Home / Blogs

Transition of the Telecoms Industry Is Overdue

Paul Budde

It is interesting to observe the changes in the telecommunications environment over the last few decades.

Before videotex (the predecessor of the internet) arrived in the late 1970s early 1980s, 90% of telecommunications revolved around telephone calls. And at that time telephony was still a luxury for many, as making calls were expensive. I remember that in 1972 a telephone call between London and Amsterdam cost one pound per minute. Local telephone calls were timed, and I still remember shouts from my parents when I was on a call to my girlfriend — 'don't make it too long' and 'get off the phone.'

This basically set the scene for the industry ever since. Only reluctantly, and only under the pressure of competition from outside the traditional industry, did changes start to occur. In the 1990s we saw resale providers bypassing the national long-distance and international telco tariffs, offering significantly lower prices. With digital technologies emerging we saw the arrival of so-called value-added service providers (VAS), often led by publishing companies. This environment improved significantly once the internet became web-based.

The incumbents initially fought tooth and nail against these changes before finally being dragged into the new world, kicking and screaming. They used all the tricks in the book to stop innovations and to stop competition. The current net neutrality failure in the USA is a good example of the strength of the incumbent lobby in that country, which totally ignored the wishes of the majority, who were in favour of net neutrality. However this monopolistic behaviour of the traditional telcos is still happening in many countries around the world, hampering innovation and competition, and it is very often supported by their local governments. The traditional telecoms industry, therefore, was never a leader in the new developments that were occurring in their own industry.

Interestingly, most of these new externally-driven developments saw telecoms becoming more of a facilitator than a service in itself.

The outcome is clear if we look at the internet and the smartphones of today. Because of its resistance, the traditional industry has never been able to lead these changes. Looking at WCIT-12 (the World Conference on International Telecommunications) in Dubai we saw that the international telecom tariffs remain an area of dispute within the industry, and at that same conference, the 'them and us' situation between the traditional telcos and the internet companies took centre-stage as well.

Regulations, linked to technologies, are used on both sides to either protect their market or to open up the market. This underlying politicised situation makes it very difficult to put the user central and build services such as e-health, e-education, smart cities, smart grids, etc. from a customer perspective. A great deal of lip service is being paid, but in reality, the user is still taking a back seat. This is also reflected in a blatant disrespect for privacy and cyber safety.

While significant changes have happened over the last 20 years, the underlying structure is still largely in place, and because of the heavy lobby in the industry, it is supported by international institutions such as the ITU. While these institutions support new — customer-focused — developments they are still heavily influenced by the vested interests. Increasingly vested interests also include the new internet monopolies (Facebook, Google, Amazon, Apple).

While the UN does have a more social approach at the same time, they lack a holistic approach towards these developments, and this means that each UN silo has its own vertical set of policies while we need to start taking a more holistic, horizontal approach.

I also advocated this approach within the UN Broadband Commission for Digital Development, which I assisted in setting up. On the positive side, they did try to develop a more holistic approach, but they were hampered by the lack the power to implement such structures across the UN organization, industries, countries, etc. Nevertheless, they are an important part of the education process and are at least able to introduce new ways of holistic thinking.

The overall social and economic structure to better utilize the new advances in ICT for the social and economic benefits that can be achieved does not, in general, exist. The same level of silo thinking exists everywhere in governments, industries, NGOs, international organizations and so on.

Furthermore — especially since the 1980s — the current neo-capitalist structure prefers market forces to government intervention. While I also support market-driven solutions over government intervention, the reality is that based on the above analysis we aren't seeing a truly customer-driven/national interest leadership coming from the private market.

In the specific situation of the telecoms/digital market, this also has to do with the fact that the social and economic benefits from e-health, e-education, smart cities, smart energy, etc. are based more on national cost savings (and other national benefits such as increased productivity and international competitiveness), and this does not deliver immediate new company revenues and new profits. This means that it is difficult to build traditional business models around these services unless governments are prepared to invest upfront in order to receive cost benefits and other national benefits later. Once that hurdle is overcome, the industry will invest in what lies beyond.

Alternatively, to attract long-term investments — for instance, from the World Bank, pension funds and other financial institutions — radical new strategic plans will need to be developed, and these developments depend heavily on government policies (which in most cases do not exist, this at least is partially because of the industry issues mentioned above). Financial institutions — those interested in long-term utilities based investments — are looking for investment-ready projects that are in the order of $500 million-plus, with extensive strategic plans and scalability.

Another important trend is that increasingly the focus of policy-making is moving towards cities and we do see local government slowly taking a leadership role in user/citizen-focused developments.

My work is in developing strategies and policies to make that happen with governments, industry, and academia. We are seeing progress but the full effects will take another 20 to 30 years, and money is an even bigger hurdle here. I recently wrote a blog on this .

With local government leadership, I assist in building two levels of collaboration — one between the different levels of government (local, province/state, federal/national) and the other between cities, industry, and universities.

In the strategies developed within these organizations, technology does, of course, play a key role; but it is not central. To participate in these collaboration processes, the commitment will have to be made to place citizens in the centre. With a holistic approach, there is little room for rigid division between technologies (mobile, fixed, IT), all with their own policies, regulations, narrow business models, etc. The city/industry collaborative in this structure tries to overcome that divide by making the customer outcome central, not the industry outcome. This is easier said than done but it will be the trend moving into the future.

In conclusion, nothing less than a major industry restructuring is needed to obtain the massive economic and social benefits that are on offer in this innovative and dynamic environment. This needs to be led by policies and regulations, aimed at creating the right environment to both maximize the technical outcomes and to attract the right investments needed to make it happen.

By Paul Budde, Managing Director of Paul Budde Communication Paul is also a contributor of the Paul Budde Communication blog located hereVisit Page
Follow CircleID on
Related topics: Policy & Regulation, Telecom
SHARE THIS POST

If you are pressed for time ...

... this is for you. More and more professionals are choosing to publish critical posts on CircleID from all corners of the Internet industry. If you find it hard to keep up daily, consider subscribing to our weekly digest. We will provide you a convenient summary report once a week sent directly to your inbox. It's a quick and easy read.

I make a point of reading CircleID. There is no getting around the utility of knowing what thoughtful people are thinking and saying about our industry.

Vinton Cerf, Co-designer of the TCP/IP Protocols & the Architecture of the Internet

Share your comments

Changing the telecoms Phil Howard  –  Feb 07, 2018 9:24 PM PDT

If we want the telecoms to do things our way, we need to stop paying for services that are wrong. We want them to provide communications. Providing content and services is fine, but that needs to be separate, at least in terms of business offering models. Back in the days of circuit switching, this was hard. Remember how they wanted to limit access even to a dedicated circuit (disallowing anything but their own equipment to be connected on customer premises). Today, it is about packet routing. But they still push consumers at their traditional voice services, even mandating bundled voice with data. There's still a big voice market out there, and the telecoms want to control it so they can suck the greatest revenue out of it.

One act I am doing to oppose their profiteering is refusing to buy voice services from them. I don't even buy channelize video, anymore. All I want is data and lots of it. Then, other services, I buy through the Internet, if I want them. But I am definitely not buying data bundled with other services. This is not even Net-neutrality ... it's trade. But we still need to fight for Net-neutrality. So, I won't buying services from any provider colluding with the Telecoms and their fake Internet.

The full stack model is the future Michael Elling  –  May 13, 2018 5:17 PM PDT

The edge will need to resemble the core.  Let's call this the Full Stack Access model.  And while the vertically integrated edge access providers move to this horizontally scaled model, the entire framework needs to implement settlement systems that flow north and south between app and infrastructure layers, as well as east and west between actors (networks, content providers, app providers, large companies/institutions, etc...).  Only then can services become rapidly ubiquitous and get quickly amortized to keep up with the rapid and continuous change in supply and demand.

To post comments, please login or create an account.

Related

Topics

IP Addressing

Sponsored byAvenue4 LLC

New TLDs

Sponsored byAfilias

Domain Names

Sponsored byVerisign

DNS Security

Sponsored byAfilias

Cybersecurity

Sponsored byVerisign