The way the telecoms industry is represented in Europe is still too weak and fragmented, says Proximus CEO Dominique Leroy in a conversation with The Digital Post on the sidelines of the iMinds annual conference. Her main suggestion for the revision of the telecom framework: more regulatory focus on services than technology.
The Digital Post: Let’s start from Internet of Things. Proximus is the first operator in Belgium, and one of the first in Europe, that launched a network for Internet of Things. What is it about?
Dominique Leroy: Historically, telecoms were always about connecting people. More and more in the future, they will also play a key role in connecting things. Against this background, what we did is not so much building a simple network, but setting up a whole end-to-end ecosystem to enable the Internet of Things. We are providing enterprises, consumers as well as developers an end-to-end system equipped with sensors and based on LoRa networks, a long-range and low-power type of networks that connects sensors without SIM cards.
The purpose is to get small packets of data from the sensors through the LoRa networks and store them in our data centers on a platform called MyThings, where we already provide data analytics. The idea is then to open the platform to developers so that they can develop new applications. There are certain domains where we would like to go all the way up to creating applications, mainly in the mobility field, where we think that we can really bring an added value through Internet of Things.
So as you see, the Internet of Things opens up a whole new ecosystem. It is more than a utility provided by telcos. We want to offer solutions, partnerships, we are opening up to other players and therefore we are creating innovation. We are also one of the first companies in the sector moving in this direction.
DL: That’s probably where telco operators have a real added value considering their knowhow: We already provide end-to-end security over our infrastructures, from your phone to the applications you use, all the way to our datacentres. This expertise is very important for tomorrow’s connectivity in cars, home automation and health. LoRa networks come already with a triple encryption key. They secure the sensor identification, the payload and the network. In general, when it comes to using certification, identification and authorization technologies I believe that is where we provide a lot of added value.
TDP: How do you see telecoms operators capitalizing on the Internet of Things in, say, five years from now?
DL: Data consumption today is driven mainly by millions of people connecting with each other. Data consumption will increase dramatically in the coming years as billions of connected devices go on-line. This new reality will create huge volumes of data traffic. IoT will thus become an important piece of the telcos ecosystems, leading to more investment in infrastructures, stimulating more innovation, value, and opportunities for new revenue streams and profit.
TDP: The European commission is working on new proposals to implement greater coordination at European level of radio-spectrum policies. Unfortunately, in the past similar legislative moves were met with strong scepticism from member states. Why this time should be different?
DL: I don’t think member states want to give to Europe their powers on spectrum policy. But they very much understand that if they want to develop a coherent European digital market, there needs to be some coordination. The repurposing of 700 MHz for Wireless Broadband Services should be done within a certain timeframe all over Europe, otherwise it wouldn’t work. If tomorrow we need much higher frequency bandwidth, for instance to be able to develop 5G and self-driving cars, some sort of European coordination is essential to get there.
Moreover, a more consistent policy all over Europe should be applied to the length of licenses. These actions are all feasible, and I think member states will in a way or another agree that’s the right path. However, what they won’t allow is that the EU decide on the prices for the spectrum. In any case, I think that we have an opportunity to have more coordination in terms of timing of the auctions and duration of spectrum licenses.
TDP: What should be the main priorities of the forthcoming proposal on the revision of the EU telecoms framework?
DL: We definitely need less regulation to be able to catch up with more competitive markets. In the last 20 years, Europe has been very effective in overseeing the liberalization of the industry securing a high level of competition. However, today if you look at the big players in the industry, either they come from America, or more and more from Asia. Regulation is certainly one of the root causes of not having strong European digital players.
So, let’s make sure that we deregulate as much as possible, and let competition drive investments and spur innovation. Levelling the playing field is also another important aspect. It is not acceptable anymore that telcos are subjected to obligations on, say, privacy, data usage, or interoperability that are not applying to players operating the same services. The problem today is that regulation is focusing too much on technology and not on services, which produce lot of inconsistencies between cable, telecom, OTT operators providing the same services. So my recipe could be summarized in three elements: less regulation, more level playing field, more regulatory focus on services than technology.
TDP: A word on the increasingly tough stance of Margrethe Vestager on Mergers & Acquisitions?
DL: I think we as an industry need to articulate better what we want, what are the risks of preventing telcos from growing in scale, and what is acceptable and what not. We are not very well-structured and every too often we shy away from speaking with one voice. That also explains why it is easier for regulators to take their own direction: we do not make enough efforts to be listened. We can blame regulators or politicians but I think we should also look at ourselves and see how we can be more united to defend our industry. The way we are represented in Europe is still too weak and fragmented.
Picture credits: Matt Brajlih
It would be wrong to assume that putting operators and Over-The-Top players under the same regulatory framework will provide the ultimate solution to the current imbalances. A true level playing field needs to be created on a fiscal level too, says Gérard Pogorel, Professor of Economics and Management at the Ecole Nationale Supérieure des Télécommunications.
Digital Single Market strategy: Is the European Commission heading the right direction?
I believe yes, and I am very optimistic. The European Commission and the European Parliament seem very committed to opening new horizons. The priorities of the European Commission indicate that they consider the digital economy from a truly holistic perspective putting innovation, investment and growth at the forefront.
They show that Brussels is placing digital at the heart of the future European economy. Against this background, the main priority is to make the European Single Market attractive to investors.
We cannot talk about innovation or growth if the market is not attractive to investors. Telecoms and digital services regulation, as well as new legislation on data protection, are central elements of a consistent framework conducive to investment. I really think that it is with this in mind that the Commission is trying to re-organize things. This is very positive.
The Commission has signalled that it wants to create a level playing field in electronic communications by putting telcos and OTT under the same rules. Is it feasible?
It has to be done, the question is how. Any action should be considered from a global perspective. It would be wrong to take a purely defensive stance. It is important that the players that operate in Europe are put on the same level playing field, but it is even more important that they are encouraged to innovate and invest. They should all contribute financially. That is why a level playing field needs to be created on a fiscal level too. For the moment the fiscal situation in Europe is unbalanced.
We have, on the one hand, telecoms providers paying lots of taxes, say on radiospectrum. On the other hand, we have other players providing the same services, which pay far less taxes or no taxes at all. I believe that it would be wrong to think that putting these services under the same legal framework is the ultimate solution. Requiring OTT players to contribute to the universal service or the emergency number is not enough.
The important thing is that they contribute a fair share in terms of taxes and investments. That’s the main point. The playing field has not only to be leveled, it has also to be opened to innovation. We have to make sure the market is open to new entrants and innovators.
The European telecom sector is said to have an investment problem. What is your opinion?
The European telecoms sector is not attractive to investors for a series of reasons. The first reason is excessive fragmentation. Some people say that this is not important and that Europe can function with hundreds of operators. On the contrary, it is very important because size matters, for instance in terms of access to equipment or influence on the design of devices.
Big operators can enjoy a much more powerful position than small operators. That is why fragmentation is very detrimental to investment, and there should be some level of consolidation of the market. T he regulatory framework should be more oriented towards dynamic efficiency.
photo credits: Daniel Hansson
Telecommunications and Media Forum, Brussels, 17-18 March 2015
Hosted by BIPT the Belgian regulator
The policy and regulatory roadmap for Europe and beyond …
The IIC Telecommunications and Media Forum (TMF) is a series of meetings held three times a year. All members are automatically part of the TMF and member organisations can send representatives to the meetings for free. The spring TMF will take place as usual in Brussels. Once again we are delighted that BIPT, the telecoms regulator in Belgium, will host the meeting
Come and join the debate – key themes for discussion
|How will Europe reach its broadband targets?
Balancing investment predictability, competition and consumer choice to get every European digital, “wherever they are and whatever their circumstances”
|Is OTT regulation over the top?
Reconciling audience demand for ubiquitous access to content with audience protection, equal conditions for platform and content providers, cultural and linguistic diversity, and presence and visibility of European works
|Cloud, M2M and the data economy, what implications for policy and regulation?
What policy and regulatory strategies are needed across Europe to drive roll-out, manage security risks and build trust?
Rigid net neutrality rules risk becoming an ineffective remedy to a badly defined problem. That’s why politicians should leave such a complex issue to technical, independent regulators. A restrictive approach would not foster innovation as many argue.
U.S. President Barack Obama’s recent statement in favor of net neutrality is a good example of why politicians should stay away from bold statements when dealing with complex issues. And indeed, net neutrality is so complex, technically, economically and politically, that no one has found the way to square the circle: the aggravating and confusing factor is that the word “neutrality” sounds appealing, whereas “diversity” and “discrimination” inevitably sound negative to politicians.
This is why it is better to leave the hot potato to technical, independent regulators. President Obama certainly had good intentions: but there is reason to doubt that what he is advocating (putting unprecedented and ill-advised pressure on the FCC) would make users better off. Here’s why.
[Tweet “The Internet is not neutral, and will never be. “]
As often invoked by neutrality advocates, it was designed to guarantee end users against discrimination and usage limitations, and to allow no intrusion or inspection of files by any central “intelligence”.
However, this is not what the Internet is today, and not only because of the recent scandals generated by massive surveillance by government authorities in many countries. Since the 2010 FCC Open Internet Order entered into force, the “information superhighway” has become populated by cars with different engines and many toll lanes, which allow different speeds.
Companies such as Apple, Microsoft, Google, Netflix and may others make regular use of traffic acceleration services, either developed in-house or purchased from third parties such as Akamai, Limelight, Huawei, Level 3. This is why some services work better than others on the Internet: in a fully neutral network, this would not be possible.
Mandating net neutrality for telcos and cablecos would not make the Internet neutral: the players that are able to either invest in their “content delivery networks” or purchase expensive services from third parties will still have a toll lane that others can’t afford.
Second, “over the top” products and services such as search engines, wireless and cloud platforms are not (and should not be made) neutral. Giant wireless platforms such as Android, iOS, Windows give priority to certain apps over others, and even block certain (very few) applications. They carry their own default browsers and apps.
As search engines Google, Yahoo! And Bing have to show some results first, and must do it in a way that match their users’ preferences; giant cloud providers such as Amazon and Microsoft sell their suites that include some favorite products, leaving others out or in second row.
A neutral Internet would entail that all these companies refrain from customizing services for their end users: indeed, the European Commission seems to be lured by the sirens of “search neutrality” and “platform neutrality” in its antitrust investigation against Google. Would this be good or bad? Most likely, bad.
Third, mandatory net neutrality would not foster innovation as many argue. A “mantra” of neutrality advocates is that net neutrality is the only guarantee that a “new Google” or a “new Facebook” will emerge in the future, just as these successful young companies have done in the past.
But reality is different: try to name recent examples of successful start-ups, and see how many of them have emerged as new “apps” for existing platforms.
This shows how the non-neutral world of Internet platforms is lowering, rather than raising, barriers to entry in the marketplace. The same is happening in the cloud: as companies compete to become the leading cloud provider, they have an incentive to host as many promising start-ups as possible on their platforms: this is why Internet hyper-giants do not initially charge start-ups for services such as sub-domains, enterprise tools, search engine optimization capacity, and access to content delivery networks.
Based on the above, mandatory net neutrality risks becoming an ineffective remedy to a badly defined problem. If it is imposed only on telcos and cablecos, then the Internet will remain non-neutral as it is today, and competition for traffic acceleration services might even be reduced. But if neutrality is extended to search engines, operating systems, wireless platforms, then the Internet will die.
This is why FCC Chairman Wheeler is rightly careful: the solution to the problem can only be cautious and, if anything, deferential to the extraordinary value that the non-neutral Internet is creating for our society every day. This does not mean that specialized services should be left entirely unregulated.
To the contrary, they might well deserve careful monitoring, a good dose of technology to monitor quality of service, and sharpened competition rules.
Most importantly, there is a need to avoid that the end-to-end Internet is cannibalized by one-way networks: otherwise, video will kill (also) the Internet star. A nuanced solution, based on the healthy co-existence of specialized services and best effort Internet, is the best suited to the ever-changing nature of the Internet: to the contrary, imposing neutrality would be tantamount to throwing out the (cyber-)baby with the bath water.
[Tweet “The temptation to be resisted is praising neutrality as synonymous of freedom, democracy, openness.”]
It is not. Full-fledged, rigid net neutrality rules are equivalent to what the Trabant was in Eastern Germany: the only car that people could have, very neutral, very bad, identical for everybody.
It became famous in the Western world when the Berlin wall fell 25 years ago, and thousands of East Germans drove their Trabants over the border: once in the “free” world, they immediately abandoned their “neutral” cars, and started a new, non-neutral life.
By 2020, we are expected to have 50 billion connected devices. Will European Telecoms firms monetize the explosive growth of Internet of Things? The next five years will be critical. In the long term, much may depend on the development of 5G technology.
Like many memes which originate in the web domain (for example Web 2.0), Big Data has an impact on the Telecoms industry. However, unlike Web 2.0 (which is mostly based on the advertising business model), Big Data has wider implications for many domains (for example healthcare, transportation etc).
The term Big Data is now (2014) quite mature. But its impact is yet to be felt across many verticals over the next few years. While Telecoms is also a vertical, it is also an enabler of value for many industries. Hence, there are many areas where Telecoms will interplay with Big Data.
Based on my teaching at Oxford University and the City Sciences program at UPM – Technical University of Madrid – Universidad Politécnica de Madrid, I propose that the value of Big Data for Telecoms lies in IoT (Internet of Things)
IoT is huge, but how huge?
[Tweet “By 2020, we are expected to have 50 billion connected devices”]
To put in context: The first commercial citywide cellular network was launched in Japan by NTT in 1979. The milestone of 1 billion mobile phone connections was reached in 2002. The 2 billion mobile phone connections milestone was reached in 2005. The 3 billion mobile phone connections milestone was reached in 2007. The 4 billion mobile phone connections milestone was reached in February 2009.
So, 50 billion by 2020 is a massive number, and no one doubts that number any more. But IoT is really all about Data and that makes it very interesting for the Telcos. Data is important, but increasingly it is also freely available.
Customers are willing to share data. Cities are adopting Open Data initiatives. Big Data itself is based on the increasing availability of Data. IoT is expected to add a huge amount of data too.
But, who will benefit from it and how?
There is a phrase variously attributed to Oil Magnate J Paul Getty – ‘The meek shall inherit the earth, but not its mining rights’. In other words, Data will be free, available and Open, but someone will make money out of it. No doubt, the web players and various start-ups will all monetize this data. But how will Telecoms?
[Tweet “Looking at the business case for Big Data and IoT, the next five years are critical for Telecoms.”]
Here’s why. IoT connectivity will come in two forms: Local area connectivity and Wide area connectivity. Bluetooth 4.0 and iBeacon will provide the local area connectivity. We can expect that from 2015 onwards – most devices retailers will support Bluetooth 4.0.
But the wide area connectivity will still need 5G deployment, which is also the most logical candidate for wide area IoT connectivity. And therein lies the value and business case for Big Data for Telecoms: 5G will be needed to connect the ‘IoT islands’ over the next years.
Will Telecoms monetize IoT ?
Time will tell. Specifically the next five years since most analysts predict that 5G deployments will take place in 2020 and beyond.