American Telecom 2006: Directions of Change
Eli M. Noam Columbia Institute for Tele-Information Istanbul
May 2006 1 Outline 1. Boom, Bust & Volatility 2. Consolidation 3. Broadband and Net Neutrality 4. Unbundling 5. Broadband Industries
6. Emerging Market Structure 2 Recent Phases of American Telecommunications Evolution and Policy • ~10-year phases – 1972-1982 Emergence of long distance competition – 1982-1995 Breakup of AT&T monopoly and clean- up – 1995-2005 emergence of narrowband Internet as mass medium; boom and bust • 2005- broadband convergence and impact on re-write of communications law
3 1. Boom, Bust, and Recovery
4 1990s Were the “Golden Age” of Networks • More electronic information • More users • More innovation (faster, cheaper, more functionality)
5 Boom and Bust 2000...
SP500 SP500teleco 250
200
150
100
50 5 7 8 1 y 96 9 9 00 02 999 0 200 0 199 19 19 19 1 2 2 1 Ma Source: Standard & Poor’s Index Committees, SPGlobaldata.com
6 …the Bust
• Telecom downturn biggest bust since collapse of railroads in 1890s • The Economist: 10 times bigger than dotcom collapse • ¾ of start-ups became gave- ups
7 Telecom’s Paradox
• Telecom industry is in crisis in the midst of rapid technological progress and strong user demand
8 “Perfect Storm” or “Fundamental Instability”?
9 “Perfect Storm” Scenario
• Slowing economy • Slowing Internet • Criminal managers • Incompetent managers • Dumb investors • Ignorant regulators • Sept. 11 (U.S.) 10 “Fundamental Instability”
• Low marginal, high fixed costs • Competition • Price deflation • Lags in supply and in regulation • Credit cycles • Technology shocks
11 Info Sector Crash • The entire information sector-- from music to newspapers to telecoms to internet to semiconductors-- has become subject to a gigantic market crash, in slow motion. • One of the fundamental trends of our time, with far-reaching long- term effects, and it is happening
right in front of our eyes. 12 Price Deflation • The main result is that prices for content, network distribution and equipment are collapsing. • Dropping toward marginal cost, which is close to zero and typically does not cover full cost. • Difficult to charge anything for information products and services.
13 Price Deflation Examples • International phone call prices collapsed • The music industry is unable to maintain prices • On-line publishers cannot charge readers • Web advertising prices have collapsed
• Software prices dropping 14 U.S. Domestic Long-Haul Capacity Pricing
Monthly STM-1 Lease Prices
$2,000,000 $1,820,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 LA-NYC $925,000 $1,000,000 Miami-NYC $800,000 $600,000 $400,000 $200,000 $200,000 $100,000 $8,250 $3,889 $0
2000 2003 Sep-04
15 Source: Primetrica, Inc. Telegeography 2004 Average Monthly Revenue Per Minute for Mobile Telephone
$0.50 $0.47 Service 1993-2004 $0.44 $0.45 $0.43 $0.38 $0.40 $0.37 $0.35 $0.29 $0.30 $0.25 $0.22 $0.20 $0.18
$0.15 $0.12 $0.11 $0.10 $0.09 $0.10 $0.05 $- 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
16 Source: Calculated using Average Local Monthly Bill and Average Minutes of User per Subscriber per Month from Cellular Telecommunications & Internet Association, October 2004. Average Minutes-of- Use/Month (1993-2004)
600 548 h t n 507 o 500 r M e 427 er P 400 380 crib s b u 300
er S 255 P s
U 185
O 200 140 136 e M 119 119 125 117 g
era 100 v A
0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 1H 2004 17 Source: Cellular Telecommunications & Internet Association; Calculated using reported billable MOUs, which includes local, roaming, and prepaid minutes October 2004. International Comparisons: Average Minutes of Use Per Month: 3Q01-3Q02
500 439 450 3Q2001 h t 400 3Q2002 n 355 350 Mo r e 300 P
U 250
MO 200 177 170 e 155
g 152
a 132 r 150 123 116 120 114 e
v 89
A 100 72 50 0 U.S. Japan France U.K. Italy Europe Ge rmany Avg. 18 Source: Linda Mutschler, et al, Wireless Matrix - 9/01 3Q01, Merrill Lynch Equity Research, Jan. 22, 2002, at 3; Linda Mutschler, et al, The Next Generation VII, Merrill Lynch Equity Research, Feb. 21, 2003, at 32-34. 19 RBOC Capital Expenditures
40 35 30
25
llions 20 i B
$ 15 10 5 0
0 4 5 6 3 9 91 92 93 9 9 9 97 98 99 00 01 02 0 9 9 9 9 9 9 9 0 1 19 19 19 1 1 1 1 1 1 20 20 20 2 Source: JP Morgan, Morgan Stanley Note: This data excludes expenditures on wireless facilities. 20 RBOC Employees
700,000 652,388 593,825 600,000 547,638 461,730 493,902 500,000 370,450 362,740 400,000
300,000 225,040 200,000
100,000 0 1996 1997 1998 1999 2000 2001 2002 2003
Source: “The State of Local Competition 2004” Association for Local Telecommunications Service 21 CLEC Employees
120, 000 106, 783 100, 000 70, 000 78, 570 76, 840 69, 247 80, 000 56, 580 60, 000 40, 000 20, 000 0 1998 1999 2000 2001 2002 2003
Source: ALTS and New Paradigm Resources Group, Inc.
Note: Employee totals exclude AT&T and WorldCom. 22 Cable Capital Expenditures
20 $18.1 $16.5 $14.6 15 $11.5 $9.9 llion
i 10 $7.6 B
$ $6.4 $6.3 5
0 1996 1997 1998 1999 2000 2001 2002 2003
Source: “The State of Local Competition 2004” Association for Local Telecommunications Service 23 Source: OECD’s Economics Department and Directorate for Science, Technology and Industry. 2003 24 • In 2006, Lucent gave up and merged with Alcatel as the junior partner
25 Impact on R&D: 2003-2004 2003-2004 % change Cisco 51.69% Motorola -6.57% Nortel NA Lucent 23.31% Agilent -11.13% Agere 4.50% Corning NA Broadcom -56.34% Avaya -21.95% Qualcomm 76.44% 3Com -7.25% JDS Uniphase -22.32%
26 Telecom R&D
• General decline, after b reak-up of Bell Labs and of the monopoly that supported it • Decline of basic telecomresearch support by DARPA (Defense) and National Science Foundation • Decline of telecom equipment industry (Lucent, Nortel, etc) • Partly offset by data equipment industry
27 The Future of Telecom Is Volatility
• The real problem is not the present downturn, but that the telecom industry is becoming inherently unstable, volatile.
28 More Trouble Ahead • The information industries will go through boom-bust cycles, of which we have merely experienced the first. • Next: broadband and wireless boom- bust cycles • As societies become information economies, they also become more volatile economies
29 2. The Major Strategy for Stabilization in the US: Consolidation 30 Local Service
3500 HHI
3000
2500
2000
1500
1000
500
0
4 5 88 96 983 98 9 992 9 001 00 006 1 1 1 1 1 2 2 2 31 Long Distance Service
5000 HHI 4500
4000
3500
3000
2500
2000
1500
1000
500
0
3 4 8 2 6 1 5 6 98 198 1 198 199 199 200 200 200
32 Mobile Telephony 3500 HHI
3000
2500
2000
1500
1000
500
0
3 6 8 84 88 992 9 01 005 06 19 19 19 1 19 20 2 20
33 • Next auction, anonymous
34 Total Telecom Services 3500 HHI
3000
2500
2000
1500
1000
500
0
3 6 8 84 88 992 9 01 005 06 19 19 19 1 19 20 2 20
35 Policy Responses to Consolidation
• Basically, acceptance of mergers that were unacceptable 5 years ago • Partly because Republican Administration is less interventionist; partly because many firms would not survive • A tacit acceptance of oligopoly as most likely industry equilibrium structure
36 3. Broadband
37 U.S. Supreme Court Decision, July 2005: “Brand X vs. FCC” • Court upholds FCC that cable BB is an “information service” and not a “telecommunications service”
38 Implications • Cable TV companies’ Broadband is unregulated, and need not be open to ISPs, to content providers, or to applications providers • Need not provide unbundled network elements (UNEs) like phone companies do
39 • In Sept 2005 FCC followed up with similar Broadband rules for telecom carriers • Only “Light_touch” regulation for Telco BB
40 • Transmission component of telco BB is not a telecom service, and therefore is unregulated • -for transmission of >200 kbps BB
41 • The FCC approach is inconsistent, because broadband isn’t just telecom with its deregulatory agenda, but converges with broadcast, cable, and other agendas that include other factors. It therfore collides with other FCC policies.
42 Convergence of Media
• Regulation and Network Regulation Creates New Substantive Issues, or New Variations of Old Issues
43 Regulatory Issue: Content Restrictions
DOOM
44
(http://www.doomnation.com/) (http://ctc.sexzine.net/cgi-bin/ctc/ctc.cgi?63914183::46689417062573::http://www.come.to/sexzine) (http://members.xoom.com/Interleave/frame1.htm) • Here, the FCC under its chairman, who owes his job to the religious right, has been going after broadcasters for indecency. For example, even the loyal Fox network was fined 3.5 million for showing some risque scene. • Whatev er one things of the issue, it sure isnt deregulagtory.
45 Policy Issue: Media Concentration and Power • Economies of scale lead to market power – Telecom – cable – Microsoft – Yahoo/ Broadcast.com – Amazon.com
46 Regulatory Issue: Consumer Protection • Big problem of fraud and misrepresentation – Sellers, advertisers can be remote and anonymous
47 Regulatory Issue: Law Enforcement and National Security
48 • This definition by the FCC of cable broadband services as “information services” is now causing the FCC problems in court when it comes to requirements on VoIP providers for 911 emergency service, law enforcement access ( CALEA), and future universal service fund contributions: all these are set by law on telecom services, not information services
49 • ( And concerning the access of law enforcement to telephone communications, it has been disclosed in recent weeks that the telecom industry has collaborated with the government in monitoring the phone records and conversations of people without court authorizations. (Except for Qwest). This has created a firestorm of criticism in the press and congress. • Law suits by organizations like the ACLU before the FCC against the companies for violation of the communications law, and of breaching privacy provisions.
50 Policy Issue: Privacy protection
51
(http://channel6000.com/news/stories/news-981004-202141.html) Regulatory Issue: Access by Content Providers to Viewers
Net-Neutrality
52
(http://www.att.com) 006 NET-NEUTRALITY DEBATE
• Can telecom co. select and block content? • Can it charge a website, or information provider, or VoIP provider for the transmission of its packets? • Can it give preferential service to some applications and information providers • Can it charge extra for better QoS (assured quality vs best-effort) • Can it give its own rival services a preferential treatment? • Will cable companies be subject to same rules?
53 • Net neutrality an unclear terrain, with many practical questions • Pits on one side, telecom, cable, equipment vendors, and free-marketeers • On other side, Internet community, Google, Yahaoo, Amazon, eBay; public interest groups, some media content providers, and some large users. – But not agreed on whether oppose any transmission charge, or only discriminatory one
54 • Vote in House Committee on a Net Neutrality Amendment to a bill: defeated 23:8
55 FCC Sept 2005:
• Principle: “parity” with cable BB, following Sup.Ct Brand X decision • To get a unanimous FCC vote required acceptance of principles of social obligations by Republicans on FCC –Universal service fund obligations for all BB providers, incl. cable –“net neutrality” principles –soliciting comments on consumer protection 56 FCC 2005 • Policy Statement of consumer rights –Right to access lawful internet content –Running any applications and using any services –Connecting any legal devices –Competition among providers of networks, applications, services, content. 57 FCC Policy Principles 2005
• FCC maintains it “has a duty to preserve and promote the vibrant and open character of the Internet” • Will incorporate the principles into its ongoing policymaking activities
58 4. Unbundling
59 FCC 2005: new unbundling rules • Follows 8 year saga • UNEs still exist for narrowband, and for low-density regions’ high capacity private line and interoffice transport • But no more “UNE-P” (which also included switching and transport) • No broadband unbundling requirement • No line sharing requirement 60 Why Changes in FCC Unbundling Rules? • Court defeats of FCC • Republican FCC majority, less regulatory • Changed economic climate and priorities: –More concern with infrastructure investment –More concern with infrastructure competition 61 Re-Assessment of UNE-Ps • UNE-Ps gave entrants a low-cost option, much cheaper than facilities- based, or resale-based, or “standard” UNEs (UNE-L) • Trends 2001-2004 of CLEC customers: –Facilities-based: 31% to 23% –Resale 45% to 10% –UNE-L 24% to 13 % –UNE-P ~0% to 53% 62 Impact of FCC Unbundling Decision • AT&T, MCI give up, let Bell companies acquire them • Verizon buys MCI • SBC buys At&T and Bell South, renames itself AT&T • Still narrowband UNEs
63 2006 Congressional Bills • House of Representatives telecom bill: –In debate; huge lobbying effort, 2nd largest in Washington –Barton bill on BITS –Eliminates local franchising requirement for telco video, 27:4 • 107 of Verizon’s local applications were pending after 1 year • Several states also passed fast-track franchising laws
64 House Bill (cont.)
– Ensures VoIP consumer protection, E911, privacy, disability access – Limits state regulation, simple FCC registration – No Net neutrality requirement • Defeated in Committee 23:8 • Would let FCC issue reports on problems, for Congress to act. FCC restricted from rule- making, only case-by-case adjudications – VoIP could be required by FCC to contribute to universal service fund
65 Senate Bill
• May 2006 Sen Stevens (R), mostly with Sen Inouye (D). • Requ. 24 rulemaking proceedings by FCC • No net-neutrality • No clear buildout requirement on telco video • FCC review over cable-telco mergers, and conditions • Against cable control of local sports • No regulation against selective price cuts by incumbent cable providers.
66 • House Bill still in Committee, far from agreement • Judiciary Committee asserts co-jurisdiction • Senate far from agreement • Congress adjourns in early October • Democrats hope for stronger position after November elections • Likelihood of comprehensive telecom law small • maybe limited law on fast-track telecom video franchising
67 5. Broadband Platforms
68 Broadband Realities
• End of 2005: over 40 mil BB subs –First time >50% of Internet users • 2004: about 8.5 mil new subs • 2004: about 30% growth • 2003: about 40% growth
69 DSL and Cable Modem Broadband Deployment
40,000
35,000
30,000 Total
25,000
20,000 Cable
15,000 xDSL 10,000 Consumer Cable Modem Service 5,000 Deployed Consumer xDSL First Deployed 0
4 3 2 1 4 2 1 4 3 4 Q1 Q Q Q Q Q Q3 Q Q Q Q Q2 Q1 Q 5 9 3 4 98 997 998 001 002 199 1995 1996 1 1 19 199 2000 2001 2 2 200 200 2004
1 Source: Company Press releases, Leichtman Research Group, Press Release, March 2, 200570 9 9 • But US only #12 in penetration • About 32% HH penetration •Factors: – Low pop density, long loops – Flat rate dial up, cheap – Limited govm’t push Even so, Canada BB penetration is higher, 43% of HHs. • In New York Governor’s race, Democratic candidate Elliot Spitzer makes BB a campaign issue 71 • Difference to much of europe, however, is that the US is developing infrastructrues that are much more powerful than DSL. They are real broadband, and potentially ultrabroadband. This is a project at my research institute, and we invite you to individually participate in it. • The platforms are cable tv fiber-coax, and telecom fiber
72 Competitive Platform : Cable TV
73 • Cable passes 95% of US HHs • Cable modem service available on 91% of all cable • Thus, cable modem service avaialble to about 86% of pop • Telecom DSL service available to about 80% of pop
74 75 Download Price / Mbps month Cablevision 10 $50
Comcast 4- 6 $43 -$58
Time Warner 5.0 - 8 $45- 60 Premium $85
76 Cable Strategy • Premium price, no price competition with DSL • Established content advantage • Deregulatory advantage • Already existing high-capacity infrastructure • Media power • Lower cost labor • Lower QoS standards • Greater entrepreneurship • Triple Play
• Add mobile through close alliance with77 Sprint Platform 1: Telco DSL
78 Unbundling of DSL • After UNE-P (unbundled network elements platform) struck down by courts, independent DSL providers had a difficult time. Covad is only major survivor, with 0.5mil subs • BellSouth wins FCC decision, does not have to provide “naked” DSL (without voice, where voice provided on UNEs) • But Qwest provides standalone DSL 79 and Verizon plansEli. M. Noamto offer it Platform 2: Telco Fiber
80 2 Major Bell Strategies
•1. Verizon: FTTH • 2. AT&T: aggressive DSL+, Fiber to the neighborhood
81 Verizon –plans to pass •12 millions homes within 4 years, pass 1/3 of its subs •3 mil add’l homes passed each year •$20 bil investment •Wall Street nervous; Verizon / shares perform sub-average 82 Verizon FiOS TV • Operate fiber network first as a regular cable TV network •1st Rollout Sept 2005 in Texas
83 Full Array of Content—a la carte
84 SBC •Project Lightspeed •Pass 18 million HH by end of 2007 •But: “Fiber to the neighborhood”, then DSL2+ (12 Mbps), x2 through bonding to 24 Mbps, HDTV quality • IPTV approach –Technical problems with Microsoft, delays •But: cheaper. SBC capex/yr $9 bil, vs. $14 bil for Verizon 85 • For new constructions, SBC plans to deploy FTTP, and for existing neighborhoods fiber- to-the-node (FTTN) technology –Replacing only 10% of the network –Using Inexpensive DSLAMs –After 2005
86 • $200-$300 per household on average (vs. $2000 for FTTH) • Plus $250 for labor and set top box • Microsoft TV IP television software platform.
87 Phone Company Strategy • Competitive response to cable • “Quadruple play” –Voice, video, internet, mobile • Response to erosion of fixed narrowband line, and of voice • Lower churn • But: high investments, limited experience in entertainment marketing, established competitors 88 Platform 3: Municipal Broadband?
89 MunicipalMunicipal FiberFiber • 398 communities in 43 States • Mostly based on local utility companies • Some complex deals with private investors who run operations, with financing through municipal tax-free bonds
90 Municipal WiFi • Big fights over municipal entry in competition with telcos and cablecos • Bills in states and Congress to outlaw municipal networks • Philadelphia: issued contract • San Francisco: Google offers to build and operate a free system • Positive consequence: accelerated
build-out by incumbents 91 Platform 5: Fixed Wireless
92 History Has Not Been Kind to Fixed Wireless Broadband Company Technology Market Entry Investment Status
• SME, Carriers Bankrupt LMDS, 28, 38Ghz $4 – 5 B • Reached 60 markets by April 2001 2000 • Large Business and Carriers Liquidated ART LMDS, 38Ghz $1 B • Reached 10 markets by March 2001 2000 • SME and Large Business Bankrupt LMDS, 24Ghz $1 - 2 B • Reached 40 markets by April 2001 2000
DSL, ATM, MMDS, 2.5 • SME, Residential Project Cancelled $3 – 5B – 2.7Ghz • Rolled out in 1998 October 2001
• SME, Residential Project Cancelled Proprietary, 1.9Ghz $1 – 2B • Reached 40 markets by January 2002 2002
93 From Adventis at CITI 4/18/05 Wi-Fi • 30,000 hot-spots in the United States –Over 16,000 hotels and resorts offered WiFi access in Feb. 2005, up from 9,000 in August 2004— 78% growth in six months.
Municipal WiFi clouds: Philadelphia References 94 WiMax Two flavors-- one fixed, one “nomadic” WiMax still heavy on hype (Intel, Alvarion), light on adoption • Unlikely to deliver on promise of 30Mbits/sec over tens of miles without line of sight- more likely to be 5 Mbits/sec over 1 mile radius • Major effort: ClearWire (Craig McCaw) 95 • FCC auction June 24 will be totally anonymous to bidders.
96 Platform 6: Mobile Wireless
97 Broadband Mobile
VerizonWireless EvDO Coverage Map 2.5 G Evolution Data Only (EvDO) – Average download speeds of 300- 500Kbps with bursts of 2.0-2.4Mbps – Deployment costs of $1B per year (Verizon & Sprint)
^ VZW 9/22/04 & Sprint PCS 6/22/04 –Smooth transition to #VZW 5/7/05 *Alltel 3/29/04 **www.evdoinfo.com 3G, because ##Bell Canada PR 12/14/05 ^^RIM PR (4/5/05) 98 already CDMA • Data upgrades by all mobile carriers • But speed limited, price/bit high
99 Mobile Data
• CDMA (Verizon, Sprint): 1xRTT, EVDO • GSM (Cingular, Sprint): GPRS, EDGE
100 Platform 7: Electric Powerline
101 Broadband over Power Lines (BPL)
•Cinergy (first utility to deploy BPL commercially) passes 50,000 homes in Ohio; Duke Energy – 15,000 homes •ComTek – first CityWide network in Manassas,VA; $30/mo. with download speeds up to 500Kbps; testing 100Mbps apps •ConEd/Ambient/Earthlink JV~ for 213-unit condo on NYC’s Upper West Side BPL initially is as much about an upgrade to the electrical management and delivery network (i.e. “Smart grid capabilities” - cost savings through remote meter monitoring, dynamic monitoring to prevent surges or implement spot blackouts to manage demand) as it is the delivery of residential broadband to capture new revenue streams. *Yankee Group 5/2005 ^Comm Daily 5/10/05 102 ~CED 4/1/05 #Dallas Morning News 4/21/05 ^^NARUC 2/15/05 Platform 8: Satellite-BB
• High price ($70), slow speed (400 Kbps in busts only), high latency • DirectPC – News Corp acquires Hughes’ DirecTV from GM, scales back next broadband data satellite generation – DirecWay service, $60-$100/month
103 • StarBand-consumer service $50- $100 per month for 500kbps download and 50kbps upload. • Struggling StarBand acquired by Gilat Satellite Networks in March 2005 • Satellite access at DSL or cable speeds too expensive for consumers-- $500/month • Total US satellite BB: 422,000 subs, mostly rural 104 6.The Emerging Market Structure of American Broadband
105 Today’s Major BB Players • 4 telecom companies, not compet w/ each other –SBC, Verizon, Bell South, Qwest • 5 cable co’s not competing w. each other –Comcast, Time Warner, Cox, Charter, Cablevision • 1 indep DSL 106 –Covad Today’s Major BB Players • WiFi: 1 –T-Mobile • Satellite: 2 –DirecWay, StarBand •Mobile: 3 –All telecom, already listed • Total major players: 13 107 Is Inter-Platform Competition Sustainable in the Future?
108 • Even in high density areas, can such BB platform competition endure, or is it only temporary, until there is a winner?
109 BB Market Structure: “2.5” –Cable –Telecom (DSL/fiber) • Frequently with wireless tail – plus a few niche players for specialized circumstances • Mobile, remote rural
110 Emerging in US: at least 2 powerful infrastructure platforms
• Cable: DOCSIS 3.0, 100 Mbps • Telecom: fiber to 100 Mbps unshared
111 Countries without cable TV infrastructure are not likely to create it now • Satellite video service is mature • Digital terrestrial broadcasting will soon be another multi-channel platform • Private and public broadcasters generate political opposition 112 Why “magic” 2.5? • In American telecommunications, 2.5 seems often to be the equilibrium –Local telecom –Long distance –Cable TV –Mobile cellular? –DBS • Enables oligopoly in prices while providing some rivalry in innovation and features, and is often acceptable to 113 regulators Is Platform Competition Sustainable? • Each platform is sufficiently different to have some market power (generating some profitability) in its home niche. – wireless in mobile communications –cable in multichannel video –telecom wireline in 2-way fixed communications 114 Single-Fiber Infrastructure ? • Telecom & cable condominium? • Where duplicative fiber infrastructure not feasible (e.g., rural areas), a single infrastructure network will be acceptable, through a wholesale infrastructure company which seves telco, cable, and others.
115 Differences Among Countries • “2.5 platform” countries: US, Canada, Korea, smaller European countries • “1.5 platform” countries: Japan, France, Italy, Spain, UK?, Germany? –In EU, only about 6-7 mil cable modem BB subs, mostly in smaller peripheral countries –In US, 28 mil cable modem subs 116 Implications of Market Structure • In 1.5 platform countries, more need to regulate and to protect open access
117 Implications for Regulatory Policy • In “2.5 platform countries”, greater volatility, greater dynamism, lower consumer prices, greater investor risk –Less regulation, but “net-neutrality” more difficult –Less need for ex-ante regulation, more “forbearance” –Less ability for gatekeeper power over content and applications 118 1.5 vs. 2.5: network investments
• Hard to tell which system generates more investments –2.5 system is more competitive and responsive –But 1.5 system may generate more profits, be less risky, and easier to finance –2.5 is oligopolistic enough to possibly combine advantages of rivalry and profitability. Also, likely to have less regulatory restrictions.119 2.5 vs. 1.5
• Different media system • 1.5: more likely full separation of conduit and content • 2.5: more vertical integration possible
120 Next
121 Next Policy Phase • Converging telecom and media policy • Net-neutrality is the early battle field • Broadband regulated like broadcasting– highly regulated-- or like telecom – lightly regulated, and with or withou common carrier requirements of openness? • South Korea negative example • In US, consensus on telecom approach. Question is only whether with openeness common carrier requirements
122 • Once media issues are added to telecom issues, the debate becomes even more political, and even more difficult.
• Which is why you should learn and observe the interesting things that are happening in america, in canada, in japan, in korea. There is a world out there beyond brussels.
123 ” • 1. Similar rules for similar services and platforms • 2. similar access by and to other applications, services, and content providers • In practice, this is a dynamic situation, hard to define, analyze, or write rules for. • More of a situation for broad policy principles, with a gradual process of creating specifics. 124 • We are in the midst of a historical move –From the kilobit stage of individualized communications to –the megabit stage –and within the reasonable future to the gigabit stage 125 BB Accelerates the Information based economy, and the information based economy is fundamentally unstable • This suggests that broadband policy is not just telecom policy with its “public utility” tradition • It is also economic policy, media
policy, social policy 126 • To underestimate the powers of the change which broadband communications will create is merely a sign of a lack of imagination.
127 • And the different paths, on both sides of the Atlantic, can lead to very different media system. • And in these days of transatlantic drift, that is not a comfortable thought.
128 End of Presentation
• Thank you for your attention
129