of issues regarding micro and macro-economic aspects, public policy, regulation, competition policy, business strategies and market structures of telecommunications markets. He has done extensive econometric research on production structures and demand analysis in the telecommunications sector. His areas of activity also encompass the analysis of internationalization and globalization in the telecommunications sector as well as multimedia business strategies. He has conducted several studies relating to technical, economical and policy issues of access to and interconnection within the Internet. Moreover, he has worked on a broad range of regulatory topics comprising interconnection, unbundling and universal service issues. He has extensive experience with many telecommunications markets including the USA, Canada, EU Member States, China, Korea and Russia.
WIK, Rhöndorfer Str. 68, 53604 Bad Honnef, Germany.
For more than fifteen years, Yves GASSOT has been at the head of IDATE (www.idate.org), an institute that has established itself as one of the leading research centres in Europe concerned with the telecommunications, Internet and media industries. In this position, he has taken part in numerous studies of the various markets and the strategies being pursued in the telecommunications sector. He is on the panel of several expert committees, including the Conseil Général des Technologies de l'Information , ITS and the advisory Committees of the PTC and Iris Capital. He was special adviser of the European Commissioner of the Information Society during the last regulatory framewoprk review. He serves as director of the journal COMMUNICATIONS & STRATEGIES and is scientific head of the annual DigiWorld Yearbook and DigiWorld Summit. With a background as DPLG architect, he is a graduate of the Institute of Political Studies, Paris (3rd Cycle).
y.gassot@idate.org
Martine GEORGES-NAÏM is of counsel at the Paris based law firm Bersay & associés, with a practice focused on electronic communications and regulatory law.
She is graduated from the Institut d'Etudes Politiques de Paris and holds a master in law and post graduate degrees in Public law and in Labour law (University of Paris).
First involved in the legal department of the High Authority for Regulation of Broadcasting and in the legal department of France Télécom, she has been General Counsel of the Directorate General for Post and Telecommunications at the Ministry of Post and Telecommunications from 1990 to 1996. Since 1996, she has been an "avocat" with the Paris Bar. Martine authored, with Alain Vallée, a book on telecommunications (Perspectives for telecommunications, La Documentation française, IDATE, 1992). She is also a member of COMMUNICATIONS & STRATEGIES' Editorial Committee. She is "Chevalier" of the National Order of Merit.
Christian von HIRSCHHAUSEN (1964) is Professor of Energy Economics and Public Sector Management at Dresden University of Technology, and Research Professor at DIW Berlin (German Institute for Economic Research). He has an M.A. (Economics), University of Colorado at Boulder (1988), Diplom-Ingenieur (MS in Industrial Engineering), Berlin University of Technology (1989), Ph.D. in Industrial Economics, Ecole des Mines de Paris (1995). Hirschhausen is a member of ITS; research specialization in applied industrial economics, network economics, and regulation.
Fabian KIRSCH (1979) is a member of the Human Centric Communication Cluster (HC3) Graduate Program at Berlin University of Technology (TUB) and associated researcher at the Chair for Open Communication Systems (OKS) and the Workgroup for Infrastructure Policy (WIP) at TUB. He received his Diplom-Ingenieur (MS in Industrial Engineering) at TUB in 2006. Kirsch is a member of the ITS. His research mainly addresses the regulation of network industries with a specialization in the telecommunications sector.
J. Scott MARCUS serves as a Senior Consultant, and also manages the "NGN and Internet Economics" department for WIK-Consult GmbH (the consulting arm of the WIK, a research institute in economics and regulatory policy for network industries, located in Bad Honnef, Germany). Previously, he served as Senior Advisor for Internet Technology for the FCC. Prior to that, he was the Chief Technology Officer (CTO) of Genuity, Inc. (GTE Internetworking). Scott holds a B.A. in Political Science (Public Administration) from the City College of New York, and an M.S. from the School of Engineering, Columbia University.
WIK, Rhöndorfer Str. 68, 53604 Bad Honnef, Germany
scott@scottmarcus.com
Laurent MICHAUD is Head of Digital Entertainment Practice at IDATE. Laurent acts as project manager for market reports on video games, music, peer-to-peer, digital rights management and content protection, mobile electronics and the digital home. He provides OSEO Innovation (a national business development and support organisation) with expert technical-economic analysis of strategic issues relating to video games, TV, internet and video. Laurent has also created the International Video Game Forum, which has been taking place in Montpellier every year since November 2002. Prior to coming to IDATE, he worked as project manager for the Centre d'Études et de Projets, Montpellier University's Economic Sciences research laboratory. He holds a post-graduate degree in Economic and Financial Regional Project Engineering from the Université de Montpellier.
l.michaud@idate.org
Jean-Gustave PADIOLEAU is associate professor at University Paris-Dauphine and senior researcher at GEMAS-Fondation Maison des Sciences de l'Homme (Paris). He has written several academic books and articles and regularly contributes to newspapers and reviews such as Les Echos, Libération and Le Débat. He is also a member of COMMUNICATIONS & STRATEGIES Scientific Committee.
Martijn POEL is senior researcher and consultant at TNO. He joined TNO in 1999 and has specialised in innovation policy, media policy and telecom policy. He conducts policy evaluations, explorative studies and market studies for national ministries and regulators and for international clients such as the European Commission and IPTS, the Institute for Prospective Technology Studies. He holds an MA in Communication science (media policy and telecom policy) and took economic and legal courses. He is an affiliate of the Delft University of Technology where he is doing a Ph.D. on the impact of the policy mix on services innovation in the media sector.
Brigitte PREISSL holds a Ph.D. in Economics from Frankfurt University. She has done research on the impact of information technology on companies, markets and economies since 1985. Most of her research experience was gained at the German Institute of Economic Research (DIW) in Berlin. Visiting fellowships in England (University of Warwick and Aston University), the USA (USC Berkeley) and Italy (Università Cattolica, Milan) have complemented her academic itinerary. From 2005 to 2007 she worked as a Senior Economist for Deutsche Telecom. Since October 2007 she is the editor-in-chief of Intereconomics and Wirtschaftsdienst, two policy-oriented journals. Dr Preissl's research interests cover telecommunication regulation, the information society, ICT and service innovation.
Lorenzo Maria PUPILLO is an Executive Director in the Public Affairs Unit of Telecom Italia and Affiliated Researcher at Columbia Institute for Tele-Information. In Telecom Italia, he is in charge of Economics of Public Strategies. He is an economist by training and has worked in many areas of telecommunications demand and regulatory analysis, publishing papers in applied econometrics and industrial organization. He has also been Advisor to the Global Information and Communication Technologies Department of the World Bank in Washington. He was Adjunct Professor of Economics of ICTs at University of Rome, La Sapienza. Before joining Telecom Italia in 1992, he was member of the technical staff at AT&T Bell Laboratories in Murray Hill, New Jersey. He earned a Ph.D. and an M.A. from University of Pennsylvania, an MBA from Istituto Adriano Olivetti in Ancona Italy and an MS in Mathematics from University of Rome.
Thierry RAYNA is a Researcher at Imperial College London. He holds a Ph.D. in Economics and was, for three years, a Doctoral Research Fellow at Ecole Polytechnique (Paris). He also was, for one year, a European Research Fellow at the University of Cambridge. His research investigates the economic consequences of the nature and characteristics of digital goods such as films, music, software and information.
Wolfgang REICHL has served as CEO of ÖFEG since 2003. He has experience in international standardisation work and has led the NGN workgroup of the European Telecommunications Platform (ETP) to the successful completion of a report on NGN regulation. ÖFEG is a joint venture between the telecommunications industry and the PTT and is responsible for project management of the introduction of digital switching in Austria and is now involved in the evolution of the existing networks to a common next generation network. Wolfgang Reichl has more than 25 years experience in telecommunications. After graduation at the technical university of Vienna he began his career with the former PTT in Austria and joined ÖFEG, a subsidiary of Telekom Austria in 1990.
wolfgang.reichl@oefeg.at
Ernst-Olav RUHLE has been Managing Director of JUCONOMY Consulting AG since 2004. Dr Ruhle is a member of the board of directors and Secretary of the International Telecommunications Society (ITS) and also is part-time lecturer at the Technical University of Dresden. Born in 1969, he completed his studies in Economic Science at the University of Hanover (1988-1993). After that he worked for WIK (1993-1995), RWE Telliace (1996-1998), as head of Regulatory Affairs at Telekom Austria (1998-2001), as Director for Interconnection and Roaming for 3G Mobile (2001-2002). From July 2002 until the end of February 2004, he joined Piepenbrock Schuster Attorneys (now JUCONOMY Attorneys).
ruhle@juconomy.com
Ludmila STRIUKOVA is a Lecturer at University College London. She holds a Ph.D. in Management from University of London. Her previous experience involves working as a market analyst for a statistical agency and as a research fellow at King's College, University of London. Her research interests include intellectual property rights and social capital.
Marianne VERDIER is a third-year Ph.D. student in economics at Ecole Nationale Supérieure des Télécommunications de Paris (ENST). She has already published some articles about payment card systems in COMMUNICATIONS & STRATEGIES, and Revue d'Economie Financière. A former student of HEC (2004), she also graduated from the Research Master at the Paris School of Economics (2005) and from the ENSAE (Ecole Nationale de la Statistique et de l'Administration Economique). In 2001 and in 2002, she participated in risk management projects conducted by two French Banks.
Jason WHALLEY is senior lecturer in the Department of Management Science, University of Strathclyde, Glasgow. His research interests include internationalisation by mobile operators, as well as the development of telecommunication policy in mountainous developing countries. In addition, his research also examines the diffusion of broadband and the regulatory measures taken to encourage its uptake.
jason.whalley@strath.ac.uk
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