ICO Globalstar Iridium Odyssey Regionals* Type MEO LEO LEO MEO GEO Orbital height 10,355 km 1,410 km 780 km 10,354 km 36,000 km No of satell- 10 +2 48 +8 66 +6 12 +3 1 + 1 ites + spares No. of beams 163 16 48 61 variable per satellite Channels per 4,500 2-3,000 1,100 3-9,000 <15,000 satellite Access TDMA CDMA TDMA CDMA TDMA Financing advanced advanced advanced uncertain some advanced Main voice voice voice voice voice services 9.6kbps data 7.2kbps data 2.4kbps data 9.6kbps data 4.8kbps data SMA fax . fax fax SMS fax SMA SMA paging fax paging paging paging position- position- position- position- reporting reporting reporting reporting speciality Planned in 2000 1998/9 1998 start-up 2001 1999 service date * EAST, APMT, ASC, ACeS
{source: Nigel Stevens, International Telecommunications, October 1997, pp.63 & 69 with some modifications }
Confidential & Proprietary to ,M9.. hr. 97. NV. I ICO Global Communications
ICO is planning 12 SANs around the globe. They will be interconnected with terrestrial networks so that calls can be made between ICO terminals and terrestrial phones (both fixed and mobile).
ppt .1..97. pa, 2 Confidential & Proprietary to ICO Global Communications
51 7 8 2. Socio-Economic Benefits of 2.2 Joint Ventures (JV) with Local GMPCS Partner
Although various GMPCS may differ from The concept and practice of joint ventures one another, ICO believes that its service (JVs) between localentities and foreign and business inter alia will benefit the world, companies are not new at all. In fact, many particularly the developing countries in the national champions in the following ways: telecommunications sector are nowadays forming alliances (e.g., Unisource, World- 2.1. Various Layers of Partnership Partneretc.)with each othertooffer servicesgloballyandtomeetfierce competition world-wide. Unlike the existing multinational corporations, particularly in the Unlike suchexisting alliances telecommunicationssector,the GMPCS among industry in practice opened up new ways of gigantic national champions, the GMPCS partnerships or interdependences between industry offers a new type of JVs, through which various layers of local entities in both the developed and developing world, ranging from space, ground to user segments. the developed and developing countries can take a part for various reasons ranging from requirements for At the level of space segment, most GMPCS national regulatory systems, including ICO, are invested in by approvals and local knowledge to business plans. many developing countries.For instance, some 40 out of 51 ICO investors are actually Taking into account the unique natures of from the developing countries, mainly in Asia and Africa. GMPCS such as global partnership and requirement of speedy access to the global markets,in At the ground and user segments, ICO also practice, itisessential to optimise various distribution channels (e.g., has a couple of strategic partners.For PTTs, PTOs, cellular/PCS operators, examples, Hughes Space and Communications International Inc. (USA) is aeronautic, maritime, trucking, governmental organisations etc.). responsible for the design, development and manufacturing of 12 satellites and associated telemetry, tracking, and control In the case of ICO, ICO itself will neither equipment for (CO4 ; a consortium led by distribute nor support its products in any NEC Corporation (Japan) for the design, country or region. The various functions and players in this global partnership will belong manufacture, construction, installation, and testing of ICO's own ground network (i.e., to the service partners6, which will be a wide ICONET)5 ; and Samsung Electronics Co. variety of local entities per se in the relevant countries. (Korea)togetherwithotherswhowill manufacture and supplyICO's dualmode handphones, which are compatiblewith 2.3. Job Creation at Local Levels CDMA, TDMA, GSM and so forth. World-wide participationin the ownership Thisformofbusiness arrangementis and JVs of GMPCS is anticipated to create uniqued since the relationship should not be more jobs for local people with a sprit of based on thetraditionaldependence enterprise. between the centre and peripheries but on interdependence between the. participating At the ground segment, many GMPCS entities - i.e., reciprocal partnerships. systems plan to build earth stations which will interconnect with the existing terrestrial
52 7 9 networks. As seen in Figure 2, ICO has As a matter of fact, their business practices selected and contracted with its SAN sites are expected to share revenues between the linking and covering every corner of the participatingentitiesby generating more hemispheres. Building and operating such telecommunications traffics through GMPCS facilities will without doubt create local jobs totheexistingterrestrialandcellular and establish a local presence. networks: i.e., the better performance, the more profits to be shared. ICO has also established a number of regional offices throughout the world (e.g., 2.5. Transfer of Technology and Brazil,SouthAfrica,Lebanon,Russia, Managerial Know-How Nigeria,India,LatinAmerica,andLA, Washington DC, Chicago, Denver in the One of the critical weakness that most of the USA and more to come) to support and developing countries have chronically faced assist service partners and/or investors in is lack of human resources. The business thecountriesconcernedforregulatory arrangements and unique world-wide approvals as well as local and regional partnerships offered by GMPCS - ICO inter marketing. a /ia-willbe contributing to transfer of technological, operational, and managerial Moreover, a great number of new and skills to local employees especially in such additional jobs, ranging from those providing areas as the state-of-the-art technologies servicesinindividualcountries to those (e.g., satellites in LEOs and MEOs, ground manufacturingequipment,havealready earthstations,andavariety created in both the ofuser been and are to be terminals from dual-mode mobile phones to developed and developing world. Indeed, speciality ones). some 2,000 jobs are estimated in the USA alone, through contracts with U.S. 2.6. Universal Access companies to implement the global satellite system'. The growing awareness concerning the 2.4. Revenue Sharing significant role of telecommunications not only in daily life but also in overall socio- economic growth has undoubtedly Some may be concerned about the potential contributed to universal service or access for bypass by GMPCS oftheir existing becoming even a political priorityin many telecommunications infrastructures. Yet, it is countries. important to note that most GMPCS do neither intend to replace existing networks Indeed,atthe G-7Summitonthe norisit feasible to do so in terms of information society held in Brussels (1995), technical functionality and capability. "ensuring universal provision of and access to services" was identified as one of the As demonstrated in Figure 3, the cellular eight core principles behind the realisation of coverage world-widewill be very limited their common visionoftheInformation even in the year 2000. Thus, most GMPCS Society8. systems are being designed to complement and augment the existing Thisconcernhasbeenmoredeeply telecommunications infrastructures, expressed by the developing countries - their especially where there are limited rural areas inter a /ia, where their teledensity alternatives or even no alternatives, as in is very poor with lack of telecommunications many rural and remote areas. infrastructures, as illustrated in Table 2.
54 81 2.7. Boosting Space
Telecommunications IndustryCountries Teledensity Urban Rest/Rural A growing number of GMPCS systems, (line/100 p) High 48.8 51.7 48.5 ranging from narrowband tobroadband, income regionaltoglobal, and LEOs to GEOs Upper-mid 12.9 21.9 10.6 represent not onlyadvancement of the - income state -of- the -art technologies, but also growth Lower-mid 8.1 19.0 6.8 and convergence of cross-industries such as income information, broadcasting and Low 0.9 5.2 0.7 space, income communicationsforbothhardware and software. {Source:ITU,World Telecommunication Development Report, 1995} Compared with the numbers of traditional satellites for GEOs and military purposes, However,definitionsvary depending on indeed, those of GMPCS to be commercially countriesandregions. InEurope,"the manufactured, launched and operated essence of universal service is the access to throughout the world are enormous: e.g., and the provision of a defined minimum more than 70 only for Iridium to over 280 for service of specified quality to all users at an Teledesic. affordable price, irrespective of their geographical location "9 , whilstit can be 2.8. Users' Convenience In Globalising defined as "a telephone within easy reach of Telecommunity all mankind"10 in many developing countries. All these, among many others, will give the Itisnecessary todifferentiatebetween global telecommunity or villageplenty of 'universal service' and 'regional or global opportunities through which they can not coverage' in the case of GMPCS. Many, not only participate in such new technological all,regional and global GMPCS systems ventures but also improve their have technicalcapabilitiestooffertheir telecommunications infrastructures. This will services (see Table 1) anywhere in the world lead to the overall economic development or the relevantregions.. as illustratedin and socio-political well-being (e.g., health, Figure 4. environment, education and even democracy). However, this does not mean that they are technically capable" to provide universal Last but not least, it will be, ultimately, the service as defined by countries like those in users themselves who willbenefit from Europe. GMPCS canoffercountries- GMPCSservices,depending on their particularly the developing countries - to help demands. In case of ICO, cellular customers theminachieving theuniversalservice can roam onto the ICO network, when they objectiveas one oftelecommunications are outside of cellular coverage either at operators through providing basic or even home or abroad, with a dual-mode ICO value-added services with terminals mobile phone; the customers in rural and specially tailored to the relevant even unserved areas of developing countries telecommunications environments and will be able to have access to requirements(e.g.,villageor community telecommunications service eventhrough fixed payphones etc.). tailored telecommunications facilities (e.g., village phones or tele-centre etc.) subject to specific country's needs and environments.
5 5 8 3. Regulatory Challenges of GMPCS Moreover, a sort of regulatory guidline on GMPCS14,which can be referred to and Such socio-economic benefits to be offered implemented by national regulators, regional by GMPCS can be realised when individual organisations as well as GMPCS-related national regulators and competent industries, has been developed by the ITU authorities allow them to provide GMPCS and willbe reported to the ITU World services in their territory. Telecommunication Development Conference (Malta, 1998). Then, what arethemajor regulatory challenges the GMPCS industry faces to 3.2. Frequency Availability & provide both the developed and developing Management world with seamless services ? One of the key elements for regulatory 3.1. Market Access: Licensing & authorisationisto have access to the Authorisation relevantfrequencybands (particularly, 1610-2200MHz), whichhavebeen Each system,firstofall,must obtain allocated for GMPCS by the ITU. licence(s) orregulatory authorisation for providingtheservicesusingsatellites, A critical issue, here, is how to allocate and operation of earth stations,and use of assign the relevant bands to numerous terminals especially at cross-borders. GMPCS systems in each country. The World Trade Organisation Agreement on Basic Licensing has been in tradition one of the Telecommunications Services (WTO/GBT) policy instruments to introduce evolving sets out a framework for non-discrimination technologies and promote competition in the and transparency that is applicable in the liberalising and privatising domainoffrequency spectrum andits telecommunications sectors. However, availability as a scarce globalresource. there is no unified global policy on licensing Although some National Regulatory criteria and policies that existstodate, Authorities(NRA's) consider the use of especially in the era of GMPCS. spectrum auctions, the GMPCS industry generally feels that this approach isnot That is why the ITU convened its first World consistentwiththeirabilitytoprovide Telecommunication Policy Forum service. Furthermore, such a practice could (ITU/WTPF, Geneva, in October 1996) on lead to incompatible spectrum assignment GMPCS, where a simplified, non- plans which would then eliminate the scope discriminatory, and transparent regulatory for harmonised regional or global coverage principle was adopted for service licensing, inherent in GMPCS systems.This policy earth station authorisation, interconnection would surely lead tothe economic non- arrangements, and user terminals12 viability for GMPCS systems through non- competitive and unattractive end-user The ITU has also endeavoured to seek a charges for GMPCS subscribers in those mechanism to allow use of GMPCS mobile countries. terminals by encouraging Administrations to exempt GMPCS terminals from requiring an Another issue is the potential and in some individuallicence(i.e.,requiringonly a cases inevitable relocation of services to "blanket"or "class"licence) and permit accommodate new technologies and visitorsto use and carry their terminals services: i.e., GMPCS. Certainly, this should cross-borders subject to certain rules and be based on technical efficiency so as to conditions13. cause no interference to the existing or future services, as well as minimal financial implications to all parties involved.
56 83 3.3. Ensuring Fair Competition competition atnationallevels isof significance for GMPCS, since there are or The success of the WTO/GBT has also will be plenty of entities providing GMPCS provided a more transparent, non- services in the forthcoming 21st Century. discriminatory,andliberalisingregulatory environment that will foster fair competition 4. Conclusion and provide a level-playing field. Among its central principlesis the concept of most GMPCS may not be a panacea to bridge favourednationtreatment (MFN) which the widening gap of telecommunications prohibits Members from discriminating infrastructures and capabilities between the among one another, or in fact from treating developed and developing world. other Members less favourably than any othercountry.Otherprinciplesprovide However, it will certainly contribute to such competitive safeguards, interconnection, opportunities as improving lack of public availabilityof negotiations for telecommunications infrastructures, interconnection, transparency of extending coverage ofcellularservices, interconnection, public availability of providingvarious enhanced and speciality licensing criteria, impartial regulation and the services, creatingjobs,and fostering non-discriminatory,timely,objectiveand industrieswithavarietyoflayersof transparent allocation and use of scare partnership from any part of the world. All in resources.In the event that Members do all, GMPCS will play a significant role for the not comply to such concepts designed to overall socio-economic growth in the global ensure fair competition, appropriate dispute telecommunity. settlement procedures have been erected. In consequence, revolutionary changes in Similar policies on fair competition are also the telecommunications sectors GMPCS reflected in the ITU/WTPF, a set of voluntary inter alia-are transforming theglobal principles on GMPCS inter alia. system from a national scale to a web of global interdependence, where every corner Taking into account the development of such of the worldisable to be reciprocally regulatory principles and policies at interconnected by technologies, networks, international fOra, ensuring open and fair and most of all peoples.
R.O.Keohane, "Reciprocity in international Conclusions", Information Societyand relations", International Organisations, DevelopmentConference,SouthAfrica, Vol.40, No.1., 1986, pp.1-27. May 13-15 1996. 2 P.A.Reynolds, An Introduction to 9 Proposal for aCouncil Resolution on International Relations, London, Longman, universal service principles in the 1980, p.274. telecommunications sector, COM (93) 543 3 Document 14, Memorandum of final, Brussels, November 15 1993, p.15. Understanding-GMPCS,ITU,Geneva,6-7 1° The Missing Link, ITU, Geneva, December October 1997. 1984, p.5. 4 "ICO and Hughes sign strategic partnership " See limited channel capacity of each deals", ICO News Release, London, October 5 system in Table 1. 1995. 12 "Chairman's Report: Policy and regulatory 5 "NEC-led consortium to build ICO's global issues raised by the introduction of GMPCS", ground network infrastructure", ICO News WTPF, Geneva, October 21-23 1996. Release, London, March 3 1997. 13 "MemorandumofUnderstandingto 6 IanVerchere,"many roads to many facilitate Arrangements for GMPCS including markets", /CO Magazine, Issue 3, London, regionalsystem",ITU, Geneva, February 1997, p.8. 1997 & "Arrangements pursuant to the ' "The ICO Partnership", A supplement to GMPCS-MoU", ITU, Geneva, October 6-7 Via Satellite, September 1997,p.8. 1997. Universal service for telecommunications in 14 The Expert Group established by Opinion 5 theperspectiveofa fullyliberalised of the ITU/WTPF has undertaken studies on environmentcommunicationfromthe GMPCS and produced a checklist and a European Commission. COM (96) 73, report based on five Regional Workshops on Brussels, March 13 1996, p.16. Also see various issues of GMPCS. "Chair's
57 8 4 The National Information Infrastructure in the Asia-Pacific Region
John V. Langdale Senior Lecturer in Economic Geography School of Earth Sciences Macquarie University 2109 Australia 1. ABSTRACT
The paper examines the development of National Information Infrastructure (NII) policies in the Asia- Pacific region in the context of the overall globalization of these industries and these countries' goals of improving their economic development and international competitiveness. It gives particular attention to the differential responses in Asia-Pacific countries to globalization developments in the telecommunications and broadcasting industries. The nature of competition and cooperation (strategic alliances) between firms and the implications of convergence between telecommunications and broadcasting industries are considered.
2. INTRODUCTION industrialized countries, organizations and Many countries in the Asia-Pacific region have individuals throughout the region are using them experienced phenomenal economic growth over more intensively (Arnold 1997). Governments of the past thirty years. These countries have shifted Asia-Pacific countries have recognized the into more sophisticated manufacturing and importance of maximizing adoption of ICT service industries following the lead of Japan. technologies and see the NIT is an important part Information, computer and telecommunications of their goal of improving their countries' (ICTs) industries have also become more international competitiveness. significant. The implementation of National Information Infrastructures (NH) by Asia-Pacific The purpose of this paper is to examine the countries represents a recognition by adoption of new ICT technologies in the NH by governments of the importance of ICT selected Asia-Pacific countries in the context of the technologies and the need to coordinate their globalization of these industries and the countries' introduction. While most countries have focused goals of improving their economic development and on planning at a national scale, Asia-Pacific international competitiveness. Policy and countries are also part of moves to promote a commercial interest in these technologies in the Global Information Infrastructure (GIl). region has been stimulated by rapid technological change and the central role of these industries in The rise in the importance of ICT technologies Western industrialized countries. They also perceive reflects rapid technological advances which has that they will not be competitive in low wage lowered costs and increased the range of industries that have been the bases of their early applications. In addition, considerable growth and recognize that they must shift into high convergence of these technologies is taking technology industries. The nature of Asia-Pacific place, reflecting the increasing role of digital countries' Nils is being shaped by the complex technologies. While adoption of ICTs in the competitive and cooperative relationships between Asia-Pacific region lags behind Western these countries in ICT technologies and in high- technology industries in general.
58 The perceived social and economic importance of Thus the Asia-Pacific region exhibits a growing these technologies has resulted in many range of linkages at global, regional and national governments' according them a high policy priority. levels. The level of economic development and Competition between Western industrialized technological sophistication of countries in the countries to be at the forefront in the adoption of region is also rising rapidly, further contributing new ICT technologies has meant that governments to a complex global and regional division of are encouraging rapid innovation in this area. This production (Simon and Yun 1995). competitive environment is also very important in the Asia-Pacific region, with developed economies Strategic alliances are playing a more important (Japan, Singapore, South Korea and Taiwan) role in globalization in recent years, particularly viewing the promotion of ICT technologies as in high-technology industries (Gugler and central to their long-term economic growth. In Dunning 1993; OECD 1991). They are very addition, near-Newly Industrializing Economies important in ICT industries. The reasons for their (NIEs) (e.g., Malaysia, Thailand and the growth include such factors as increased Philippines) have targetted these technologies. Asia- international competition in industries, rapidly Pacific countries also see these technologies as escalating R&D costs and growing technological contributing to social goals, but these tend to be of convergence in information industries. In secondary importance. addition, many states play a critical role in limiting entry of foreign firms into their 2.1 Globalization countries and encouraging formation of joint ventures with domestic firms (Office of Globalization is a key development shaping Technology Assessment 1993; National Research countries' economies and is having major Council 1996). These alliances are important economic, social and political ramifications Asia-Pacific countries' NII plans, because it is (UNCTAD 1995). It is being driven by such increasingly necessary for ICT policies to factors as rapid technological change, particularly recognize the role of the global transfer of in ICT technologies, and the liberalization of technology. trade and foreign direct investment. However, the role of globalization should not be overestimated. 2.2 National and Global Information While global forces are playing a more Infrastructure prominent role in shaping industrial growth, complex interdependencies exist between The NII is envisaged to have a central role in processes operating at geographical scales transforming the economies of industrialized ranging from the global to the local. countries. The U.S. and other industrialised countries are shifting into knowledge-based Globalization processes are a significant force in societies; national well-being and international shaping the implementation of the NII in competitiveness will depend on the speed with countries in the Asia-Pacific region. This is which knowledge is created and the ease with partly the result of the rising importance of which people are able to access it. Many major transnational corporations (TNCs) governments are attempting to encourage the throughout the region in ICT technologies. creation of a national information and Furthermore, these firms are forming strategic communications network using broadband alliances with other TNCs and with national telecommunications to connect homes and firms. businesses as well as public institutions such as schools and hospitals (U.S. Department of The operations of TNCs represent an important Commerce 1994). component of globalization. Major TNCs from the U.S. and Europe have expanded their The GII is an international extension of the NII production activities in the Asia-Pacific region concept. The GII will allow countries to share from the 1960s in electronics and other high- information and to communicate as a global technology industries. More recently, TNCs in community (U.S. Office of the Vice President telecommunications, broadcasting and 1995). The U.S. argued that these connections multimedia industries have entered the region, will facilitate economic progress, enhance although the extent of their operations are democratic trends in countries and provide better circumscribed by government regulation solutions to global environmental challenges. (Langdale, 1997a,b,c). At the same time, The plan is based on five principles: complex trade, foreign direct investment and encouragement of private investment; promotion other linkages have emerged within the region. of competition; creation of a flexible regulatory
59 86 framework that can keep pace with rapid The third group includes a diverse set of countries, technological and market changes; provision of but ranges from the near-Newly Industrializing open access to the network for all information Economies (NIEs) such as Thailand and Malaysia to providers; and ensuring the provision of universal poorer ones such as China. In general,the service. teledensity (the number of telephones per hundred population) in these countries is very low and the A number of Asia-Pacific cooperative multimedia central telecommunications issue is expanding basic plans are being developed. Member countries of telephony services throughout the country. the Asia Pacific Economic Cooperation (APEC) However, they also want to promote economic are planning to develop an Asia-Pacific growth in their major cities and advanced Information Infrastructure (AM) to facilitate telecommunications services are seen as central to regional information exchange. The success of this national goal. such a network partly depends on the extent of cooperation among countries in the region, but 3.1 Northeast Asian countries also on the number of countries that successfully implement their own Nils. In addition, a number The international competitiveness of information of Asian countries are cooperating in the Asian equipment industries in the Northeast Asian Multimedia Forum in developing multimedia economies of Japan, Taiwan and South Korea is an applications: participants include firms from important factor underpinning their expansion in Japan, Hong Kong, South Korea, the ICT technologies. Major information equipment Philippines, Thailand, Malaysia and Singapore. companies, such as Sony, Toshiba and Fujitsu from Japan and Samsung and Daewoo from South Korea, are using their technological expertisein 3. NATIONAL INFORMATION semiconductor and consumer electronics industries INFRASTRUCTURE IN THE ASIA- to develop new markets in ICT equipment and PACIFIC REGION services. These countries have been concerned about the "hollowing out" of their manufacturing base, as While Asia-Pacific countries are facing common ICT firms pursue globalization strategies which opportunities and threats in their NII development entail expansion of manufacturing operations in from globalization and regionalization trends, each Western industrialized countries (U.S. and Western is unique in its particular situation (Langdale Europe) and also to low-wage East Asian countries. 1997a,b,c). The diversity of national responses to In part, the governments' NII policies represent a global and regional forces depends on such factors as desire to facilitate major economic restructuring of the country's level of technological and economic their economies and to take advantage of development and the nature of government opportunities in new high growth ICT equipment intervention. Clearly, implementation of an NII and service industries. strategy for an industrialized country such as Japan is very different from that for a large developing Japanese developments in telecommunications and country such as China. multimedia technologies are of particular importance given Japan's international competitive While generalizations are difficult in Asia-Pacific strength in ICT industries. The U.S. government's region, three broad categories of countries may be NII plan has attracted major interest from both recognized. Firstly, Northeast Asian economies Japanese firms and the government worried about (Japan, South Korea and Taiwan) with large export- the competitive threat to Japanese industry, oriented electronics industries have developed NII although some groups in Japan exaggerated the policies, partly because it would be difficult for U.S. threat in order to bring about a more unified their telecommunications and information Japanese response (West 1996; West, Dedrick and equipment firms to be internationally competitive Kraemer 1997). The Japanese government has given without a large innovative domestic market. A the development of ICT technologies a high second group are regionally-oriented economies priority. A report to the Ministry of Posts and (Singapore and Hong Kong) which have NII Telecommunications (MPT) argued that Japan policies facilitating their regional headquarters' role needed to expand information-based industries and for foreign ICT companies. However, these cities that a nationwide fibre optic network should be a are facing growing competition from other regional core component of Japan's new information society cities (e.g., Kuala Lumpur, Sydney and Taipei) (Telecommunications Council 1994). which are expanding their regional services role. However, the development of an NII in Japan is complicated by a number of factors. One is that
60 87 there is continuing uncertainty over Japanese development of ICT technologies, while on the telecommunications policy. Under an agreement demand side such applications as education, between NTT and the MPT announced in 1996, electronic currency and new databases in arts and NTT is to be divided into a long-distance company culture were envisaged (Taiwan Business News, and two local telephone companies, wholly owned 1997; Yu 1997). by a holding company. However, it is not clear how much competition will be stimulated by this A central policy goal of the Taiwanese and Korean agreement (Oguwa 1996). A second factor is that governments is that they have to accelerate the shift the introduction of these technologies is influenced of their respective economies into high-technology by on-going 'turf wars' between government industries. Both economies face the problem of departments, particularly the MPT and the Ministry expanding higher value-added manufacturing, given of International Trade and Industry (MITI) (Morris- the relocation of low-wage production offshore. The Suzuki 1989). Both ministries are attempting to rapid increase in domestic labour costs in Korea and take control of the NII policy agenda. Thirdly, little Taiwan is leading to low wage assembly-type attention has been paid to the likely demand in the operations shifting offshore to cheaper locations in home for broadband services. It has been proposed Southeast Asia and China (Tyson 1995). For that the NII would provide fibre to the home by example, Taiwanese companies manufactured over 2010, although it is uncertain what consumer US$5.3 billion worth of IT equipment in low-wage demand exists for broadband services. countries in 1996. The offshore shift is expanding, with overseas production of Taiwanese information South Korea and Taiwan have strong ICT technology firms increasing 75 percent in 1994-95 equipment industries and in some areas are (East Asian Executive Reports 1996). technologically comparable with Japan (Sharma 1995). The Korean and Taiwanese governments are Another factor underpinning Taiwan's playing a prominent role in building nationwide development of a NII is its desire to develop as a fibre optic networks in their respective countries, regional services centre. Taiwan has implemented although private enterprise in Taiwan is also an Asia-Pacific Regional Operations Centre developing a number of network products and (APROC) strategy for technology-intensive services. manufacturing, air and sea trans-shipment, finance, telecommunications and media industries Both Korea and Taiwan are liberalizing their (Engbarth 1995; Shapiro 1995). A world-class telecommunications industries as part of their NII NII is necessary to enhance Taiwan's plans and in response to international international competitiveness in its APROC deregulatory pressure, although it is unlikely that strategy. The partial deregulation of the competitors will make a significant impact on telecommunications industry and the the market dominance of the former monopoly government's approval of the entry of foreign carrier in each country for some time. Foreign carriers (albeit in a minority equity position) is a carriers are unlikely to occupy a major role, even major component of this strategy. However, the though under pressure from the U.S. government slow pace of these changes and the lack of and liberalization moves in the WTO, both internationally competitive service industries governments have allowed additional foreign means that Taiwan is unlikely to pose a major equity in telecommunications carriers: Korea and competitive threat to Singapore and Hong Kong Taiwan will allow up to 49% foreign equity by in regional services activities. 2001. 3.2 Regional hubs: Singapore and Hong In 1997 an NII Taskforce of the Taiwanese Kong government advocated that Taiwan should focus on a number of projects. These included advanced Singapore and Hong Kong are the dominant telecommunications network construction; regional services cities in the Asia-Pacific region. integration of cable television and Both have major regionally-oriented industries in telecommunications; education, government and banking and finance and freight and passenger health applications; and electronic payment transportation and have attracted regional systems. Similarly, the Korean government released headquarters (RHQs) of major firms operating in the a report in mid-1997 on the NII which aimed to region (Raguramanm 1997; van der Knapp and make Korea one of the world's top five IT countries Smits 1997). The traditional rivalry between the in the next decade. The plan focuses on both the two cities has expanded in recent years to include supply and demand side of the NII. On the supply information-based industries, such as side, particular attention was given to the rapid communications satellite uplinking, film and video
61 88 production and regional telecommunications hubs communications and will have competition in other for large firms. ICT technologies are a central services by 2000. component of both cities' current and future global and regional competitiveness. The government plans to attract foreign multimedia firms on the basis of two complementary policies. Hong Kong's regional role has been affected by its Firstly, the government is promoting the country as high cost structure; office rents and labour costs are an innovative multimedia market. A fibre optic among the highest in Asia and some firms have cable infrastructure will be completed by 2000 and relocated part or all of their operations to other the government is rapidly introducing multimedia Asia-Pacific cities to reduce costs (Business Asia technologies in schools, colleges and government 1994). However, it is the traditional hub of offshore offices as a part of its IT plan. business in East Asia and has strong regionally- oriented banking and finance, telecommunications The government is introducing an information and transport industries. Furthermore, close network, Singapore One, a project designed to economic and cultural linkages with the booming promote IT in Singapore and provide a wide range southern China region have given its economy a of public and private information to households. It major boost. will provide high bandwidth applications for data, voice and graphics. A number of domestic and Competition is likely to emerge between Hongkong foreign firms are providing services to households, Telecom and Wharf Cable, the cable television some for a fee. The Singapore government is operator, in the interactive cable television market. heavily involved in the project, but has been Hongkong Telecom plans to start an interactive criticized for subsidizing U.S. multimedia service in 1997, which will provide video-on- companies' market trials (McDermott 1997b). demand as well as banking, retail, information and However, the counter argument is that consumers community services. Wharf Cable is providing a will not subscribe to multimedia services unless conventional cable television service at present, but there is a wide range of content available to them. expansion of its hybrid fibre and coaxial cable network to homes will provide it with the The government is also encouraging foreign firms capability of providing telephony and multimedia to locate in Singapore to help design and provide services in the future. In addition, a new entrant software. Singapore's strengths are its very well- plans to provide video-on-demand services: the developed business infrastructure, excellent transport consortium includes such firms as New World (an and conununications networks and pro-business affiliate of Hutchison Whampoa), Mei Ah attitude of the government. A difficulty with its International (Hong Kong-listed Chinese-language ICT strategy is that other developed East Asian video distributor) and film producer Win's Movie countries are moving quickly to develop these Investment (Najberg and Stein 1997). Hong Kong industries and have the attraction of much bigger is an ideal location for introducing video-on-demand domestic markets. Malaysia's Multimedia Super given its dense population and wealth. However, it Corridor, in particular, represents a competitive is unlikely that demand for these new services will threat. In addition, costs for office space and labour be very large at least for the next five years. are rising rapidly in Singapore and severe skilled labour shortages present a growing problem. Singapore is also a major hub for regional services in the Asia-Pacific region. The Singapore The second and complementary part of the government has targetted telecommunications, government's strategy is to encourage foreign broadcasting and information technology industries multimedia firms to use Singapore as the RHQ for as being critical to enhance its global and regional their expansion in Southeast Asian multimedia role; the development of a world-class markets. Singapore's attraction for these RHQs is telecommunications infrastructure is a very high its overall efficient business operations. It already national priority. New telecommunications and serves as a base for satellite uplinking, media multimedia technologies are important for the financing and post-production services (Lim 1994) Singapore government's long-term international and has achieved some success in attracting a competitiveness plans. The government has number of foreign multimedia production firms. accelerated the entry of competition in telecommunications in order to boost the country's 3.3 Near-Newly Industrializing ICT development. Fibre optic networks are being Economies built by Singapore Telecom and Singapore Cablevision. Furthermore, Singapore Telecom While most NII activity has taken place in currently faces competition in mobile developed Asia-Pacific countries, significant
89 62 developments are taking place in other Asian Malaysia. US West, the large U.S. countries as well. However, other issues such as the telecommunications carrier, has a 20% shareholding low level of telecommunications development as in Binariang, the largest Malaysian competitive well as the introduction of competition and carrier. The Malaysian company was interested in privatization of telecommunications carriers have accessing the multimedia expertise of the U.S. been of greater policy importance. These countries company. Telekom Malaysia is planning to develop currently have very low teledensities, although a a national broadband network to support multimedia rapid expansion is projected in the future. applications. The government argues that Malaysia needs to have telecommunications services Introduction of the NII raises a policy dilemma in comparable to those of other industrialized the delivery of telecommunications services for countries. many countries. On the one hand, less developed Asia-Pacific countries' governments want to expand Malaysia is developing a Multimedia Super the geographical coverage of the telephone network Corridor (MSC) linking Kuala Lumpur with the to all citizens (the universal service goal), while at new administrative capital, Putrajaya, and the the same time introducing advanced business new international airport. Details of the MSC are telecommunications services in major cities in order fairly general at present, but include a futuristic to enhance firms' connections to global information city, a multi-billion dollar test bed wired with the networks. Despite the avowed adoption of universal latest technology. Fibre optic cables will connect service principles by many countries, non- activities within the MSC and provides links to metropolitan areas in Asia-Pacific countries are international high-technology centres. The poorly provided with telephony services. In general, government will provide tax concessions to telephone penetration rates are much lower outside approved multimedia companies and allow major cities. The teledensity in Thailand, for foreign firms to bring in skilled foreign workers, example, is projected to rise from 8.6 in 1995 to although shortages of skilled labour may provide 18.4 in 2001. However, most of the lines are likely a significant long-term problem for the corridor to be in Bangkok: the teledensity in Bangkok is (Economist 1997). There is considerable projected to rise from 39 in 1993 to 56 in 2001, uncertainty about the viability of the project, whereas the rest of the country will still have low with a major problem of reconciling Western teledensity levels, rising from 3.4 in 1995 to 11.7 ideas in a traditional, mostly Islamic society with in 2001 (Durongkaveroj 1996). pervasive censorship. Internet access will not be censored in the MSC while it is in the rest of New telecommunications and multimedia services Malaysia (Wysocki 1997). In many respects the are usually introduced in major cities. However, MSC may be seen as competing with extension of the universal service principle to Singapore's ICT plans: both countries are aiming broadband services would be prohibitively expensive to attract foreign TNCs in global and regional at a stage when demand for them is in its infancy. ICT technologies. Furthermore, cross-subsidization from city to rural subscribers would discourage overall adoption levels 4. CONCLUSIONS and make the services economically unviable. On the other hand, if these services are as important to A central problem for Asia-Pacific countries in society as many have argued, then the lack of access formulating NII policies is that most have for people living in non-metropolitan regions targetted similar activities. Furthermore, they reinforces existing regional inequalities. have followed Western industrialized countries in their pursuit of the NII and face strong Countries which are moving towards developed competition from them. Clearly, not all status such as Malaysia and Thailand are expanding countries will succeed in these industries their usage of ICT technologies. While their (O'Connor 1995). Asia-Pacific countries need to strategies in these technologies areas are still being focus their NII policies on addressing the developed, ICT technologies are central to these particular social and economic problems facing countries' overall development. However, the their countries. Furthermore, the direction of each situation is complicated by the rapid restructuring country's NH needs to focus on the country's taking place in telecommunications. existing and potential international competitive strengths. I focus here on NII developments in Malaysia. Malaysia is introducing more competition in The direction of NII policies in Singapore and telecommunications, allowing limited entry of Hong Kong is clear, since both are major foreign carriers, and has partially privatized Telekom regional services centres for the Asia-Pacific
63 90 region. The Singapore government, in particular, Multinational Strategic Alliances,International has policies in such industries as banking and Business Press, New York (1993) 123-65. finance, transportation (e.g., world class facilities for Changi Airport and the port) and Langdale, John V. 1997a `Globalisation or telecommunications which reinforce its regional regionalisation? Telecommunications and and global city role. While Hong Kong's role in interactive multimedia in East Asia' in Pacific the Asia-Pacific region as a headquarters location Rim Development: Integration and Globalisation for the booming southern China region is well in the Asia-Pacific Economy, Rimmer, Peter established, it is not clear what the government's (ed.) Sydney: Allen and Unwin, 115-29. ICT policy will be in the future. Langdale, John V. 1997b International The situation in other countries is less clear, competitiveness in Fast Asia: Broadband partly because of multiple and often conflicting telecommunications and interactive multimedia, policy goals. A number of Northeast Asian Telecommunications Policy, 21(3), 1997, 235- economies have focused on the NH to provide an 249. innovative market for equipment manufacturers in new ICT technologies. However, the Langdale, John V. 1997c East Asian broadcasting emergence of an Nil strategy in Japan is partly industries: Global, regional and national related to economic and social goals, but also to perspectives, Economic Geography, 73(3), 305- the bureaucratic conflicts between Japanese 321. government departments, particularly the MPT and MM. While the Korean and Taiwanese NII Lim, S. 1994 Singapore, Movie/7V Marketing, plans have paid more attention to supply-side 25 July, 11. considerations recently, it is not clear how much attention has been given to what consumers McDermott, Darren 1997a Singapore allows 2 actually want from the NII. bidders to enter telecom market, Asian Wall St Journal, 20 Jan., 3. 5. REFERENCES McDermott, Darren 1997b Singapore, Asian Arnold, Wayne 1997 Technology in Asia: Not Wall St Journal, 10 June, S18. quite clicking, Asian Wall St Journal, 1 Aug., 1, 4. Morris-Suzuki, T. 1989 Beyond Computopia: Information, Automation and Democracy in Asian Wall St Journal 1995 US West enters Japan , Keegan Paul, London. media venture with Binariang, 27 Feb. 22. Najberg, Adam and Stein, Peter 1997 Home- Business Asia 1994 Costs: the tale of two video services race in Hong Kong intensifies, cities, 23 May, 1-3. Asian Wall St Journal, 11 Mar., 22.
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91 64 of West, Joel 1996 Utopian and national Different Rules U.S. Congress, Office competitiveness in technology rhetoric: The case Technology, Washington, D.C. 116. of Japan's information infrastructure, Information Society, 12(3), 251-272. Oguwa, Joshua 1996 Restructuring would put NTT into hot global arena, Nikkei Weekly, 9 West, J. Dedrick, J. and Kraemer, K. 1997 'Back Dec., 1. to the future: Japan's NII plans' in National Information Infrastructure Initiatives: Vision and Raguramanm K. 1997 International air cargo Policy Design, Brian Kahin and Ernest J. Wilson hubbing: The case of Singapore, Asia-Pacific (eds.) Cambridge, MA : MIT Press. Viewpoint, 38(1), 55-74. Wysocki, Bernard 1997 Malaysia builds its own Shapiro, D. 1995 Transforming Taiwan Asian Silicon Valley, Asian Wall St Journal, 11 June, Business , 31(4), 24-28. 1, 8.
Sharma, R.1995 "Infobalms" in Asia: Promises Yu Kun-ha 1997 Government to develop Korea and perils IEEE Multimedia 2(2) 80-5. into a top information-technology power, The Korean Herald, 4 June. Simon, D F and Yun, Y 1995 'Technological change, foreign investment and the new strategic Zarit, W. 1995 Taiwan mapping out plans to thrust of Japanese firms in the Asia Pacific' in build the superhighway to its information future, Chen, E K Y and Drysdale, P (eds)Corporate East Asian Executive Reports ,17(1), 8,15+. Links and Foreign Direct Investment in Asia and the Pacific, HarperEducational, Pymble, 203-26.
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65 92 National Sovereignty and the Regulation of Transnational Information Flow: An Asian Perspective
Georgette Wang Institute of Telecommunications National Chung Cheng University Chiayi, Taiwan
Abstract
As the global community is entering into the twenty-first century,regulating one of the most important forms of global communication, i.e., network communication, has become an increasingly complicated issue.
While reasons for taking a "hands-off' policy regarding network communications are not difficult to find from either the technological, legal, or political perspective, governments around the world have begun to take moves toward the opposit direction.Especially worthy of notice are measures adopted by two Asian nations, i.e, China and Singapore.
Whether the measures work will undoubtedly have significant and long-lasting influence on the future of network communication. But equally, if not more, important, is the rationale behind the governments' unwavered stance in regulating the medium.
It is the purpose of this paper to look at the difficulties in regulating transnational information flow over computer networks, and the reasons why governments chose to undertake this almost impossible task. Using Singapore and China as examples, the paper examined the effectiveness of policy measures adopted by these two nations, and the rationale of such measures in relation to the concept of national sovereignty.
Regulating Network Communication: Legal did not apply; and because it provided information Barriers content and various other types of online services, the telephone model was out of the question. Any From a legal perspective, regulating network attempttoregulate networkcommunication, communication is complicated partly because of therefore, would require a whole new approach the nature of the medium.In the past different which was not likely to come by quickly (Liu, 1996). models were used to regulate media of different nature.Regulation of the electronic media was One other major obstacle in the way of regulating based on the principle of spectrum scarcity, and networkcommunication wasthejurisdictional that of cable television on economic scarcity. quandary faced by governments in dealing with a Although telephone might have features similar to medium that allows vast volume of information to that of computer networks,it was traditioanlly flow across national borders in split seconds. As the regulated as a common carrier, not as a common network is decentralized and anarchical in nature, carrier and content provider (Liu, 1996). problem came when regulations in one nation conflicted with that in others. When computer networks emerged as a powerful means of communication, policy makers found One case in point involved financial data at the Bank themselves faced with a new challenge. Because of Nova Scotia, a multinational bank with more than there was no spectrum or economic scarcity 1,200 branches in forty-six countries (Branscomb, involvedforcomputernetworks,regulatory 1993). The Canadian Bank was faced with an models for electronic media and cable television impossible situation when its Miami branch was
9 3 66 subpoenaed by a U.S. federal district court to interventionist approach. What brought the change release financial data in subsidiary banks in was the increasing supply of pornographic materials Bahamas and Cayman Island, while laws in these over the networks. While freedom of communication nations prohibited disclosure of such information. remained to be highly valued and new regulatory The case illustratedthe necessity of close modelyetdeveloped,politicalleaderswere international cooperation before any effortin beginning to feel the need to exercise a certain regulating network communication could be truly degree of control to filter out materials harmful to the fruitful. younger generation.
The greatest challenge in carrying out the task, The Free Flow Principle therefore, was for the government to walk the fine line between freedom of information and protection Despite the difficulties involvedinregulating of the young within the existing legal framework. The network communication, it did not cause a great German government's request for Compuserve to deal of concern to policy makers in majority of the block users from accessing 200 of its newsgroups, Western nations, at least not in its initial stage of and U.S. supreme court ruling the Communications development. These nations, with a long tradition Decency Act a violation of the First Amendment were of honoring the ideal of free flow of information, two notable examples of the plight faced by policy chose to take a non-interventionist approach makers. regardinginformationflowacrossnational borders, even when transborder data flow raised concerns over individual privacy and intellectual Regulating the Net: Two Pioneers property rights (Drake, 1993). While the U.S. supreme court decided to guard In addition to the time-honored tradition, there are against legislations that might hamper the freedom of more reasons for keeping information flow over speech, in countries that had traditionally put other the networks free from government regulations. values above such freedom, the question was not Computer networks may not be the only means whether toregulateinformation flow over the of communication that allows for information to be Internet, but how. freelydisseminated,by-passinggovernment controls; yet throughout human history societies This differences in policy attitude, coming from an have not seen a medium that is better capable in entirely different way of lookingat information realising the spirit of freedom of information at the freedom, is especially pronounced in two nations in scale and the scope that Internet has achieved. the Asia Pacific: China and Singapore.In both countries governments have taken specific steps to control information flow over computer networks: By nature network communicationisopen, democratic and interactive, thus allowing for 1. China almost complete freedom in the exchanges of information and ideas. The imposition of limits The first step the Chinese government took to and restrictions on such a form of ensure safety on the net was self-censorship by communication, therefore, is not only violating the service providers. ChinaInternet,thelargest free flow principle, but is running the risk of Internet linkup-service provider in China, announced jeopardizing a medium which is capable of in 1995 thatthecompanyprohibitedany making freedom of communication a. reality. "pornographic orpoliticalmaterial,or Western decadent culture" to go on its network. Similar However despitethe above considerations, measures were taken by the government-owned recent events in Europe and North America China Net. seemed toindicatea changeinthenon-
67 94 On February 1 1996, China's State Department the class licence. unveiled a "TentativeRegulation onthe Management of Chinese Computer Networks and Under the above regulations, ISP (Internet service InternationalNetworks,"stipulatingthatall provider) licensees and content providers must linkages with international networks must go register with SBA and comply with the SBA Internet through the Ministry of Post and Content Guidelines which specifically bannedthree Telecommunications or three other government types of information: departments.In addition the regulation specified that any attempt to post, copy, disseminate or 1) Information that jeopardizes public security or even browse information that is "harmful to public national defense, including contents which security" would be penalized (Huang, 1997). undermine the public confidence in the administration of justice, mislead the public, or bring To further strengthen government control over the government into hatred or contempt. network uses, two weeks later China's Public Security Department issued another decree, 2) Information that disturbs racial and religious requesting all users of international computer harmony, including contents that promote religious networks to report to its offices within 30 days. deviation or occult practices. Users were asked to sign an agreement in which the signatory guaranteed that he or she would not 3) Information that denigrates public morals, such as do harm to the nation or commit crimes by using pornographic, violent materials or contents that deal the networks. with sexual perversions such as homosexuality.
The purpose of these rules and regulations, In addition ISPs must assist SBA investigations into according toa. Chinese officer in charge of any alleged violations of law and ensure that their computer management, was to prevent criminal services are not used for purposes, or contain behaviors and to prevent the spread of harmful programs that are "against public interest, public information (Huang, 1997). order or national harmony," or "offends against good taste or decency." As a demonstration of its determination, the Chinese government blocked access to 100 sites on the World Wide Web in September 1996. Under the regulatory design, the ISPs are regulated Banned were sites run by American newspapers, by SBA, but the responsiblity in censoring content is Tibetanexiles,the Taiwanese government, in effect placed on the providers.To ensure that Playboy and The Economist (Millard, 1997; The ISPs comply with the new laws, they were asked to Economist; September 14,1996). The list install "proxy servers," a large-capacity computer covered all of what the government promised to that is capable of blocking access to sites banned by keep out of the net: pornographic materials, SBA. "Western decadent cultures"and information withpolitical implications, e.g., sites run by the In the few months after the regulation came into Taiwan government and Tibetan exiles. effect, the news media and networks were reporting casesthatinvoked ISP or SBA actions. A 2. Singapore newsgroup that posted criticism of some lawyers was blocked by its ISP, a man was fined $61,500 for Regulations on network communications came using the Internet for pornographic purposes, and into effect on July 15, 1996 in Singapore (Millard, the homepage ofa 19-year-oldyouth was 1997). According to the Singapore Broadcasting terminated for posting jokes on the Malays. AuthorityClassLicenceNotification1996, computer online services constituted licensable Reactions to China and Singapore's effortsin broadcasting services, therefore were subject to regulating Internet uses were either critical, cynical,
95 68 or both.Cynical because the nature of the Also criticized wasmaking ISPs responsible network makes any form of information control inassisting SBA investigation in any alleged violation extremely difficult. of law. What the regulation implied wasthat in the name of the law, the government could look into any Punishment in the form of legal sentences or user'sactivityoverthenetworks, including politicalpersecutionusedtobe one of information accesses, message exchanges, and government's most powerfulweapons in business and financial transactions. To those who intimidating attempts to disseminate information wereconcernedaboutindividualprivacy,the it disapproved. However for network stipulation was an added blow to the already frail communication,theoriginof informationis protection of network users' rights. all-too-frequently outside of the jurisdiction of a national government.Governments may hold localgatekeepers,i.e.,content and service Policy Rationale providers responsible for the information flowing over the networks, however the speed and In the eyes of many, regulating the networks means volumeofinformationtransmitted and the fighting against the current; nothing needs, or should spontaneity and interactivity of the system have be done unless it is matters of grave concern, e.g., turned network information a "moving target" for the surge of pornographic material. However not all censorship, whether carried out by government read the attempts China and Singapore made the agencies or by the gatekeepers. same way, especially nations that have a long tradition of guarding against media content that is Both the Chinese and the Singapore perceivedtobepotentiallyharmfultosocial governments have taken actions to ban Web harmony, or to political stability. sites.But withcountless number ofsites appearing and disappearingdailyover the After pornography sites were blocked in Singapore, networks, it is questionable whether banning a an article in Hong Kong's South China Morning Post few dozens, or a few hundred sites could solve (September 20, 1996) wrote: the problem. As an article in Singapore's Strait Times Forum suggested, rather than taking the "...its [Singapore's] experiment in taming the net will trouble of filtering out unacceptable sites itself,it be closely watched by government around the world, would probably be easier for SBA to use software but particularly so in Asia, where many politicians are packages such as Net Nanny which automatically nervous of the nature of the web, which they criticise blocks access to several thousands sites. as a polluting influences, full of decadent Western values." While the effectiveness of the measures was questionable, the intention of the government In many Asian nations, therefore, concerns over free stirred criticism.It was pointed out that not only access to the Internet are caused not just by sex or the prohibited content categories covered topic violence in the materials that are made available areas much wider thanpornography,their through the networks. When democracy has yet definition was subject to interpretation by the been fullymaterialized and memories of racial gatekeepersandlawenforcementofficers. conflicts or colonial rule still fresh, ideals such as Although SBA insisted that all sites banned were freedom of information would hardly be viewed as pornography, thatit was not involved in the important as social harmony, political stability or decision to block the newsgroup that criticized economic growth. Leaving network communication lawyers or that the government could still be entirely unregulated not only raises concerns that criticized, there were suggestions that it was the it may allow Western influences to flood in, but may ruling party's intention to restrict free speech by alsobringinpoliticallyorethnicallysensitive banning information that tended to "bring the materials that would disturb a very delicate, fragile government into hatred or contempt." social system.
69 96 Allfactors considered, the need to regulate mass media was direct broadcast satellite (DBS). network communication is much the same as the When the issue of direct television broadcast via needtoregulateanyothermedia. As DBS was discussed in the United Nations in the Singapore's Minister of Information George Yeo 1970s and 1980s, whether free flow of information or put it, "...laws of the land must apply as much in national sovereignty should take priority was the cyberspace as they do in real world" (transcript of center of heated debates (Fisher, 1990). BBC interview, September 15, 1996). Others who take an even broader perspective Concerns of developing nations over the influences may regard regulating network communication as of uncurbed transnational flow of information and simply a matter of gaining control of what is television programs were illustrated in the Argentine happening within a nation's territory. The attitude draft of DBS convention. In contrast to the U.S. draft is clearly spelled out in a statement made by which advocatedfortheencouragement and China's Minister of Post and Telecommunications expansion of free and open exchange, the Argentine after ISPs in China announced that draft sought to subject DBS broadcast to "national self-censorship would be exercised: "China as a sovereignty, the fundamental rights of states, the sovereign state is putting this type of information family and the individual" (Fisher, 1990: 121; draft under control (Huang, 1997, Lange, 1995)." article 2).
Itis perhaps least surprising that resolutions that A Matter of Sovereignty were adopted after heated debates as those over DBSreflected only the compromises that national Since the late 1980s, "globalization" has become delegates reached, while decision makers were left a prevailing concept in the business, political and tofeeltheir way through the miring forces of also academic community. As Hamelink (1993) communication technologies. pointed out, beginning with the concerns for global climate change due to the greenhouse Today transborder television broadcast is part of effect, our world has embarked on a globalization everyday life for billions of people around the world. process, thanks toat least five driving forces: Regulationsofsatellitetelevisionhavebeen technological innovations, military security and significantly relaxed in many Asian nations (Chan, environmental conservation, the need for justice, 1994; Wang, 1997), however national governments financial market operations and growth of trade. have not ceased trying to exercise some form of control. A survey of 12 Asian nations and territories showed that only four--Hong Kong, Japan, Thailand In contrast to this rising globalism is the perceived and the Philippines--did not have any restrictions on decline of the power of the nation state and transborder televisionbroadcast (Wang,1997). national sovereignty. As increasinglypolitical, Amongnationswhichkeptsatellitetelevision economic and scientific activities are conducted regulated,China and Singapore were among the at the international level, nations seem to have ones with most vigorous restrictions. lost grips of things taking place within their borders in a number of domains (Braman, 1995). After initial attempts by the government to block the signals,satellitetelevisionis now available to average familiesinboth Singapore and China. With the rapid development of communications However it would be grossly underestimating the technologies, media are also becoming regional power of the stateif the popularity of satellite and global,contributing to both theriseof television were used as an indicator of its strength. globalismand,presumably,thedeclineof sovereignty. In both China and Singapore nowadays, satellite television is put under control through cable networks The first major threat to government control over while direct reception through dishes is banned. In
70 addition, the Singapore governmenthas Following this line of thinking, national sovereignty is succeded in acquiring cooperation from a number far from being dead.As some critical theories of transnational channel operators in submitting suggested,itis through the "practices of power theirprogramspriortobroadcast,sothat relations and norm development" that sovereignty is necessary changes could be incorporated after structured and contested (Rosenberg, 1990; Drake, screening.According to a HBO executive, the 1993). Regulating a global medium such as Internet arrangement is"mutually beneficial" because may very well be just one of the "practices" that "whatever is acceptable to Singaporeans should sovereignty is being contested. be acceptable toother nations" (Clark and Huang, 1997). Conclusion Satellitetelevision may be thefirstmajor challenge to national sovereignty by Whenthefirstlaws in regulatingnetwork communications media, but was certainly not the communication came into effect in 1996, Singapore onlyone on the list.Concerns over sovereignty had an estimate of 150,000 Internet users, while rights very similar to what was voiced in the DBS China had about 100,000. The number, however will debates were heard in international meetings on not likely remain at that level as both governments transborder data flow (TDF).Delegates from have undertakenvigorous plansinbuildingthe developing nations insisted that information be information infrastructure. treated as a public good, for the UN Resolution of Permanent Sovereignty over Natural Resources In1994,the number of computer serversin stated that sovereignty over natural resources Singapore was only 0.1 percent of the world total, was a "permanent and fundamental right of and China, 0.01 percent.However the growth in nations"(Adams, 1983:41). Unfortunately computer networks was also phenomenal; whether information was a natural resource or a Singapore's figure represented a 45 percent growth public good was not established in international from the previous year (Yang, 1997), and China's laws, although it was recognized that international computer industry wasgrowing at an average of 28 laws legitimated the regulation of cross-border percent a year (Huang, 1997).It was estimated that flows (Drake, 1993: 279). by the end of the century, annual sales of computers would reach ten million in China, making it the The debate on TDF issues, therefore,failed to world's second-largest computer market--next only to arrive at any solution to the problem, just as the the U.S. debate on DBS did. But what canbe learned from the DBS example is that the Analysts have pointed out that putting network autonomy of nationstates may have been communication under control in China might be circumscribed by transnational media, however possible in the mid-1990s for two major reasons: a) this is not the end of national sovereignty. most of the online services had very little to offer besides email communication, and b) many potential In 1979, Waltz (1979) wrote: "the sovereignty of users lack the English language skill to master the states has never entailed their insulation from the system. The situation, however, will change. As effectsofotherstatesactions."National network communication grows inpopularity and sovereignty, therefore, is not necessarily sophistication, the task of regulating the medium will undermined or eroded simply because activities also become more challenging. within a nation are affected by what happened outside ofitsterritory. As Hamelink (1993) Challenging as the task may be, the determination of observed,even withfar-reachingeconomic Asian leaders in carrying it out does not seem to be integration of the European Community member affected.On the contrary, the more popular and states, sovereign states is still the basic unit of sophisticated network communication is, the more European politics. urgent the task becomes. In early September 1996,
71 98 a meetingofthe member statesofthe Harasim (Ed.)Global Networks: Computers and Association ofSouth-EastAsian Nations International Communication. Cambridge, MA: The (ASEAN) was held in Singapore to discuss the MIT Press, pp. 83-104. promotion and policing of theInternet. No agreement was reached regarding a common Drake, William J."Territoriality and Intangibility: approach to regulation, but the meeting showed Transborder Data Flows and National Sovereignty." that Singapore and China would not be the only InKaarle Nordenstreng and Herbert L.Schilller Asian nations that try to regulate transnational (Eds.)Beyond National Sovereignty: International informationflowoverthenetworks(The Communication in the 1990s. Norwood, New Jersey: Economist, September 14, 1996). Ablex, pp. 260-343.
In the end, whether network communication can Braman, Sandra (1995)"Horizons of the State: be effectively regulated may not even be the InformationPolicyandPower." Journalof most criticalquestion. A Singapore minister Communication, 45(4), pp. 4-24. openlyadmitted that all the government was doing was to stop pornography from being one Chan, Joseph Man. (1994)"National Responses click away, considering the ingenuity of surfers and Accessibility to Star TV in Asia."Journal of and the inexhaustible number of sites (South Communication, 44 (3), pp. 70- 88. China Morning Post, September 20, 1996). Clark, Judith and Yu Huang(February 1997)"A To many Asian leaders, what is really important Study of the Development of Satellite Broadcasting perhaps, is tomakeknown wherethe and Government Control:The. Case of East and government stands on the issue. When asked Southeast Asia."Radio and Television: 3 (1), pp. about the effectiveness of the measures in 137-141. controllinginformation over the networks, a Singapore officer stressed that the government Fisher, David. (1990) Prior Consent to International was under no illusion that it could police every Direct Satellite Broadcasting.Dordrecht: Martinus site, picture and videoclip; the intention was to Nijhoff Publishers. "set a standard which reflected its values even though that standard would not always be Hamelink,CeesJ. "GlobalismandNational attained. (South China Morning Post, September Sovereignty." in Kaarle Nordenstreng and Herbert L. 20, 1996)" Schiller(Eds.) BeyondNationalSovereignty: International Communication in the 1990s. Norwood, Regulating transnational information flow over the New Jersey: Ablex, pp. 371-393. networks, therefore, is not just a demonstration of what can be done, but what should be done when Huang, Yu. (May 20-22, 1997) The Plight of Chinese national sovereignty is considered. Government Information Control--A Discussion of the Effect of New Media Technologies. Paper presented at the Fifth International Conference on Television, Film and Video Images, Taipei, Taiwan (in Chinese). References Lange, L. (October 2, 1995)"Develping Nations." Adams, J. M. (October 1983) Canada's Future Information Weel. TDF Policy: Reconciling Free Flow with National Sovereignty. Transnational Data and Liu,C.Y. (1996) "Law and Technology in the Communications Report, 6, pp. 405-411. Information Age." Yue-dan Law Review, 19, pp. 145-148 (in Chinese). Branscomb, Anne Wells. (1993) "Jurisdictional Quandaries for Global Netorks."In Linda M. Millard,Christopher. (February 1997) "Local
72 99 Content Filters and the 'Inherent Risk' of the Internet." Intermedia, 23 (1), pp. 21-22.
Rosenberg, J.(Summer, 1990) "A Non-realist Theory of Sovereignty? Giddens' the Nation-state and Violence." Millenium: Journal of International Studies, 19, pp. 249-259.
Waltz, K. (1979) Theory of International Politics. Reading, M.A.: Addison Wesley.
Wang, Georgette(July 3-7, 1997)"Protecting the Local Cultural Industry: A Regulatory Myth in the Global Age." Paper presentedatthe International Association for Media and Communication Research, Oaxaca, Mexico.
Yang, Chung-chuan (1997) "The Impactof InternetandGlobalInformationHighlyon Telecommunications Policy." Journalism Research, 55, pp. 16-39 (in Chinese).
73 i00 The Shaping of the Universal Service Obligationin Telecommunications for a Competitive Environment: a Review of Policy Change in the United States, Australia and New Zealand
Richard Joseph School of Business, Murdoch University Perth, Western Australia, Australia
Deanna Campbell Robinson School of Journalism and Communication University of Oregon Eugene, Oregon, USA
Graham Wagner Wellington, New Zealand
1. ABSTRACT
The Universal Service Obligation (USO) is a central element in the social contract between the provider of telecommunications and the state. This paper describes the major aspects of these changes in three economies: the United States; Australia; and New Zealand. For each of the three countries, the different legislative and funding approaches being adopted are discussed. It is argued that, in some respects, the new relationships being forged under competition could undermine the social benefits that are traditionally thought to be derived from the USO.
2. INTRODUCTION serving people in remoteareas is one major barrier to universal telephone According to Eli Noam, beyond the initial penetration and the cost of service start-up costs, a telephone network "will anywhere may preclude grow on its own": or severely limit usage by the poorest segment of society. Neither of these groups, remoteor poor, Through this phase of network can pay the full cost of their telephone growth, which can be called the service and service to them must be "cost-sharing" phase, the network subsidized if the society users can lower their cost by adding agrees that the social benefit of telephone serviceto these members. However, at some point groups is sufficiently high. average costs increase, and utility Thus, universal telephone service isa political as plateaus Left to themselves, the well as an economic issue. existing subscribers of the network would not accept members beyond Political problems associated with that private optimum (Noam, 1994, p. 689). universal service do not disappear, however, once a society decides that everyone benefits from ubiquitous Beyond the generally beneficial cost- usage. First, the level of service still hasto be sharing stage, governments usually impose defined, not an easy task in universal service obligations (USO) upon an age of rapidly changing technology. The old notion dominant carriers in order to ensure of USO required dominant carriers simply service to those still not on national to supply dial tone to subscribers. networks.Even with government- Now many regulators and industry leadersagree that engendered subsidies, telephone penetration plain old telephone service (POTS) rarely exceeds 95 per cent. The cost of also must include touch-tone, single-partyand emergency services.And a growing
101 74 number of people are insisting that POTS Zealand, Australia and the United States- - must be expanded to include PANS (pretty are trying to answer those questions. The advanced new stuff) such as wider-band three sample countries represent divergent connections (e.g., ISDN), Internet access, deregulatory roads but they all lead in the and, eventually, video conferencing same direction to a competitive, more capability. technologically advanced telecommunication environment. These three countries were Second, related to whether or not PANS chosen because of their cultural should replace POTS as the USO similarities in the Pacific region, their requirement, are questions of universal relatively high percentages of rural access vs. universal service. The latter regions (frequently the recipients of USO term implies that everyone will get the funds), and their early regulatory reforms same things regardless of ability to pay or that introduced telecommunications location. But basic service is not the same competition (Nevitte and Gibbons, 1990, p. as universal service and neitKer are the 1).. As well, in terms of the changes in same as access to services. Access to telecommunications technology, both services is the real briar patch of USO Australia and New Zealand have been issues. What exactly does access mean? strongly influenced by the United States. That you can get whatever you want if you can pay for it ?Or that involved services For each of the countries below we provide are available atreasonable prices and that a brief description of the separate routes to you have the equipment and skills to use deregulation and competition in them beneficially? telecommunications and then assess the implication of this for future USO policies. Third, once the decision has been made to We believe these comparisons may prove impose USO and the expected level of useful to countries who are now service has been defined, another political contemplating deregulation. issue is how to pay for the program. The 3. DEVELOPMENT OF COMPETITION AND major questions here are who should pay USO POLICIES IN TELECOMMUNICATIONS IN and through what mechanisms. A number of THE SAMPLE COUNTRIES subsidization mechanisms exist such as In addition to internal cross-subsidization. 3. 1 NEW ZEALAND cross-user type subsidies, external subsidies may help companies serve high New Zealand's recent history of cost areas or help poor people pay their telecommunications reform can be taken telephone bills. Such mechanisms are from early 1987 when the nation's Fourth fairly straight forward but require Labour Government was returned to power supervisory regulation to implement and for a second term.In early 1987, the maintain even under a monopoly situation. public debt was $NZ42 billion or 81 percent of gross domestic product (Hyde, In summary even though countries move 1991, pp. 55-69), a state of affairs that toward telecommunications competition was of deep concern to The Treasury as well mainly for economic reasons (to make a as politicians.Increasingly, after the nation more competitive, to better serve Fourth Labour Government returned to the interests of the business community, to office, The Treasury saw asset sales as part encourage technological innovation, and so of a necessary economic strategy forth), this path leads to three USO (Mascarenhas, 1991). So committed did political issues: how to determine the social The Treasury become to the principle of benefits of different levels of universal "less intervention and more competition in service, how to allocate services in a the economy" that even deep divisions in the technologically dynamic environment, and Labour Cabinet over the need for how to pay for whatever services fall under privatization did not sway Treasury from the newly defined USO. This paper its drive towardsprivatization of state examines how three countries--New assets (The Treasury, 1987).
75 Pressing on with their view of economic to give stronger negotiating powers to the rationalization, The Department of Trade dominant carrier over its competitors. A and Industries and The Treasury engaged a major competitor to Telecom New Zealand, firm of international consultants (Touche Clear Communications commenced Ross), in mid 1987, to ensure that operations in 1990. competition was introduced into telecommunications. At the same time Early in 1990, the Government announced pressure built among the Government's that the worsening economic situation advisors and commercial interests for asset necessitated the sale of Telecom (the jewel sales to be used to off-set the ever in the crown of state assets). Although increasing public debt.In retrospect, the there was considerable opposition to the privatization move was fostered largely by sale both within and outside Parliament the Government's economic advisors and the (lssac, 1990), the Government went ahead New Zealand Business Round table (an and sold Telecom for $NZ4.25 billion to a influential lobby group for large corporate consortium of Bell Atlantic,Ameritech, interests) some of whose members already Freightways and Fay Richwhite (the latter were playing key roles in running the two were New Zealand companies with 5 Government's State-Owned Enterprises percent each of the shares).Bell Atlantic (SOEs) (Hyde, 1991). and Ameritech were required by the sale agreement to reduce their combined Early in 1988 the Government made it holdings in the company to 49.9 percent clear that it viewed asset sales as a means over the next three years. Another of reducing the public debt (Mascarenhas, condition of the sale was that the New 1991).In the July budget of that year the Zealand Government would retain a criteria for asset sales were listed and at controlling interest in the privatized the same time it was emphasized that Telecom Corporation of New Zealand by corporatization was not working; which is virtue of what is known as "the Kiwi Share" reallyrather problematic as none of the (Prebble, 1990).The 'Kiwi Share' SOEs had been corporatized for more than essentially maintains the remnants of the about a year when this was first announced USO obligation in New Zealand. (Mascarenhas, 1991).Later that year the Ministry of Commerce was set up to offer Even though a New Zealand Ministry of advice to the Minister of Communications, Communication official recently pointed out and as one of its duties it took over the (Galt, 1996) that "universal service has responsibility for administering the not been a commonly used term in New Government's telecommunications and Zealand telecommunications policy" (p. 1), broadcasting regulations. The Commerce long before the State codified USO Act became the defining act for fair requirements,there was an unwritten competitionin the market place and with expectation that all New Zealanders would entry of deregulation in broadcasting be able to access a telephone line and that Television New Zealand and Radio New this line ought not only to be affordable to Zealand were created as separate SOEs. even the poorest citizens, but it ought also (Rodger, 1988). It was not long before the to allow free local calling for all users broadcasting spectrum became a (Wagner, 1984). marketable commodity and state television (TV1 and TV2) started competing with TV3 In effect, there is nothing very permanent a private company for advertising dollars. about the Kiwi Share but, at this point in time, it served to define a kind of universal The Government adopted a so called "light service for residential users. handed regulatory approach" which appeared to the free market purists to be In Telecom's Articles of Association, the the ideal policy in the period leading up to Kiwi Share ( only one convertible the privatization of Telecom New Zealand in preference share) imposes four obligations 1990.This policy in retrospect has proved on Telecom:
76 103 Telecom's standard residential line Third, it would appear to be in the interests rental rates can increase only in accordance of all common carriers to offer enhanced with consumer price index increases; services to their clients.In some respects they are proactive (for example, fibre Telecom can charge rural optic cables and ISDN) and in other residential users no more than the standard respects they can be slow and reactive residential line rental; (e.g., Telecom's Xtra, alate entry into the Internet Service Provider market ). Gabel Telecom must maintain a local (1996) claims that Telecom has no free-calling option (in New Zealand local incentive to provide a better service to its residential calls are unmeasured); and residential customers because there isno competition in the market.Furthermore, Telecom must maintain the extent of he argues, while residential services have the network as it was in November 1990 been subsidized in the past this is not the (Williamson, 1996, p. 2). case any more. Gabel concludes his paper by saying: There are three matters concerning universal service that the New Zealand "While the current light-handed Government will be looking at in the future. regulatory regime has provided First, in a free modern economy important benefits to New Zealand, competitive markets ought to provide the the governance structure of that kinds of telecommunications services that regime does not provide a mechanism people want without Government which will enable the consumers to intervention. And yet the New Zealand benefit from cost reductions being realized by local service network experience to date indicates that even though "The Government does not know operators around the world." (p. 7). best", about what suits the needs of the In other words the Kiwi Share is being used telecommunications industry (Williamson, as an obstacle by the dominant carrier for 1996, p. 6),it will still be required to passing on price reductions to its intercede in the industry's business customers. The Government now recognises practices from time to time as arbiter on that when it introduced the written version some occasions (as in the interconnect of the Kiwi Share it did so as an' expediency. issue mentioned above) and as protector of Now, in a changing and dynamic the common interests (ensuring that every telecommunications environment, it has to New Zealander irrespective of socio- deal with the consequences of what the Kiwi economic status has access to a telephone) Share really means to the industry and the on other occasions. all New Zealand telephone subscribers. The Kiwi Share, which is in reality a Second, there is a growing concern in limited version of the Government's advanced Western societies that some of the universal service obligations, and a carry "have nots" are falling through the net and over from pre-privatisation times, is do not have access to a telephone line at an clearly in need of revision.It is affordable cost (U.S. Department of acknowledged in the industry that a Commerce, 1995). This matter has revision should be undertaken, not with a recently been debated in the Wellington view of getting rid of the obligations, for newspapers with Telecom denying the claim there is evidence that universal service that up to 40% of people in parts of obligations are consistent with the Porirua (a low income suburb of promotion of competition in the Wellington) are without a telephone telecommunications industry (Lipman, (Perry, 1996, p.4). 1996), but in order to pass on new technology savings to the customers. In the light of Telecom's escalating annual profits there is little evidence that residential
77 104 customers are benefiting in spite of high The successful bidder for the Aussat profile marketing ploys such as weekend satellite was Optus Communications, a $5 toll calls and reduction in long distance consortium involving Bell South, Cable and tolls which are, after all, big money Wireless, Mayne Nickless, AMP and spinners for Telecom. National Mutual. Arena GSM (later to be called Vodafone) was successful in obtaining 3.2 AUSTRALIA the third mobile licence at the end of 1992.
Recent structural change in Australian The issue of universal service has been one telecommunications commenced with a particular theme that has been prominent major economic statement in May 1988 by in debate since the introduction of the then Labor Government (Evans, 1988). competition. The provision of a universal Telecommunications formed a central part telephone service has been a long-term of this.Part of the telecommunications policy objective of successive Australian market was to be liberalised and opened up governments. Under the monopoly to competition (e.g. value-added services, arrangements, Telecom Australia was customer premises equipment). A expected to fund universal service from its regulator, the Australian profitable services. Telecom Australia met Telecommunications Authority (Austel) the demands of the legislation which was established to regulate competition and imposed universal service obligations on it. consumer issues, among others. Telecom In 1975, for example, some 62 per cent of Australia's monopoly over facilities and households in Australia had telephones basic services was to remain intact but the connected and this had risen to almost 95 need to invest in network modernisation per cent by 1990 (Wilson and Goggin, was increasing pressure on the Government 1993, p.7).With the introduction of to provide it with the necessary capital. competition, government legislation While the Labor Government had moved a provided two obligations on universal considerable way towards deregulation, it service: first,it must be provided; and, was the ever growing debt of Aussat (the second, "where delivery of universal national satellite system) that pushed it to service results in a net cost to the consider major structural and ownership universal service carrier [Telstra], the reforms of the industry.By 1988-89, cost of fulfilling the delivery can be shared Aussat's accumulated debt had reached among all the carriers on an equitable A$478 million (Leonard, 1990). basis" (Department of Communications, 1994, p. 54).In effect, "the cost of As a result, it was announced in 1990 that universal service is shared by the carriers Aussat was to be privatised and Telecom (Telstra, Optus and Vodafone) indirect Australia and OTC (the government proportion to each carrier's share of timed authority responsible for international connections (in minutes) established telephone traffic) merged to form the core across telecommunications networks in of another carrier (to be called the Australia" (Bureau of Transport and Australian and Overseas Communications Economics, 1995, p.39). Telecommunications Corporation--AOTC). One of the key issues has been the definition It was announced that AOTC would then of "universal service" adopted by the compete in a duopolistic arrangement until government. "Universal service" under the 1997 with a new carrier, the core of which legislation in force since 1991 refers to would be the privatised Aussat. Since "the standard telephone service, payphones 1993, the name of the interim and other prescribed services being organisation, AOTC, has been progressively reasonably accessible to all people in replaced with the new corporate name Australia on an equitable basis, wherever Telstra. The crucial decisions on industry they reside or carry on business" structure were taken at the end of 1990 [Department of Communications, 1994, p. together with a decision to allow three 54]. Consumer groups have taken a competing carriers into the mobile market.
78 105 somewhat broader view of the definition 3.3 USA (Wilson and Goggin, 1993). The definition became subject to scrutiny as part of a For the purposes of this paper the early major inquiry in the provision of 1980s represent an important starting broadband network services in Australia point for analysis.By this time the notion (Broadband Services Expert Group, 1995) that telephony is a "natural monopoly" had and the Review of the Standard Telephone succumbed to the reality of competition in Service (Standard Telephone Service customer premises equipment and long Review Group, 1996). distance. In addition the convergence of computers and telecommunication plus the Following the change of government in increasing internationalization of markets Australia in March 1996, further and operations rendered not only voice legislative reform led to a new telephony but also data exchange crucially Telecommunications Act 1997. From 1 important to businesses. Their leaders July 1997, the Australian threatened to build private networks if telecommunications market was opened to clearer, wider-band and cheaper public full competition. The new Australian lines were not made available, a legislation effectively extends the development that would have endangered the provisions of the 1991 Act but makes traditional cross-subsidy of residential changes that: ensures the scheme will work service by business subscribers.In 1976 in an open licensing environment; clarifies when the Department of Justice launched and extends the USO; enhances efficiency in yet another anti-trust suit against AT&T, delivery; and improves the accountability the company was embroiled in an internal of universal service providers. One of the dispute about whether to ignore mounting most significant changes is that the pressure to change its organizational Minister for Communications is able to structure and goals or to embrace new determine a system for the selection of technologies and recognize the competitive national and regional universal service wolf, who was not just at the door but had providers, including tendering out all or clearly crossed the threshold. A change of part of the USO in particular areas. The administration from traditional to new- 1991 Act levied carriers in accord with a horizon executives took place on the heels carrier's share of timed traffic as the basis of a failed AT&T attempt to force national for calculating the share of the total net legislation that would have protected its universal service cost payable. Under the monopoly against further encroachment and new legislation, Telecommunications Act just before MCI won a huge monopolistic 1997, contributions are proportional to practices suit against Ma Bell. Although in each participating carrier's share of total 1981 AT&T made $16 million each day, had 'eligible revenue'.In effect, the new assets of $150 billion (a figure exceeded regulator, the Australian Communications by the gross national product of only 20 Authority (ACA), will be able to designate countries), and could clearly afford to certain areas as net cost areas and carriers settle with MCI, the competitive writing will be able to claim costs for providing a was on the wall. AT&T's more forward- USO in these areas. At the moment, Telstra looking new leaders chose to negotiate a is still the Government's designated modification of the final judgment of an old universal service provider. In addition to Department of Justice suit launched in the ACA, the Government has shifted the 1956. The Modified Final Judgment responsibilities for the regulation of resulted in AT&T's 1984 divestiture of its competition in telecommunications to a new local telephone companies. The Bell regulatory body - the Australian Operating Companies (BOCs) were spun-off Competition and Consumer Commission into seven Regional Holding Companies (ACCC). (RHCs). AT&T retained Western Electric (later renamed), Bell Labs (whose function became more applied and less theoretical)
79 106 and the Long-lines Division. Western subscriber lines they have in each Electric eventually became the independent exchange. "Access" charges also are Lucent Technologies. AT&T also spun-off a calculated based on local companies' costs to newly acquired computer division and accommodate IXC traffic (access charges acquired McCaw Wireless. Thus, the main account for more than one-third of local telecommunication activities of today's companies' revenue.)Individual company are long distance and wireless subscribers also pay a monthly charge telephony.Ironically, the phrase called the "Subscriber Line Charge." "universal service" was coined by the first Recently, mainly as a result of intense CEO of AT&T, Theodore Vail, to convince AT&T lobbying, the FCC increased the SLC regulators of early telephony that a single in order to reduce access charges. Rural monopoly telephone system would be telephone companies with subscriber loop economically more efficient than dual, costs in excess of national average unconnected competitors. The seeds of a subscriber loop costs are eligible for socio-political universal service policy universal service funding to reduce their appear to lie in the opening paragraph of costs to the 115 percent level. Bell the Communications Act of 1934 in which Operating and GTE (which has had its own Congress set up the Federal consent decree) companies are ineligible Communications Commission for the for universal service funding and have been purpose of expected to continue traditional cross- subsidies to keep all rates "reasonable." .regulating interstate and foreign Individual poor people can get their commerce in communication by wire and monthly bills and installation charges radio so as to make available, so far as reduced through "Life-Line" and "Link-Up" possible, to all the people of the United programs, which are partly paid for by States a rapid, efficient, Nation-wide, state and federal funds. Despite a 94 and world-wide wire and radio percent telephone penetration rate, some communication service with adequate areas of the US still do not have telephone facilities at reasonable charges.... service or are underserved. Without the (TitleI, Sec. 1, par.1). current USO subsidies, many other rural A system of internal cross-subsidies customers might well go unservedas evolved within AT&T to keep rates service is directly related to cost-per-loop "reasonable" for all customers, no matter which increases inversely to population where they were located. Before the density. February 1996, after 20years of break-up, urban, business and long- struggle over bills to revamp the distance customers paid higher-than- Communications Act of 1934, Congress necessary charges so that rural, residential passed a new telecommunications act. The and local subscribers could pay lower- Telecommunications Act of 1996 than-cost charges. Independent (not part of acknowledges the new communications the Bell system) rural telephone companies environment, addresses many of the were further helped by the Rural problems engendered by the break-up of Electrification Administration (REA, newly AT&T, and further opens electronic renamed the Rural Utilities Service,RUS) communication markets.It expands the low-cost loans which enabled expansion and number of TV stations one entitycan own, upgrading of rural facilities. largely eliminates radio ownership rules, Traditionalists within AT&T argued that permits competition between cable internal cross-subsidies would disappear television and telephone companies, allows with the introduction of competition. To Bell Operating Companies to enter thelong prevent subsequent damage to universal distance and manufacturing markets(once service as a result of the MFJ, a complex they sufficiently open their local exchanges array of funding mechanisms was set in to competition), and opensup that last place.Currently, long distance bastion of monopoly service, the local (interexchange carriers or IXCs) telephone market. Universal service companies pay fees according to how many sections stipulate the following principles:
107 80 States can designate the common FCC Universal Service Pages carriers who qualify for universal service (http://www.fcc.gov/ccb/universal_servi support and will designate carriers who are ce/welcome.html); Benton Foundation best equipped to serve areas presently (http://www.benton.org/Policy/96act/jbo unserved and order them to do so. ard.html);United States Telephone Designated carriers can relinquish USO Association only with State approval and only if another (http://www.usta.org/univplan.html); eligible carrier assumes USO for the National Exchange Carriers Association service area in question.(Section 102) (http://www.neca.org).
A federal-state joint board on 4. COMPARISON AND COMPETITIVE universal service is established "to FACTORS AND USO POLICIES IN THE recommend changes to any of the [FCC's] SAMPLE COUNTRIES regulations in order to implement [universal service sections], including the The US deregulatory process differed in definition of the services that are supported details from those of NZ and Australia by Federal universal service support primarily because American mechanisms ...." (Section 254) telecommunications was always in private hands. NZ and Australia in the beginning The Joint Board and the FCC are to used--and, to a great extent, still use base their USO policies on the following today-- a public interest model of principles: quality and rates; access to regulation whereby the needs of society are advanced services; access in rural and high considered, a government entity is created cost areas (services and rates "reasonably to address those needs, a system is put in comparable" to those available in urban place, and the system adopts technologies as areas); equitable and nondiscriminatory they became available and are deemed contributions (by all telecom providers); appropriate. NZ and Australian specific and predictable support telecommunications began as government mechanisms; and access to advanced enterprises and, even after deregulation telecommunications services for schools, and the introduction of competition, health care, and libraries. (Section 254) government decisions remain the major determinants of system structures and A new definition of universal functions. service will encompass "an evolving level of telecommunications services that the There are reasons to explain why Commission shall establish periodically ... deregulation occurred in taking into account advances in telecommunications in our three sample telecommunications and information countries. Some of the reasons are the technologies and services." (Section 254) same, especially those that relate to worldwide economic and technological All carriers that provide "interstate processes occurring everywhere. Some telecommunications services shall reasons are different according to unique contribute, on an equitable and circumstances within each country. The nondiscriminatory basis, to the specific, economic and social consequences of policy predictable, and sufficient mechanisms changes are, for the most part, identical established by the Commission to preserve and perhaps inexorable. The question now and advance universal service." (Section is what does this mean for USO and the 2 5 4 ) communication needs of those people in danger of being left out of the new era. Each of these stipulations remains highly controversial and the debate surrounding them can be observed on the following Internet sites: The competitive era has begun in all three 5. CONCLUSION countries examined in this paper but the full impact of what it means will not be felt Blackman (1995) defines "access to for several decades. While competition is telecommunications services as a basic now present among telecom providers in right of all citizens (the right to respect to Customer Premises Equipment communicate) which is essential for full (CPE), long distance and, soon, local participation in the community and as a services, merging of various types of basic element of the right to freedom of communication systems and the new expression." He adds legal and economic competitive situation that this phenomenon details to this social definition by requiring heralds is only on the horizon. For 1) geographically-neutralstandard example, satellite competition within telephone service, 2) non-discriminatory Australia isstill a strong possibility now access, and 3) reasonable costs or that Optus owns Aussat and can explore Low affordability (emphasis ours).Each of the Earth Orbiting Satellite (LEO) emphasised terms is now highly possibilities.Thus Australian government controversial.The definition of universal so constrained Aussat's functions that the service, although not necessarily specified, satellite system went deeply in, debt. But was fairly clear in the past, at least in our the Aussat's potential for competing with three sample countries.Now competitors Telecom, was not the only reason that the closely represent their economic self- satellite system became so unwieldy. interests in the positions they take on these Whether Aussat could have competed in basically political questions. As more and provision of telephone services even different competitors enter the field, the without its deadly regulation, is complexities of the situation will increase questionable. Geosynchronous satellites are and the political issues are likely to become not well suited to voice service and, because even more intractable in regard to USO. the interior is quite flat, terrestrial radio- based telephony works quite well in the The review of the three sample countries outback. Now technology has changed and shows that the evolution of competition in LEOs offer realistic competition for all telecommunications is closely linked to types of communication services changes in the USO policies of the everywhere. respective countries.It is evident that in The same situation applies in NZ and the US. the new competitive environment there is Even though the US pioneered in satellite scope for thinking more broadly about the communication, satellites began as common USO concept than is traditionally accepted. carriers and were used as aids to AT&T's If the USO concept continues to be too long distance transmission rather than as closely tied to the politics and structure of competitors.In NZ the government forbade evolving competitive markets, there could installation of satellite-based systems be a real possibility that national benefits (using Aussat) because of potential from telecommunications could be foregone. competition with TVNZ. Now TVNZ already The concept of USO must retain its essential has private competition and the argument element of a social contract but be flexible against satellites makes little sense.In the enough not just to include telephony but US, it is cable television, which is only now information - transcending the catch beginning to be installed in the other two cry of competition and making it more countries, that offersstrong competitive relevant to the changing nature of the possibilities for all types of communication economies of the sample countries. services at this point. However, its traditional television service is being challenged by direct-to-home satellite service and various terrestrially-based wireless television services, including soon to be digitized broadcast TV
82 6. REFERENCES Hyde, T (1991), 'How they sold Telecom, why they sold Telecom', Metro, September, Blackman, C R (1995), 'Universal service: pp. 55-69 obligation or opportunity?', Telecommunications Policy, Vol. 19, No. 3, Issac, P. (1990), 'Backbenchersa threat pp.171-176 to Telecom float', The Dominion, 15 January, p. 20 Broadband Services Expert Group (1995), Networking Australia's Future, Final Leonard, Peter (1990), 'Footprints Downa Report of the Broadband Services Expert Narrow Road', Media Information Australia, Group, Australian Government Publishing No. 58, November, pp. 36-41 Service, Canberra. Lipman, A.(1996).'Demystifying Bureau of Transport and Communications universal service and developing rational Economics, (1995) Telecommunications in policies'. An address ata Australia, Report 87, AGPS, Canberra Telecommunications Universal Service p.39 Symposium, Wellington,1-3 July. Wellington: TUANZ in association with The Consumers' Telecommunications Network Centre for Research in Network Economics (1995), For Whom the Phone Rings: and Communications, University of Residential Consumers and Auckland. Telecommunications Competition, CTN, Surry Hills, NSW. Mascarenhas, R.C. (1991), 'State-owned enterprises', in J Boston, J Martin, J Department of Communications and the Arts Pallot and P Walsh (eds), Reshaping the (1994), Beyond the Duopoly: Australian State, Oxford, Auckland Telecommunications Policy and Regulation, Department of Communications and the Nevitte, N. and Gibbons, R. (1990), New Arts, Canberra, p.iii Elites in Old States: Ideologies in the Anglo- American Democracies, Oxford University Evans, G. (1988), Australian Press, Oxford, UK Telecommunications Services: a new framework, Australian Government Noam, Eli (1994), 'Beyond liberalization Publishing Service, Canberra,p. iii III: Reforming universal service',
Gabel, D.(1996).'Is residential Telecommunications Policy, Vol. 18, No. 9, telephone service subsidised?: Moving past pp. 687-704 the rhetoric through an empirical analysis Perry, A. (1996).Kelly, Telecom differ of the cost and revenue associated with the on phone access. Comment, The Kiwi Share',. An address at a Dominion, July 15, p. 4. Telecommunications Universal Service Symposium, Wellington,1-3 July. Prebble, R (1990), Final step in Telecom Wellington: TUANZ in association with The sale, Media Release, Minister for State- Centre for Research in Network Economics Owned Enterprises, 12 September and Communications, University of Auckland. Standard Telephone Service Review Group (1996), Review of the Standard Telephone Galt, D.(1996). 'A New Zealand Service, Department of the Communications perspective on universal service in and the Arts, Canberra, December telecommunications'. An address at a Telecommunications Universal Service The Treasury (1987), Government Symposium, Wellington,1-3 July. Management: Brief to the incoming Wellington: TUANZ in association with The government, Government Printer, Centre for Research in Network Economics Wellington and Communications, University of Auckland. 83 110 U.S. Department of Commerce. (1995). Falling through the net: A survey of the "have nots" in rural and urban America. Washington: NTIA.
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84 111 Access & Interconnection Trevor Jordan Media & Telecommunications Policy Group Royal Melbourne Institute of Technology Melbourne, Australia
1. ABSTRACT
The terms access and interconnection are often used interchangeably and with little precision. However there are two fundamentally different reasons for connecting telecommunications networks together. These reasons need to be understood in order to develop a sensible regulatory environment. This paper proposes distinct defi- nitions for access and interconnection and explains the differences between them and their significance in terms of regulatory intervention.
2. ACCESS & INTERCONNECTION the major points of difference are that a telecommuni- cations network generally provides point-to-point 2.1 THE THEORY rather than point-to-multi-point (distribution) connections(1) and it can provide different services The concepts of access and interconnection over the same network. Even where telecommunica- are central to any understanding of the telecommuni- tions services are provided on a point-to-multi-point cations services provided by multiple suppliers, yet basis, it is usually a limited, rather than ubiquitous, there appear to be no generally accepted definitions form of distribution. for the terms. They are often used without any The products provided over a telecommunica- attempt to distinguish between them or to understand tions network are not fungibles. A call from C to D, or the different purposes that they serve. Further even a call from A to C, is not a substitute for a call confusion arises from the more general use of the from A to B. Similarly, a data call between two points term local access in a different context to refer to the is not a substitute for a voice call between those same connection between a customer and the network. two points. Most other utilities provide a unidirectional In this paper, the terms access and inter- distribution (or collection) service for products which connection are used for quite specific purposes. have largely indistinguishable origins and Access is used in the context of access to characteristics. The user of water or electricity will infrastructure for economic or competitive purposes. be largely unaware of and indifferent to the origin of This includes access to the services provided by that the product that they are consuming and would not infrastructure. Interconnection is used in the context expect to receive more than one product from the of interconnection of networks to achieve connectivity distribution network. Similarly, the producer of the between those networks; it is concerned with enabling product will often not be aware of the individual users any user on one network to connect to any user on of the product and will see only the aggregate any other network and has minimal competitive signifi- demand. cance. The use of these two terms in this paper is In these respects, telecommunications quite arbitrary.It is simply a convenient means of networks have greater similarity with transport describing the different characteristics of the services networks than with the distribution networks with provided by carriers and service providers to each which they are frequently compared.Because both other in a competitive telecommunications market. the origin and the destination of a connection are The importance of the distinction between the two important for a telecommunications service, these concepts will become origins and destinations are individually identified; in apparent later in this paper. the most simple case, with telephone numbers. There A common theme of the discussion is no equivalent in the other network industries. The surrounding the reform of the telecommunications provision of a unique address or telephone number to industry has been the uniqueness of the industry each location on the network means that there is only compared with other network industries such as one way in which a call can be connected to that electricity, gas, and water distribution. location and that is through the network which has Telecommunications networks share many been allocated that number. characteristics with other types of network. However, Interconnection is necessary to increase the
85 112 population of accessible destinations and thereby to the provision of access. Except where there are improve the utility of the service to consumers. It is significant market distortions(2), the traffic between necessary wherever there is more than one network the two networks will generally be symmetrical with providing the same, or a similar, service.It is not the same volume of traffic in each direction. associated with competition in a market between the This symmetrical flow of traffic between the owners of those networks. networks tends to balance the charges for each For example, the telecommunications carrier's traffic and hence, the carriers will be much networks in two adjacent sovereign states, each less sensitive to the level of the interconnection rates owned by a separate monopoly carrier, would still imposed by each carrier. By contrast, the traffic have to be interconnected to ensure that calls could generated by the provision of access is normally be made between the customers on each network. highly asymmetrical and the rates charged for While competition in telecommunications is a relatively handling this type of traffic are usually extremely recent phenomenon, work on the interconnection of contentious. networks, usually at the international level, has been This is not to say that competitive issues do in place for more than a century through organizations not arise with interconnection. When two or more like the ITU and its predecessors, and similar regional carriers compete in the same geographic market, bodies. consideration obviously has to be given to the relative The introduction of competition for telecom- market power of each competitor. A small new munications services means that interconnection often network which is not interconnected with a much now take place between networks which compete for larger incumbent network is likely to fail in the market. customers in the same geographic area. The incumbent is under no such pressure and may Nonetheless, interconnection remains a concept which have an incentive to avoid interconnection for that is quite distinct from the concept of access. There are reason. Furthermore, this effect is related to the markets where competitive carriers exist and inter- market power of the incumbent carrier (essentially connect their networks, but where there is no measured by its market share of local access mandated provision for access. Such an approach is services) and does not diminish with increases in the appropriate where there is a general shortage of local level of competition in the market for access services access services to meet the demand from consumers. or with the deployment of competing infrastructure. A legislated access right frequently removes the The only thing that is likely to diminish the incentive for a new carrier to provide local access power of an incumbent local access carrier over services and allows a new entrant to the market to interconnection is a loss of market share which, in the pursue only the market for long-distance and absence of regulatory intervention, will rebalance the international calls. By providing only interconnection, negotiating power of the parties. The existence of a the connectivity between competing networks is competitive market for local access services alone is achieved, while still maintaining an incentive for new not sufficient to achieve this. However, once inter- carriers to provide local access services. Mandated connection has been provided to one new competitor, access is most appropriate in well serviced markets, further new carriers can interconnect with the first new where there would be inefficient duplication of carrier, which would normally want to improve its infrastructure if new carriers were required to build market position through increased volumes, and direct connections to consumers in order to enter the the incumbent carrier loses much of its market market. power(3). When two electricity networks are connected The symmetrical nature of the traffic also together, it is done for economic purposes such as creates an expectation that the charges should also load balancing or to utilize cheaper generating be symmetrical(4). Although this expectation is not capacity.It is not done for the purpose of maintaining entirely justified, it makes any attempt to misuse connectivity between the networks; as occurs with market power, through the application of highly telecommunications networks. The consumers asymmetrical charges, much more visible. connected to an electricity network will be indifferent The need for interconnection is closely to the origin of the electricity that they consume and associated with use of the number spectrum. These they will be interested in the only price and reliability numbers represent the unique addresses for each advantages which may be available to them. service on the network.Irrespective of the availability The traffic resulting from the interconnection of number portability, each number can, at any given of two telecommunications networks also has quite time, have only one location. While it is possible for different characteristics from the traffic generated by competitors to provide competing direct connections 113 86 on which customers can originate calls, there is to those customers. This service enables a customer generally only one location on which an incoming call connected to the Telstra network to make a long- can be terminated.It is therefore necessary that any distance call through the Optus network in one of two interconnection obligations apply to those who have ways: either by first dialling the Optus access code or been allocated part of the national number spectrum. by arranging to be preselected to Optus so that all In general, this will mean carriers and service long-distance calls would be routed providers, but as number allocations can also be automatically through the Optus network.It connects made directly to consumers or end-users, either the calling customer through the Telstra network to a directly or effectively through the provision of number point of interconnect between the two networks. A portability, the interconnection obligations should apply similar service was offered to switched service more broadly. By way of contrast, access requires the providers(7). ownership of infrastructure and access obligations Because this service was used for access and would apply to a much smaller group. the customer is billed by Optus for the call, the Optus There are therefore two distinct reasons for network is also supplied with the CLI [calling line regulatory intervention in the telecommunications identitythe telephone number] of the calling industry: to provide for call completion to maintain the customer when the call is established. CLI would connectivity of the overall network; and to promote normally be provided between networks, but for competition in a market through the provision of operational rather than commercial reasons. access to infrastructure which cannot be economically Separately, Optus is also supplied with the billing replicated. The first is fundamental to the telecommu- name and address of the customer. nications industry and has been achieved by the An originating service can also be supplied industry, with little regulatory intervention, for more as an interconnection service in the case of calls that than a century. The second arises from the more are charged to the called customer. In these cases modern phenomenon of competition in telecommuni- there is no need for information to be provided to cations markets. The approach to regulating this enable the calling customer to be billed as the calling issue depends on a range of complex issues, customer, if billed at all, is billed by the originating including the market structure, the level of competition carrier. in the market, and the political aspirations for The transmission service provided by Telstra infrastructure development. was necessary to enable Optus to introduce a long-distance service well before it could install its 2.2 THE PRACTICE own transmission capacity throughout Australia.It was largely the same as the transmission services To complement the theoretical treatment given which Telstra provided to its other customers, except above, it is worth considering the practical realization that its prices were subject to the Minister's direction of access and interconnection in an environment with on intercarrier pricing(8) rather than Telstra's retail a monopoly carrier such as Australia in 1991(5). tariff. Optus was a general carrier under the The experience in opening the Australian Telecommunications Act 1991 and was entitled to, market to competition serves as an illustration. When and did, install its own transmission capacity. Within a Optus entered the Australian market in 1992 to few years, Optus had installed major transmission provide long-distance services it needed three basic links between the capital cities. Its dependence on services from Telstra: an originating service to enable Telstra for transmission services had reduced the existing customers to make calls to Optus; a considerably. Eventually, Optus may be completely transmission service to enable Optus to connect its independent of Telstra in this regard. switches together into a network; and a terminating Obviously, transmission services are provided service so that Optus could deliver calls to the to increase competition rather than to achieve destination customers. These requirements are not connectivity. However, it is not clear that these unique to carriers. They were repeated, in slightly services were provided as part of an access regime different form, when switched resellers(6) entered the which sought to avoid the uneconomic duplication of market. infrastructure. The fact that Optus proceeded to The originating service is an access service duplicate much of this infrastructure would suggest as described in this paper, in that it is necessary for that access was mandated simply to allow Optus to competition rather than connectivity reasons.It enter the market at an earlier time than it could have enabled Optus to provide long-distance services to achieved using its own infrastructure. There were also existing customers without having to connect directly pressures from the Government of the day to 87
9 la duplicate infrastructure. Optus and Vodafone were In this environment, where an artificial barrier required to introduce network based competition: had been interposed between the markets for the something that was forgotten in the subsequent supply of local and long-distance telephone services, debate in Australia over the aesthetics aerial cables it was necessary for each customer to choose a and mobile telephone towers. preferred long-distance carrier in order to be able to Vodafone was also provided with transmission make long-distance calls. Preselection was the services by Telstra and, to a lesser extent, by Optus technological solution to this problem, which was but the circumstances were a little different in that created by the regulated structure of the industry, and Vodafone did not hold a general carrier licence and every customer had to choose a preferred long- was unable to install its own transmission links except distance carrier or have one arbitrarily allocated by through the use of radio technology. the local telephone company. The situation was A telephony terminating service is an inter- different in other countries, such as Australia, New connection service as described above, in that it is Zealand and the United Kingdom where the market required to maintain the connectivity of networks.It was not subdivided into local and long-distance. All enabled Optus to terminate long-distance calls, and carriers, and the numerous service providers, were later local calls, into the Telstra network.It connects a free, although not necessarily able, to compete in all call from a point of interconnection between the two markets. Preselection in these countries was a networks to the called customer in the Telstra network mechanism to accelerate the introduction of and thereby enables the called customer to receive competition into the long-distance market.It did so calls from customers on the Optus network.It also by giving new carriers to the established base of local enabled all three carriers to terminate calls from their access customers, as it had in the USA. However, as mobile networks into the fixed network and the other the carriers providing local access services, also mobile networks. competed in the long-distance market there was In an environment where interconnection resistance to its is the only consideration, access would not be introduction. mandated. The only requirement would be for each Australia, under government direction, carrier to provide a terminating access service(9). introduced preselection for the second carrier fairly These are exactly the circumstances which exist in early(10). As in the USA, there was a preselection Australia for the interconnection of the various mobile ballot. However, unlike the USA which allocated the networks and the interconnection between the mobile non-respondents proportionately between the long- networks and the fixed networks. It is only between distance carriers, non-respondents continued to the fixed networks, where competing long-distance receive their long-distance service from their local services are available, that access, in the form of an carrier. In the UK and New Zealand, where originating service, is provided. preselection was not initially mandated by government, dial code access was the only 3. PRESELECTION, DIAL CODE ACCESS & mechanism available for several years and NUMBER PORTABILITY preselection ballots were not held. Australia did to introduce preselection for additional Preselection and dial code access were long-distance competitors until 1997. concepts originally developed in the US market. It can be argued that access, either in the During the 1980s the US telecommunications market form of preselection or dial code access, is necessary was partly deregulated with the introduction of new because single line customers are not prepared to carriers and the break up of the AT&T network. The change their telephone number, and are therefore RBOCs, or local telephone companies, were formed unable to use the services of a competitive service with a monopoly on the provision of local service, provider. However, cable TV operators are now presumably because it was considered to be a natural duplicating much of the customer access network, so monopoly, and a prohibition on the provision of it would appear that the customer access network long-distance services. The long-distance carriers may not be the monopoly that it was previously competed against each other but were prohibited, at believed to be. In an environment with competitive least in theory, from providing local service. Similarly, customer access networks, number portability may be the local telephone companies were prohibited from a more important issue than access in the providing cable television services and the cable development of competition in telecommunications. companies were prohibited from providing telephony The other factor that needs to be considered services. is how many genuine single line customers remain. 88 115 In other words, are we looking at the right market? appear to be mirror images of each other and the mis- In Australia the size of the mobile market is fast take is often made that this should lead to similar, if approaching half the size of the fixed line market and not identical, prices being mandated for these ser- the number of mobile services is almost equal to the vices. Given the different number of metropolitan households. In other words, economic functions that access and interconnection the mobile networks are fast becoming realistic serve, this is not necessarily appropriate. alternatives to the fixed networks for long-distance In the case of telephony services, the revenue calls. This further undermines the market power that the local access carrier receives will be the com- inherent in the (fixed) customer access network. bination of the access charges for outgoing calls and This means that at least three mechanisms the interconnection charges for incoming calls togeth- are working to reduce the market power inherent in er with the retail local access charges. This revenue the incumbent carrier's customer access network: its will provide the incentive (or lack of) for investment in duplication by cable network operators, the competi- the local access network. tion available from mobile networks, and preselection The long-distance carrier will see the access and/or dial code access. The continuing need for pre- charges and the interconnection charges together with selection to be a mandatory access requirement is its own costs as a disincentive to compete in the long- questionable in these circumstances. distance market. However, it is able, at least over A comparative table of access and intercon- time, to connect directly to the customer who origi- nection characteristics, including comparisons with nates the call and to substitute its own costs for the related retail services, is included below.It access charges of the other carrier. summarizes the sources of market power for each ser- For that reason, a better outcome may result from the vice and the extent to which a competitor may application of different charges for access and find or create substitute services. The particular interconnection services. This is not simply to significance of the terminating service in an open compensate for the generally slight differences in cost competitive market will be apparent from this table. between the two services, but also to allow for the greater capacity for access to be provided through 4. REGULATED PRICES substitute products. Whatever the objectives of a regulatory The major regulatory intervention in a regime, the regulator will never be absolutely certain telecommunications market is likely to be in the setting that the prices which it sets are absolutely optimal to of terms and conditions for access and interconnec- achieve the desired objective. There will always be a tion services. A regulator must achieve a delicate bal- degree of uncertainty.If the charges for access ser- ance by setting prices which are neither too low nor vices are set at the higher end of the range of uncer- too high. Low prices may discourage investment in tainty and interconnection charges at the lower end of telecommunications infrastructure which may lead to a the range, the incentive to invest in local access infra- gradual degradation of existing services and a lack of structure will be largely unchanged for the local new and innovative services. High prices however, access carrier and increased for the long-distance car- may have the effect of stifling competition rier. The lower interconnection charges will also and perhaps of encouraging uneconomic duplication increase the incentives for competitive networks to be of facilities. established, albeit with some reduction in the incen- The balance that needs to be struck between tives for simple long-distance bypass. these two alternatives will depend greatly on the From another perspective, this amounts to the underlying objectives, which are often not stated application of price setting arrangements which more explicitly, of the regulatory regime. These objectives closely reflect the underlying cost of the service on differ between countries not least because of differ- those services, such as interconnection, which are not ences in economic development and culture. The con- subject to simple market substitution. For example, it tinuing debate about the best method of determining might be these charges is, at least in part, a manifestation of desirable to use a cost based pricing technique, such these differing objectives. as Long Run Incremental Cost, to determine intercon- Notwithstanding the differences in objectives nect pricing, while applying a market based technique, which may exist in different jurisdictions, there are such as Efficient Component Pricing, to the determi- some basic insights that can be drawn from an under- nation of access pricing. standing of the distinctions between access and inter- The degree to which these price differentials connection.Access and interconnection services often should be applied depends on the degree to which 89 116 investment in local access infrastructure needs to be infrastructure in jeopardy and place an undue and encouraged. At one extreme, those countries that inappropriate responsibility for long-term industry onto have chosen not to mandate access services have the regulator. placed a very high value on the development of the local access network. They have effectively left the 5. CONCLUSION price of access to be determined by general competi- tion law(11) or by the market through the cost of dupli- Access and interconnection, while superficially cated facilities or substitute technology. similar, represent two very different concepts in Even where there is less concern about local telecommunications. They have quite distinct charac- access infrastructure investment and the major objec- teristics which must be understood before a satisfacto- tive is to encourage competition, the differential ry regulatory environment can be developed. A regu- between the charges for access and interconnection latory regime which does not recognize this distinction should at least represent the degree of uncertainty of is likely to be clumsy in operation and liable to pro- the regulator in determining the appropriate level of duce unsatisfactory results. charge. To do otherwise could put future local access
Characteristic Type of Service Source of Market Power Substitutable
Quantity of local access services moderated by the quantity of any competitive local Yes Access Originating Service access services
Unique telephone numbers moderated by the quantity of competitive No Interconnection Terminating Service local access services
Quality of local access service moderated the quality of any competitive local . Yes Consumer Local Access Serviceice access services
Quantity of local access services moderated Yes Consumer Local Call Service by the quantity of any competitive local access services
Table - A summary of the Characteristics of Access andInterconnection services and Comparable retail services.
1. A simple distributive cable television network is an exception which, in this 6. Switched ressellers obtained transmission links from carriers and used respect, has more similarity to a water or electricity distribution network than their own switches to create a switched network and provide call service to to a telephone network. customers. Simple resale was a commercial transaction which involved only the resale of switched calls without the provision of any network infrastruc- 2. Market distortions are not uncommon, with the international settlement ture. rates being one more major source of distortion. Differences in the retail prices in different countries result in an imbalence in the flow of traffic in 7. Dial code access only with no preselection. favour of the lower priced market. There price differentials also lead to arbi- trage operations such as call-back services which create further imbalence. 8. Telecommunications (Interconnection and Related Charging Principles) 3. This would not generally be a particularly efficient method of interconnec- Determination No. 1 of 1991, made pursuant to section 140 of the tion, but the threat of interconnecting through an intermediary carrier should Telecommunications Act be sufficient to encourage the incumbent carrier to provide direct interconnec- tion. 9. Leaving aside the logical reversal which occurs with calls that are charged to the called party. 4. The services provided by each network may be different and there may be different costs and risks associated with each network. The interconnections 10. The second carrier, Optus, commenced long-distance service in of rural and urban networks is a good example of such cost asymmetry. November 1992 and preselection was available from July 1993. The preselec- 5. There were actually three carriers in Australia at theat time. with varying tion ballots followed six months after the introduction of competitive long-dis- statutory monopolies: Telecom Australia had a monopoly on terrestrial ser- tance service in each. All ballots were completed by 1996. vices within Australia, OTC(A) had a monopoly on international services and AUSSAT hada monopoly on the use of satellite technology within Australia. All 11. New Zealand being the pre-eminant example. these monopolies were removed over the period 1991 to 1997. 90 117 The Local Dimension in Global Competition
John R. Norsworthy, Professor of Economics and Finance* Rensselaer Polytechnic Institute Troy, NY USA Diana H. Tsai, Associate Professor of Economics National Sun Yat-Sen University Kaohsiung, Taiwan
Abstract. The British Telecom-GTE-Worldcom profits and the customer base that local service competition for MCI implies a corporate strategy provides will be critical in the development of for building the global telecom giants of the fu- the global telecom industry, because many of the ture. The strategy consists of acquiring major lo- habits of mind of regulators will be carried over cal companies as anchors in each of three major into the near future. This, in turn, guarantees that regional markets: the European Union, North the monopoly profits and protection of local (or America, and Southeast Asia-Western Pacific. national) monopoly will decline slowly, rather The monopoly profits of these local companies than abruptly, in the US and other countries will decline as competition increases, but will be where deregulation is proceeding. An example of the primary sources of funds for technology- similar opinion concerning global competition in enhancing investments and penetration of new other industries appeared in "Analysis: Boeing, a markets. The local companies' customers will Giant in Jets and Foreign Policy" by David E. also serve as captive markets for innovation in Sanger in the New York Times, December 17, services. The Regional Bell Operating Compa- 1996, where the foreign policy dimensions of the nies (RBOCs) in the U.S., because they are large, Boeing/McDonnell-Douglas merger are recog- profitable and private, are likely to function as nized and discussed. If true, this fact will condi- nucleating factors as this strategy plays out glob- tion, and in important ways, determine the path ally. The rationale for this strategy is explained, of the international telecommunications market and the implications for the individual RBOCs in the next eight to ten years, and thus will are explored in light of their recent perform- strongly influence the form of the global telecom ances. companies that emerge. Much of the reasoning on which these opinions are based derive from empirical evidence in Norsworthy's written tes- Introduction timony filed with the CRTC, FCC and state regulatory agencies, and in other papers prepared The events surrounding the MCI acquisition have jointly with several colleagues, as cited in the resulted in varied reappraisals of the US and references.' However, the opinions expressed global telecommunications markets, the near here are ours, and are not endorsed by any spon- term prospects for their evolution, and strategies sors or collaborators in earlier work. Finally, it for global competitiveness.Itis notable that should be very clear that we do not advocate the Sprint seems to be quietly adopting a similar ap- politico-economic environment that is an impor- proach; Cable & Wireless's current interest in tant premise of this paper, nor its consequences. acquiring Sprint suggests the same orientation. But we do expect that the future will unfold to On the other hand, the discussions of strengths reveal a world very much like that outlined here, and strategies in the global telecommunications with producer-oriented politics-driven localism market appear to me to ignore the crucial role of only gradually giving way to consumer-oriented the local carrier the only reasonably secure technology-driven globalism. My optimistic view source of high profits in the near term. Recent is that the transition will largely be accomplished experience at state and national levels in the US in the next eight to ten years. and Canada in measuring the productivity and profitability performances of telephone compa- The paper is organized as follows. In the first nies persuade me that in the next decade, the section, the empirical evidenceispresented, based on cost, productivity and technology stud-
See references. 91 118 ies of US telecom companies. The cost evidence were to enforce competition in local markets. is used implicitly as the basis for expected costs The decline in the market value of the RBOCs' in the near future in developed countries in common stocks after the passage of the Tele- Europe and East Asia. In the second section, the communications Act of 1996 in February, and implications of technology and cost for politico- the sharp recovery after the FCC's announcement economic decisions in the Asia, the EU and the some details of its proposed implementation in US are explored, and the general regulatory pat- August suggest that the stock market shares this tern of the next coming decade is explained. In view to some degree.)2 the third section, I outline the optimal strategy that large international telecom companies are 2. Wireless telephony will grow rapidly. How- likely to adopt when they perceive their deci- ever, it will not be a competitive alternative for sionmaking environment to be roughlythat routine telephone services for residential and which I outline. In the fourth section, I discuss small business concerns for at least five years, the prospects of the Regional Bell Operating and thus will not seriously decrease the local car- Companies (RBOCs) and GTE in the market for riers' effective monopolies of local markets. As a global telecommunications ownership-based alli- consequence, competition in the local market will ances. be based on physical connection to the global network for the next eight to ten years.
I. Corporate Decisionmaking Environment in 3.National and international markets will be the Telecom Market in theNext.Decade wide open from the US, as at present.
These elements are listed to make clear the basis 4. Alliances in the international telecommunica- for the analysis and strategy formation that fol- tions industry will be meaningful only when there lows, not to hedge that position. Some of the is substantial stake in joint profits. This means elements that follow are little more than common that, in particular, the alliance between AT&T sense applied in the light of the technological and Kokusai Denshin Denwa (KDD, the long scenario developed in the preceding section. distance successor to the former monopoly car- While individual elements may be debatable, I rier in Japan) does not necessarily foretell "the believe that their concatenation represents the alliances of the intermediate future. most likely scenario for the near future, and that the strategic implications are not sensitive to mi- 5. European telecom policy will for the next few nor changes in the environment that I postulate years concern itself with protecting national mar- here. kets and the EU market for telecommunications. a. Major Elements 6.Japan will effectively open its national tele- com market only slowly. This manifestation of its 1. Local US telecom markets will be open in xenophobia, as well as the negative reaction to principle but only gradually competitive in prac- Japan from the EU and residual fear of Japanese tice, and will continue to provide substantial hegemony in southeast Asia, may well mean that though declining monopoly profits. In 1995, the Japan will not play a dominant role in the Pacific seven Baby Bells alonethe Regional Bell Op- Rim in the near future. erating Companies or RBOCsenjoyed a cash flow exceeding $20 billion from their sales in 7. China will continue to retard the effects of the regulated markets. The FCC seems to plan to telecom revolution in its economic and political leave the management of emergent competition society. While its domestic market will be a to the states, (which is almost to say, to the Local magnet, its companies will not provide the nu- Exchange Carriers, or LECs). The LECs have cleus of a global giant. If anything, announce- successfully lobbied their respective state regu- ments since the death of Deng tend to suggest latory authorities into decisions concerning price that this scenario is more likely than before. caps and special restructuring expenses that leave the companies generally in extremely favorable 2 The RBOC common stocks as a group fell positions. (I assert this descriptively, not pre- from February to August 1996 as the market scriptively. In my personal view, it would be (S&P 500) rose, and then outperformed the mar- better for users of telecom services, if the FCC ket from August through early February 1997.
92 119 b. Other Factors in the Telecom Market II. The Strategy
Cable services may be the long shot, if two-way This description of the national and international modems for the home soon become sufficiently telecom environment leads to a strategy for the inexpensive. Such a technological development global competitors that depends critically on a would not change the outline of global strategy, local presence in three major markets: the Euro- but it would expend the number of options for pean Union, North America, and the western Pa- globalization by making, e.g., Time Warner and cific Rim: thus a three region strategy is key for TCI major potential candidates for the local the next several years. The need for a local North American footprint for telecom giants. Ca- "footprint" in each area derives from the political ble companies are typically franchised on a local and economic realities that remain unchanged basis in the U.S., and so provide that vital down- (although they certainly adapt) by the telecom home link to the local polity. revolution. The economic reality is that the basic local telephone market provides good jobs and One might build a case for current electric power economic profits. The political reality is that distribution companies as telephone service pro- these jobs and profits invariably find their way viders, based largely on their ownership of right- into forms that benefit local (in the global per- of-way and poles which are the key elements of spective, national) politicians. The national gov- the distribution network. However, I think it is ernments, which will initially control the nego- probable that there is too great a cultural gap tiations, will seek to protect and advance the in- between electric power companies and the tele- terests of their "clients". To be successful in the com industry, particularly in marketing and in the world market, the global company must have a accustomed pace of technological change.It strong advocate in each major policymaking re- would be nice to see this happen; competition gion. Hence the necessity for a three footprint from this quarter would weaken the role of mo- strategy. Other regions, such as Eastern Europe, nopoly profits from local telephone service. Central Asia, Latin America, and Africa will ini- tially be dominated by the needs for expanded Is a manufacturing arm necessary to a global local service and connections to one or more of telecom strategy? In my view, probably not. the three major markets. Telecom hardware manufacturing has become more, not less, competitive in the last decade. In- By itself, this "localism" (by global standards novations may be expected to come from some nationalism,asitisconventionally viewed) small as well as large companies. The common- would lead to continuation of national monopo- ality between telecom equipment manufacture lies. But there are extreme "economies of den- and the R&D and manufacture of computer pe- sity" that prevail in telecommunications. These ripherals is enormous; indeed, the line dividing economies come about because there are very them either doesn't exist, or moves erratically. large fixed capital costs in the telecom network, Relying on internal innovation or adaptation of and very little additional cost associated with ad- new hardware would probably retard the global ditional traffic. These low costs set up a powerful telecom companies. counterforce to high international access charges, and to ultimately too high local telephone rates. The deregulation of telecom in Canada is not as Moreover, a medium-sized country cannot isolate advanced as in the US, but Canada will not be itself from the telecom revolution while embrac- saddled with simultaneous federal and local ing the manufacturing and financial revolutions it regulation, as is the U.S. After an initial period has spawned. So the monopoly profits in local that allows for privatization of the major compa- telecom service, while declining, will continue to niesnow partially or wholly owned by regional play a dominant role in the global industry for governments the independent local companies perhaps the next ten years. in Canada may be attractive for cross-border linkages with US RBOCs and, if it survives, The local footprint also provides a customer base GTE. And as noted above, advances in technol- for experimentation with and development of ogy or merging with a large telecom company new telecom services, a route into cable TV, high could vault Time-Warner or TCI into the role of bandwidth data services (Internet), funding for significant competitor in local markets. R&D and for "content" services (e.g. education,
93 1 9 0 entertainment). The learning effects, in both cost Italia), UK (British Telecom). They will proba- reduction and marketing savvy, make itless bly include a similar alliance with a local mo- costly to extend the new services to other mar- nopoly in one of the following major national kets. It is clear from the US experience that long markets in the western Pacific Rim: Austra- distance service is easier to enter for the local lia/New Zealand, Hong Kong, Korea, and Tai- company than local service is for the long dis- wan. (It is hard to imagine NTT in a consortium tance company. Long distance companies by that does not include KDD, so NTT is probably themselves will not be able to afford R&D on a not a potential partner for any other international sufficient scale. long distancecarrier. The PRC's impending takeover of Hong Kong makes Hong Kong Tele- The Bellcore case illustrates this point clearly. A com a problematical prospective partner.) major portion of Bell Labs, Bellcore was spun off during divestiture to become a jointly owned As an illustration of analysis based on the three- nonprofit research arm of the RBOCs. Bellcore's region strategy, consider the present status of budget was dominated by projects shared by all AT&T. The BT/MCI merger illuminates its in- the RBOCs, including software and hardware activity in establishing a local footprint in North applications associated with the new generation America. According to the strategy outlined here, of switches mandated by the equal access re- ideal partners in the US for AT&T include GTE, quirement for long distance. The RBOCs cut the BellSouth, and Ameritech (rumored to have been budget beginning in the late 1980's, while ex- left at the altar by MCI). Slightly less desirable panding their own separate spending on R&D. In because of its current fmancial structure is its recent divestiture, AT&T again spun off most Time Warner. These three companies are com- of the remainder of Bell Labs as part of Lucent. plementary with AT&T in that all need the strong Bellcore hasrecently been sold off by the national and international long distance linkage, RBOCs. This case history has lessons for alli- and AT&T sorely needs a local footprint in the ances in the global telecom industry: generic US. It is doubtful that the FCC would counte- projects will in general fall to more parochial, i.e. nance a merger between AT&T and either of the profitable, alternatives. Super-RBOCs, SBC/Pacific Telesis and Bell Atlantic/NYNEX. Either Taiwan, Korea or Aus- The MCl/British Telecom (BT) merger to form tralia/New Zealand' would provide the third re- Concert foreshadows the international telecom gional footprint. Taiwan is particularly desirable giants of the early 21st century. It combines BT's for AT&T and other global players as well, be- strong local monopoly base (which is open to cause it has a common language and informal competition) with MCI's marketing and interna- connections with China. tional experience. Now imagine this company merging with a major US RBOCor GTEand with a major local player in the western Pacific: III. The Cost and Technology Frontier for Australia/New Zealand, Taiwan, Hong Kong or Telecommunications in the Next Decade Korea.Such a configuration would provide a stable revenue basis for experimentation with I first analyze the telecommunications environ- services and new technology, with crucial politi- ment of the major US telecom firms, then state cal supportand hence market entry in each the elements of what I believe to be the strategy of the three major regions. that successful firms will adopt in that environ- ment, and fmally briefly survey their individual What is the mechanism for building a competi- prospects. tive global telecom company? The giants to emerge in the near future will be nucleated on The telecommunications revolution has been existing international long distance companies driven by technological changes that have dra- such as MCI (was), AT&T, Kokusai Denshin matically realigned the costs of conventional Denwa (KDD),andSprint/DeutscheTele- telephone services, and closely related services, kom/France Telecom. They will include some including data transmission, mobile phone serv- form of profit-sharing alliance with a local mo- nopoly in one of the following major national 3 With its recent reforms, New Zealand is proba- markets in the EU: France (France Telecom), bly too competitive as well as too small to pro- Germany (Deutsche Telekom), Italy (Telecom vide a viable local presence by itself.
94 121 ice and paging services. This industry is charac- the international network infrastructure and the terized by economies of size on both sides of the competitive marketing experience for rapid ex- market. Economies of scale in production, de- tension of their services abroad. However, like rived largely from the increasing density of traf- major local telephone companies throughout the fic on the local and international networks make economically developed world, they have a ma- the marginal cost very near to zero (until conges- jor requirement for success: reliably high profits tion sets in). The falling costs of national and in- in the near and intermediate terms. ternational long distance have encouraged expan- sion of the customers' demand for service. But While it may be argued that the RBOCs were also on the demand side of the market, the phe- created equal in 1984, the ensuing decade has re- nomenon of critical mass has been at work, most sulted in considerable dispersion of their individ- visibly in the expansion of Internet connections ual cost performances, as described below. by businesses and households. The critical mass concept comes from the fact that a communica- tion medium's value increases as the number of IV. Prospects for the Major US Telecom people and enterprises accessible by that medium Companies: GTE and the Regional Bell Oper- increases. This concept, referred to as "external- ating Companies as Partners in Global Net- ity in use" or in consumption in some of the eco- works nomics literature, is a feature common to most networks. The earlier diffusion of telephone If the three footprint view of global telecom service itself, of the automobile in association strategy is correct, the RBOCs are ideal partners with the highway network, and of the growth of for aspiring global telecom giants: they provide railroad traffic are all examples of the critical the required local connection in North America, mass phenomenon. on a scale that guarantees a temporary flow of monopoly profits, and a captive test-market for As a consequence of the effects of both supply new services and for new technologies. The in- and demand factors, the marginal cost of access creasingly deregulated markets for local services to the local loop is now acknowledged to be quite voice, data, cable TV, etc.is unmatched cur- small, although there is, not surprisingly, no con- rently and in near prospect in any other country sensus between the Local Exchange Carriers and on such a large scale. The single most important the long distance carriers about the level of the economic lesson for the previously monopolistic costs. FCC hearings currently in progress will major national telcos is likely to be marketing: determine a cost basis for access charges that will AT&T's learning-by-doing has been described as largely determine the rate at which competition "painful". The RBOCs are also accustomed to emerges in the markets for local telephone serv- the comfort of monopolized markets, but will ice. The introduction of new telephone services necessarily be learning new tricks in the coming now is largely a matter of software- rather than years. Their individual performances and relative hardware-based augmentation of the network. standing in 1995 are noted in the next section. This characteristic of current technology is ex- tremely important because it means that most of Performances of the RBOCs Since Divestiture the costs of new product introduction are fixed, which means that the marginal or incremental The period since the break-up of AT&T provides costs of new services are near zero. Rather, the an excellent laboratory experiment for studying realized costs, and the strategic elements lie in corporate performance. The seven RBOCs began theextension of serviceto new customers as approximately equivalent heirs to the local through marketing, where the long distance com- customers and physical facilitiesas well as the panies have more experience than the Local Ex- local monopoly franchises of the Bell System. change Carriers (LECs). Their respective evolutions since reflect their strategic visions and their individual successes The future prospects for the LECs in the inter- with state regulators, as well as their adaptations mediate and long terms depend upon how they to the rapidly evolving technological environ- position themselves in the global telecom market. ment of telecommunications. Their dynamic per- They must be allied with or part of the three or formances are summarized in Table 1. There is four global giants that will emerge in the next not a great deal of dispersion in the growth of ac- few years, because, for the most part, they lack cess lines of the RBOCs: Bell South leads the 95 122 pack with a growth rate of about 3.5% and nerable to take-over or (relative) secular decline Ameritech trails. The effects of growth in access of those remaining. Uniquely, it is land-locked lines is largely based on factors external to the geographically. Canada would be a natural place fi rm; the other factors describe the firms' per- for Ameritech to extend its domain but the pace formances. Annual cost per access line has of deregulation in Canada, which is accompanied grown rather slowly, compared to other indus- by privatization of several of the major compa- tries' operating costs, but this is hardly remark- nies,islikely to continue to lag. Economic able in light of two other factors: annual growth growth prospects inits region lag both Bell in total factor productivity averaging 4.3% and South and US West, the other orphans. A white about 2.3-2.5% lower inflation in input prices, knight in the form of BT/MCI or AT&T or compared to the national economy. By contrast, GlobalOne(Sprint/DeutscheTelekom/France total factor productivity (or TFP)an important Telecom) should be welcomed by shareholders measure by which the FCC gauges the perform- and management alike. ance of the RBOCs and other local exchange car- riersin manufacturing is 1-1.5% per year. Sig- Bell Atlantic/NYNEX nificantly, Pacific Telesis does extremely well by both measures. Its cost per access fell by about This merger is likely to face more rigorous ob- 0.2% per year, and its TFP increased about 5.4% jections from the FCC than the SBC/Pacific per year. Further, Pacific Telesis had the lowest Telesis combination. Bell Atlantic has probably cost per access line in 1995, perhaps an indirect been the star of the post-divestiture decade and partial measure of overall benefit to custom- among the RBOCs. It has innovated in services ers. The gross profit margin is reported because to business and residential customers, and in depreciation is part of cash flow, and is affected deal-making. Indeed, if NYNEX were nearly as by regulatory allowances more than by economic efficient as Bell Atlantic, this combination could considerations. Thus gross profit is one reason- conceivably form the basis of a global telecom able measure of corporate performance, and giant itself, as noted below, because a very large probably better than the rate of return on assets, proportion of the US's international telecom traf- which was regulated until the introduction of fic originates or terminates in the combined ter- price cap regulation in 1991. Southwestern Bell ritories of these two RBOCs. However, NYNEX Corporation (SBC), a mediocre performer by is the least efficient of the RBOCs in terms of other measures, has by far the largest gross profit operating cost per access line, and in conse- margin, and SBC is buying Pacific Telesis. This quence, it probably faces the most severe com- fact alone should serve to reject the notion that petition in its local telephone market of any of the telecommunications story is completely tech- the RBOCs. More than theother RBOCs, nology-driven. NYNEX has enjoyed the fruits of monopoly power since divestiture, at least partly in conse- When we examine the stock market perform- quence of its successful special pleading for ex- ances of the RBOCs, the story is also a rosy one. traordinary cost allowances before state and fed- Based on the conventional dividend discount eral regulators. If the merger is approved, and model, the average annual rates of return for the Bell Atlantic's is the surviving management, the RBOCs ranged from 18.7% to 21.5%, a rela- combined company's efforts to retain business in tively narrow range, but high compared to the the NYNEX territory may depend on massive market's performance for that same period write-offs of NYNEX' assetsnot because they 13.4% measured by the S&P 500. The per- are obsolete, but because, in a competitive mar- formance of the RBOCs includes both regulated ket, they are probably vastly over-valued. If the and unregulated services provided by the telcos, merger is approved, Bell Atlantic/NYNEX may and removes effects some of the necessarily fic- not be permitted by the FCC for a few years to tional accounting conventions incorporated in combine with a global international company. their reports to the FCC. However, NYNEX's efforts to enter the Asian market may establish a basis for the merged Ameritech company to become an international competitor on its own. If that is the aim, it is critical for the If the proposed combinations of other RBOCs company to establish an early foothold in either are approved, Ameritech, which was rumored to the Pacific Rim or the EU market, with the other have been jilted by MCI, may be the most vul- to follow within, say, a year.
96 1 3 a large thinly populated territory.Its growth prospects are good in many parts of its territory, Bell South fair in others. The company does have a crucial window on the Pacific and physical adjacency to Bell South may be the debutante of the year British Columbia, the most rapidly growing among the RBOCs. While has been rather con- province in Canada. Its high cost per access line servative in innovations, and has revealed little make US West a candidate for experimentation international ambition beyond itsforays into with wireless technology for telephone service, Latin America, Bell South is much beloved by perhaps jointly with wireless TV. The company stateregulatoryauthorities,becauseithas has an alliance with Time-Warner, which shows charged very low rates for basic local service, good strategic vision, but to date the alliance has drawing most of its profits from access charges. borne little fruit. If Bell South is the first round Economic growth prospects inits region are draft pick for combination with a global carrier, high, and state regulation has been typically quite US West is probably second. Its prospects seem conservative, i.e. rate of return-oriented. Combi- more promising, if more risky, than Ameritech's. nation with Ameritech or US West offers no spe- cial advantage beyond the basics of long distance service. Bell South's efficiency is about average. GTE Bell South is financially sound, but notat least not obviouslycash rich, as would be required GTE may emerge as a desirable merger or acqui- to overcome US West's financial problems, or sition partner for a Europe- or Pacific-based Ameritech's isolation. As a footprint in North company if it can bring down its costs of service. America, with strong established business con- The company has many desirable characteristics: nections to Latin America through Florida, where it is about as large as the RBOCs, it "owns" Ha- a secondary battle for territory will take place in waii in the mid-Pacific, it has a major presence in the next decade, Bell South is a prime candidate California, and its scattered local service entities for combination with a global giant, such as provide local platforms from which to launch lo- AT&T, BT/MCI, or Global One. cal telephone services competitive with the RBOCs themselves. However, according to con- SBC/Pacific Telesis ventional measures, GTE is a very high cost pro- ducer. Along with the "mom and pop" telcos, Pacific Telesis arguably has been the Boy Scout GTE, although in aggregate a large national of the RBOCs: the company invested most heav- company, has been allowed to charge a premium ily in new technology and pioneered in bringing for its services, which are rendered mainly in advanced services to its customersand, in con- disparate,thinly populated areas. (Hawaiiis sequence, will likely be absorbed into SBC Cor- clearly an exception). The relatively permissive poration, whose chief virtue has been to amass regulatory attitude may derive in part from the financial wealth. Pacific Telesis is the most in- difficulty of determining the costs properly at- debted of the RBOCs, with middling efficiency. tributable to any particular GTE location. The SBC stands with Bell Atlantic as a most success- company has been described as "harder to audit ful RBOC, despite its relatively low comparative than the Mafia." efficiency. SBC/PacTel's critical window on the Pacific,high economic growth prospectsin Sprint Texas, and advanced technological experience in Pacific Telesis make the company a prime candi- Sprint is included in the analysis of local tele- date for combination with a global carrier. How- phone companies becauseitsacquisition of ever, the FCC may mandate some period before United Telephone puts it in a position similar to another major combination involving the com- that of GTE: a strong if scattered local presence, pany is permitted. and a well established long distance position. If its alliance with Deutsche Telekom (DT) and France Telecom (FT) matures into more signifi- US West cant ownership and strategic coordination, the Global One alliance could rapidly become a US West is a high cost producer of telephone major international competitor. Perhaps this per- services because its customers are dispersed over ception, as well as the direct potential benefits to 97 124 itself, underlies Cable & Wireless's current effort which has lit a firecracker under national telecom to buy Sprint. In terms of the strategy outlined monopolies in Asia and Europe, and generally here, C&W, which already has scattered local worldwide consists innot interveningto con- presence in a large number of former British trolcall-backservices, whose providersare colonies, is a nearly ideal partner. Sprint's alli- largely outside the US. (AT&T has recently un- ance with the EU companies may complicate the veiled its own callback service in Japan. See picture. It is difficult to imagine that DT and FT WSJ, Nov. 29, 1996, p. A4). Consequently, the will move effectively and quickly to counter FCC's policy can be defended on the principle of C&W's offer, principally because so much is at "letting the market work", which is harder to op- issue politically between their respective coun- pose in international policy forums than a spe- tries concerning the near future of the EU. But cific intervention. If it continues to prevail, this the lure of major global presence in telecommu- policy of benign neglect may in the long run nications may overcome France's linguistic na- prove to be the most significant foreign policy tionalism and Germany's conservatism. initiative of the two-term Clinton administration.
In this view of the international telecom industry, As these brief summaries have shown, the itis hard to envision more than three or four RBOCs, GTE and Sprint are quite different from major international players in global telecommu- each other. The various potential international nications in the middle years of the next decade. long distance companies are even more so, in It is quite possible that some of the current na- their current capabilities, their national and re- tional giants may not make the cut if they ignore gional regulatory environments, and their pat- the critical local dimension to global strategy. terns of ownership and capital structures, espe- cially because most have not revealed their ca- pacities to compete or to move strategically. All of these factors will influence their initiatives and REFERENCES decisions, as well as their responses to the changing regulatory environments in the EU, the Norsworthy, John R., Show-Ling Jang, James C. US and Asia. In my view, the decisions of the MacDonald, Diana H. Tsai, Cecile W. Fu and Yi emerging global telecom giants will underscore Jing. Measurement of Productivity and Mar- the central role of local telephone service and the ginal Costs for Incentive Regulation of Tele- associated profits in globalization. communication Services, Report to the New York State Public Service Commission, Center for Science and Technology Policy, School of V. Prospects for the Near Future Management, Rensselaer Polytech- nic Institute, January, 1993. How long will it take for the global telecom companies to emerge? Allowing for some rever- Norsworthy, John R. Chapters 2 (Overview and sals thereafter, the outlines will begin to emerge Framework for Analysis) and Chapter 5 (Audit of in the next one to two years. I think that some Affiliated Relations with Bellcore and Cost- creative negotiations will soon take place if Benefit Methodology) in Focused Management they are not already in progressbetween na- Audit of Illinois Bell Telephone Company's tionally owned companies (and their govern- Affiliated Transactions, Frederick and War- ments) and the existing long distance giants: riner. Report to the Illinois Commerce Commis- Concert, AT&T, Sprint/DT/FT, KDD of Japan. sion, April 1993. These negotiations will be sticky. But a major stimulantand irritantto globalization of tele- ,"Analysis of Total Factor Produc- com services is the widespread and growing use tivity Methods for Measuring the X-Factor of the of international call-back services based pre- LocalExchangeCarriers'InterstateAccess dominantly in the US. While FCC Chairman Services," Appendix A in Comments of AT&T, Reed Hunt is roundly cursed by the national tele- Docket CC 94-1, Price Cap Performance Re- com companies in Asia and Europe, his policy of view of Local Exchange Carriers, January 11, pressing for reform of international interconnect 1996. charges has surely not caused crowds of foreign citizens to burn him in effigy.That policy
98 125 , "Responses to Issues for Com- , Reply to Declaration of Melvyn ment," Appendix B in Comments of AT&T, R. Fuss: in behalf of AT&T, Docket CC 94-1, Docket CC 94-1, Price Cap Performance Re- Price Cap Performance Review of Local Ex- view of Local Exchange Carriers, January 11, change Carriers, October 3, 1996. 1996. , Evidence of Dr. John R. Nor- and Ernst R. Berndt Reply State- sworthy, Prepared on behalf of the Public Inter- ment of Dr. John R. Norsworthy and Dr. Ernst R. est Advocacy Centre for La Federation Nationale Berndt, "Response to Comments of Local Ex- de Consommateurs du Quebec, National Anti -. change Carriers on Methods for Measuring the Poverty Organization, Consumers Association of X-Factor for their Interstate Access Services," Canada, Pursuant to Telecom Public Notice Appendix B in Reply Comments of AT&T, CRTC 96-8, Price. Cap Regulation and Related Docket CC 94-1, Price Cap Performance Re- Issues, Canadian Radio-Television Telecommu- view of Local Exchange Carriers, March 1, nications Commission, August 30, 1996. 116 pp. 1996.
99 126 Table 1: Dynamic Performance of RBOCs, 1985-1995 Growth of Annual Change in Total Factor Relative Cost perAnnual Market RoR Access LinesTC per Access Line Productivity Access Line: 1995 1984-1995 Ameritech 2.21% 1.08% 3.33% 92.7% 21.3% Bell Atlantic 2.30% 1.61% 4.77% 92.2% 18.8% Bell South 3.48% 0.43% 3.91% 107.0% 19.2% NYNEX 2.23% 1.15% 3.80% 117.9% 18.7% Pacific Telesis 3.09% -0.18% 5.37% 82.9% 21.4% SBC 2.42% 1.31% 4.89% 103.1% 21.5% US West 2.51% 1.35% 4.26% 104.2% 19.5% Average: All RBOCs 2.61% 0.96% 4.33% 100.00% 20.05%
Chart 1: Access Uses (000,000) Chart 2: Operating Cost per Access Use
AmeritechIII Il'"*.t. Ameritech
Bell Atlantic Bell Atlantic
Bell South Bell Southel.'
NYNEX NYNEX
Pacific Pacitc Telesis Telesis
Southwestern Southwestern Bet Corp. Bell Corp.
US West US West
0.0 5.0 10.0 15.0 20.0 25.0 0.0100.0 200.0 300.0 400.0 500.0 600.0
Chart 4: Total Cost per Access Line
Ameritech
Bell Atlantic
Bell South
NYNEX 8-"e,:.
Pacific Telesis
Southwestern - Bell Corp.
US West
0.0 200.0 400.0 600.0 800.0
© John R. Norsworthy March 21, 1997 100 127 Cross-Border Telecommunications Investments: The Building Blocks
Glenn S. Gerstell Milbank, Tweed, Hadley & Mc Cloy Washington, D.C.
1. ABSTRACT
The wave of privatizations that has swept the telecom industry in the Asia-Pacific region has resulted in unprecedented opportunities for investments in newly-established companies seeking to obtain and exploit licenses for telecoms installations. Market forces compelling consolidation have also generated opportunities for investment in private sector fixed-line and wireless operators established over the past few years. A cross- border acquisition or alliance in any industry creates legal challenges, but the telecom industry presents some unique risks and difficulties. This paper examines, from a legal and business point-of-view, the key "building blocks" for successful cross-border investments in the telecom industry.
2. INTRODUCTION reassess their international strategies, some have determined to withdraw from some Asian telecom The early 1990's gave rise to an explosion of investments in favor of other regions or to seek investment opportunities in the international synergies through other forms of investment or telecommunications market, especially in the Asia- alliance.All of these factors yield in turn further Pacific region. While privatizations effected through opportunities for investment. the capital markets may have generpted the most attention, extensive opportunities for private International investors can capitalize upon the initial investment were produced in the form of strategic experiences to enhance the overall quality of new sales of equity in previously state-owned telecom transactions. A review of the early successes and operators, and in the form of joint ventures with local failures of the first wave of cross-border telecoms companies to bid for and exploit new licenses. Even investments highlights the importance of certain before they had developed global penetration building blocks: first, there is no substitute for proper strategies, many major telecom operators were quick due diligence, including detailed analysis of the to seize early opportunities thought to be unique or country in which investment is to take place and the economically attractive, perhaps out of fear that proposed partners in the venture; and second, market entrance barriers would be raised. Although investors should understand the interdependence of the pace has abated somewhat, opportunities for the structural elements of an investment in a cross- telecom investment in the region are continuing to be border telecommunications venture, and the parties generated, both from countries that were not at the should clearly define those elements at the outset. forefront of Asian privatizations and from countries exploiting new technologies. 3. DUE DILIGENCE
Now that some of those early investments have An investment decision, of course, is only as good as matured to the operational stage, a second wave of the information on which it is based. A complete opportunities is emerging. Many observers believe "due diligence" review for cross-border that there are currently too many industry participants telecommunications transactions includes an in some countries and economic efficiency will investigation of the risks associated with investments compel a series of mergers. For example, in the in the target country. Typically, such a review is Philippines, there are now several private franchisees conducted by not only the investor's own personnel, that are installing and operating fixed lines in various but also by its accounting firm and international and regions of the country, in competition with Philippine local law firms, and sometimes by investment banks Long Distance Telephone, the former monopoly and special technical consultants.It is critical that all operator. Moreover, as global carriers refine and members of the due diligence team establish effective
101 123 communications, so that facts uncovered by, for are intended to survive changes in laws and example, a technical consultant, are disclosed to government, the telecoms industry for various other team members who are in a position to reasons has generally not witnessed such agreements apprehend the significance of such facts to their between governments and project sponsors. specific areas of responsibility. Investors' concerns might be partially addressed by 3.1 COUNTRY RISK procurement of political risk insurance from sources such as OPIC for U.S. developers or MITI for Broadly speaking, investors can view country risk Japanese ones. Private political risk insurance is an associated with cross-border telecommunications alternative or supplement to host country transactions as arising in two categories: economic undertakings. However, its availability may be and political. Economic risk assessments in the limited. Some investors derive comfort from the telecoms context are no different than those in other "umbrella" of protection to be afforded by cross-border transactions. General macroeconomic participation in the project of multilateral entities such stability, the parameters of the target market, labor as the IFC, the World Bank, US Eximbank or JEXIM. and supply issues, and currency risk and hedging Such participation should offer a hedge, it is thought, strategies are among the most important elements to against arbitrary action by a host country government consider. that presumably would not want to offend these important institutions. Political risk assessments are typically limited to analysis of the risks of violent coups-de-etat or civil 3.2 REGULATORY/ENVIRONMENTAL FRAMEWORK wars. A more complete analysis, however, includes an assessment of the general stability and One fundamental difference between project transparency of the governing regime, because major financings in emerging markets and those in the political shifts, substantial changes in government industrialized countries is the importance of policy, or shifts in the tenor or substance of the identifying and dealing with the local law aspects of telecommunications regulatory regime can also have the transaction. The challenges here generally stem significant impact on the value of any cross-border not so much from complexity of the local law, as telecommunications investment. A related political simply from its absence. Many of the recent telecom risk, expropriation risk, is often minimized by analysts investment opportunities have been in countries in the current "globalization" environment, but if one where the commercial and regulatory legal system is includes the risk of the revocation of a concession in not fully developed. The consequence of this is that a project finance transaction, or the dilution of foreign investors must place reliance on other mechanisms to shareholdings in a telecommunications operator by reduce legal risk. An obvious element that foreign governmental action, one can quickly see that the investors utilize for this purpose (if not otherwise risk, although different from that of wholesale required by local rules) is to seek a local partner, to nationalization of assets, still warrants attention. serve as a guide to, and buffer against, legal uncertainties in the host country. In many of the developing countries in which telecommunications projects are being undertaken, It is equally important, however, for investors to bear there are perceived to be greater political risks than in mind local legal deficiencies when structuring and are found in the industrialized West. The stability of negotiating the arrangements with other shareholders the national government itself may be an issue of and the target company. For example, in a country concern to equity participants.If a government is that affords limited or no realistic ability for judicial swept aside suddenly or undergoes a major political enforcement of contracts, the investor must place shift, foreign project participants will be concerned greater reliance on creating leverage in the inherent that the successor government may not share its structure of the transaction itself. Thus, predecessor's commitment to private counterparties will be obliged to honor their telecommunications development.While in certain contractual commitments because of economic areas of private infrastructure development, some compulsion rather than the threat of judicial sponsors have been able to minimize political risks enforcement. Perhaps establishing enforceable "put" through direct agreements with the host country that or "call" rights with respect to equity shares upon
129 102 another party's default might serve to deter the significant equipment and technology supply party's breaches more effectively than simple threat capabilities); perhaps one or more financial investors of suit for damages for the default. Or perhaps more who view the venture as a promising passive elaborate "conditions precedent" to the making of a investment; and a local partner with knowledge and participant's equity contributions are called for than in experience of the domestic legal and regulatory. other situations; or critical payments are to be held in environment (and possibly some telecommunications escrow pending satisfactory performance of a experience as well). counterparty's obligations. It is common for the local partner to have far less In any event, the laws of the host nation will need to financial capability than the international partners; and be analyzed carefully to determine the issues and that is true too for its level of sophistication about risks to be addressed. Careful consideration must be and familiarity with the expectations of international given to a myriad of matters, among the more investors. Needless to say, these disparities generate important of which are: (1) the convention, franchise friction at best, and at worst antagonisms fatal to the or concession governing the telecom project and any transaction. Consequently, one of the most related legislation, undertakings or guarantees of the important hurdles to overcome is creating a common host government given in respect of the project; (ii) vision among the participants, which reflects among the host country's regulatory structure that may other things the level of resources each participant is govern the project especially requirements and willing to commit. tariffs relating to interconnection to the PSTN and other private fixed-line and wireless carriers; and (iii) Any co-investor should, of course, have the any applicable host country import restrictions, resources necessary to fulfill its financial obligations exchange controls (including rights to repatriate under the proposed venture. Investors should also dividends), limits on off-shore borrowing, restrictions investigate the potential of a prospective partner to on transfers in respect of interest, principal and fulfill future equity contribution obligations. dividends, taxes (especially withholding taxes on Otherwise, future expansion may be constrained by a interest), labor laws (including rights to obtain visas local partner's inability to fund future capital calls and for the investor's personnel), export controls, maintain any legally mandated minimum ownership limitations on the creation and enforcement of level.Initial contributions by local partners are often security interests, local bankruptcy laws and non-cash in nature, creating difficulties in allocating insurance restrictions. equity shares, as further noted below.
3.3 PARTNER RISK 3.4 CURRENCY RISK
Many developing nations require majority ownership Currency risks are also an important issue in cross- of telecommunications ventures by a domestic entity, border project financings.In many countries there highlighting the importance of choosing wisely one's may be limitations on the exchange of local currency co-investors. Moreover, even where no such into hard currency. Telecommunications projects in requirement exists, one obvious way of the Asian-Pacific region have generally been understanding and dealing with the domestic political structured so as to produce local currency revenues process is to seek local participation in the project for the private sector operator (whether from a through domestic equity ownership. There are revenue sharing arrangement with the national several layers of investigation to be undertaken, but telecom authority, as in Indonesia or Thailand, or the focus of the investigation should center on the from direct customer billings, as in India and the capabilities, integrity and compatibility of the Philippines).In some cases, operators with prospective partner. international long distance rights are able to derive U.S. dollar revenues from net settlement payments Investment consortia are often formed among parties from international carriers. Obviously the latter with complementary capabilities. Telecommunications situations are more attractive for investors both consortia often consist of an "operator", an because they afford a greater probability of dividend international telecommunications company with repatriation in U.S. dollars, and also because they significant operational experience (and possibly with
103 130 successful financing as operational ortechnical assistance agreements have an enhanced probability of one party's control over from the commercial bank or capitalmarkets. may be used to supplement the activities of the venture.Irreconcilable disagreements in governance may beresolved using Developers and lenders will want toscrupulously previously agreed exit strategies.Taxation rules can comply with any foreign exchangeregulations and affect the economics of any dividenddistribution register their loans and equityinvestments for policy, and may impact the terms oftransfer as well. currency conversionrights when possible.In addition, project participants maywish to pursue direct exchange contracts orundertakings with the 4.1 CAPITAL CONTRIBUTIONS central banks of the host countries. Parties can often encounter significantdisagreement (especially when the local partner lackscapital and Of course, the basic risk of local currency provides pre-incorporation services inlieu of cash) devaluation cannot be ignored, andinvestors often regarding the valuation of equity contributions(and seek "natural hedges" for thisthrough the presence (e.g., the purchase this is aside from exchange ratefluctuations, which of other local currency obligations these non-cash produced must be considered). Generally, in local currency of domestically contributions are not of the type where anorganized equipment). market exists to provide a valuation,and thus the determination of the value of the contributionsis 3.5 LEGAL OPINIONS subject to the negotiation of the parties. of legal Investors will want to obtain opinions mechanism legality, validity and Any capital call structure should include a advisors as to the authorization, who default on enforceability of the legal documentation,perfection for disciplining venture participants basic legal matters. In their contribution obligations. Thestraightforward of collateral security and other by a will retain experienced approach, the dilution of equity shareholdings some cases, foreign investors the others international counsel to assist local counselin defining participant who fails to contribute while purchase new shares, may not besatisfactory for the relevant issues and shapingthe deal to conform several reasons. First, many telecomregulatory to international market expectations.Opinions of regimes require domestic minimumownership local counsel are particularly importantbecause they requirements that would be "tripped" byexcessive will highlight the particular risksarising out of the counsel should be dilution of the local partner. Moreover,and probably host country's legal system. Such dilution remedy does not assure brought into the due diligence process at anearly more importantly, the the venture that it will in fact be able toobtain the stage so that potential legalproblems and risks can necessary amount of capital, asthe non-defaulting be dealt with at thestructuring/negotiating stage -- shareholders may not or cannot assumethe rather than arising at the time theopinion is delivered defaulting party;'s contribution. Finally,transfer at the closing of the transaction. restrictions may limit the ability of the other participants to dispose of their surplus sharesarising 4. STRUCTURING THE INVESTMENT from any assumption of the defaultingparty's In such cases, a restructuring of the Investors tend to analyze separatelythe various contribution. profit distribution or governance structure maybe the structural elements of cross-bordertelecoms only viable option; negotiation of thoseprovisions is transactions. The issues of capitalcontributions, thus dependent upon the outcome ofthe capital call distribution of profits, taxation, governance,ancillary contractual relationships, transferrestrictions and exit structure. Structuring issues strategies are in fact interrelated. bear in mind should be considered as a whole andnegotiated A related point is that investors must of lenders to the venture together to optimize the allocation ofrisk over all any potential requirements example, the terms of if a project financing is contemplatedfor "sponsor aspects of the transaction. For equity control and the pattern of profit distribution maybe support" in the form of additional contingent commercial used to discipline parties to fulfill theirrespective commitments or debt guarantees. Many under bank lenders are not satisfied with thedebt-to-equity contribution obligations (and obligations looking ancillary agreements). Ancillary agreementssuch ratios that are acceptable to project sponsors
104 131 minimize or avoid any required "gross-up"payments to maximize their ratesof return, and such lenders to compensate lendersfor withholding on debt insist on additional equitycontributions. Again, it is service payments. preferable if the investors anticipatedsuch requirements at the initial structuringstage rather 4.4 GOVERNANCE than being forced toreconsider the equity arrangements in the midst of aproject financing. The governance structure of the ventureis often the most heavily negotiated aspectof any cross-border 4.2 DISTRIBUTIONS telecommunications transaction. For purposesof this discussion, there are three major aspects to In addition to the standardprofit-allocation structure governance issues: allocationof control, minority based on equity participation,distributions can be protection and dispute resolution. structured to provide additionalincentives to the efforts to enhance the parties to undertake extra ownership by perform their Since local law often requires majority value of the venture, or simply to be given (described domestic entities, significant thought must obligations. Ancillary service agreements participants are given control supplement the earnings to the means by which below) can also be used to and If debt financing of the relative to their contributions to the venture potential of the venture. the venture. investors should note that relative to the value they can add to venture is contemplated, supermajority distributions, Internal governance methods, such as lenders place significant restrictions on for important to prevent the voting requirements or veto powers and often control revenue accounts undertakings and changes in structure, orthe right of effective subordination of thedebt to the venture's the foreign investor to approve one or moreof the contractual commitments withits shareholders.If nominees of the local partner to the managementof the equity sponsors desire tospecify the distribution the outset, they the venture, are often used.Almost universally, policy and business plan in detail at the additional restrictions strategic investors insist on a veto power over should account for anticipated budgets and prospective lenders. All too often determination of capital expenditure to be imposed by with protracted negotiations business plans. When the participant equity participants engage in is a foreign and then find months later in telecommunications operations experience over dividend policy, of directors (in the that their carefully- investor, the structure of the board negotiations with project lenders skewed to give that wrought compromises must be undoneto corporate context) is often operator/participant effective day-to-daycontrol over accommodate lenders' concerns. the venture for a certain period,while the local partner retains certain veto powers overfundamental 4.3 TAXATION changes. In addition, the existenceof ancillary mentioned below elements of the service agreements such as those The structure of all economic of the control aspects transaction should be considered inconjunction with can in practice devolve some of the venture to the foreigninvestor while the both the applicable tax regime inthe host country of internal governance structure nominallyfavors the the venture and the tax rules ofthe home country of each of the sponsors. The primaryeconomic local partner. considerations affected by tax policy are:how tax issues must include regulations affect the taxation of theventure's Any discussion of governance dispute resolution. Rarely will allparties in a venture income; whether a more tax efficientstructure can be agree on all decisions, andoften the disagreement achieved by routing the equityinvestment of the can be such as toundermine the viability of the sponsors through a thirdcountry with favorable tax venture. Given that litigationin many developing treaty exemptions; howdividends are taxed; how countries is not necessarily an attractiveoption, shareholder loans may be taxed;and to what extent alternate methods of resolving disputes maybe dispositions of interests in the venture aresubject to best mechanism venture's or sponsors' required. As previously noted, the capital gains taxation in the in the first place is In addition, if the venture is tobe for resolving or obviating disputes jurisdictions. for the structure of the transaction tocompel financed with offshore indebtedness,the sponsors' performance by the parties of theircontractual should consider accessing the debtmarkets of third commitments. But sometimes this is notpossible, or countries with favorable tax treatyexemptions to
105 132 sometimes good faith disputes arise that are not partner. One should note, however, that there may susceptible to structural resolution beforehand. In be legal and financial limitations on deviations from such cases, arbitration can be an attractive option for arms-length pricing. foreign investors, because many nations are signatory to international treaties on the recognition and When partners play multiple roles (such as equity enforcement of foreign arbitral awards. participant and equipment supplier), competing interests among the venture partners, and even Arbitration may permit the foreign investor to within the different departments of the sponsor itself, circumvent the potential risks of the local judicial can ensue. For example, the financial department of system, including lack of sophistication, arcane and an equity sponsor who is providing technical burdensome procedure, and possible hostility to assistance to the venture may desire the technical foreign interests. One must be cautious to ensure assistance agreement to extend for the life of the that all steps have been taken to minimize the risk of venture, regardless of the economics of the an arbitral award being reviewed by local courts, such agreement itself, simply to ensure the venture as the waiver by the participants of any judicial maximizes the value of the technology transferred. A review or the contractual submission to jurisdiction of foreign investor should consider beforehand the courts other than those of the local country. In some extent to which its various contractual arrangements situations this is not possible, so enforcement of a are linked to prevent, for example, unintended foreign arbitral award may be subject to a limited or obligations under an ancillary agreement following the even full review of the matter on the merits by local termination of the primary relationship.In the courts.Finally, it is usually the case that purely absence of approval of ancillary contractual financial obligations (e.g., a financial guaranty) ought arrangements prior to investment by the foreign not be the subject of arbitration, as it is thought that participant, foreign investors should pay close financial obligations are either due or not, and are not attention to the venture's contract approval appropriately susceptible to the type of compromise mechanism and any legal constraints on the activity that often is the product of an arbitration. of "interested" management personnel.
4.5 ANCILLARY AGREEMENTS 4.6 TRANSFER RESTRICTIONS
Telecommunications investment opportunities One of the primary concerns of a foreign investor in generally take the form of a joint venture to bid for telecommunications transactions is the identity of its and operate a government concession or an partners.First, one wants to ensure that all acquisition, either in the context of the privatization counterparties are creditworthy entities, both to of a public entity or in the context of an investment ensure proper performance and to provide appropriate in a private telecommunications operator. The enforcement leverage in the absence of proper traditional investigation of the terms of the performance. Second, a party does not wish to concession (in the joint venture context) or the pursue a major investment, and possibly share critical background of the target (in an acquisition context) financing and technology, with (at best) strangers or should be supplemented by an analysis of the (at worst) enemies, nor surrender negotiating interdependence of the terms of the primary leverage to a counterparty under threats of undesired investment mechanism and any ancillary transfers. Often legally imposed restrictions are relationships, such as goods and services supply sufficient to accomplish this goal, or in the alternate, agreements, technical assistance agreements (the current or prospective lenders will insist the foreign partner promises technology and/or personnel shareholders be obliged to maintain their ownership. for a specified period), interconnection or traffic If this is not the case, the balance to be struck in agreements (the foreign partner promises to carry designing appropriate contractual transfer restrictions voice or data traffic for customers of the venture) is between the desire on one hand to bind the other and licensing agreements (for technology and/or participants to remain involved and the desire on the trademarks). These ancillary agreements can be used other hand to be free to exit the venture whenever it to enhance the profitability of an investment through is.no longer desirable to continue. preferential pricing, or give a foreign investor additional control over the actions of the local
133 106 Investors should keep in mind that lenders tend to the control structure of the venture must be restrict the withdrawal rights of the shareholders of considered. Parties should specify whether entrants any venture, to preserve the technical and financial will be issued new shares, diluting the control of viability (and thus the debt repayment ability) of the current shareholders, or whether current shareholders venture. While drafting these provisions, an investor will divest their holdings (and, if so, how). Finally, should contemplate the possibility of transfers of the parties should agree beforehand on a valuation control of a shareholding subsidiary by its corporate method: examples range from the book value of the parent, and incorporate into the terms of the joint shares to a predetermined price that compensates an venture agreement parallel restrictions on the ability investor for its initial investment plus an agreed upon of the parents of the shareholders to transfer their return. The sponsors should keep any legally interests in the shareholding subsidiaries. imposed transfer restrictions in mind while negotiating the terms of each party's exit from the venture. 4.7 EXIT STRATEGIES 5.0 SUMMARY Investors in a cross-border telecoms venture should clearly stipulate early on the means by which they The deregulation trend that is sweeping the can exit the venture. The terms should anticipate developing world provides significant opportunities to departure during good times, when a sponsor seeks gain access to previously inaccessible markets, and to cash out its investment, and during bad times, the telecommunications field is no exception. The such as when sponsor disagreement may risk undertaking does involve significant risk, some crippling the venture's activities.If sponsors are also endemic to all cross-border investments and some engaging in ancillary contractual arrangements with unique to the telecommunications field. As a result, the venture company, contingencies should be any prudent party contemplating an investment in a contemplated to permit exit rights if most of the cross-border telecommunications venture must foreign investor's benefit is captured in the ancillary carefully study the risks associated with the country agreements, and those agreements are, for whatever in which investment is contemplated and the other reason, not executed. parties with which such investment will be made. The results of this due diligence review must be The common exit strategies include: an initial public incorporated into a party's negotiating goals and offering of shares in the venture; put or call option strategy. Once the proper background research has agreements among the investors in the consortium been completed, the prospective participant should that could be used to resolve disputes or to take negotiate and assess all the structural elements of the advantage of a relaxation in local control regulations; venture as a whole, to account for (and capitalize on) and the invitation of other strategic investors to the interdependence of each component of the participate in the venture, to add either financial or transaction. Taking these steps will not guarantee a technical capabilities. A critical issue associated with successful venture, but it can help to minimize the the negotiation of exit strategies is control. Parties additional risks associated with telecom investments should determine beforehand when and subject to transactions that, by their very nature, often require what terms changes in shareholding can occur.In significant amounts of capital. addition, the effects of any change in shareholding on
107 4134 "Convergence" is Needed in the Workplace; Its Lack May Cause Serious Miscommunications
Kazuo Mitamura, Director at Melco Overseas Corporation, a subsidiary of Mitsubishi Electric Corporation, Tokyo Yu Serizawa, President of Forma Corporation, Tokyo
This paper discusses the behavioral side of "convergence," particularly as it may occur in offices. In step with the so-called globalization of business and as an analog of the convergence taking place in electronic equipment, businessmen expect that business practices, taxation systems, etc., in different countries will also converge. In fact, any such convergence is a far from a natural process, and there are considerable differences between business in different countries. Business procedures, though superficially similar, may differ considerably in practice. If you assume that business practices are converging on a common international standard, you lay yourself open to serious miscommunications. It is easy to list numerous national differences in a manual for cross- border businesses. But a manual of this kind bulky and necessarily non-systematic will be of little use in the real world of business, not least because of the unpredictability and urgency of the emergencies that might call for its use and the difficulty of finding the right answers in time to be useful. The authors have therefore launched an original training program in the belief that the best crisis management policy for a company investing overseas is to make its expatriates aware of cultural differences and functional in overcoming them. The best approach will be to adopt the mental flexibility to identify and dispense with unconscious preconceptions in business. The way of doing things is necessarily different in different cultural contexts. The authors share some tips for modifying our ways of thinking so as to usher in true "convergence." The authors are experienced in setting up international business alliances and now run a cross-cultural training course for Japanese business persons posted overseas, which is equally applicable to non-Japanese business persons stationed in Japan.
Introduction would in their home workplace. This unconscious The primary reference of the phrase "coping with assumption of "business as usual" is a fruitful cause of convergence" is to the technological side of equipment miscommunication. Their messages may not be for telecommunications, computing and consumer received by local staff as intended. A steady stream of electronics. Consider the example of the video screen. miscommunications can cause resentment among It is now technically possible to use a single screen for employees. In a worst-case scenario, the executives computing, information retrieval and TV entertainment. will be accused of discrimination or harassment. At home, however, at least two kinds of screen are generally needed. One will be a big screen primarily An examination of the situation reveals that the ex- for entertainment, with a viewing distance of six feet or patriates regard their way of doing things as the more, that may also be used to display information. international standard, even though it may be more The other will be a smaller screen, primarily for distinctive of Osaka or San Jose. By no stretch of the information display with a viewing distance of two feet imagination can it be called a common international or so, which may also be used to show TV programs. standard. This shows that a technological development may not necessarily, and certainly not immediately, be Nevertheless, the relentless pressure of technological paralleled in human behavior. convergence and the globalization of business force businessmen and -women to cope with cross-border Both "globalization" and "business ethics" are communications and multicultural management. buzzwords in every part of the world. Businessmen and -women, dispatched overseas with no training in the cultural differences likely to be encountered, and Case studies none in how to attain convergence in the workplace, An Englishman who worked in London for the will naturally tend to assume that their usual ways of subsidiary of a Japanese company complained that conducting business will work: the new workplace is, the hardest thing for him was to grasp his Japanese after all, a subsidiary of head office, from which they boss's non-verbal messages. To the other Japanese come, and usually has the same management staff dispatched from Tokyo, it was easy and quite structure. They will therefore behave much as they natural to get the right message from those non-verbal
108 135 communications. In contrast, the Japanese staff were slow to catch the symptoms of distress, discomfort or The case is also a reminder of Japanese group even mistreatment shown by their local employees. behavior. The Japanese see democracy as a system in which everyone is free to have their say regardless The same Englishman complained that the Japanese of time, place or occasion. You have doubtless noticed boss always "ordered" him around, seldom just asking in business meetings with Japanese that the boss will him to do something. Was the Japanese boss being bring along several subordinates or colleagues to arrogant? Was his management style too autocratic? meet you, and that they will often speak without Not necessarily. It might well be that the Japanese bothering to get permission from the boss sitting boss's poor command of English made him beside them. unnecessarily curt in his communications. But a more important factor is an underlying assumption made by About a year ago, an interesting report was published most Japanese. The average Japanese associates by the National Bureau of Asian Research (NBR) more polite or formal expressions with "politeness entitled "A Looming Entry Barrier: Japan's Production language," which is such an integral part of the Network in Asia." Its basic theme was as follows; Japanese language, and which is used towards seniors. The unconscious assumption is that polite "...Japan has adopted a regional industrial policy expressions are only for superiors, not for throughout Asia, similar to the industrial policy that subordinates. The plainer, more direct forms are guided Japan's economy in the post-World War ll era, thought to be much friendlier and informal. A wife and with the same kind of exclusionary effects that might feel her husband cold and unloving if he have made the market in Japan so difficult for foreign consistently used the polite forms to her. This is why companies to penetrate." the Japanese boss will use imperative expressions without adding the word, "please," for instance. But "...Japanese production networks represent an Asia- this by no means justifies the boss's treatment of the wide threat to free and open trade... (and this) holds a English employee. But rather than accuse him of danger for the host economies which become 'captive' arrogance, we should see that his misconceptions are to network strategies that strictly control diffusion of removed, and that he becomes aware of the technology, impose harsh contract terms and limit the differences between English and Japanese usage in promotion of local managers." the workplace, and the misunderstandings they are likely to cause. In the eighties, it is true that Japanese executives were concerned over cheap imports from developing Perhaps you remember the sad case of Mr. Di Muro, economies to which Japanese companies had an American baseball umpire who worked in Japan transferred their technologies. In those days, the last year. He left Japan after only three months, Japanese market was virtually closed to foreign because he felt in danger when surrounded and companies especially to those from adva-nced shoved by several players and coaches protesting his economies. Now, things have changed dramatically. call of "strike." Under the headline "Slugger swings, Many governmental regulations have been lifted, and fans cheer, ump walks," the Washington Post reported Japanese companies have to compete with foreign that manhandling of umpires absolutely taboo in the companies not only overseas but also in the domestic United States is quite common in Japan, although Japanese market. This has changed Japanese Japan is one of the world's least violent societies. executives' attitudes. They are far more concerned Fans threw plastic noise-makers and garbage into the with the interests of their own companies than of field to protest the umpire's call. Mr. Di Muro said, Japanese industry in general. They are now eager to "What will the next guy be allowed to do ifI call a enter strategic alliances with their competitors strike take a bat to my head?" This incident tells us overseas. They try to globalize their companies and to two things. First, that Japanese professional baseball modify their way of doing things with a much higher has diverged from the American game since it was priority on ethical issues than before. There is no room originally introduced from America. Second, the at all for coordinating their business strategies with umpire is strong in America and weak in Japan, those of their Japanese competitors. However, their although the number of players and umpires is the attitudes and behavior are still perceived as if they are same in both countries. This incident also forces us to still doing the same kinds of thing they were doing recognize cultural differences in the expectations of more than a decade ago. The reason is a distinctive the public with respect to umpires, coaches and Japanese "quirk" as marked as the one behind the players. .baseball case. The executives still talk of "the
109 13 industry" and "Japan's interests" when they mean their themselves maintain an "insider" mentality that largely own company and its own interests. They pay lip prevents them from adequately representing the service, if you like; to the concept of Japan stakeholders' interests. Incorporated. When Japanese bureaucrats speak, they tend to use "we" or "the Japanese" instead of "I." Executives' titles differ also from one country to Japanese bureaucrats cited the peculiar needs of another. As you will know, the term "managing "Japanese culture and tradition" when requesting that director" in Britain means CEO. In France, the the 1990's ivory trade ban be lifted last year and in "Monsieur le President" is better understood as the opposing the opening up the Japanese rice market a chairman. couple of years ago. This is asking for the kind of misunderstanding we see in the NBR article. "Corporate governance" is also becoming a major concern in Tokyo. Suppose that an American lawyer were to hold a seminar on this issue in Tokyo. She Preconceptions are the culprits calls for "directors" in Japanese companies to be more Mistaken preconceptions leads to misunderstanding, informed and more actively involved in the the basis for miscommunications. We need to administration of their companies. The reaction of the examine the assumptions on which such audience would be cool, to say the least. Because preconceptions are based. When you meet someone "directors" are actually "executive officers" and as the with the title "General Manager, Telecommunications heads of business units they will necessarily be well Division," you may assume that he has authority to aware of critical information, and carry day-to-day commit the company to his decisions in the responsibility for administrating their own business telecommunications business. After all, doesn't his units. If the lawyer enthusiastically tries to persuade business title tell you that? Not, perhaps, if he is from the audience without taking into account the actual a Japanese company! More often your assumption will practice in Japan, she cannot achieve effective be far from the truth. When a decision is required, he communications with the "directors," who will feel they may have to consult the general manager of the have nothing to learn from her. Communications Equipment Plant, or he may have to circulate a proposal or briefing (in Japanese a "Ne- mawashi") to obtain the reaction of his superior, who "What do you take for granted?" may be the Managing Director supervising The ideal may be to have identical business systems telecommunications businesses, before a decision can and practices in different countries. Even so, this alone be reached. You will be safer not to believe English- is not enough to guarantee freedom from language business titles on Japanese business cards. miscommunications. There are so many languages and linguistic nuances. The meaning, or range of A board director in Japan is a rather different being meanings the connotations of the nearest single- from his or her counterpart in other nations. Although word equivalent may differ widely in different the board of directors is legally invested with the languages. Even within the same language your highest decision-making authority, directors are in fact message will not always be understood as you intend. subordinate to the President or CEO. All the executive No message can have the clarity of a mathematical vice presidents and other directors, a total of as many formula. The meaning conveyed will differ according to as thirty or forty people, are in effect corporate the background of the recipient, the emotional executives reporting to the president. The chairman atmosphere, and the body language of the speaker. will not be the chairman of the board in the same Against a different cultural background, the gap sense as it is known outside Japan, but a nominally between the message as sent and as received will senior position to which retired presidents are yawn wider. If you stick to your own logic, it will be "promoted upstairs." hard for the recipient to get the message you intend to send. Good communicators do not keep to their own In a German company the directors board is virtually logic, but restructure the message in line with the an executive board, but it has a separate auditors recipients' logic. In a meeting, ifI stick to my agenda, board, which functions more like the board of directors and if you stick to yours, it will be difficult to have a in Anglo-Saxon society. In a Japanese company, too, real meeting of minds. Perhaps the most productive you will find standing auditors, who are approved at procedure would be to seek agreement first on "our" the annual general meeting of shareholders. However, agenda, a synthesis of the two agendas. This is an the candidates are selected from among the idea advanced at the PTC a few years ago by Ron employees or directors by the president, and they and Joan Parsons of The Alliance Collaborative,
1 1 0 137 based in Portsmouth. facto "global americanization," or a "global adoption of American standards." But whatever form of The first step to composing "our" agenda is not to convergence we seek, we must realize that it will be abandon the conviction that "my way is best" but to some time before its necessity is universally admit that there must also be acceptable alternatives. recognized and even longer before it can be Please always try to keep an open mind to accept established. such alternatives. The second step is to pay close attention to anything and everything that does not Our short-term conclusion is that internationally active accord precisely with your expectations. Observation businessmen and -women should to be alert for the and listening can be a great help here. The differences in local business practices, and to aim for atmosphere of the meeting room, the body language convergence between the different practices and or the attitudes of the participants, the reactions of the cultures through frequent and careful verbal people, and anything that seems strange or unusual to explanations and communication. As a long-term you will be an excellent opportunity for learning the objective, we must all get together to define the values differences or variations from your own culture. One inherent to an international business standard, and to difficulty to be overcome here is that the stronger your determine the appropriate means of communication preconceptions, the more you will tend to overlook for implementing these values in the multicultural these signs. Whenever you notice such signs, ask workplace. your local colleagues or friends to tell you what they mean. Some may indeed be exactly as you thought, but others will almost certainly be quite different. The greater the difference, the more valuable the learning experience.
The third step is the hardest thing of all. It is to ask yourself what it is you take for granted. This will help you to estimate the distance between your ways and the local ways. Knowing this distance is very important to prevent miscommunications.
The convergence of different business practices towards an internationally accepted standard is desirable from the viewpoint of the business world. However, we also have to make sure that such "convergence" is not a pretext for cultural imperialism. The reality, however, is lagging so far behind expectations that there is little danger of this in the near future, although trends toward convergence can be detected. The question, then, is what kind of convergence are we to seek.
Conclusion The convergence of telecommunication, computing and consumer electronic equipment is taking place at a bewildering pace. This was made possible by the development of technologies. This convergence has brought world markets much closer to the domestic market. The psychological distance to a foreign market has shrunk virtually to zero, thanks to those technologies. In line with this technological convergence, we must work towards another kind of convergence, one that will bring the business practices of different countries towards internationally accepted standards but which should, again, be sought with all due care to order to avoid recent French criticism. This claimed that "globalization" as used now means a de
1 1 1 138 ATM-Based Telemedicine Trial in Taiwan
Lung-Sing Liang, Chain-Chin Yen, Cheng-Sheng Lin, Yen-Ting Chen, Min Chen, and Rong-Ruey Lee Chunghwa Telecom Laboratories Tao-Yuan, Taiwan
1. ABSTRACT
To be a communication backbone of National Information Infrastructure, a nationwide broadband ATM network has been deployed by Chunghwa Telecom Co. to provide broadband services in Taiwan. Telemedicine has been one the major applications to improve the medical quality and to enable experienced experts to help the doctors at rural or remote sites diagnose patients. Three pairs of hospitals have been using the telemedicine services. Based on the success of the trial, the telemedicine services will be expanded to an island-wide scale and is expected to bring medical standard in Taiwan to a new era.
2. INTRODUCTION circuit emulation interfaces provided by the ATM trialnetwork. The trialwillenable experienced BroadbandIntegratedServicesDigital Network experts at the equipment-advanced hospitals to help (BISDN)hasbecomethetrendoffuture doctors at rural or remote hospitals using medical telecommunications network due to its flexibility to videoconferencing,medicalhistory and image provide different servicesina network andits transmission, electronic bulletin board capabilities, efficiency to utilize the telecommunications facilities. etc. Besidesdatacommunication, BISDN canalso In this paper, we describe the deployed ATM-based provide TV program distribution, video conferencing, broadband network, especially on broadband network and entertainment services. Information of broadband and telemedicine. The cause of failure is analyzed to services is transported in fixed sized cells and routed improve the network reliability and to satisfy the through an Asynchronous Transfer Mode (ATM) demand of service continuity. The importance of network. telemedicine system is also described to minimize the Providing high-speed telecommunication networks medical resource gap between urban and rural areas. will be helpful for Taiwan to attain the aspiration to be the Asia-Pacific Regional Operations Center. The rest of this paper is organized as follows. Section Chunghwa TelecomCo.(CHT),therefore,has 3 introduces the ATM trial network. The telemedicine actively deployed a nationwide ATM trial network network is described in Section 4. Section 5 evaluates that can act as the communication backbone of NII, the efficiency of the trial results. Finally, conclusions and some ATM local area networks in the Greater are drawn in Section 6. Science-Based Industrial Park (GSBIP), Northern Taiwan Business Group of CHT, Kaoshiung Harbor, 3. ATM TRIAL NETWORK Taichung Harbor, Keelung Harbor, and Hwa-Lien Harbor. Many broadband services including LAN Tosatisfytheincreasing demandinnetwork interconnection, video conference, distance learning, bandwidthandtoprovideversatileservices, telemedicine,imagetransfer,and multimedia Chunghwa Telecom Labs (TL) has been developing database retrieval have been provided on the network. ATM-based broadband products. Several products, Based on the technology of telecommunications, it is including ATM switches(BEX-VPX), ATM possible to improve the medical quality in rural and multiplexers (BEX-AMX), ATM LAN switches, and offshore districts. Department of Health and CHT ATM hubs, have been completed. Based on BEX- have devoted much effort on telemedicine using DS1 VPXs and BEX-AMXs, CHT hasdeployeda
112 nationwide ATM network which has contained ten management, and security management. These sets of BEX-VPXs by June 1996 [1]. To increase the functions are summarized below. reliability and trunk capacities, connection between (a) Configuration Management: two BEX-VPXs uses both an OC-3c trunk and a Configurationof networknodes: Any DS3/PLCP trunk. The architecture of the nationwide BEX-VPX, BEX-AMX, Optical Amplifier, ATM trial network is shown in Figure 1. and trunk can be added to, modified, or deleted from the network. 3.1 ELEMENTS OF ATM TRIAL NETWORK Management of Permanent Virtual Circuit (PVC): The management of PVC includes An ATM trial network contains three parts which are functions of establishment, modification, BEX-VPX, BEX-AMX, and network management deletion, display, and report. system (NMS). They are described as follows. Rerouting of PVC: Existing PVC can be (1) BEX-VPX: rerouted automatically or manually if there A BEX-VPX system consists of eight racks and is disruption of connection. each rack has four modules. Each rack can be (b)Fault Management: configured as either a user network interface The fault management includes functions of (UNI) or a network nodeinterface(NNI). receiving the notification from BEX-VPXs, Among the thirty two modules, each module can BEX-AMXs, and Optical Amplifiers with be either an OC-3c module (one port per module) appropriately response if necessary, or a DS3/PLCP module (three ports per module). executing segment-to-segment audit The system capacity of a BEX-VPX is about 5 between any two BEX-VPXs, executing Gbps. To increase system performance, the end-to-end audit between any two BEX- switching fabric of BEX-VPXs adopts shared AMXs,displayingandloggingsystem buffer memory architecture. BEX-VPXs provide messages. PVC cell relay services which are managed by (c) Performance Management: NMS. Theperformancemanagementcontains (2) BEX-AMX: functions of collecting traffic and A BEX-AMX connects to a BEX-VPX by a UNI performance information, setting thresholds, interface operating at either an OC-3c or a and generating related alarms. DS3/PLCP. Each BEX-AMX consists of three (d)Security Management: types of user interfaces: DS1, DS3 and Ethernet. Two level access controls for operators and Moreover, the BEX-AMX mainly provides the administrators are provided. useraccessinterfacesandperformsthe electronic-optical signal conversion. With respect A network function monitoring procedure is used to to the provided services, DS1 circuit emulation, monitor the status of the network. This procedure can DS3 circuit emulation, and Ethernet bridging be executed either automatically or on demand. Once function are offered by combining the BEX-VPX afaultisidentified,a networkfaulthandling withBEX-AMX. DS1 andDS3 circuit procedure is executed to minimize influence to on- emulations can provide real-time applications line users. which require constant bit rate transmission. Ethernet bridging function can provide 3.2 Applications of ATM Trial Network transparent LAN interconnection service over the ATM network and can let users formvirtual Based on the ATM trial network provided services of LAN networks. DS1 circuit emulation, DS3 circuit emulation, and (3)NMS: LAN bridging functions, several pilot projects and NMS is connected to the network through an demonstrations running over this ATM network are NNI with operation interface using AAL5/ATM inprogress. Among theseservices, telemedicine protocol. It provides functions on configuration project will be discussed in Section 4 in detail. management,fault management, performance Other projects including multipoint video conference,
113 130 campus networking, distance learning, and Telecom, Singapore Telecom, and U.S. Sprint. international ATM interconnectionarebriefly The international trials use DS3 transmission rate described as follows. to interconnect the BEX-VPX ATM switches locatedin CHT and switches of Fore and (1) Multipoint Video Conferencing Project: NewBridge locatedinlabsof theforeign CHT has set up a DS1-based video conferencing carriers. Applications which have been tested are system to connect its eight district subordinate video conference, video on demand, and LAN organizations, including IBG, NTBG, CTBG, interconnection. STBG, LDMBG, TL, TTI, and DCBG. Within this system, a multipoint control unit (MCU) 4. Telemedicine Network located at TL is the operation center and decides which screenataspecificsiteshould be Thehighlyintegratedapplicationsystemof broadcasted. Through this video conferencing telemedicineis combined with medical skill and system, the employees of CHT can hold a telecommunication technology. There are two critical meeting without the limitation of distance and factors to achieve this application system. One is the can save lots of time and transportation cost. telecommunication backbone provided by CHT. The (2)Campus Networking Project: other is the image management and communication To share the education resources among schools, capabilities which provide medical physicians and Ministry of Education (MOE) and CHT have out-patient department instant access. been conducting a campus networking trial. This trial interconnects the campus networks of seven 4.1 Architecture of Telemedicine universities, including Taiwan University, Central University, Tsing-Hua University, Chiao- To fit the high speed transmission demand of image TungUniversity,Cheng-KungUniversity, and data access, Department of Health (DOH) and Chung-Cheng University,and SunYat-Sen CHT have conducted a DOH-supported telemedicine University. The campus ATM networks of these project on the ATM trial network using DSI circuit universities are all connected to BEX-VPXs emulation interface. Three pairs of hospitals have through DS3/PLCP interfaces. been using the telemedicineservices. They are National Taiwan University Hospital to Jin-Shan Distance Learning Project: (3) HealthCenter,National Cheng-Kung University To enhance campus teaching and learning and to Hospital to Provincial Peng-Hu Hospital, and Taipei alleviatethedifferenceoftheeducation VeteransGeneral Hospitalto Kin-Men Granite resourcesamonguniversities,NIIsteering Hospital.Thearchitectureof thetelemedicine committee and MOE have been prompting a network is shown in Figure 2. distancelearningproject.Three universities, including Taiwan University, Tsing-Hua 4.2 Applications University, and Chiao-Tung University, have joined this project. Students in these universities The success of image management and can register and take the courses offered by other communicationcapabilitieshaspromotedthe universities. These sites interconnect each other development of telemedicine. As an example, Figure through a DS3 transmission rate of ATM/ADM 3 shows the application architecture of National (add-drop multiplexer) path and use the Digital Taiwan UniversityHospitaltoJin-ShanHealth Cross Connect system to perform the broadcast function for multisite teaching. In the future, Center. A scenario of the application is explained as follows: universities from Hong Kong, Singapore, and USA will also join the program. (1) Medical video conferencing: (4)International ATM Interconnection Project: To verify the standard conformance for the Health workers in remote area or off-island developed ATM switches and to enlarge the can participate in many activities, including ATM fieldtrialscale, CHT haslaunched case study, medical conference, etc. international ATM trialswith Hong Kong
114 4 .1 To provide training courses to health workers Broken of optical fiber due to digging in remote area or off-island (2) CPE Equipment To support large medical meetings Failure of power supply or outage of power (2)Medical history and image transmission Speed of CPE cannot achieve T1 rate Instant access to image libraries containing digitalX-ray, CAT scanimages,EKG, Malfunction of CPE Ultrasound Bugs caused by application software Instant retrieval of patient medical information Operatingerrorcausedbyunfamiliar (3)Electronic bulletin_board capabilities operators
(4)Distance joint diagnosis 6. Conclusions To providereal-timeconsultation and treatment of emergency patients In this paper, we have described the ATM-Based telemedicine trial in Taiwan. During this trial, critical 5. Field Trial Results factors that may interrupt service continuity have been identified and improved. Contribution of the The trial system has been started in April 1996. After trial network is summarized as follows: the first trying period for one and a half years, we (1) ATM trial network have noticed that service continuityis extremely important and has big influence on joint diagnosis. In Analysis of failure was used to improve the order to guarantee this, we not only recorded each system reliability failureindetail -including time of interruption, description of phenomenon, the way to resolve, and Bugs were pointed out to correct function the strategy of failure preventing, but also analyzed the . availability of the system [2]. To reduce the Adding new function to meet requirement interruption time, system maintainers must resolve Reducing theeffect of manpower and each problem as soon as possible. From the collected environment data, there are many topics worth -to evaluate. One can calculate the availability of telemedidine during (2)Telemedicine the trial period. An availability of 98.95% [3] has been achieved during the trial period. The other Minimizingthemedicalresourcegap focuses on the analysis of the failure. The analysis between urban and rural areas. can be used to identify the cause of failure and to Providing real-time consultation an_d improve the systemreliability throughanalysis. treatment of emergency patients Several critical factors that affect service continuity have been summarized as follows: : Providing training ranging from basic health workerskillstoadvanced specialist (1) ATM Trial Network techniques
Malfunction of CSU/DSU equipment Increasingoveralloperatingandinter- hospital cooperative efficiency Failure of transmission unit Constructing inter-hospital medical Malfunction of BEX-VPX) techniques and supporting mode Malfunction of BEX-AMX Owing to success of the ATM-Based telemedicine trial, the government has promised to expand the Malfunction of NMS
1 1 5 I.9 telemedicine scope in the future. The scope will [2] Bellcore, SR-TSY-001171, Methods and become more widespread as island's public and Procedures for System Reliability Analysis, Issue private sectors continue to cooperate. Certainly, the 1, Jan. 1989. ATM network will play a critical role on the transformation of medical environment. [3] S. S. Liu et al., "A Broadband Trial Network and Availability Analysis", IEEE SICON '97, 7. References Singapore, April 1997, pp. 141-154.
[1] C. C. Lin, et al., Deployment of ATM Broadband Network Trial and Service, Chunghwa Telecom Labs, June 1996.
NMS (Tung-ssu) Taipei Chung-Li )
International (AI-Kuo)Netwc4k
Hsin-C u EX-vex (Kuan-Tung)
Taichung (Min-Chun) Hwa-Lien
Tainan OC-3c (Min-Sheng) DS3 59 \ (-)Optical Amplifier Kaoshiung (Chung-Shan) Unit : Km
Figure 1. Architecture of the Nationwide ATM Network
143 116 BEX-VPX Taipei Tung-Ssu TL Chung-Li Nan-Er Ai-Kuo BEX VP International Network
sin-Chu
BEX-VP National Taiwan Hospital
Taipei Veterans General Hospital
JinShan Health Center BEX-VP Taichun Hwa-Lien
Peng-Hu Hospitirl
Cheng-Kung University Hospital
Kaoshiung 0C3c DS3
Granite 1/1 -BEXANIX Hospital 1
. Figure 2. Architecture of Telemedicine Network
Archivin National Jin-Shan Station Viewing Taiwan Hospital Station Health Cente
Video/ Image Server Mpeg I Encoder Video Conference Video Conferenc0.1 1 System for System for Consultation Consultation
Figure 3.Telemedicine between Taiwan University Hospital and Jin-Shan Health Center
117 144 From Radio Relay Links to Telemedicine -Proposing "The Telecom Aid Activity "-
Iwato Asahara Basic Association Tokyo, Japan
1. ABSTRACT
Our NOD, Basic Association is very small but what we have accomplished in the past five years ranges from implementing Radio Relay links to transfer image and data inthe damaged areas around Chernobyl to providing Telemedicine or internal PBX Telecommunication system inside the hospitals for mutual communication. Our activities will expand further, from now on.
2. TELECOM & BHN (BASIC HUMAN NEEDS) & CIVIL- mature its advantage because of lack of invest-
MINIMUM ment for the second version up or shortage of daily repair and maintenance.
Basic human needs such as food, clothing and The advantage that highly developed, information shelter, elementary education, medical treatment conveying ability of telecommunication has are essential for human beings to live and lead brought to mankind is extremely big. But ordinary a life. Also life line such as water supply, users may feel the existence of telecommunica- electric power, means of communication and means tion is natural just as air and few people think of transportation is necessary for human beings what may happen if telephones disappear from to maintain the minimum civilized life. Among this world. them communication, especially telecommunication above all, is overwhelmingly powerful and we can But those who have been involved in telecommuni-
say that it is the best civilization means of cation business, especially in network management
civil minimum from the viewpoint that it spreads business and have experienced of being cultivated
and increases human sense ability such as hearing in this area, feel deeply how important they are
and sight to the extreme limit as well as it in the network society and feel cowered to think
conveys voice,image and document etc. to deliver what a big social disorder there happens and how
our will at real time. However,it is only a much blame the public accuse of its network
limited number of nationals and local residents management if some disaster or accidents occur.
among all mankind on the earth that benefit this It seems the outer people don't take it so
civilized means. This fact was pointed by ITU seriously than we expect.
Independence Committee Report "Mussing Link"
in 1982 and after that much efforts have been However, how do you evaluate the degree of the made to improve the situation, but it is true civilization of your life if you live in the
that it has not still been in sufficient society where the network originally doesn't
situation even now in a large amount of areas. We exist at all or it exists but doesn't function
sometimes come across the case that even if the sufficiently?
basic facility has been implemented they can not
118 Actually there are numberless of those areas and CO the case where the patients living in no
occupations in the world.In order to improve the medical facilities areas far from the urban
civilization standard of the whole human living, medical organizations, are left alone just as we should make up for the insufficient situation the damaged area of Chernobyl nuclear accident.
of telecommunication and give relief to them It On the site, they wish to offer at least may be the people who have worked hard and went traveling medical check -ups, but they voice through difficulties in the telecommunication there are no means of transferring medical data carriers regardless of nationalities and depart- from remote sites to cities for quick advice. ments that understand the necessity of it most.
(3) the case where there lies anxiety to dispatch
It has been discovered since old times that the doctors and volunteers urgently to the areas spread of telecommunication is correlated with where. natural disasters such as earthquakes, the nation's economic power. Look at Figure 1, eruptions and forest fires often happen because which is a bit old data and we can find out that there are usually not enough'ffeans of camiunida= there is a remarkable correlation between GDP per tions in those areas. person and the spread rate of telephones. It is
important that huge programs should be made We have already experienced coping with all of and much investment can be done in order to these cases so far. We call these projects "Tele- construct the network sufficiently, maintain them medicine" or "Teleenvironment". and level up them We cannot realize them without
superintendent government offices and carriers I would like to state the actual examples in with high technology and economic power. But even which we have been engaged so far. if such organizations exist, there are not a few cases where the actual conditions of service level 3. TELECOM FOR BHN are extremely poor on the sites.
3.1 RADIO-RELAY-LINKS FOR VICTIMS OF CHERNOBYL Basic Association is aiming to discover such NUCLEAR ACCIDENT cases in the developing countries and market developing countries (ex-socialist countries), The worst nuclear accident in the worlds history to substitute them and to offer projects to took place on 26 April 1986 in Chernobyl nuclear supplement them power station in Ukraine.It was the catastrophe
which caused 10 millions sufferers and exposed
For example,(1) the case where there are nearly one million people to ionizing radiation. hospitals, capable doctors and nurses on the The damaged area extends over three countries medical site, there are however no means of Belarus, Ukraine and Russia.In spite of communication between wards or there are means desperate measures made by each country, they of communication but they are decrepit and use- are still in the serious condition that there less so that it takes time to gather the remain radioactive nuclides in some areas and necessary doctors for an emergency case and the number of thyroid cancer among children is offers only inefficient medical treatment. increasing recently in the affected areas. (See
Figure 2)In 1991 WHO (World Health Organization)
119 146 60 Figurel
50
40
30 uminm
20
IMO111111111VAM111111 1111111111 1111 10111111111211111111111E IINSI NNW 11111111 MOMS
0 500 1000 1500 2000 2500 3000 GDP per head (U.S dollar) Reserched data by CCITT,Economic Studies at the National Level in the Field of Telecommunications (Geneva;ITU 1968) The number of thyroid cancer among children (0-14 year-old at that time) by country after Chemobyl nuclear accident Figure2 Pelarus Russia Ukrine Total
86 2 8- 10
87 4 1 8 13
88 5 11 16
89 7 1 23 31
90 29 8 40 77
91 59 8 42 109
92 66 8 75 149
93 79 12 75 166
94 82 33 80 195
95 91 33 * 124*
Total 424 104 362* 890*
*Data Is not decided.
Medical Radiological Reserch Center in Russia March, 1996
1 20 1 4 7 has implemented IPHECA (International Programme 3.2 TELEMEDICINE SYSTEM FOR REMOTE TRAVELING on the Health Effect of the Chernobyl Accident) MEDICAL CONSULTATIONS project and has decided to accumulate and make
use of victims' annual check-up data (including We began to tackle the next field by visiting
image data taken by echo systern) for data base the damaged areas in Ukraine suffering from
stored at MRRC (Medice! Radiological Research the Chernobyl accident. (See Photograph "Children Center) located in Obninsk (100 km south of at Korostn inter-area medical diagnostic center") Moscow)in Russia. There were not however lines We provided not only Telemedicine activities but
in local areas which can transfer such images to also support of medical activities by
the center. Therefore WHO referred to the world accompanying doctors directly and by bringing for an installation of such lines. Then Basic medical materials and medicines themselves to Association, as Japanese NGO offered one idea the site. We owed these activities to aid from
to them. That is to make reuse of the equipment "International volunteer savings funds" promoted
currently used for analog lines provided by NTT by Japanese Ministry of Posts arid Tele-
(Nippon Telephone & Telegraph Co.) since NTT had communications. been promoting network digitalization in those
days. This idea was welcome to WHO and MRRC. In relation to the Chernobyl accident a lot of
Russian sides executed the implementation under assistance have been made since early times for
the guidance of NTT engineers and they were the victims' medical check-ups and treatments by
completed in October 1994 and have been used many countries including Japan, but recently a
since then. At general meeting of International part of those assistance have been suspended.
Pathology Academic held in Hong Kong coinciden- There are some areas where radioactivity still
tally at that time, pathological images were remains and regular medical check-ups are
transmitted from Obninsk as the example of Tele- essential in those areas. We thought of traveling
pathology and they received high evaluation. WHO check-ups system in which portable multi-media
bore the actual implementation expenses. terminals, developed inside Japan, for satellite
communication are used. We found out that the
It was really a heavy burden for Basic system would be of great help for multiple
Association with only a few members at that time remote medical consultations by introducing it to implement the microwave lines of more than 100 to communications between local medical centers
km with six relay stations.(See Figure 3) and mobile medical buses. We have begun to
Fortunately we could make it with strong backup provide the system in four areas, Kiev, Zhitanir, of two international organizations of WHO and Rovno and Boris. Much expectations are gathered
ITU, well-understanding of Russian Telecommuni- in local areas since this system can be carried cation Ministry and much support of Japanese out in fairly low cost (approximately 20
Ministry of Posts & Telecommunications, Ministry thousands dollars per set) and are possessed of of Foreign Affairs and NTT. a lot of functions. However, the organization
Our heart is full of deep emotion that small NGO should be prepared for the system since expertise
like ours could accomplish such a big project. is needed in assembling machines and tools and
I would like to comment on this later. maintaining them The Telemedicine system in
Ukraine was contributed by Ministry of Posts &
121 48 Figure 3 PT&TMoscow Dolgabldoni (Television)End Office 74.6m 30.5km Iron53.1m Tbwer 14.0km --> 55.5m 28km 119m IF-- 26GHz18.7km End Office RelayObninsk Station lbwer Narofominsk Iron lbwer Gol. tzino ThIstbatibo Iron Thwer Moscow Bostania 000 0.7km > 0 0 0 Obninsk Relay Station --Moscow Planeta Entrance1km(PLANETA) Cable D (PLANETA) (PUNNET:k)(PT&T) IPT&T)Relay Staion (PLANETAJRe ay Staion [PLANETAIBranch Office Voice(Telephone)End Cable Office MRRCRAMSRadioactive Medical Insutitutennnnn Outline of Microwave Route between Moscow and Obninsk 1995, Spr i n g PublicRussia LinePTT Te I ecanrun i cat i ons in Japan. in Ukraine by the International Telecamunication
Union and BASIC Association(a non-governmental 3.3 PROVIDING HANDY TELECOM SYSTEM FOR COMMUNI- organization from Japan). The telecamiunication CATION INSIDE HOSPITALS sector can no longer afford to be simplya carrier of traffic. Today's telecamunicition community
What we have discovered next was the fact that must not only understand new applications, but also there exist approximate number of hospitals and be active participants in the developmentof those adequate doctors in urban cities, but PBX applications. We in the ITU are focusingon Telecom system inside a hospital have become telemedicine, tele-education, environmental decrepit or the amount of system has been projection and remote and rural applicationsas completely insufficient. The wards of these examples of convergence-there are , of course, hospitals are dispersed in the fairly wide many moreTand more particularly the socio-economic compound and the means of mutual communication benefits to be derived from telecommunication among management ward, check-ups ward, operating development in itself and especially when appliedto room and warehouse of materials have been different sectors of today's fast-changingeconomy. definitely underequipped. They walk or use The speech of Dr. Tyrjanne at theceremony- bicycles for mutual communication, which
decreases medical efficiency notably. Originally these kinds of projects should be
made under self-help by the governmentsor We have decided to provide PBX-based mobile public organizations of the countries concerned.
personal handy -phone system (contributed by NTT But it is the actual conditions that they cannot
Mobile Communications Network Inc. or NTT DoCoMo in set to work to such improvement because of Japan) to those hospitals. economic difficulties, administrative in-
sufficiency and political disorder of the
The first system was implemented in the Central countries which have become independent recently. Emergency Hospital in Kiev and the system was One of the doctors we have met there toldus welcome to doctors and nurses working at the that he has been desperate of the current
center very much. The cost of this system is situation. also fairly low and it is easy to implement them so we expect they will be the most suitable We also plan to renew PBX Telecom system in system for those hospitals in which theyare Yangon General Hospital in Myanmar, South East
Troubled with internal PBX Telecom system At Asia. In this hospital where they handle tens of the ceremony of the presentation of this system thousands of patients every year, the telephone held in October 1997, Ministry of Health and system has been decrepit and doesn't function at Ministry of Telecommunications in Ukraine as well all. Therefore it takes time for them torun as Dr.Tarjanne, Secretary-General of ITU attended around the vast compound. So capable doctors and he praised highly the systemas symbol of cannot execute adequate medical activities and Telemedicine in his speech : in spite of emergency patients theyare left To complement this effort(Large-scaleprograms of alone at the outpatient counter because the medical surveillance for the Chernobyl accident), specialist doctor cannot be called immediately. two telemedicine pilot projects were launched Our research members have instantly decided to
123151 renew the internal PBX system in this hospital. for them to have knowledge and experience of
On the first stage existing analog telephones technology and system operations in order to will be renewed and increased to 150 models and grasp their needs and carry out the Measures. operator console and power supply system will be The third reason is that each of these kinds of
renewed for functioning. On the second stage projects costs at most one hundred thousand we plan to let the whole system become digital dollars, so it is not fit for government or big and to increase the number of telephones greatly. companies. Moreover judgement and adaptability
are needed to cope with changing small and
There seem a lot of needs to renew the existing large situations flexibly.
PBX system like this kind. On the visit to Kiev We have selected NGO as an organization of this time (October,.97) the plural number of possessing this kind of adaptability. We have hospital managers appealed us to do so strongly. previous history for our NGO currently composed
of mainly veterans of Telecom. There used to be
In the hospital facilities in these countries, Telecom Foundation in accordance with Japanese much of the equipment was "contributed favorably" law and they were tackling with the tasks of by foreign countries.In same cases buildings, developing countries. When the Foundation was equipment and medical apparatus were contributed dissolved because of certain circumstances, above and gathered separately by several countries, -mentioned 1PHECA project by WHO arose and our the rule of maintenance and repairs is insuffici- Basic Association had recklessly decided to ent and the budget is in shortage. Therefore it realize this plan in our NGO in 1992. is sometimes difficult to set to work the task.
NGO is the abbreviation of Non Governmental
4. ORGANIZING TELECOM NGO AND PROPOSING "THE Organization and it can give an idea unconven-
TELECOM AID ACTIVITY" tionally,look for possibility of its reality and
carry out plans under our own responsibility.
As we have learned these facts and situations, A variety of experience and ability are needed. we began to think that these kinds of projects Also not a few amount of money is necessary. are not suitable for big aids or big business based on government or large companies. We have overcome this problem by reusing the
current equipment in the first project. We cover
One reason is that in order to find out management costs by collecting membership fees their needs we have to carry out task work to from people working for the company or probe the other party's circumstances related field. We have currently been receiving elaborately, to watch the current facility and cordial medical advice from departments of then have to take the measures to cope with the medicines at both Nagasaki University and Tokai conditions. The large delegate by top executives University. cannot usually provide good service up to these.
Second reason is that it is desirable for the In Japanese society based on free economy and persons in charge of research to have human democracy, not a few social aspects are still motivations based on the sympathy with other premature. We cannot say Japanese NGO activities party's pains and hardships.It is also desirable or volunteering activities based on one's
. Lr5 2 124 voluntary spirit are sufficient compared with
Western countries. But since Hanshin Earthquake
in Kobe in January 95 those activitiesseem to have been established in the Japanese society. We have cone to handle the projects seemingly
beyond our ability. Due to these workswe have become conscious of our existenceas a citizen in this society. Especially friendship made by
people through these works is completely
different from that of business world.I cannot refer to these socio-philosophical matters
further more on this manuscript.
We dare to call these activities "The Telecom
Aid Activity?' because we can realize and
confirm that Telecommunication is effective for
improving basic welfare of human life depending
on how we make use of it.
Our organization started in September 92. What
we have accomplished in five years is not big at
all, but we can surely realize how extensiveand how big the future activities will become.
I would like to propose the followingmessage. The persons concerned in Telecommunications
field in the world, why don't we gather in each
Telecom WO, promote "The Telecom Aid Activity?' and contribute to the global welfare, friendship and peace!
125 J3 Telemedicine Through Shemet
David Yong Chang Zhao Shanghai University Shanghai, China PR
ABSTRACT
Telemedicine is a modem computer networking system used to offer real-time consultation for patients. Telemedicine Through Shemet (The Shanghai Education and Research Network) is the first real-time Telemedicine network project in China. This paper introduces the Telemedicine system now running on Shemet and discussesits prospects and impact.
I. Introduction professional doctors are able to offer their consultation to improve the quality of Telemedicine is a modem computer medical service, and at the same time able networking system used to offer real-time to gain more experience and knowledge in consultation for patients. The significance their respective professional fields. The of Telemedicine to both the patient and benefits Telemedicine can offer to both doctor is very impressive. For patients, the individual and the society as a whole especially for those in the remote areas are becoming more and more aware in where the local medical service is often many countries. With the availability of insufficient and its quality not good, they advancedtechnology and financial do not need to spend long hours traveling resources, Telemedicine has found its long distances for receiving the. medical wideapplicationinthedeveloped treatment at the medical centers in big countries. cities. With Telemedicine it is possible for In China it is relatively late for them to share, at their localities, the high Telemedicine to play a role in her social level medical treatment from the best life. However in recent years big strides doctors living in different places in the have been made with an eye to catch up. home country and even in other countries Supported by Shanghai Education of the world. For doctors, it is possible to Commission,theShanghaiMedical acquire, through the Telemedicine system, University beganthe project of the medical records of the patient stored Telemedicine System in 1995, to run on at any hospital covered by the net. Various Shemet--theShanghaiEducationand
1, 5 126 Research Network. It is the first real-time Golden Health MedicalSatellite Telemedicine network project in China. Network has been openedinto (Chen, 1995) In the same year, a large operation. Up to now the network project named Golden Health Project was has covered for the first batch of 20 started and its sub-system called First Aid hospitals spreading over 15 cities Network System was developed, with the throughoutthewholecountry. result that part of the subsystem went into Among them are Fuwei Hospital of successful operation in 1996. The first China'sMedicalAcademy,the electronics medical cards have started Third Hospital Affiliated to Beijing their way to serve the people in Shanghai Medical University, and the First and Anshan cities, as well as in Hebei and HospitalAffiliatedto Harbin a few other provinces. The card holders Medical University, etc.. can have the accessin the first aid Anyone who possessesa network system from any of the terminals, "Golden Card" issued by the Bank so that the doctors can read the medical of China can store his/her medical recordsanddecidewhatfirstaid records into a hospital in the net and assistance to offer. (Lu, 1996) A more thus be able to receive the service recent example is seen from a news item of Telemedicine. on Jaifang Daily of Shanghai, August 14, 1997, reported by Xinhua News Agency The events mentioned here and from Beijing on August 13: many more others emerging now and in With Golden Health Satellite the days to come have put us in a situation Network,theexpertsof brain in which we have to keep a close -eye on surgeryinBeijingand Harbin thedevelopment of Telemedicinein conducted today, at different places, China. With this in view, let's take a a successful"faceto face" closer look at the Telemedicine System diagnosis for a girl of 12. The eight Through Shemet. specialists are either from the First HospitalAffiliated toHarbin II.The Telemedicine Through Shernet Medical University or the Beijing Golden Health Brain Telemedicine The Telemedicine Systemof Center. Aftertheconsultation Shanghai Medical University is running among them,analternativeof on the Shanghai Education and Research treatment was reached. Network (Shernet). Not long before, the Organized by the National first national specialized computer Health Department, the exclusive network, named China Education and
127 5 5 Research Network (Cernet) was formally connected to the network through campus initiated in November 1994. In order to network, with theothermedical construct the Shanghai Education and universitiesandlargerhospitalsin Scientific Research Network, Shanghai Shanghaiconnectingtothenetwork Education Commission set up a team to through ISDN, DDN, X25 communication work on the project in April 1995. After & satellite, or telephone lines. People can thefirststageof theprojectwas access the Center Database and ask for completed, the network, Shemet, began its service through the telephone line. The operation with a formal opening ceremony system embraces 8 consultation in January 1996. management centers and various With CONVEX-C240 distinguished consultation centers, such as supercomputer, SUB-SPARC20 stations, that of hand surgery, tumor pathological CISCO-2511andCISCO-4500route slice, liver cancer and medical switches as its hardware, it is designed to imagination,etc.. The system has the takeintoconsiderationof thedata capacitytocarryoutinternational communication capacities in accordance Telemedicine with Macao, Singapore and with the overall plan of Cemet. The San Francisco through Internet or satellite Shemet trunk line adopts the DDN special transmission. line synchronousdatatransmission The ConsultationManagement network, which is connected with star Center is responsible for allocating and topology subnet. The major advantages of controllingtheconsultationresources, this structure lie in its reduced investment bothspecialistsanddevices.Every and good performance. The trunk line of consultationcenterisequipped with Shemet now covers 10 knots, including modem diagnostic computer system and Jiaotong University, Fudan University, other necessary facilities. Doctors from Shanghai Medical University, etc., and different hospitals or consultation centers offers the services of distance education, are able to exchange their images, patient remote diagnosis, data retrieval, as well as records and other information through the routines like e-mail, homepage and FTP. network and cooperate with each other TheTelemedicine System of through real-time discussion. The ShanghaiMedicalUniversity(RCS) consultation center is designed to share began to run on Shemet on December 21, medical information resources with other 1995. It was then the first real-time RCS countries through Internet and become a network project in China. The system member of the whole global public health includes Shanghai Medical University and network group. her seven affiliated hospitals which are Based on the multimedia computer,
156128 the Telemedicine System of Shanghai Medical University adopts the technology The Telemedicine System's effects and device of Intel and transmits the on thesocietyare multi-dimensional. compressed data and the image Generally, the more directly involved are information through Shernet, added by the following aspects: telephone lines, microwave, satellite and Patients can conveniently receive so on to the remote areas. In view of the prompt medical help and service from presentcommunicationsituation in experts at their own distant places. This Shanghai and the basic characteristics of will save them substantial time, money Shernet, the system applies a two-level andeffortsinacquiring timely and network structure with its core network on effective medical treatment. More Shernet to construct a 64-2Mbps high- importantly,thesystem can makeit speed channel. The topological structure possible for those living in the poor, is so designed that high reliability, short remote areastoenjoythe advanced network delay and economy are to be medical services of Shanghai. materialized.This helps get over the The network enables doctors to possible weaknesses of the Telemedicine receive patient's records from Remote on the telephone line with its poor quality Patient Database and transmit X-ray Slice, andlowtransmissionspeed. The CT or other kind of high resolution Telemedicine system, at the same time, images.This willlargely reduce the cansharetheadvantagesofhigh medical expenses which would otherwise transmissionspeed,lowdisturbance, be very high, and result in the assurance cheap expenses from running on Shemet. and improvement of diagnostic qualities. Now the Telemedicine System can For each health and medical care offer remote image transmission (active or organization,thesystemhelpsavoid stable), whiteboardsharing,remote duplicate investmentsofthelike medical education, remote registration, equipment, so as to reduce constructive Shanghai Medical GuideDatabase, cost,butwith improved input-output medical seminar, medical science and effects, because the system will make all technology information services. With the the high quality, excellent and enlarging of its service scope covered by sophisticated medical devices be allocated the system, the generally acknowledged and shared more properly. benefits the society can get are increasing Through the network, workers in and gaining in importance. the health sector can conduct remote education,academicexchangesand III.The Social Effects of the System discussions between different areas. This
129 157 willenhancethepopularizationand integrating the Western and the traditional prevailingofhealth andmedical Chinese medicine. knowledge of the whole nation, and 2. In the process of this integration, contribute to closing the gap of living a kind of mutual understanding will have conditionsbetweenpeoplelivingin to be reached in terms of the medical different areas in our country. philosophy in both the Western and the People can access to the network Chinese Medicine. via telephone lines for the database of the 3. This mutual understanding can service center. This, in a sense, brings the only be realized through overcoming the outside medical information world into obstacles in language communications. the home of an individualwith an 4. In overcoming such obstacles, a opportunity for each to receive health and standardization of terminology in medical medical education, and in turn, promotes terms would have to be fulfilled. This the production and sales of the telephone process might be called the globalization related communication products. of medical terms. The significance of the services 5. Then a new discourse will in this from Telemedicine is far beyond those way becreatedtoaddressa new directly related to people's health care and theoretical system for the explanation of medical treatment, and to the health and the phenomenon in the respect of human medical education of the people. With the health and medical care. development of Telemedicine systems in 6. In all this process, the world many other countries, the communication peace and development willpossibly stimulated by Telemedicine services the come true and a new light will cast in the worldoverwillbringaboutmore life of human society. significantevolutionor revolutionin As is known, whatever a new thing medical theories, in people's world view it is, when appearing on the scene of the and in forming a new and more integrated human history, it can not be perfect at the human civilization in the next century. early stage. Both the far-reaching effects Sincemore and more peoplefrom of the system on our society in terms of different cultures will have to economic and social benefits, and the communicate through Telemedicine problems coming with it, are largely open systems, the exchanges and interactions for further discussions. With between peoples in different parts of the Telemedicine entering our society, more world will probably achieve the following specifically we have to ask: What kind of results (Cui, 1996): patients are suitable for Telemedicine? 1.Acceleratingtheprocessof What would be the cost-effectiveness in
-115 8 130 this service? What are the existing and 344, November 15, 1995. potential managerial problems for us to Cui, Liang Yi, The General Trend of solve so that the effective and efficient Integration,Supplementation and operation of Telemedicine can be made, Innovation of theEastern and especially when this system grows into Western Medicines,in Medicine enormoussizeandbecomesmore and Computer, No. 2, 1996. comprehensive? What shall we do to Lu, Ping He,The Development and prepare the related rules and regulations ApplicationoftheFirstAid for the normal operation of this system? Network Systeminthe Golden What are other potential problems we will Health Project, in Medicine and have to solve when the system offers Computer, No. 2, 1996. international Telemedicine services for average people? Although theremight be more problems lying before us, we are not to be discouraged. Instead, humans are always encouraged and inspired by their beautiful dreams. The significance from Telemedicine services is far beyond those directly related to people's health care and medical treatment. The development of Telemedicine System Through Shemet has just started and there is still a long way to go for us both in theory and practice. It is hoped that the sharing of suchinformationwouldinvitemore discussions and be beneficial to us all, and more contributions will be made in the years to come both in China and other parts of the world.
References: Chen, Yin, Consultation Through Telemedicine - -a New Approach in MedicalService, inShanghai Medical University Newspaper, No.
131 I 5 9 CDPD Technology and Mobile Computing
Willie W. Lu Wireless Mobile ATM Task Force New Jersey, U.S.A E-mail: [email protected]
1. ABSTRACT
A growing number of web pages and information banks (IB) are being constructed for corporate Intranets. The current technology can build an inexpensive wired / wireless Intranet site that, in addition to minimizing graphics, uses a standard browser like Netscape and TCP/IP protocols - thus permitting access to the web site or IB via a Cellular Digital Packet Data (CDPD) network.
2. INTRODUCTION spectrumandInternetapplicationtools,the Cellular Digital Packet Data (CDPD) network is an Telecommunication developmentisindeed an optimal solution. amazing event in these years, and will further change our lives in the next century. The world is gettingsmaller andsmaller,andour work 3. CDPD TECHNOLOGY becoming more and more wonderful. The success of Internet brings up the new concept of Virtual CDPD was announced in 1992 as an alternative World, including Virtual Shop, Virtual Library, way to send and receive data over the existing VirtualTV,etc.Thisgreatlychangesthe cellular network. The intention was to develop a traditional style of life and make our working method where short messages and data could be custom contradictional: why we must spend much sent in between voice calls using much of the same time in the jammed traffic to go to the office while infrastructure.Atthetimeofitsinitial the Virtual Office is available at home; why we development, circuit cellular data calls were slower must send the kids to the far-away school just for and less reliable, so virtually anything would be an one course while the Virtual School is open at improvement. home. In the meanwhile, the Virtual Shopping and Virtual banking are already popular in our daily CDPD is a packet technology, that is,it sends life. small packets (usually up to about 1,500 bytes) of informationfor smallbursts of time,while Whatever it happens, it is an advance in terms of technically, files of virtually any length may be civilizationandprogress.The most of the sent, the network is optimized for fast, low cost achievements result from the rapid development of transmission of smaller files. Since the data (such information technology and telecommunication as messages) is often sent in small amounts, users network. are not as concerned with throughput, as they would be with circuit switched data (where you are How to extend the Internet services to the mobile paying for time, not data). application is the new growing demand. In order to make full use of the existing cellular frequency
160. 132 CDPD is designed as an IP network. It does not cycle, which in this case is 10% on, 90% off). use phone numbers directly, rather it uses address Thus, user throughput with multiple users can for everyone on the network. range from around 960 bits per second (bps) to 9,600 bps depending on system load. These figures As such, you would not directly dial the modem are raw and do not include compression. In actual on your desktop as you would be with circuit use, we perform necessary data compression (i.e., switched data, rather you would send a message to V.42 bis), and the true user throughput can reach an address which could go through a gateway to around 38.4kbps. your LAN, then to your desktop as another node on the network. Since CDPD is billed on a per packet and / or per byte basis, short messages and small inquiries can CDPD uses a modulation technique known as be very cost effective in comparison to circuit Gaussian Minimum Shift Keying (GMSK) to switched cellular. Due to its "addressing" nature, modulate the carrier in a full duplex mode CDPD easilymeets theneedsof two-way (forward and reverse channels).It also uses a messaging today. forward error correction technique known as Reed Solomon coding. Due to network and protocol CDPD is a connectionless packet data system. requirements (including the error correction), the That is it could take several seconds for your data raw modulation rate of 19,200 baud is reduced to to be received by another address. In some cases, about 9,600 bits per second of actual user data on this might be less convenient to use in a remote an unloaded system. This data rate is relatively access application where high data rates and quick constant while the CDPD user has grabbed a response are required. However, CDPD has no channel for single or multiple packets. However, connection time wasting, and connections can be depending uponthenetwork,theactual made instantaneously. implementation, and the user load (including voice), actual CDPD channel control by a single The proposed CDPD Network Reference Model is user (channels are shared by multiple users) can be as follows: as low as 10% (often referred to as the access duty
F-ES : Fixed End System IS : Intermediate System (provide network relay function) MDBS: Mobile Date Base Station M-ES : Mobile End System MD-IS: Mobile Data Intermediate System (perform muting function based on current location of the M-ES)
Fig.1: CDPD Network Reference Model
133 161 Currently, the CDPD New Design and System 11. Wireless Data Management > To describe the Enhancement include: Wireless Data Network Management system, includingservicemanagement,connection 1. Automatic HDD update procedure > To define management and fault management. theMobileNetworkLocationProtocol (MNLP) with the ability for the home MD-IS to inform the serving MD-IS about updates to 4. ISDN INTERNETWORKING the Home Domain Directory (HDD). 2. RRM "forcedhop"efficiency> Radio As an example, we connect the CDPD with the Resource Management (RRM) procedures ISDN (Integrated Service Digital Network). By have been defined to favor "planned hop" multiplexing several CDPD channels (i.e., 1 8) procedures. Inefficiencies may result if the into the ISDN B-channels, we can obtain higher system predominantly relies on "forced hops". wireless data transmission up to 600kb/s which is 3. CS-CDPD Call-back > Circuit Switched (CS) suitable for low-speed multimedia transmission CDPD provides capability for system to "call (the real-time multimedia transmission requires at back" to allow network initiated reconnection. least 2Mb/s datarate, which is not reachable in 4.IPv6 & Mobile IP > To support multiple cellular networks so far). Meanwhile, we propose connectionless network protocols, including to explore the XTP-Lite/ST-II protocol[2] to Internet Protocol version 6, and Mobile P. replace the normal TCP/IP protocol (XTP-Lite/ST- 5.PPTP > To support Point to Point Tunneling II is compatible to TCP/IP) for the multimedia Protocol (PPTP) to establish virtual private servicessincetheexistingTCP/IPhasno networks and enterprise networks. mechanism in dynamic rate control and therefore 6.CALEA > To support CALEA to address data can not guarantee the QoS (Quality of Service) in interception, data rerouting, intercept initiation transmission. The following figure shows the / termination functions and protocols. protocol stack for this system under independent 7.Bi-lateralauthenticationextension> To CDPD infrastructure, where `LAPD (Q.931)' is the support authentication of the mobile unit by ISDN signaling system with slight modification of the network. CDPD's shared medium feature; 'Mobile TCP/IP' 8.Initial activation / provisioning > The CDPD handles the mobility control and Handoff issues maintains authenticationcredentials for for the CDPD packet transmission. In this way, the Network Entity Identifiers (NEI). However, CDPD network can be a separate wireless link prior to the first registration to the network, the provider instead of relying on other cellular authentication credentials may be vulnerable to networks.. `CDPD Network Management' includes fraudulent misuse. Mechanism to reduce this ISDN management protocol plus CDPD Mobile window of vulnerability need to be designed. MIB (Management Information Base) module, 9.Accounting system Interface > To support which extends the ISDN service management, multipleRF airlinks, includingcircuit Channel management and Fault management to switched access, CDMA RF access, TDMA the wireless mobile hosts. 'Network Adaptation' RF access, common interface to accounting provides an interface socket between IP and lower system is essential. media accesscontrolprotocol. RS (Reed- 10. Encryption alternatives/ extensions > To Solomon) Code withappropriateinterleaving definethe use of RSA RC4 encryption depth is used in the Link Layer. Other issues about algorithm for data transferred over the airlink. thisconfiguration can be referred toin[3].
162 134 CDPD ISDN
X Window
CDPD Network Management LAPD
Mobile TCP TCP or XTP-Lite (Q.93 1) Mobile IP IP or ST-II
Network Adaptation
Media Access and Link Layer Control
Air Link ISDN PHY
Fig.2: Proposed CDPD / ISDN Infrastructure
5. ON-SITE APPLICATION connected, we operates like any other node on the network. However, our38.4kb/s wireless In order to maintain a high level of productivity in connection lets us roam wherever we need to. research as well as in designing work, it is crucial Since our laptop is already configured and loaded that we be up and running in our labs in the with all the software tools we need, once we shortest time possible. As we seek ways to shorten connect to the local network we can begin testing our start-up time, we realized that being able to use and debugging a software application immediately. personal laptop computer, rather than "borrowing" If during testing the local host finds a defect in the a desktop computer, would go a long way toward application, we edit the code on-the-fly and then saving valuable productivity time. But how could use the ME located on the local network to rebuilt we attach our laptop to different networks and still the application. Using the same computer and be able to roam freely among these various lab development tools used to create the application sites ? shortens the testing and debugging process. This not only saves the time, but also enables us to offer A CDPD wireless connectionisthe obvious better service. answer. Therefore, we connect the laptop to the CDPD network to meet all of our criteria: good range (300 - 800m and more), good throughput Real-time software in mobile computing also (38.4 kb/s and more), affordable price (around specializes in designing web sites and we have $400perunit),ease-of-useandsoftware- found that CDPD wireless networking can boost independence. productivity in this area as well. We frequently give on-site presentations that involve accessing Now when we arrive on-site at different labs or the Internet or Intranet. We can simply connect the offices for mobile computing, we come equipped laptop to the local network via the CDPD airlink with our laptops CDPD unit attached and a second and access the Internet via the ISDN line. Faster unit which we attach to the local network. Once
135 163 Internet access speeds our presentations and wastes less of our time.
Fig.3: CDPD Network Application
CDPD connectivity gives us a definite increase in productivity, raises the level of service and offers the additional benefit of greater flexibility in our work environment. If beautiful spring approaches, 7. REFERENCES we can migrate the entire office to the great out- doors. We will be able to work from our own back 1.Technical Specification sheets, MOTOROLA porch where we can enjoy the beauty first-hand CDPD system, 1993. an unexpected, but welcome benefit. 2.W.Lu, CDPDMobile DataNetwork, Technical Report, DELSON LABS, 1996. 6. ACKNOWLEDGMENT 3.W.Lu, System Architecture of Lower Layer for Thanks are given to the DELSON Laboratories for theWirelessMobile ATMIntegration, their support of the Broadband CDPD Channels Globecom'97, Nov. 4-8, Phoenix, USA, 1997. and ISDN/ATM Test Beds during the system test work.
164 136 Intelligent Satellite Overlay Networks Enable Quick Deployment of Future Internet Services
John Puetz Via Sat, Inc. Carlsbad, California USA
Abstract - While wildly successful, the true power and impact of the Internet has yet to be fully realized. New push, streaming, and IP multicast technologies can distribute audio, video and real-time events with true worldwide coverage. The existing paradigms in radio and TV broadcasting, newscasting, live event coverage, and software and information distribution will change as a result. Yet deploying these technology advancements into the existing Internet backbone and multi-layered wired infrastructure will take time. Overlaying the many layers of the existing wired Internet infrastructure with satellite enabled services can deploy these new services much more rapidly.
Introduction Where did the Internet come from and Recent headlines in telecommunications what is the Backbone? periodicals dub the Internet as the "World Wide Weight," referring to the "star" network of the The Internet began with packet switching Internetwith the backbone centered squarely projects in the late 1960s, primarily attributed to in the United States and the end points in the the Advanced Research Project Agency rest of the world. Others speak tongue-in-cheek ARPANET. During the 1970s the network grew of the "World Wide Wait," which is but one to support many organizations in the U.S. artifact of the former and refers to the Department of Defense, other government congestion appearing not only in geographically agencies, and to support universities and remote regions, but also within the U.S. research organizations. In the early to mid- backbone as demand far outweighs capacity. 1980s, the Transmission Control Protocol and Internet Protocol suite (TCP/IP) was developed Take for example the following statistics. India, to interconnect the numerous computers and a nation of over 900 million people, has access networks effectively. By 1985, the ARPANET to approximately 10 Mbps of international was heavily used and extremely congested. The Internet capacity. Russia, with only 150 million National Science Foundation founded the people, is expected to have quite a bit more by interconnection of six supercomputer centers 1998, somewhere in the neighborhood of 40 using point-to-point links known as NSFNET. In Mbps. Demand is high in Asia, Latin America 1987, a new award was made to upgrade and and Africa, while capacity is similar to that of operate the NSFNET backbone. This network India. And as new fiber capacity comes online at was based on T1 circuits, and connected some the end of 1997 in Asia, over-subscription 13 regional networks and the supercomputer abounds to the tune of four times available centers. After commercialization in the early capacity. How can the Internet become a truly '90s, the new Advanced Network and Services international resource, where throughputs match (ANS) was formed reaching interconnecting demand? The answers won't be found speeds of 45 Mbps (DS3). overnight, but by providing intelligent satellite based capacity, optimized for Internet access Today the Internet "backbone" is predominantly and applications, solutions can begin to be a collection of U.S.-based high capacity implemented today. networks owned by 22 companies. These networks are interlinked (full mesh) passing traffic between themselves (around the
e'rtrr" 137 J backbone) and their customers, Internet service and Archie to point-and-click graphical web providers (ISPs) and private (corporate) browsers complete with sound and animation. intranets. ISPs in turn provide low to medium This more graphically-rich, multimedia (video speed connections to consumers and corporate and audio) content has created even greater users. Network access points (NAPs) serve as a demands for transferring large amounts of data means for moving data between the backbone between the source (server) and the user (client). and the ISP networks in a manner that does not Existing capacity is insufficient to handle the restrict which internetworking protocol or demand. routing policy is used. Connectivity between the Solution: Use existing bandwidth more NAPs is made with speeds ranging from DS3 intelligently. Replicating this information as (45 Mbps) to 0C12 (655 Mbps) and is capable close to the end-user as possible on alternate of supporting hundreds to thousands of ISPs. To host machines can free all intermediate date the extension of the "backbone" outside of connections and bandwidth for other uses. the U.S. has been slow. Europe currently has a hand full of NAPs with backbones ranging from 2) Another phenomena of the Internet is that 2 Mbps to 34 Mbps. Fortunately this number is most of the traffic pattern (approximately 80%) growing and spreading to northern Europe with is pulled from a relatively small number of 155 Mbps links within national boundaries. server sites (20%). It is also interesting to note that over 80% of Internet content is English Some industry experts are forecasting that while language based, once again indicating that those 80% of international traffic is voice today, outside of the United States need to connect to within five years only 20% will be used for the backbone more often than not. voice. Because of the reasons cited previously, Solution: Use existing bandwidth more among others, there is considerable interest in efficiently through data replication and large expanding the worldwide connectivity of the scale caching (storage) at key traffic nodes Internet at very high speeds. One such project is content is then available "locally" or at worst, the Fiber Optic Link Around the Globe (FLAG). within a closer region. Since the information Yet fiber infrastructure deployment takes source is now only restricted by local data paths, considerable investment and time. Furthermore, the quality of service can increase significantly. as we shall see in further discussions that In the ideal case this concept could extend follow, there are other technologies that need to directly to the end user PC. be deployed to make the Internet "healthy" once again. 3) Yet another noteworthy aspect of content What's Behind the World Wide Wait and traffic is the very significant 10:1 ratio of data leaving a server compared to the data entering a What Can Be Done About It? server from a user. Traditional terrestrial There are a number of issues behind the connections do not support this asymmetric congestion and overall poor performance of the traffic loadingonly full duplex symmetric Internet as seen from users within the United circuits are available with unused bandwidth States and beyond. We present a number of capacity left idle. reasons for this poor quality of service (QoS), Solution: Implement asymmetric circuits to the with a proposed related technology solution. ISP points of presencesomething that satellite (These solutions are explored in later sections.) technology is excellently suited for. High speed multiple Mbps (e.g., 145 Mbps) outbound 1) As most everyone knows, the use of the carriers deliver the content from the server, Internet has risen rapidly in the past five years. while lower speed (e.g., 64 Kbps to 1 Mbps) The means of searching and viewing inbound connections handle user requests. The information has transitioned from the language saved bandwidth can then be used to provide yet of computer whizzes such as telenet, gopher, more outbound capacity. The resultgreater
138 throughput and higher quality of service (QoS). and, when implemented together, result in a (The inbound circuits are used to query data, very powerful package: interactive sessions or for protocol support 1)Replication and mirroring content implementing them as simplex circuits to save 2)Asymmetric links with dynamic satellite bandwidth and power.) capacity management for load balancing 3)IP multicasting 4) New subscription-based services (like Pointcast) are meeting a very important market As mentioned earlier, replicating data and need. Users are more interested in having distributing the content to mirrored server sites focused information delivered to their PC for that are reachable by local connections can immediate viewing rather than having to send a significantly reduce data access time also query (pull) for the informationin short, freeing up the transport channels for other information finds you. An appropriate analogy services. The local connections at the mirror is walking to a newsstand to buy a newspaper server sites can be LAN, dial-up terrestrial or (pull) or having it delivered to your home each cable TV distribution plants as shown in the morning (push). Because TCP/IP is a diagram. The cable plants have the potential for connection-based reliable protocol, these new providing the highest local loop speedseven "push" services must transmit the same data up to 45 Mbps per cable channel. To be over and over again (N times) until all (N) effective in providing content at the speed of the subscribers receive the information and confirm cable channel, large amounts of data (5-50 reception. Or if user datagram protocol (UDP) is Gbytes or more) should be stored within used for unicast connections, there are still N server(s) at the head-end. Management of this transmissions required. mirrored data is important to ensure that content Solution: Implementing IP multicast in the is current. Mirroring can be implemented using network, sends data to all subscribers with a web-prefetching, replication and auto-update single transmission, thereby greatly reducing the along with smart caching. amount of data on the network by a factor of N- 1. There is a basic standard for managing IP groups known as IGMP (Internet group
management protocol). However, there are a Gateway number of challenges for updating routing paths, Scout Server joining and leaving multicast groups, streaming protocols, etc. Compatibility between router Remote vendors is also an issue and has led to a rather Scout Server slow rate of adoption in the terrestrial wired Internet world. Currently only small private Comm Server networks support multicasting. A satellite-based solution can bypass the terrestrial infrastructure Cable Headend and directly connect users to the host server. Cable Neil() With an IP multicast enabled satellite overlay network ISPs and network access providers For lower bandwidth client links, the ISP (NAPs) can roll out advanced services, improve implementing the service installs a server PC at network response time, customize service each point-of-presence (POP) within their offerings, and increase revenue. desired service area. (An ISP can even install several POPs within a major service area). In this scenario a lower speed wide band IP Technologies that make a difference multicast channel operating at 0.5 to 8 Mbps is Now we will look at three different technology transmitted from the Internet gateway access approaches that enable the presented solutions point (or primary host site) to all POPs. The
139 167 return channel can be established on demand or PoP (although much less bandwidth efficient) PoP permanently assigned. The return channel carries user queries that aren't satisfied from the local server and replication error recovery data. Additional The users dial into their local POP over telephone connections. Most (if not all) capacity information is available on the local server. circuits. There are no Internet access or satellite latenciesthe information is pulled directly off the hard drive and sent immediately to the end- user.
When interconnecting these Po Ps to the gateway, use of space segment use should be PoP optimized, to reduce operating costs or maximize the quality of service. In actuality, both are achievable. First, asymmetric links IP Multicast is an IP protocol that permits should be used, with the greater bandwidths transmitting the same information to more than allocated for the outbound channels from the one receiver at a time. The most widely used Internet to the Po Ps. This is possible since most transport protocols are TCP (transmission (70-80%) of the traffic is from the web server. control protocol) or UDP (user datagram The capacity savings gained in not using protocol). TCP/IP is a reliable, connection- symmetric links can be used to increase the oriented protocol while UDP is an unreliable, outbound channels or to implement variable connectionless protocol. Both however share the capacity overflow circuits. These special same characteristic in that there is one overflow circuits can be activated when a transmitter and one receiver in each bottleneck occurs in either direction (to or from transmission session. So if 2,500 sites require the PoP). This additional bandwidth is allocated the same software to be downloaded, then 2,500 only when needed and wherever congestion FTPs would be required. This is a considerable exists. With this approach less bandwidth needs drain on bandwidth resources, not to mention all be pre-allocated for the permanent circuits, with the time spent transferring 2,499 more times more bandwidth allocated for the overflow than absolutely necessary. With IP multicast, the capacity that can be shared among all sites. file could be transmitted once using a single group address for all 2,500 sites. In contrast, typical satellite permanent circuits have fixed capacity, so some POP There is a basic standard for managing IP interconnections will be overloaded while others groups known as IGMP (Internet group are underutilized. With dynamic capacity, management protocol). However, there are a permanent circuits can be sized for 80% of peak number of challenges for updating routing paths, and the remaining bandwidth across the network joining and leaving multicast groups, streaming is allocated for dynamic overflow circuits. In protocols, etc. Compatibility between router this way, higher quality of service is ensured, vendors is also an issue and has led to a rather especially if the interconnecting network is slow rate of adoption in the terrestrial wired across multiple time zones. Internet world. A satellite-based solution can bypass the terrestrial infrastructure and connect users directly to the host server.
168 140 The Satellite Overlay with the Terrestrial Incorporating IP multicast, push-services, web Internet site mirroring and smart caching brings ISPs Over 80% of Internet content resides on the U.S. new never-before offered value-added services. backbone. For more effective user services worldwide, providers need to extend high speed access and implement in region infrastructure. High speed (2-155 Mbps) satellite circuits from the network access points (NAPs) to the desired terminating sites can achieve these services. A partial list of Internet NAPs is provided in the following table. There are over two dozen locations in the U.S. alone. Scout VSAT Remote Satellite Proxy United States Europe Terminal Server MAE East (MFS) MAE Paris o MAE West (MFS) MAE Frankfurt MAE LA (PAC Bell) French (GIX) The above diagram shows an enterprise network Amsterdam Internet Exchange MAE Houston site configured for a terrestrial connection to the MAE Dallas (AMS-IX) MAE Chicago (Ameritec) Stockholm Exchange (DGIX) Internet. For more advanced services, the MAE New York (Sprint) London Internet Exchange (LINX) properly enabled satellite network can connect Belgium IP Interconnect Point to the existing network equipment and provide a seamless, transparent overlay. This hybrid Pacific Rim Middle East system provides the best of both worlds, and can Hong Kong Internet 0 Israeli Internet Exchange even provide an enterprise-wide intranet through Exchange the VSAT terminal. o New Zealand Internet Exchange (NIX) Wrap Up The Internet has become a casualty of its own As the diagram shows, satellite links with successtoo much demand, not enough gateways located at key sites can serve whole capacity thereby creating "traffic jams" on the regions. These links, if supporting backbone information superhighway. What is needed is a interconnects, would be symmetrical or slightly "high occupancy vehicle" lane that expedites asymmetrical depending on traffic patterns. traffic to where it's going. That is exactly what While supporting backbone interconnects the IP multicasting can do for the Internet; carry lots same NAP facility can be used to provide ISPs of traffic to more than one place in a single with traffic capacity as discussed in the previous package. Coupling IP multicast with web-site sections. These ISP satellite gateways can be replication and distribution can support located on-premise and may also support considerably more users with consistently corporate clients directly. higher QoS levels.
Furthermore the technology can extend the Internet backbone and ISP services to international locations where access has been difficult, if not impossible. And these new NAPs or ISP Po Ps can be implemented in days or weeks, not months and years. Capabilities such as adaptive and flexible rate routing and high- speed asymmetric connections focus
141 169 performance where it is needed while saving bandwidth costs.
Clearly IP and the Internet are changing the way in which the world communicates. Satellites, with integrated IP services and dynamic bandwidth management (DAMA), not only provides the highest quality of service levels possible, but also offers IP multicast-based push services that are not yet possible in the "wired world."
170142 Internet Roaming: A Solution fir Global Internet Access
Jingsha He, Ph.D. and Tomohiko Taniguchi Fujitsu Laboratories of America, Inc. 3350 Scott Boulevard, Building #34 Santa Clara, CA 95054, USA
1. ABSTRACT
In this paper, we identify and discuss the various issues and solutions in the design and implementation of Internet roaming, among the most important being user authentication, ISP server routing, and settlement between ISPs. Essential technical, financial and business issues are therefore discussed for Internet roaming. Finally, the impact of Internet roaming in the Asia Pacific region is examined.
2.INTRODUCTION ISP server routing. These and other technical issues will be discussed in Section 2 on Internet roaming Internet roaming has been widely accepted as a technical issues and solutions. convenient and economic way of providing dial-up global Internet access by Internet service providers Since, in an Internet roaming situation, more than one (ISPs)totheircustomers. The economicsisin ISPs are involved, the local ISP that provides the actual comparison with the traditional way of making long Internet service will expect to receive payment for the distance or international calls for a user to connect to service. Furthermore, since the local ISP does not have the Internet through the home ISP with which the user a formal service relationship with the user and does not has established an Internet service relationship. Internet have sufficient information about the user to be able to roaming is most appealing to small ISPs whose bill, it is natural that the payment will be made by the networks only cover relatively small areas for it helps home ISP. This type of financial arrangement is also these small ISPs to expand their virtual network highly desirable to the user because the user then will coverage for user access. It is also most appealing to only deal with a single ISP, i.e., the home ISP, no frequent travelers who may go out of the areas that matter how many. local ISPs the user has used for their ISPs provide a coverage. Most importantly, Internet roaming during a previous billing cycle. To Internet roaming costs much less than dialing long support the roaming financial requirement, there is the distance or international calls to connect users back to issue of settlement between ISPs. Since customer the home ISPs for Internet access. billing by an ISP, whether it is for Internet roaming service, is generally considered to be a local issue, it is Internet roaming is defined as a user to use another not addressed in Internet roaming solutions except that ISP's network (the local ISP) to gain Internet access the roaming transaction records have to be made while maintaining the service relationship with a available to be integrated into the local billing system. different ISP (the home ISP). Internet roaming requires These and other financial issues will be discussed in the establishment of a business relationship between Section 3 on Internet roaming financial issues and ISPs to serve each other's customers. The business solutions. relationship ensures that the ISPs will become known to each other so that user requests for Internet access Given the large number of ISPs (around 4,000 in the can be routed by a local ISP to the correct home ISP U.S. and 7,000 in the entire world), it is very difficult, for verification. Therefore, there is no sharing of user if not impossible, for an ISP to establish and maintain a information needed between these ISPs. To support the business relationship with each and every other ISP to roaming technical requirement, there are two key enable global Internet roaming. To maintain a flexible issues that have to be resolved: user authentication and and scalable global Internet roaming network, business
143 relationships between ISPs can be better served by is a roaming user, the local ISP will send the user ISPs' forming an alliance or a consortium with a information to the home ISP for validation. The central administration that acts as a clearinghouse for mapping between a domain name and an ISP is the resolving certain technical as well as financial issues. function of ISP server routing, which is the subject of This central administration will take the responsibility discussion in the next subsection. of maintaining the roaming network as well as of settling charges and payments between ISPs. Each ISP The home ISP, after receiving a user authentication will then need only to establish and maintain a business request,willalso examine theuserinformation relationship with the clearinghouse. Subscription of received against the user database information it has to Internet roaming service will simply become a matter determine whether this user is a legitimate user. If the of joining the consortium. These and other business authentication succeeds, a "yes" response will be sent issues will be discussed in Section 4 on Internet to the local ISP to authorize it to offer Internet service. roaming business issues and solutions. The home ISP may require further user authentication stepssuchasone-timetokenbeforefinally Finally, the impact of Internet roaming to the Asia authenticating theuser.In thiscase, a response Pacificregionisdiscussed, which can bebest containinginformationandrequestforfurther illustrated by the active participation of ISPs in the authentication is sent back to the local ISP. The next region in one or more global Internet roaming consortia round of user authentication from the local ISP will and the areas that have already been covered by the resemble the first one based on user identifier and consortia. Conclusions to this paper will then follow password but will use a different set of values supplied this study. by the user. There is no major difference in principle between the different authentication mechanisms. The final goalis for the home ISP to reach a user 3.TECHNICAL ISSUES AND SOLUTIONS authentication decision to authorize or not to authorize the local ISP to offer Internet service to the roaming Since Internet roaming requires the cooperation of two user. If not authorized, the local ISP will reject the user ISPs, with one being the home ISP with which the user and tear down the connection because the local ISP has established an account and the other being the local would not get paid by the home ISP should it decide to ISP that provides the actual Internet service, the proceed otherwise. following two issues have to be resolved:
(1) User authentication: since the local ISP does not 3.2 ISP SERVER ROUTING have any information about the user, authentication has to be performed by the home After the local ISP determines that the user is roaming ISP. user, it needs to derive the server routing information of a home ISP where a request can be sent and user (2) ISP server routing: since the user may be from any authentication can be carried out. There are three one of a group of ISPs, the local ISP needs some approaches to accomplish this function: distributed mechanism to derive the correct home ISP that routing, centralized routing information and centralized will do user authentication. routing implementation. In distributed routing, routing information is stored and maintained at each ISP so that the local ISP can use the domain name information 3.1USER AUTHENTICATION supplied by the user to derive the home ISP server information. The advantage of this approach is that it is User authentication involves communications between fast because the routing information is always available the local ISP and a home ISP. This is because user in the local ISP site or network. The disadvantage is authentication establishes the accountability of the equally obvious, that is, it does not scale very well; transaction and, therefore, must be done by the ISP that therefore itis not easy to implement and maintain owns the user and has the user's information. To given the large number of ISPs in the world. facilitate roaming, when the user logs on to the local ISP, the user has to provide the domain name that will The solution to the distributed ISP server routing identify the home ISP that the user belongs to, in problem is to centralize the routing information. With addition to the traditional user identifier and the the centralized routing information, there are two password. By examining the domain name of the user approachestoperformactualroutingofuser login information, the local ISP is able to determine authentication requests. In the first approach, the local whether the user is a local user or a roaming user. If it
1 7 2 144 ISP will query the central routing server for routing (2) ISP settlement: since Internet roaming involves information to the home ISP. The actual routing will more than one ISPs, the financial settlement has to still be carried out by the local ISP based on the routing be arranged and has to be flexible and scalable. information obtained from the routing server. This processof routinginformationqueryessentially (3)User billing: since Internet roaming is generally translates the domain name supplied by the user to a offered to customers by ISPs as a value-added routable address, e.g., the IP address, in order for the service, the ISP existing billing systems have to be local ISP to address a user authentication request to the enhanced. correct home ISP. The routinginformationwill normally be cached at the local ISP to improve performance; therefore, future user requests with the 4.1 INTERNET ROAMING PRICING same domain name will not require the querying of the central routing server. Given that the local ISP and the home ISP play different roles in Internet roaming with the local ISP In the other approach, the local ISP will route all the providing the network and service and the home ISP providing the user, both ISPs need to be paid by the roaming requests to the central routing server. That is, user. Thus, Internet roaming pricing includes at least the server willinvolvein each and every user authentication transaction; it becomes a central node in two components: charges by the local ISP and those by the user authentication chain. This approach allows the the home ISP. The charges by the local ISP are central routing server to perform better network control primarily based on the cost of providing network service. On the other hand, the charges by the home butsufferssevere network performance problem because the delay of every authentication request and ISP are related to customer services, which include, but notlimitedto,accountmanagementand reply will virtually double. This way of implementation are will perform the worst if the local and the home ISPs administration, billing and payment collection and are connected via high-speed network links but their handling to the local ISP. If a clearinghouse model is connections to the central routing server are relatively employed to handle financial transactions between Internetroaming service, poor. ISPs for an additional component has to be added to the pricing structure, i.e., the charges by the central clearinghouse agent.It 4.FINANCIAL ISSUES AND SOLUTIONS should be noted that the addition of a clearinghouse in the pricing structure does not necessarily lead to a Each Internet roaming transaction usually involves two higher price to the end users. While the charges by the ISPs, i.e., the local ISP and the home ISP, although, in local ISP will mostly remain the same, the charges by certain applications and environments, there could be the home ISP can be substantially lower. This is other ISPs in between them. Since Internet roaming has because the central clearinghouse agent now takes over to involve financial transactions between the local and some of the work that otherwise has to be done by the the home ISPs, this flat structure of ISPs in a roaming home ISP,noticeablythefinancialtransactions network makes it impractical for individual ISPs to between the home ISP and the local ISP. The agent settle financial transactions with each other. This is might also be able to aid in the customer billing of the because ISPs must establish mutual trust relationships home ISP thanks to the detailed transaction records that with each other on financial issues. Furthermore, it usually accompany the invoice from the agent to the may not be economical for an ISP to deal with each home ISP. In addition, the centralized clearinghouse and every other ISP for fmancial settlement. Therefore, may handle the settlement more efficiently such that it is inevitable that some arrangement must be set up to the overall cost of inter-ISP transactions can be greatly resolvefinancialissuesbetweenISPsregarding reduced. This reduction will be reflected in the home Internet roaming. ISP's cost structure and the savings should ultimately go to the users. There are three issues that have to be addressed: 4.2 ISP SETTLEMENT (1) Pricing structure: since there is more than just the home ISP in a roaming situation, the pricing ISP settlement can be carried out on a peer-to-peer structure of the Internet roaming service will no basis. This will work fine if the number of ISPs in a longer be simply determined by a single ISP. roaming network issmall.In reality, due to the existence of a large number of ISPs in the world, any Internet roaming network will be expected to grow to
145 173 have a substantially large number of ISPs. The existing In the peer-to-peer relationship model, an ISP works Internet roaming consortia such as GRIC and iPASS with another or a group of other ISPs on an individual Alliance can demonstrate this. For scalability reasons, a basis in order to expend its network coverage and to clearinghouse model is, therefore, more suitable to offer Internet roaming service to its customers through Internetroamingtohandlefinancialsettlement the network of the other ISPs. This arrangement would betweenISPs.Another advantage of havinga work fine if the number of ISPs were small. However, centralized settlement agent is that an individual ISP unlike the telecommunications industry where a few needs only to trust and deal with the agent for all issues very large companies dominate the markets and the relatedtotheroamingnetwork.Peer-to-peer entry barrier into the market is very high, the ISP relationship is no longer needed and maintained under market has been flooded with thousands of companies, such circumstances. This would contribute large and small. Since it is especially true that Internet significantlytothestreamlining of the network roaming is more attractive to small ISPs than to big operations and to the lowering of the overall cost of ones because it serves to expend the network coverage, Internet roaming. any Internet roaming network tends to have a large number of (small) ISPs. Under such a circumstance, peer-to-peer relationship would be very difficult to 4.3USER BILLING establish and maintain. In addition, the global nature of the Internet roaming makes such a relationship even User billing in Internet roaming is generally considered more difficult, especially for small ISPs. The nice to be a local issue. That is, billing should be handled by feature of Internet roaming is that, once the network is the home ISP. At a matter of fact, this arrangement established, the ISP would have a global network serves everybody well in the roaming network and is coverage or, more precisely, have a coverage in the considered to be one of the major features of Internet area where it has a partner ISP. roaming. That is, the user receives a single bill, the home ISP retains its own users and the local ISP will not concern itself with payment once the user is 5.2 INTERNET ROAMING CONSORTIA authenticated by the home ISP. Given the fact that the home ISP has already had a billing system in place for Internet roaming consortium is a natural way of dealing ordinary customer billing, the addition of Internet with a large number of ISPs. It makes the management roaming would not create a new requirement for the of the business relationships between ISPs much home ISP. Integration of the roaming transaction simpler. There is typically an independent enterprise or records into the existing billing system is the key and organization that owns the consortium, manages the the only work the home ISP needs to do to be able to network and serves the ISPs. ISP members of the bill its customers for Internet roaming service. The consortium benefit each other. Once becoming a home ISP may elect to rely on the detailed transaction consortium member, an ISP immediately benefits itself reports from the central clearinghouse agent as the in both ways. On one hand, the entire roaming network basis for generating its own customer billing. Although represented by the combination of all the member ISP this may not be a desirable alternative, it nonetheless networks becomes accessible to the ISP. That is, the illustrates how little the home ISP needs to do in order ISP effectively expands its network to the size of the toofferglobalInternetroamingservicetoits roaming network for access by its users. On the other customers. hand, the ISP's network becomes accessible to all the other ISP members. Thatis,the ISP effectively expands its user base to the total number by all the ISPs 5.BUSINESS ISSUES AND SOLUTIONS in the roaming network. When a user of the ISP is in the local area where the ISP has POPs, the user will use Global Internet roaming can be accomplished in a the ISP's network to access the Internet. Whenever the variety of ways. Among the most common are the user goes or travels to an area that is out of the network traditional way as that in international coverage of the ISP, the user will use a partner ISP's telecommunications services, i.e., peer-to-peer network to access the Internet, i.e., roaming. Similarly, relationships, and the membership way, i.e., Internet a user of another partner ISP can use the ISP's network roaming consortia. to access the Internet whenever the user is in the area that is covered by the ISP. The user is not prohibited 5.1 PEER-TO-PEER RELATIONSHIPS from accessing the Internet through a particular ISP. It is always the economics and quality of network service that determines the favorite local ISP a user prefers to use. The reason for a user to access through a local
174 1 46 POP is to avoid paying for expensive long distance or Internet access becomes a necessity rather than a internationaltelephonecharges.Thesharingof luxury to them. Therefore, Internet roaming is very network resources among ISPs in an Internet roaming appealing to them because it is usually cheaper than consortium achieves the objectives of providing users dialing international long distance to directly connect with low cost Internet access and, at the same time, to their home ISPs. generatingadditionalrevenuesforthemselves. Therefore, it is both a win for the users and a viable CurrentInternet roaming has coveredallmajor business for the ISPs. countries in the Asia Pacific region such as U.S., Japan, China, Australia, Korea, Hong Kong, Singapore, etc. The success and rapid growth of Internet roaming Together with the network coverage in Europe, other consortia demonstrate the usefulness of the service and countries in the North and South Americas and even in the wide acceptance of the concept. Since the concept parts of Africa, Internet roaming has really achieved is easy to understand and the service is easy to use, it is the status as a useful mechanism for users to gain really the market and economics that define the global Internet access with singleuser accounts. limitation of the scope and the success of Internet Another interesting observation of Internet roaming in roaming. On the economics side, as long as the rate of the Asia Pacific region is that a number of major ISPs Internet roaming compares favorably to that of long have participated in globalInternet roaming and distance and international telephone calls, it will exist offered the service to their customers. Updated lists of as a valuable and competitive service for global the major ISPs can be obtained by visiting the home Internetaccess.Currently, due to the monopoly pages of GRIC (http://www.gric.com/) and iPASS situation in the telecommunications market in most Alliance (http://www.ipass.com/), two leading global countries, especially in the Asia Pacific region, the cost Internet consortia in the world. of Internet roaming to the users is substantially lower than long distance and international telephone calls. For example, most ISPs offer global Internet roaming 7.CONCLUSIONS service to their customers at the prices ranging from $4.00 to $24.00 in U.S. dollars per hour, depending on There has been a tremendous growth during the last the region, which comes down to $0.07 to $0.40 in eighteen months on global Internet roaming. However, U.S. dollars per minute. Compared with most domestic the implementation of Internet roaming involves not long distance and international telephone calls, the rate only technical issues but also financial and business is substantially lower. As the result of privatization issues.In this paper, we discussed most of the effort underway in a lot of countries, telephone rate outstanding issues and the various alternatives that may gradually go down and the gap between the make global Internet roaming a commercially viable Internet roaming and direct phonecall may be solution for global Internet access. The impact of narrowing. That will gradually reduce the global Internet roaming to the Asia Pacific region was competitiveness and attractiveness of Internet roaming alsoexaminedtoillustratethepopularityand and, eventually, certain users may decide not to use acceptance of Internet roaming in the region. The roaming. Nevertheless, under such a circumstance, increases in the use and in the number of users of the Internet roaming will still remain as a viable alternative Internet together with the economics that Internet for global Internet access. roaming offers will undoubtedly drive the global Internet roaming traffic to a substantially higher level in the near future to come. The market share of Internet 6.IMPACT TO THE ASIA PACIFIC REGION roaming in the global Internet access business will only be determined by the difference in rates between GlobalInternet roaming has generated alotof Internet roaming offered by ISPs and long distance and enthusiasm in the Asia Pacific region, especially during internationalcallsoffered by telecommunications the last eighteen months. This can be demonstrated by companies. the large number of major ISPs, including the telco- based ISPs, that have joined one or more global Internet roaming consortium and offer Internet roaming service to their customers. This new development has primarily been the result of a favorable economic situation in the region, which results in frequent business travels within and out of the region. Since most business travelers have to stay connected to the Internet while on the road as a part of normal business,
147 175 How Developing Countries will Profit from GMPCS
Ming Louie Vice President, Asia Pacific Business Development Globalstar United States of America
Introduction Is There Really a Difference Between PTTs, regulators, investors and consumers All These Satellite Companies? around the world are closely watching the continuing progress of Global Mobile Personal While the essential concept of a satellite Communications by Satellite (GMPCS), which telecommunications system is the same from promises to radically advance basic system to systemcalls get routed up from telecommunicationsservicesthroughthe the ground to one or more satellites and then developing world. back down to the ground againGMPCS comes in several different flavors (see Figure The wait will not be long.Beginning in 1). 1998,several Low-Earth orbit (LEO) and Medium-Earth orbit (MEO) satellite-based GEO Systems communi-cations systemswill compete to provide digital voice, data, fax and position Geosynchronous(GEO)satellitesare location services to users in every town, village those that reside 35,000 Km abovethe and island. equator, and orbit the earth every 24 hours, allowing them to remain stationary above one Satellite technology . arrives at a critical fixed point on earth. juncture for developing countries. In order to Currently, the only global GEO mobile quickly expand telecommunications services available into rural areas, the existing communications communications satellitesystem network and additionalfacilities must be today is INMARSAT. The primary advantage extended to rural regions of very low telephone to INMARSAT's system is that it is available today; however, the bulky, heavy, expensive density.But deployment of wirelines and switching facilities imposes heavy financial phone (the size of a small suitcase, costs burden and requires a significant investment around $3k), and propagation delays inherent to GEOs make the newer GMPCS systems of time for developing countries. more attractive. To be sure, after 15 years of Under these circumstances, financing and operation, INMARSAT still has fewer than deploying the telecommunications 50,000 customers. infrastructure to the rural areas of developing countries pose major challenges for most of CurrentandplannedregionalGEO these countries. In many partsof the satellite systems include Australia's Optus developing world and for many applications, MobileSat and Telstra MiniSat, AMSC in the the demand for basic communications can United States, TMI in Canada and ACeS in only be met through mobile satellite services the Asia Pacific region.While these newer offered by GMPCS companies. GEO systems have taken advantage of the technologicaladvancesinthepowerof satellite antennas, allowing for smaller and
148 GEO Orbit ------MEO Orbit oo INMARSAT Regional GMPCS ACeS LEO Orbit S. Mobile Sat ------_ Mini Sat AMSC Odyssey TMI %1. % , 12 Satellites CDMA Globalstar 48 Satellites s .CDMA ICO Global . % Satellites 10,TDMA Iridium %, 66 Satellites
TDMA % t
Figure 1. GEO, MEO and LEO constellations.
lighter portable phones, these systemsall approval to operate in the United States, suffer from two major disadvantagesfirst, primarily due to 1) the. FCC's objection to the most are regional rather than global.Take relationship between ICO's investorsmany these phones out of range of the GEO of them national PTTsand the signatories footprint and they become useless.Secondly, of Inmarsat, and 2) the as-yet unbounded they cannot escape the propagation delays relocation costs of compensating existing users inherent in GEO satellites. However, for of the 2 GHz band that ICO plans to utilize. users who rarelystrayfar from home On the funding front, Comsat, in explanation essentially,thosefrom manydeveloping of its decision to abandon its direct equity countriesthese regional systems may be position in ICO, recently announced that ICO very attractive. system costs were increasing from $2.7 billion to $4.7billion. Odyssey has received only bare-bones funding to date. However, despite MEO Systems these stumbling blocks and the fact that MEOs, or Medium-Earth Orbit, satellites neither ICO nor Odyssey will be available orbit the earth at approximately 16,000 km until after the turn of the century, both are from the earth's surface.The two GMPCS expected to be strong competitors in the systems falling into the MEO category include GMPCS market. ICO, ownedpartly by INMARSAT, and TRW/Teleglobe's Odyssey. Because they are technically similar, these two systems are Big LEO Systems often lumped together with Globalstar and Orbiting between 500 and1,400 km Iridium as "Big LEDs." ICO plans on a 10- above the earth, Low-Earth Orbit (LEO) MSS satellite TDMA system, while Odyssey will systems offer another choice to potential MSS rely on 12 satellites and will utilize CDMA. users.The two primary competitors in this arenaincludeIridiumandGlobalstar. These faster-orbiting, lighter weight MEO Anothercompany,Teledesic,backedby satellites allow for less expensive hardware Microsoft's Bill Gates and former McCaw and service than the GEOs, but their distance Cellular CEO Craig McCaw, is also a LEO from the earth still causes slight voice delays. system, butTeledesic'spositioningas In addition, ICO has yet toreceive FCC primarily a wideband, high data rate Internet
149 1 ? 7 access service place it in a different market that 60% of the population will not be covered than Globalstar and Iridium. by cellular by the year 2000, due to the prohibitivecostsofcreatingawireless Iridium, backed by Motorola, is the most network in areas of low population density expensive of all the MSS systems at $5 billion and inhospitable geography/ topography. in total system costs and quoted rates of $3,000 handsets and $3-a-minute airtime. Clearly, the telecommunications market Indeed,Iridiumexecutiveshavestated requires a new system that will allow these publicly that their primary market will be millions of people, particularly in developing international businesstravelers who can areas, to communicate with the rest of the afford these costs, rather than rural users. world.Cellular and wireline networks will Iridium plans a TDMA-based 66-satellite continue being built, but will not be available constel-lationthatwillpasscallsfrom until well after the turn of the century.If satellite to satellite; therefore, most of its developing nations are to keep advancing into technology is in space. As such, upgrading the the political, economical and social spheres technology may be extremely expensive, if not populated by industrialized nations, they will impossible. In addition, local PTTs without need before then areliable,cost-effective gateways could lose out on potential revenue. means of communicating. Right now, GMPCS However, Iridium was first to launch in May is a good solution. 1997, has declared its intention to be first to market and is backed by the well-known global telecom-munications entity Motorola, Costs vs. Benefits of GMPCS for making it a major forcein the GMPCS market. Developing Countries Globalstar is the only CDMA-based LEO Much attention has been paid to the sexy system in the market. Globalstar plans a 48- side of GMPCS: mobile applications. GMPCS satellite constellation whose satellites will act brochuresare filled with photos of as simple "bent pipe" receivers, passing calls internationalbusinessexecutivesonthe from one gateway to a reflective satellite and move, phoning the office from China, faxing then back down to the user. CDMA allows from the Australian outback, getting paged in Globalstar to operate with higher spectrum an African village. Indeed, GMPCS will efficiency and greater signal quality. Moreover, deliver on these promises and the the extensive use of worldwide gateways, international business community will reap permitting individual countries to share in the rewards of this new technology. But what Globalstar's revenues, has led to over 100 about developing nations,for whom fixed agreements with potential service providers services will play the bigger role? How will around the world. Globalstar plans to begin they benefit from GMPCS? providing service in late 1998. As mentioned in thesectionentitled "Projected GMPCS Market," the needfor Projected GMPCS Market reliable communications in developing nations is overwhelming. To compete effectively in the How many users are all of these systems increasingly global economy, developing competing for?Estimates place the total nations must commit to supporting this need. addressable market at close to 30 million. GMPCS provides these countries with several Currently, over 3 billion people lack basic benefits: phone service and,according to the ITU, nearly 50 million people are on registered GMPCS is Coming Soon. GMPCS will waiting lists for phone service. be available in the next few years, as opposed to cellular and wireline networks, In addition,internationalconsul-tants which will take decades and billions of KPMG Peat Marwick did a study that found dollars.Developing countries don't have
150 178 the luxury of waiting, nor do .they-possess require maintenance, and service the capital necessary -to invest in these providers will need a network of repair other networks. GMPCS willallow people, technical support workers, and developing nations to catch up salespeople to keep their customer base dramatically to industrialized nations by satisfied. fosteringcommunication,trade,and, ultimately, wealth_ Clearly, GMPCS offers a reliable telecommunications network, invest-ment and GMPCS Provides Reliable, Consistent job opportunities, and a piece of the revenues Service. Existingtelecommunications to developing countries.Yet in the recent networksindevelopingcountriesare World Telecommunications Policy Forum held notorious for limited availability and poor last October in Geneva, developing countries voice quality. GMPCS service solves these expressedanumberofconcernsabout problems through state-of-the-art digital GMPCS. technology that eliminates echo (with the exception of GEO-based systems), The primary concern was that GMPCS provides increased capacity and improves operators would siphon off traffic from the availability. existing telecommunications networks. In fact,theshareof a developingnation's GMPCS Increases Investment revenue will depend on the GMPCS operator. Opportunities for Developing With Globalstar, for instance, all calls that Countries. While the business plans of originateor terminate inthedeveloping the various GMPCS companies differ, all country will pass through the local ground have recognized that joint ventures with station, and a certain percentage of that call's local investors of developing countries are charges will go to the PTT. Globalstar service the key to success.Both Globalstar and providfers expecttobuild70-80ground Iridium, the front runners of the Big LEO stations, or gateways, around the world to companies, have secured agreements with ensure that local PTTs are not cut out of the over 100 countries each by joint venturing action.Other GMPCS operators will also with investors who have a vested interest have a small number of ground stations inmakingsuretheirterritoryis throughout the world that will provide for successful. revenue-sharing.It is critical for developing nations to study the business plan of each GMPCS Increases Revenue GMPCS operatortoensurethatitis Opportunities for Developing compatible with their own goals. Countries.Again, GMPCS companies have chosen different ways to address It is also critical for industrial nations to howdevelopingcountrieswillreceive continue to recognize and accommodate the revenue from their systems, but among requests of developing nations. For example, themaresharingcallrevenue,tail at the WTPF, industrializednationsdid charges, roaming charges, handset make a concession in the area of revenue distribution,and ground station sharing by agreeing to share traffic data with maintenance. developing nations. The compromise was later incorporated into the MoU regarding GMPCS will Bring Jobs for Local mobile satellite phone terminal circulation. Residents.As more and more people purchasefixedandmobileproducts, Another issuethataffectsdeveloping GMPCS operators will need to employ countries is political.For example, nations localresidents whohavetheskills that are politically blacklisted by the United necessary to work with potential Statesgovernment (such asIran,North customers in the marketing, business and Korea, and Cuba) are concerned that the U.S. technical arenas.Ground stations will view of them as politically undesirable could
151 179 lead to a service cutoff, restrictions on the Clearly, this is an area that GMPCS number of circuits or other trouble in getting operators -need to consider more in-depth, equal treatment from the satellite operators sincethefixedservicesmarketwillbe (three of the four Big LEO operators are U.S. - essential to their profitability. based). They want assurances that this will nothappen,andthatthey willget nondiscriminatory access to the systems. Bridge the "Missing Link"
A U.S.governmentofficial atthe In 1984, under the leadership of Sir Donald conferencestatedthat whiletheUnited Maitland, the Independent Commission for States government will never relinquish its Worldwide Tele-communications Development rights to cut off communications or use other issued "The Missing Link" report. This report sanctions involving any global systems,it pointed out that developing countries, which rarelyexercises them in connection with accountedfor70percentoftheworld telecommunications systems and ishighly population and 20 percent of thegross unlikely to do so with satellites. domestic product (GDP), possessed only 7 percent of theworld's telephones. This Moreover, as a show of good faith toward disparity is even more marked in low-income these countries, GMPCS operator Iridium has developing countries where telephone systems made arrangements to allow Iran to buy was restricted to the urban areas, and beyond shares in its system which will be licensed those areas there is no system at all. No there by setting up an offshore companyin substantial progress has taken place since Bermuda to handle its government ownership the report. programandotherfinanciallyrelated matters. GMPCS operators must uphold the vision of bridging this "Missing Link" and allowing Ultimately, developing countries are most this 70 percent of the world's population to concerned about the systems' costs.GMPCS receive basic telecommunications services that operators are very aware of the fact thatthey will upgrade the efficiency of their economic, will not be able to utilize the same pricing commercial and administrative activities and, structure for the fixed market that they dofor more importantly, improve their daily lives. the mobile market.Mobile calls that cost anywhere from $1 to over $3 a minute are simplynotaffordabletocash-strapped residentsof ruralareasanddeveloping nations. So what is the solution?
GMPCS companies are currently examining several options for establishing an equitable fixed services pricing policy.These options include subsidizing fixed service with the revenues from mobile services, although this option will not work in countries whose fixed services far outweigh mobile services. Operatorsare also hopingthat the governments of these developing nations will consider an initial subsidy of fixed traffic or equipment, although any subsidy would be minor.In addition, local service providers may offer special rates at certaintimes of day, as many of the long distance carriersdo.
150 152 Bangladesh Ventures for Cellular Mobile Phone Service To Access Village People
Fazlur Rahman Dhaka, Bangladesh
ABSTRACT
This is the story of the challenges being made for providing basic telephone service to its teeming rural population by one of the poorest countries in the world. Time and again Bangladesh managed survival during the natural calamities. It developed and introduced the concept of Micro Credit without any collateral to combat poverty for the poorest of the poor. Now it ventures to provide access to telephone service to its rural populationwith Cellular Telephones!
1.Rural poverty is one of the most vexatious a Non-formal Education and Empowerment issues for the developing countries anywhere of destitute rural woman. This is the story of and its alleviation gets top priority in the the challenges now being made for providing agenda of development. Bangladesh occupy a basic telephone service to its teeming rural special position in this field, because 7.2% of population by one of the poorest countries in the world's poor live in Bangladesh. With a the world. Bangladesh ventures to provide per capita annual income of US$ 240 and a access to telephone service to its teeming population density of about 820 per sq. km, ruralpopulationwithmobile cellular Bangladesh has a telephone density of less telephones! than 4 telephones per 1000 population. 80% of its people lives in the rural areas, where 2. A pervasive feature in the rural areas of there are less than 3 telephones per 10000 Bangladesh, is lack of or very poor access population. It has a scanty infrastructure and to basic infrastructure, basic social and is frequented by natural calamities like floods human services,and poor prospect of and cyclones too often. However,ithas welfare improvements and growth. For city shown the world time and again how to dwellers with their illusions of superiority manage thesurvivalduringthenatural complex,conceivinganytechnological calamities and saveitspopulation from breakthrough in the village is nothing but dreadful diseases like Cholera and Diarrhea fantasy. Yet it is the village that sustains the bydeveloping simple solutions like city with its produce and human resource. A administration of Oral Saline. From here two well functioning telecommunication of the most successful models of rural infrastructure and a good transport system poverty reduction emerged. It has developed in the village shall allow division of labor and introduced the concept of Micro Credit and increase employment opportunities in without any collateral to combat poverty for the rural areas. Lesser costs in the rural the poorest of the poor. It has also developed areas shall increase competitiveness. The
153 181 Billing of Village Pay Phone
Customer T i Sells Telephones Services to Village Pay Phone Collects bills from Customer VPP Customers
Receives bill from- Grameen T- Bank Collect bill from VPP Receives bill from GTC for Grameen Bank (Taking risks of all VPPs GB uncollectable) T
.1., Receives bill from Grameen Grameen Telecom Collects bill from GB Phone GTC T 1 Grameen Phone Collects bill from GTC GP
Figure I. Flow Diagram of Billing System
tto ftg-
Figure 2. Children from village talking with Father working in city.
154 182 Distribution of Village Pay Phone Earnings
Customer Pay Tk. 4.50 per minute VPP Operator Keeps Tk. 1.90 per minute Grameen Bank Keeps Tk. 0.18 per minute Grameen Telecom Keeps Tk. 0.12 per minute Value Added Tax (VAT) Tk. 0.30 per minute Grameen Phone Gets Tk. 2.00 per minute
1 US $ = Bangladesh Taka (Tk.) 45
Revenue from Village Pay Phones during first three months
Name of VPP Telephone Revenue in Revenue in Revenue in Total Operator No. 1" Bill 2" Bill 3rd Bill
1 Lai ly Begum 17510000 15314.71 10167.92 8341.67 33824.30 2 Renu Akhter 17510001 3711.31 2989.49 1455.12 8155.92 3 Nurjahan Begum 17510002 8845.11 10897.74 4374.35 24117.20 4 Parul Hossain 17510003 1697.21 1875.89 964.53 4537.63 5 Anwara Khatun 17510004 3156.46 1862.66 1116.13 6135.25 6 Jahura Begum 17510005 2065.49 1172.90 909.59 4147.98 7 Jothsna Begum 17510006 2710.52 8407.83 2301.82 13420.17 8 Tahmina Yasmin 17510007 3055.45 1619.18 968.45 5643.08 9 Sufia Begum 17510008 3584.96 14382.50 12273.45 30240.91 10 Rina Akhter 17510009 2990.19 1778.44 740.72 5509.35 11 Foratunnessa 17510010 2945.19 11959.82 7350.41 22255.42 12 Chhaaya 17510011 226.57 1444.85 2479.47 4150.89 13 Sheuly 17510012 2339.62 2004.32 4343.94 14 Shukurbi 17510014 2274.32 21571.39 23845.71
Total 50303.17 73173.16 66851.42 190327.75
Average monthly bill paid to GP from each VPP Tlc.4010.28 Average GTC earning per month from each VPP Tk.208.53 Average GB earning per month from each VPP Tk.312.80 Average total bill paid (monthly) by each VPP Tk.4531.61
1" BillFrom 14/4/97 to 11/6/97 2" Bill - Upto 20/7/97 3rd Bill - Upto 20/8/97
These earnings do not include the income by VPP Operators through Tips that she/he gets from the customers for rendering service for Incoming Calls. The earnings from Tips for incoming calls from abroad in particular are substantial.
155 183 linkage effect of telecommunications will telephone traffic of a group of people to a facilitate inflow of required information specific telephone to act as a mobile Village speedily. Good telecommunication facilities Pay Phone has been ensured. The mobility will diminish the distance from decision- of the Pay Phone ensures adequate coverage centers,willincreasetheamountof of the telephone servicetothevillage accessible information, willsupport the population. The Operation and Maintenance availability of services and training and will costs of these telephones have been kept at help to establish the missing link to distant a minimum level by involving local people firms and markets. to maximum extent.
3. The idea of introduction of cellular phones 6.People livingin a ruralarea, do not to the village, especially to its women, is generally have enough financial means to one of the most ingenious notions in the pay for theCellular Handsets. Modus history of rural development. It may be operandi to finance the Cellular Handsets questioned, " What can be these village by the rural banking institutions to the people do with mobile cellular phones village people, who normally have little or anyway?" To put it simply the "village nosparecapitaltoinvest,hasbeen people" are using the phones to make addressed. money. Bangladesh has not only come up with the innovative approach of giving 7. A village woman, chosen by the people villagers the access to information in order living in the area, receives a loan to finance to generate income but has also brought the theCellularHandset.Sheresellsthe city closer to the village and vice versa. telephone service to the people of the village with a small premium and clears the 4. Many people residing in the cities regard telephone bill as well as pays back the loan cellularphonesasoneof themost on weekly basis. glamorous progeny of modern technology. It was the ultimate status symbol, especially 8.Under the system, the Village Cellular for a man, to possess a mobile phone. Now Service Provider purchases bulk Air-time the game is reversed. In the rural areas of from the Commercial Cellular Operator. Bangladesh, itis now the woman who The VillageCellularServiceProvider possesses the cellular handset, and it is the leases one handset in one village to a phone call that is of greater significance qualified Village Cooperative Bank than the ownership of the phone. member (who is normally a women) of that village at a fixed charge with fixed rates for 5.Telecommunicationisa highlycost incoming and outgoing calls.In houses intensive industry. To get an economic where there is no electricity, the Village return on the investment, a high Telecom Cellular Telephone Service Provider installs traffic per telephone is required to generate a solar panel for recharging the batteries. the necessary revenue. But the normal The member is trained to use that phone traffic from individual subscriber in villages and extends the services to customers for istoo meager to justifyitseconomic both incoming and outgoing calls. That is viability.Therefore, concentrationof
156 184 she (or he) becomes the Village Pay contact his bed ridden sick mother in the Phone Operator. The phone call service is village, as the mobile pay phone can reach herenterprise,andsheearnsthe hereasily. A farmerisabletoget difference between the fixed charges paid information regarding prevailing price of toVillage Cellular Telephone Service hisproduce and cantakeappropriate Provider and the amount charged to the marketing decision. There has been burst of customerforthecall.TheVillage economicactivities andthevillage Cellular Telephone Service Provider fix community have become alive. theratestheOperatorchargesher customersandmonitorherbusiness activities, so the customers are assured that she is not getting undue advantages of her new asset. Further, if she defaults her payment to the Bank, she loses her status as the Village Operator. As the Operator takes the payment in advance, there is also little scope for the customer to take advantage of the situation. In villageeverybodyknowstheother villagers. There is a lot of trust among the villagers, and words travel quickly. There ishardly any chance of theft of the handset, or harassment of the Operator.
9.The mobile phones are reducing the cost of living in the villages while increasing the purchasing power of those places. This will lead to greater volumes of trade that will Figure 3.Incoming Call from Husband working abroad benefitthecountryasawhole.The exposure to modern technology will also Acknowledgement / Reference remove the fear of technology. The greatest social benefit is that cellular phones will Subject Source
give villagers the incentive to be literate. It 1. The Information Fazlur Rahman will happen naturally with the exposure to Infrastructure Meeting the PTC'96 technology. Further, the implementation of Need of Bangladesh. the telephone services will ensure progress 2. Bridging The Star Magazine, in practically every aspect of the life of the Information Gap Dhaka, Bangladesh. villagers. June 6, 1997
3.GRAMTEL ----A Vision Fazlur Rahman 10. As a result, the overall perspective in the for Rural Bangladesh APT Telecom Journal rural community is changing drastically. No Jan 1998. longer the rural people have the feeling of being isolated. It is now possible for a son 4. Grameen Bank Dhaka, Bangladesh working in the capital city of Bangladesh to 5. Grameen Telecom Dhaka, Bangladesh
1 57 Development of a Delivery System for Multimedia Instruction over the Internet: The Adaptive Multimedia Education Enabler (AMEE) T. Craig Montgomerie, Dwayne Harapnuik (University of Alberta), Tom Keenan, Urmil Chugh, Irena Kirek (University of Calgary), Hugh Pfoh (ISA Corp.), Neil Smith (TELUS), & Norman Udey (Alberta Research Council) Alberta, Canada
1. ABSTRACT The Adaptive Multimedia Education Enabler (AMEE) suite of applications provides value added enhancements to the Internet. AMEE is designed to provide an easy to use interface to multimedia courses which are delivered at a distance. The operation of AMEE is effectively transparent to the user, being an extension of the World Wide Web browser paradigm.
have similar plans for connectivity at speeds up to 1,000 2.INTRODUCTION times faster than what is possible today. This advance will be helpful in addressing the connectivity needs of major The Internet has been used as a medium for providing institutions. A greater challenge, is to bring the benefits distance education for decades. With the emergence of the of technology-based education to people who need it all World Wide Web with multimedia delivery capabilities, over the world." (Keenan, 1997) It is highly unlikely that the number of courses designed for delivery over the in a country as sparsely populated as Canada, or in many Internet and the bandwidth requirements for each course of the developing countries of South East Asia, that high has grown exponentially. Unfortunately, the kind of speed connections (e.g., cable modems, fibre optics or bandwidth necessary to deliver, for example, video on wireless service) will be ubiquitously available in the near demand, is not widely available, particularly in rural areas future, rather, traditional telephone connection (possibly and in developing countries. including ISDN service) over twisted pair wires will be The Adaptive Multimedia Education Enabler (AMEE) the available technology of the masses. project (1) was conceived to address the rising demand for accredited courses which are ubiquitously accessible 3. PURPOSE electronically. This ambitious, 15 month project brought together stakeholders from ten consortium partners in the The purpose of the AMEE project was to develop a family fields of education, computing science, engineering and of products that would move us significantly closer to human resources (2). This document outlines the goals of open, easy to use, and integrated access to distance the consortium, presents the implementation, and then learning opportunities regardless of "last mile" network examines the effectiveness of those efforts in reference to technology. the goals. This goal can be further broken down into the following The adoption of the Internet as a communication and requirements: information exchange tool, has presented an opportunity a simple, effective interface for learners and educators for educators to change non-interactive distance education using computers for distance education; to a multifaceted, multimedia rich system. Unfortunately, an interface product that can be adapted for any size of not all institutions, schools and learners are connected to network; with the Internet although there is growing pressure for schools o a network product that will enable access to print, to be connected. For example, the Alberta government video, audio, text and multimedia learning tools; provided a grant of $5 million to assist schools in o scheduled delivery of those tools to learners regardless connecting to the Internet by June 1, 1997. This grant of the computer technology used at the learner's end provides $2,750 for each school site and for the and "last mile" communications technology. jurisdiction office site to obtain "basic Internet service" which was defined as 28.8 Kbps Internet connection with 4. PROJECT COORDINATION & MANAGEMENT WWW, FTP and e-mail service (Alberta Education, 1996). The AMEE project involved ten institutions located "It is apparent that the United States government and throughout the Province of Alberta, and over 45 people. major U.S. Universities intend to be inter-connected at As lead contractor, TELUS provided a project manager very fast speeds by the year 1999. Other parts of the who coordinated the work of two project teams: the world, including the Asia Pacific economies and Canada,
158 186 Education Team and the Technical Team. Members of The most important links that the site provided were the both teams were separated by regional and institutional links to the Course Calendar and to the CACs boundaries. The Technical Team leader worked for ISA (Community Access Centres) that were involved in the Corp., located in Calgary. The project's chief systems field trial. In a very short time the AMEE Web site developer and his development team were also located in became the entry point for information on the AMEE Calgary, but the other half of the technical development project or for access to the AMEE Field Trial. team was located at the University of Alberta in 5. REQUIREMENTS FOR DISTANCE LEARNING Edmonton. Similarly the Education Team leadership was AS SPECIFIED BY THE EDUCATION TEAM distributed between the University of Alberta and the University of Calgary. The entire process was overseen by The Education Team put forth the following key two senior researchers, one each from Universities of requirements crucial to distance learning and teaching: Alberta and Calgary. Table 1 identifies the identify the kinds of courses which can be delivered, leadership/management roles of the project personnel. identify course providers to write and/or deliver the courses, Most of the day to day coordination and communication of provide a user friendly interface, the project was handled electronically. E-mail between provide on-line registration specific to each individuals, mailing lists for broadcasting information, an institution, FTP site for the storing of documents, specifications, etc. provide the opportunity for students to browse the and a Web site (http://amee.com) provided effective inventory of course offerings, communications between members of the teams. The schedule & track students' activities, AMEE web site was also used to share information with provide trouble shooting on technical and academic the public. Various presentations were posted for viewing issues, and and details about the AMEE project and the AMEE deliver as much material as possible through Frequently Asked Questions were presented. electronic means.
Table 1: Location and Roles of Project Manager. Senior Researchers and Coordinators Title Located at Roles Project Manager TELUS primary administrator primary contact for legal negotiations, communications with CANARIE budget coordination Senior Researchers University of Alberta and provide "vision" University of Calgary oversee the entire project Education Team University of Alberta worked closely with the technical team Coordinator coordinator to ensure the desires of the education team were met act as a liaison between the diverse educational community and the technical team act as a facilitator, delegated duties and passed information to the rest of the team relayed the project direction to all project participants Technical Team The ISA Corporation worked closely with the programmers Coordinator responsible for writing the code and developing the system worked with the network provider to establish the network for the field trial Chief Systems Alberta Research Council designed/implemented technical specifications Developer oversaw the programming team
159 187 NEE Central Adaptive Multimedia Switch
Internet / Education / Training Intranet Institution Administrative Database
Student PC Course Developer PC
Education / Training Institution Administrative Course Database Developer PC Education/TrainingInstitution Corporate Training Administrative Physical transfer of material Database V Community Access Centre Windows NT Administration Server PC CAC Database Windows 95 PC
High Volume Printer
Physical 4 Video Learning Conference Resources Facilities Figure 1 - The Education Team's View of AMEE
These requirements led to the design of a family of have optional control of NTSC video output to products designed to provide distance learners with the attached VCR for staged video download where ability to access a wide variety of instructional materials insufficient disk space is available to store the entire across heterogeneous communications systems. Figure 1 sequence, provides a pictorial overview of AMEE as developed by have optional control of audio output to attached the Education Team. audio recording device for staged audio download where insufficient disk space is available to store the Three different groups of users were identified: entire sequence, exchange e-mail, 5.1 THE INDIVIDUAL LEARNER access class computer mediated interaction, The Individual Learner User Interface was specified to download / upload assignments, and provide a common, integrated front end to both existing utilize desktop video conferencing. and newly created tools. The individual user would be able to: 5.2 THE COURSE PROVIDER browse available courses (open access), The Course Provider User Interface, similar in design to apply for a student ID, the Individual Learner User Interface, would allow the apply to register in a course, course provider to: specify preferred delivery mode, specify course structure and timing, specify configuration of delivery site, utilize templates from previous courses, download course modules, distribute updates, identify supplementary material,
160 188 identify demand availability vs. scheduled availability, 6.1 DESIGN OVERVIEW set up class computer mediated interaction, review / modify class registration, 6.1.1 USER APPLICATIONS/INTERFACE distribute, collect and grade assignments, send / receive e-mail, AND The User Applications/Interface layer consists of: 1) the utilize desktop video conferencing. Content Provider User Interface, 2) the Community Access Centre Tool Set, and 3) the Learner User Interface 5.3 THE COMMUNITY ACCESS CENTRE (see Figure 2). The Content Provider User Interface was implemented in The Community Access Center User Interface WOULD Java (version 1.0.1). When downloaded via a web browser, provide mainly administrative tasks: it connects with the Content Manager (Centra 2000) via set up and manage learner accounts, CGI (Common Gateway Interface) programs to retrieve, track CAC AMEE usage and provide local billing edit, create, and organize course content. The design of information, this interface is based upon a file manager paradigm as create hard copy, video tape, audio tape, etc. for pick exemplified by Microsoft' WindowsTM 3.1 File Manager up by students, and Sun's® File Manager (Solaris 2.xTM). manage local storage space, and schedule usage of local facilities and equipment. The CAC Tool Set provides administrative tools to manage users, physical resources, and scheduling of 6. DESIGN AND IMPLEMENTATION - THE physical resources. The information is maintained in a TECHNICAL TEAM'S TASK Microsoft Access 7.0TM database. The tools are implemented as a set of web pages with access to the The Technical Team had the task of trying to implement database provided by CGI programs using ODBC the changing and at times unclear specifications provided connections. by the Education Team while working in an environment The Learner User Interface consists of a set of web pages of constantly changing technology. The architectural which permit the learner to schedule (reserve) physical model of the AMEE framework comprises of five layers resources, to enroll in courses, to drop courses, and to illustrated in Figure 2. provide links to enrolled courses and conferencing.
Content Provider Community Access Centre Learner User Interface Tool Set User Interface UserApplicationsfloterfaceLayer
Messaging Content Student Trouble Scheduler Delivery Network Mgmt Ticket Control Topology Services Manager `C6reAppticationsLayer
Adaptive Multimedia Schema Oracle RDBMS RelationalDatabaseLayer
IBM RS6000 I DEC Alpha I Sun I PC / Macintosh RAID Disk + VHS Tape Near line Hardware&OperatingSystems Layer
ATM Backbone ISDN Switch 56 Serial Voice Network&CommunicationsLayer Figure 2 - AMEE Logical Design Overview
161 1.89 Data used by this interface is stored in the MS AccessTM accounts for each student are created and students access database and functionality is provided via CGI programs their e-mail via a SimeonTM client. Conferencing is using ODBC connections. provided by the Virtual U system at the University of Alberta. 6.1.2 CORE APPLICATIONS SOFTWARE Trouble Ticket was implemented through a set of Unix trouble reporting procedures. This layer consists of: 1) Student Management, 2) Scheduler, 3) Delivery Control, 4) Network Topology, 5) 6.1.3 RELATIONAL DATABASE Content Manager, 6) Messaging Services, and 7) Trouble Ticket. The Scheduler, Student Management, Delivery The AMEE Technical Team designed the central Control, and Network Topology are implemented as a set repository based on an open standard in order to avoid of cooperating daemons. A new function implemented by having the end product committed to a proprietary product the "Gateway" daemon provides a single point of access whose closed architecture might hinder the purchasing from clients, the CACs, to the other daemons; and enables decisions of potential customers. The relational database secure access to the AMS. Another daemon called used was an Oracle 7TM system. This database is also used "Database" provides information to clients, where such by the Content Manager. The AMS database schema information is not provided by any of the other daemons. consists of additional tables which were created and The daemons are written in the C programming language populated with relevant information. Access to these and typically use embedded SQL queries to the Oracle tables by the AMS daemons is via embedded SQL database. These queries are written in PRO*C. programs written in PRO *CTM and gathered together into Student Management is responsible for registration of new a program library. students. It provides a unique id number for each student, thus providing an institution independent registration 6.1.4 HARDWARE system. This module also provides the capability for Hardware and operating system requirements can be students to enroll in, or to drop a course. categorized into three different configurations: the AMS The. Scheduler manages schedules for each student. A and Application Server configuration, the CAC Server student has a schedule for each course he/she is taking. configuration, and two different CAC node configurations. When a student accesses his/her schedule, it is uploaded to The AMS consists of two machines. The Oracle database, the CAC, modified by the student, and then downloaded to content manager, and the AMS daemons reside on a the AMS. Any modifications may cause the Scheduler to SPARCTM 5 running SunOS 4.1.3TM. The AMEE web notify the Delivery Control and Network Topology site, the IMAP4 e-mail server, and the content are located modules which may in turn initiate actions of their own. on a SPARC 10 running Solaris 2.4. In addition to the The Delivery Control module is responsible for shipping AMS hardware, application servers were made available to course content to the CAC and/or student. Content which distribute the load of supporting applications, such as is purely electronic is queued for later delivery via FTP. video conferencing. Table 2 provides a summary of the For physical materials such as video tapes, or CD-ROMs, minimum hardware configurations required. an e-mail message is sent to an AMS administrator; this e-mail notifies the administrator what content needs to be 6.1.5 SOFTWARE sent (mailed, couriered, etc.) to where or to whom. Software was either purchased commercially or developed The Network Topology module allocates and controls by the Technical team. Table 3 identifies the applications bandwidth for the secure and reliable delivery of course installed on their respective platforms and the feature that material. It does this by creating a shipment for the course each application provided. content that needs to be sent and then tries to find a suitable time for the shipment. If it fails, it recommends 6.1.6 NETWORK & COMMUNICATIONS the earliest available time. If successful, the shipment is handed over to the Delivery Control system. The Content AMEE was conceived out of a need to better service the Manager functionality is provided by CentraTM 2000 long distance education market. With the advent of which is a document management system which resides multimedia products and information rich content, the on top of an Oracle database. current bandwidth and accessibility limitations presented interesting network challenges. Messaging Services consist of both e-mail and conferencing systems. The e-mail is provided by an Although the specifications called for an Intranet as the IMAP4 e-mail server running on the AMS. E-mail network infrastructure for the AMEE field trial, the latest
1621 ISO Table 2 - AMEE Minimum Hardware Configurations Configuration Hardware Specification Purpose 1. AMS Server Sun SPARC 10+, 64Mb to 128Mb. The AMS Server is the central repository, 4 mm Tape backup. registration, authentication and data server. Such 12xCD ROM services require ample disk space 5G+ and significant 5G SCSI disk. processing speed since it could potentially serving all 2-Network Interface Cards. of the students within the AMEE network. All of High Quality 21" Monitor. these services need not reside on one machine. 2. Application Server SPARC or Intel® Platform 166MHzVideo Servers, 32Mb RAM Web and E-mail Servers, 2.1 -5G Storage. Computer conferencing servers. 17" Monitor Backup Device Multiprocessing 0/S,® Unix or Windows NT. 3. CAC Server Pentium Processor 150MHz or aboveServer is the gateway through which the students 64 Mb RAM access the AMEE network. All requests initiated out 12xCD player of the CAC must be routed through this server. The 2 GB SCSI disk + 1GB SCSI per server houses the client software as well as the attached desktop indigenous information for the respective institution. Network Interface Cards (MC) Laser Quality Printer 16 bit sound card High Quality graphics monitor, 17" 0/S - Windows NT or higher. 4. CAC Node a) PC-Intel Based Pentium 133MHz The CAC nodes act as the access points for the CAC 16-32MB RAM students. Some courses will have special requirements 2 GB IDE or SCSI such as computer or video conferencing, subsequently 16 bit Sound Card, Speakers optionalthe node will be equipped with the corresponding MC or Ethernet Card hardware and software. 12xCD Player 17' monitor Windows 95/NTTm b) Apple Macintosh Macintosh 7500-8500 Apple uses their own proprietary network protocol 17" Multisync monitor (Apple Talk), however there are third party 0 16 bit Sound Card, Speakers optionalapplications that allow PC's to mount Macintosh MC or Ethernet Card files and vice versa. Note: because of the translation 16 MB of RAM layer there was significant administration overhead. 12xCD Player System 7 or higher Mac OS. advances in technology would more appropriately define requirements, the network team was able to implement thetetwork as an Extranet. The network team, which what may be the first large scale Extranet in western designed and administered the AMEE Network, faced many Canada. The different connection types included ATM to challenges, not the least of which was defining an open routers, ATM directly to the back of CAC PCs, standard for both the hardware and the Internet Protocol. multiplexed switch 56 lines to routers, and multiplexed Faced with six different sites, each with their own ISDN BM channels to routers. Figure 3 shows the AMEE standards, network specifications and communication logical network diagram.
163 191 Table 3 - Minimum Software Requirements Platform Software Application Purpose 1. AMS Server Oracle 7 RDBMS Backoffice repository for AMEE administration and content. AMEE, AMS server software. Application Access. DNS/NIS services Name Services for access and authentication. HTTP Services Web Services 2. Application Server Video Server Software Course required, software. Computer Conferencing Software Course required software. IMAP4 E-mail Server 3. CAC Server AMEE CAC web site installation Access to the AMEE Network. software Microsoft Office with Microsoft Central Application used by the CAC Nodes. Access Netscape Navigator 2.1 Used for administration and trouble shooting Analysis tools, (i.e., Big Brother) For trouble shooting. E-mail client software Communication Software ODBC driver pack ver. 3. Interface to the AMS repository. 4. CAC Node Netscape Navigator 2.1 or greater AMEE interface tool for content. a) PC-Intel Based (Must be Java Enabled browser). Various plugins both commercial and freeware for viewing multimedia content. Microsoft Office 95TM or most Office automation software either loaded locally or current shared on a network drive. Course specific software such as Self explanatory. PhotoshopTM E-mail client Either loaded local or on a network Drive. b)Apple Macintosh Same as above. Same as above.
AMEE Network Operations Centre (TCI Edmonton Toll Office) University of Alberta Banff Centre (CAC) I (CAC / Development Site) 10 mbps Ethemetover ATM (TELUS Woet Research Network) 384 kbps / 3.BRI (TELUS Microliok Service) 10 mbps Ethernetover AT (TELUS Wild Research Network) Canmore AVC (CAC)
1.5 mbps DSI / Ti (TELUS Megaute DSI Service) 10 mbps Ethernetover ATM AMEE Network (TELUS Woet Research Network)
University of Calgary (CAC) 224 kbps / 4*SW56 Canmore Collegiate (TELUS CENTREX Service) High School (CAC)
10 mbpsEthernetover AT 224 kbps / 4*SW (TELUS Woet Research Network) (TELUS CENTREX Service)
Morrin School (CAC IAlberta Research Counci (AMS Development Site
Figure 3 - AMEE Logical Network Overview
.92 164 6.2 IMPLEMENTATION PROCESS conducted by the Technical Team, and status reports were produced. However, the lack of sufficient communication 6.2.1 ADAPTIVE MULTIMEDIA SWITCH between the two Technical Teams resulted in a divergence of interpretations of the requirements. A major requirement for AMEE was the ability to The CAC team consisted of a Educational Advisor, schedule then deliver course content to the student. The Module Team Leader and two programmers. The development of the core applications; student construction of the community access center utilized Java, management, scheduler, delivery control, network CGI Programming, and HTML. The interfaces required the topology and the creation of the AMS database schema Netscape APIs and ODBC in order to communicate with (Figure 4) became the primary focus in order to fulfill this the browser and the local database, respectively. requirement. The CAC application was sub-divided into the following Initially, there were two independent design and segments and features. implementation efforts. The first was the development of the Content Provider User Interface. The second was the User interfaces: development of the Scheduler. The development process Generic CAC Home page consisted of a series of design, code, and test phases. AMEE Home Page CAC Account creation For the AMS, individuals were assigned to specific Program/course listing implementation tasks: Course Enrollment Process Scheduler and Student Management, Payment Process Database Schema and database access routines, Student Course portfolio management Topology Manager and Content Provider, Student Course scheduling (Integrated with Shipper, and CAC schedule) Course content management and implementation of Taking a lesson secure access to courses. Change to another CAC Fundamental integration tests of the AMS and CAC were CAC Administration Interfaces performed by the team as a whole and a functioning AMS was demonstrated to a CANARIE representative by Dec. Manage client accounts 15, 1996. Update CAC's asset management calendar Financial management 6.2.2 COMMUNITY ACCESS CENTRE The CAC features and modules were constructed according to the functional process depicted in Figure 5. No formal process was established for the development of the CAC client application. Code and feature reviews were
Socket
Func:tioncall
0 R A C L
Figure 4 - AMS Implementation Architecture.
165 Functions markedrequire CAC UID AMEE and Password HOME PAGE
Establish CAC Clients* /Contact CAC Project Details (CAC Home Page)
Product Details Location Change Look At Available Course Portfolio* courses Process*
Register In Program Chose a Program (Re)Schedule withInstitution or Course Lesson* (notanAMEEprocess)
AMEE Course Delivery Lesson Enrollment Establish CAC Account
Payment* Take Lesson*
Figure 5 - CAC Functional Process The CAC interface teams iterated throughout the design, In the process of building the AMEE network three phases build, test development cycle, producing a prototype in were required in order to ensure CACconnectivity (defined August of 1996, and the alpha version of the production as the ability to communicate with the AMS): software in January of 1997. CAC LAN Connectivity - establish network The assumption that each CAC could provide a technical connectivity with in the CAC's local area network, resource to install and administer the internal CAC LAN CAC Point of Presence - establishing connectivity between the routers of each of the CAC's, and proved to be a mistake. Many of the administrators were ill prepared to handle the nuances of installing and Point to Point Connectivity - establishing connectivity between all of the AMEE nodes. configuring the operating system and CAC applications. It is not feasible to specify a minimum level of technical During the project, the Class C Internet address was administrative competence for the CAC administrators. transferred to TELUS. At the same time, a decision was Subsequently a significant effort was made to provide made to move the network from the TELUS PLAnet centralized technical support including hardware setup, service to the TELUS Advanced Communications service. application support and network support. The two changes resulted in delays and introduced a new set of problems. 6.2.3 NETWORK Because the CAC LANs were computer labs within the Two independent but related sub-tasks were defined for the respective institutions, the allocation of the network implementation of the AMEE network. The first was the equipment and computers fell under the policies and configuration and system setup of the individual CAC capital asset structure of the individual institutions. LANs and the second was CAC/AMS connectivity. Figure 6, the detailed diagram of the AMEE Extranet, TELUS provided connectivity to the demarcation point shows that the implementation of the AMEE network was (i.e., the telephone patch panel at which the no simple task. Incorporating the requirements of the communication line entered the CAC's building) of the project with the network policies of the respective CAC. When it became evident that some CAC's were institutions served to compound the problems of building unable to connect their internal networks to the an Extranet. demarcation point, TELUS offered to configure their Once the network was operable, tests were conducted to routers and help each CAC connect the router to the evaluate connectivity and performance. The connectivity internal CAC LAN. This is an important observation was measured through actual participation in the field since many Internet customers are faced with the same trial. As each CAC received their respective hardware and challenges. configured their servers and routers a point of presence was established for each site. Connectivity to the CAC LAN was then tested.
1 66 1 9 4 University of Alberta (CAC / Development Site) work.mkoas caked. amee cern a I to 3 AMEE Network Operations Centre Cisco 25 MBPS NI (ICI Edmonton Toll Office 3rd Floor) CanmoreAVC (CAC) IBM telus.ames.com Rooter / Bridge /Server 12 Port GrA11017.VC.1111111.0111 babernetLeuEntelatlen ATM Switch _IINT Server (Dynamic WIC's) NT Sense (Dynamic SVC.s( OraTSlZAOlis I 10BasetIT 25 /ABM NIC Ethernet Matt OCR' 0C3c I10 MOPS WorkstatiOns Ethernet 10 MBPS 1 to 5 Ethernet Cisco Rooter IUNIX Maintenan IBMVideo Workstation (Dynamic SVC a) 0C3c Server Ethernetet Hob scend Rout 0030 DS -1 10 MBPS Ethernet POTS . Lbw ICI Calgary LW
10 IMPS Wnet Ethernet Ascend Network Backbone Alberta's ATM Research Router TELUS Communications SON I PRI Public Switched Telephone Network PermanentVirtual (POTS, SW56, & ISDN Services) Circuits TAC Internet PLAnet 10 NIPS Gateway OS -1 SW56 10 MBPS Ethernet Rooter Internet POTS Ethernet Access Line POTS 4SW1511 10 PIZIPS Line I Ethernet 0C3c ut15Baserffentswaltub TELUS PLAnet Internet Service sc nd R VINuel LAN l'EnthaWarnelPS (CM.) II IMPS Ascend Router NT Sasser Ethernet lilltes ARCLAN Internet Gateway via CIVnet 10BasedT 110 MBPS IWorkstations' Ethernet Itub Ethernet 111 to 3 I10BasecIT I ucalsotty.anunecom Ethernet Hub University of INT ServerI Calgary(CAC) AMERWeb AMEE MallSewer ELUSAdvanced Communications NT Sewer Workstations (LANInterconnect Service) al to 3 berneyarcnOt Printery DNS Wm Secondary DNS IWorkstations' Albert; Research Council Calgary NewsCocumServIce canmorecallegieteatmee.com II 1 to 10 Canmore Collegiate Workstatiocts (AMS Dev. Platform) 1 to 3 High School (CAC) rrunn-scrootAMMO .COM Morrin School (CAC) tanb.centre.amencom AMS Adaptive Multimedia Server Banff Centre CAC - Community Access Centre -denotes non-ATM Transport connectivity (CAC) -denotes ATM Transport connectivity Figure 6 AMEE Intranet Infrastructure Detail the network) was established for that site. Connectivity to simultaneously serve the needs of a number of distinct the CAC LAN was then tested. groups of learners: K-12 learners, post secondary students, adult learners, and business training. CAC network protocols were as varied as the members of the consortium, ranging from NetBeui to AppleTalk. The field trial sites were selected to test the utility of the Since AMEE content was delivered across the Internet the system in delivering course material to different physical standard had to conform to the Internet Protocol. In locations with different levels of access. The Banff Centre, addition, the TCP/IP packets ran across: University of Alberta and the University of Calgary were Asynchronous Transfer Mode (10Mbps Channel), set up as high-level access centres; AVC Calgary, Morrin Integrated Synchronous Digital Network (ISDN, 3 School and Canmore Collegiate were set up as low-to- Multiplexed BRI Lines, for a total of 384Kbps), medium level access centres. The Field Trial began on 56Kbps switched data lines, and January 27, 1997. DS1/T1 (1.5Mbps). In order to transmit TCP/IP packets across the ATM 7.1 AUDIENCE AND CONTENT: lines, TELUS subscribed to the Encapsulation Standard, The primary client was defined as an adult learner, RFC 1483. including people from all aspects of society who wished to pursue life long learning. These learners, for the most 7. THE FIELD TRIAL part, had limited experience with distributed learning. Ensuring that AMEE met functional specifications did The on-line AMEE course calendar was the primary not, however, adequately test whether "the right product" information source for courses offered through the AMEE had been produced. The field trial with learners taking project. All pamphlets or handouts made reference to this courses in a real world setting was the true test. It was on-line calendar. Community Access Centres used both essential that the AMEE product family be able to internal institutional promotion (word of mouth instructor
167 recommendation, etc.) and external promotion (distance in secondary and post-secondary education without education advertising, etc.). modification; b) to continue using AMEE as an educational tool with modification; c) to discontinue the 7.2 REGISTRATION use of AMEE in education. The field trial and evaluation (Kirek & Chugh, 1997) of AMEE was guided by three Learners were required to satisfy the registration questions: requirements of their CAC. The AMEE system was 1. How do learners perceive AMEE's effectiveness? designed to channel students into the registration process. 2.How do course authors/providers perceive AMEE's A disclaimer statement informed students of the nature of effectiveness? the research and gave them the right to opt out. Those 3.How do CAC staff perceive AMEE's effectiveness? students who chose to opt out were allowed to participate in the AMEE delivery of material, but were excluded from "Effectiveness is often but not necessarily used to refer to research reports. the conclusion of goal achievement evaluation, with all its limitations. Success is roughly equivalent to this All cancellations and withdrawals were handled by each sense. Effectiveness can be construed more generally as institution in their normal fashion. Students were given referring to achieving an outcome ...it always refers to a specific dates to withdraw from the course with a full, goal,... It is a means and end notion" (Striven, 1991 p. partial, or no refund. The withdrawal dates were 129) (3). considerably more flexible for this particular Field Trial. Normal fees were collected by the institutions, but no Three different populations were invited to take part in the additional fee was charged for use of the CAC or the study: learners/students (terms student and learner are used AMEE technology. interchangeably), course authors/providers and CAC administrators. Three distinct instruments were used to 7.3 COURSE SUPPORT collect attitudinal, experience with the computer, and demographic data from each type of user. Data were Support personnel were generally existing system collected by means of both on-line questionnaires and administrators or other computer lab personnel. AMEE telephone structured interviews. Frequency distributions support personnel were required to handle all technical were computed on closed questions whereas content aspect of running and supporting an instructional analysis was conducted on open-ended responses. computer lab. Extensive experience with both PC and Macintosh systems was required. In addition, support 7.5.1 EVALUATION FINDINGS/SYNTHESIS personnel were required to maintain the lab network which required experience with Windows NT. All three groups of AMEE users considered flexibility its main strength. Because of the flexibility and the promise The AMEE Educational team in conjunction with the of integrated access to distance learning opportunities, the Technical team drafted standard operating procedures learners and providers agreed that AMEE may improve (SOPs) for the delivery and administration of AMEE educational transactions. But "educational technology is courses. Levels of support included FAQs, Help Forms more than the sum of the individual processes and (response from lab personnel or instructor with 24 hours), hardware. It provides the knowledge and means to extend the Conferencing System (response from other students); and enhance learning through communication" (Garrison, peer support, and e-mail system. 1989, p. 49). Theoretically, educational transaction, supported by two-way communication, is based upon 7.4 IMPLEMENTATION three crucial factors: a) seeking understanding and The field trial had been planned to run from January 4, knowledge through dialogue and debate; b) there is no 1997 to April 30, 1997 but a number of organizational, place for coercion and manipulation; and c) education must technical and personnel considerations combined to delay be able to support explanatory feedback (Garrison, 1989). the start of the field trial. Extreme pressure caused the A majority (70%) of the learners and half (50%) of the Field Trial to begin on January 27 even though some of course providers felt that AMEE would improve the the technology had not yet been implemented (e.g. the e- educational transaction and 70% of learners felt technology mail system). This caused students and CAC should be incorporated in the framework of learning. administrators severe problems. Paradoxically, AMEE's technology was seen as both it's strength and it's weakness. Users reported varying degrees 7.5 EVALUATION of frustration with some of the commercial components that AMEE utilized. Notably, e-mail capabilities and The evaluation was designed to allow decision makers to computer conferencing failed the users regularly. decide between three options: a) to continue using AMEE
168 196 Some users missed the classroom type interaction: 55% of necessary have been identified, and a preliminary the learners and 34% of the course providers felt a loss of evaluation suggests that these improvements can be interaction. Some users specifically felt the loss of face- implemented without unreasonable costs being incurred. to-face interaction with their instructor and peers. Finally and most importantly, students and course Overall, 65% of learners, 83% of course providers and developers generally supported the use of the technology. 60% of CAC administrators were pleased with the services AMEE is a technology that will allow distance learners provided by this trial; 80% of the learners said they would who do not have high bandwidth access to the Internet to enroll in courses delivered through AMEE in the future; engage in courses which are rich in multimedia and and 83% of the course providers said they would develop interactivity. and deliver courses through AMEE. 9. NOTES The evaluators, however, felt that AMEE was only moderately effective in this trial. Users had a range of both 1. The AMEE project was seeded by a $1.8 million technological and administrative problems. Users provided (Canadian) grant from CANARIE Inc. a spectrum of suggestions to refine and improve AMEE, 2.The AMEE consortium was led by TELUS, Corp., a including: improve the technology, incorporate face-to- the third largest telephone company in Canada. face component, make AMEE more flexible ("walk the Partners included the Alberta Research Council, talk"), improve educational transaction/interaction, Alberta Vocational College (Calgary), Banff Centre improve accessibility and administration, and conduct on- for the Arts, Canmore Collegiate High School, High going evaluation to determine progress. Performance Computing Corporation, Integrated Given that the field trial was implemented before the Systems Application Corporation (ISA Corp.), technology was completely in place, the developers were Morrin School, the University of Alberta, and the extremely pleased with the results of the evaluation. University of Calgary. Changes to the system which incorporate the suggestions 3.The evaluators did not determine the efficiency of the of the evaluators are under review. AMEE development. "Efficiency goes beyond effectiveness by bringing in a reference to the amount 8. CONCLUSIONS of resources involved. It implies the absence of The general purpose of the AMEE project was to answer wastage from inputs to outputs. To that end two core questions: (1) Can educational content be efficiency question(s) measures wastage (or lack of it) effectively distributed across the Internet? and (2) Will from the input to the outputs" (Scriven, 1991 p. there be a demand for this service? As the project comes to 129). a close the answer to the first of these questions is a resounding, YES!! The answer to the second question is 10. REFERENCES "Yes -- but how can we recover the cost of implementing Alberta Education. Network Access Grant to School this technology." The challenge now is to leverage this Jurisdictions. http://ednet.edc.gov.ab.ca/technology/te body of research into a viable commercial product that can ch_network_access.html, 1996. fulfill that demand. The members of the consortium are Keenan, T.P. "Sharing Global Knowledge Through presently discussing how they should proceed with Technology-Based Distance Education." In AMEE. In this vein, the following recommendations are proceedings of APEC Tel HRD '97 International made: Symposium, Beijing, China (1997). A modified AMEE project should continue. Contracts should be negotiated with a few beta-sites. Kirek, I & Chugh, U. Effectiveness of AMEE: Results of Features that have either been deferred or missed from the AMEE Field Trial. University of Calgary. June, 1997 the AMS should be prioritized and implemented. Garrison, D.R. Understanding Distance Education: A Rewrite the CAC software to utilize push technology Framework for the Future. Routledge, New York, and zero administration operating systems. 1989 Develop financial models to examine the cost/benefit Scriven, M. Evaluation Thesaurus (fourth edition). Sage Of using AMEE. Publication, Newbury Park, 1991. Modify the AMEE interface to interact directly with common Post-secondary registration systems. Virtual-U, Virtual-U Research Project, http://virtual-u.cs.sfu.ca, 1997. In summary, the development and implementation of the AMEE technology can be considered a success. The technology worked. Some areas where improvements are
169 197 Interworking Between Telephone Network and Multimedia Communications Network
Hiroki Yanagawa Tadashi Enomoto NEC Communication Systems Tokyo,Japan
ABSTRACT
Rapid growth of the Internet and mobile communications networks shows a shape contrast to the nearly saturated telephone network in Japan. We analyze the features of these networks from the viewpoints of the communication time, expansion, representation of information and user age groups. Based on this analysis, we discuss the future interworking and development of these two types of communications.Identifying the network functions which are required to realize the near-future network, we propose a new network system configuration.
1.PREFACE 24 million at the end of January 1997.As shown in Figure 1.1, the number of providers at the end Inrecent years, mobile andInternet of 1996 was nine times greater than that in the communications have grown explosively in Japan. previous year.As of January 1997, there are The number of mobile communications reported to be more than 10 million Internet subscribers has increased by more than 200% subscribers. from 7 million as of the end of September 1995 to
30 0
25 0
2o 0 50 0 0 5 0
0 3 6 9 1 2 3 4 5 7 a 9 1 0 1 1 1 2 9 4 ' 9 5 (Source: Reference materials from the Ministry of Posts and Telecommunications) Note: The above graph indicates the total number of registered class-1 and class-2 carriers providing the Internet services.
19 94 19 95
Yearand month 3 6 9 12 3 4 5 6 7 8 9 1 0 1 1 1 2
Numberof carriers 11 18 24 31 38 42 45 58 78 78 110 163 206 279 Figure 1.1Growth in the number of Internet providers (Source:1996 White Paper on Communications )
170 Internet communications differ fundamentally communications.By considering the network from the existing communications systems and services which will be necessary in the near researchisrequiredtounderstandthe future, we propose a network system background to its explosive growth.Studies are configuration which will be able to realize these required to determine a direction for the future services efficiently. coexistence of the existing telephone communications and the Internet.Through this 2. COMPARISION OF TELEPHONE AND research and study, we must propose and INTERNET COMMUNICATIONS construct a network system in the necessary direction. InFigure 2.1, telephone andInternet communications are classified by the forms of This paper first clarifies the features of telephone presentation of sent and received information and Internet communications from the and network services.This figure shows that viewpoints of communication time, expansion, freedomtoselectforms of presentationis representation of information, and user age allowing Internet communications to extend the groups.Then this paper discusses the direction scope of its coverage hand-in-hand with the forfuturefusionofthetwotypesof development of personal computers.
T.4 Strucrtured Future multimedia oommunicsatione aervirsess Multi- information media Multimedia. eommunieetione ftervieem in 8-1SDN age oommu- (4...neuter- niomti nm ermaciamad 1 Multimedia. ememunicletionm aervicmesture. ..r.y. .nformetion) Internet-oriented inforeltieo Tele...... cm a.nd remote educmtion ...... TV Fez Tel S ngle-medie mem...Animation Redid 1 rvirma Telephone)
Other. Voicie Na el Naturel Numeri Dynamic. With dynemturio nd motuetor nformetion immgcm (csomOut4r (taotile (vide.) Cineluding pro''gTs) (LtVt;.!?7)° <=..) handwriting date type) and
Natural informetion...... c.rma.tioneti er0.N. aing and output)
Other 1 A.... Visual Other Figure 2.1Multidimensional range of media (forms of presentation of information)
"Media-blank areas" (Figure 2.2) suddenly came Internet seems the best means of filling these into focus when introduced in the 1978 White blanks. Paper on Communications of Japan. The
Time T000irod to romoivo information 3 months. -- Film
1 menth Monthly zi
1 wee..
24 hour..
Blank oroo which . 12 hours. mom 17o mmvormel by tFlm ImtaTmot 0 hour..
1 hoc.
3--4 10 100 1000 10theu. 100thou.lmil. Number of information remiDemto10mil. Source: -Tee." Information Oememnieetien Sleet...mein the gee ef New Medi'' (Tai min Bunkeehm..1984) The oriminal concept im hewed on the 1978 White Rawer on Ooewmniemtionm. Figure 2.2Media-blank areas(Source:Networking Economics )
BEST COPYAVAILABLE 171 199 The quick downsizing of computer systems hierarchical network structure to a flat one caused computer networks to change from the (Table 2.1).With those changes, the popularity centralized to the distributed processing systems. of Internet communications is growing. Meanwhile, communications changed from a
Centralized processing Distributed processing
- -
------.....- 44111 ------'I -,-----.------Computer c = network 401
..---- ...-- - -Mainframe and dumb terminals -Interconnections of microcomputers -Centralized -Not centralized -Specialists required -Specialists not required for daily operation
1 I
Telcom 4. '..% 7 ., \, , .______. 1 network Other network -POTS oriented -ISDN -Hierarchical -Not hierarchical -Monopolistic -Competition -CPE essential for network CPE separation -Interconnections including LANs and private networks
Table 2.1Centralized processing to distributed processing(Source:Networking Economics)
3. FUSION OF TELEPHONE AND cover telephone communications.However, we INTERNET COMMUNICATIONS should not jump to the conclusion that we should only think of constructing a network for Internet With this tendency in communications, Internet communications. Figure 3.1 shows the age communications, when realized in the existing groups of telephone and Internet users in Japan. communications network, will also be able to
Diaribution of Distribution of population Internet users ( %) (%) 1 8.0 8.0 8 7. 6. 9 7 2 6. 1 5.4 I 3 0 LIL131
3. 6 2 0 5 2 -.- 1. 8 1 0 O
0 1 0 2 0 30 40 50 0 7 0 8 0 9 0 0 1 dor (Age) InternetI user generationI Telephone user generation
Figure 3.1Age groups of telephone and Internet users in Japan (Source:Sixth Study Meeting of Communications Software Engineering)
172 200 As the figure shows, most Internet users are in For many users, telephones are communications their 20s to 30s.People in their 50s and older, terminalsandpersonalcomputersarefor accounting for about half the telephone users, Internet communications and they don't think of will probably not use the Internet.When we using the same terminal for both telephone and look at our parents in their 60s and 70s, they Internetcommunications. Telephoneusers tend not to use machines with more than three expect a network to support the existing voice function buttons.For many people in their 50s communications available anytime, anywhere, or older, the Internet is not exciting but nuisance. and with anybody.Internet users expect a Function of terminals increasingly improve and network to support text and other non-voice become complicated while learning ability of the communications even with those who do not aged declines.This means they will continue to subscribe to the Internet. stick to telephone communications for about another 20 years.Once people now in their 40s Ultimately, a network is expected to realize reach their 60s, people in almost all age groups communications compatibility between telephone will feel no resistance to Internet, and telephone and the Internet with the functions listed in communicationswillbetotallyincluded in Table 3.1.In particular, telephone users expect Internet communications. tousethecommunicationsterminalslike ordinary telephone terminals.
Asynchronous Synchronous File transfer Information communications communications service retrieval service service service
TelephoneTelephone to E-mail Telephone and (Based on (to be realized by Internet phone representative WWW) enhanced voice (Already implemented Telephone and WWW to recognition tech- by IDT of the United j See 'Telephone and nologies at the States as .,-- Internet phone" biginning of the "NET2phone") for vioce media, Internet 21st century in "Telephone to Japan) E-mail" or Telephone and IRC -E-mail to Internet E-mail to telephone telephone" (to be achieved by for text media and , voice synthesis / "Telephone and to and storage) Telephone and CU-SeeMe" NetNews to telephone CU-SeeMe for image media.
(already in service (Telephone and . Telephoneusing voice answeringInternet for audio
equipment) communications,pending . for video
communications) .
Table 3.1Compatibility between telephone and Internet communications kSource:Sixth Study Meeting of Communications Software Engineering)
Torealizemutual conversion between the for voice recognition, synthesis, and storage.By different means of communications, a media linking these functions with the mailing and conversion network is expected to develop in the broadcasting functions of the Internet, different future to enable smooth communication between kindsofcommunications. canbesetup the telephone network and Internet (Figure 3.2). seamlessly between the telephone network and Internet. The media conversion network requires functions
173 201 L- A NJ
Multimedia network Clotoroot m000mm) Internet Voioo Modim Network Vjr. j VCR CaIr o. r. =yr a..se Comoo!i-Lioo by voioo To 1 ...... _/"<6rleass 1 modio ootworla -For dorforoo-Liotioo ooloo. oorriero
TolooN000 O. Et X
Figure 1_2Network configuration_at the beginning of the 21st century (Source:Sixth Study Meeting of Communications Software Engineering )
4. CONFIGURATION OF MEDIA anywhere CONVERSION NETWORK v) Extensive range of packages: A great variety of hardware packages and software Before discussing the configuration of a media libraries that allows immediate realization of conversion network, we should consider the desired functions functions expected from the telephone network and Internet and compare them to determine the Given the above, what functions should be functions required from the media conversion required from a media conversion network network.Then we discuss the optimum network between the telephone network and Internet? configuration to realize these functions. All the requirements from i) to v) must be met by Communicationssystemsforatelephone the media conversion network. Although difficult network should satisfy the following will it be to satisfy all these requirements and requirements: despite the potential risk of overinvestment, it is necessary to fulfill these severe conditions in i) Realtime characteristics: switching order to construct the intelligent communications telephone terminals always within system. 100 ms ii)Ultra-multiplex processing: constant There is an argument that these requirements monitoring of 100,000 or more telephone must be satisfied at the terminal level.However, terminals to connect requested terminals no receiving Internet terminal can be ready 24 immediately hours a day for communication (transmission) iii) High reliability: immediate recovery from from a telephone terminal. Therefore,the faults to prevent system failure network needs voice storage, voice conversion, and other voice service functions.This is why To meet these requirements, systems have these services should be realized at the network been built up from scratch by adding level. dedicated operating systems and dedicated application software to dedicated hardware. The following three methods of construction are available for creating a network system to satisfy Internet is expected to have a structure that the severe requirements i) to v): satisfies the following requirements easily and immediately: 1) System separation method: This is a method to separate from existing iv)Standard interface:open interface that switching systems that part of the functions enables communication with any party and which is determined to be more effectively allows user-created software to be used developed as a general-purpose products and
174 to realize such part on a general-purpose purpose machine the real-time processing, machine. ultra-multiplex processing and high reliability, which are the requirements for This method is often used in intelligent networks switching systems, and thereby to make the (IN), home location registers (HLR) and general-purpose machine perform switching intelligent peripheral (IP). operations which have been done by switching systems. 2)System-OS coexisting method: This is a method to add general-purpose This method has been common among data interfaces and OSs to existing switching switching systems but has not been adopted systems and thereby to enable realization of by any manufacturer of communications general-purpose functions which is equipment for telephone switching systems. determined to be more effectively developed on a general-purpose machine. (See Figure 4.1 for details of the three methods.) This method is adopted by some manufacturers of To selectthe optimum system construction communications equipment. methods forthe media conversion network, advantages and disadvantages of the system 3) General-purpose method: construction methods are compared, as follows. This is a method to realize on a general-
System separation method System-OS coexisting method General-purpose method General-purpose machine(FTC)
Communi- Commun i Speech I cations Communications cations Communications path--i process- service processing service -- Communi-Communi- ing cations cations process-service General-purpose ing OS General-purpose OS
Realtime OS Realtime OS Realtime general-purpose OS
Switching system Switching system General-purpose machine(FTC)
Figure 4.1System configuration of the media conversion network
1) Features of the system separation method: 2) Featuresofthesystem-OScoexisting This system construction method is suitable method: This method is very effective for forquickconstructionofalarge-scale extending the life of an existing switching communications network because functions system but is still worse than the system canbeaddedeasily. However,the separation method in terms of keeping up separationoffunctionsfromswitching with the trend of downsizing.Considering systems causes equipment investment and the facts that it requires a lot of labor to port, increase additional function processing, and maintainandmanagegeneral-purpose system construction will not be able to keep packages for each specialized (realtime) OS up with the trend of downsizing (logic of andthatdifferentmanufacturersare mass).Therefore, this method can only be creating and using their own OSs, this regarded as an intermediate solution. method is very risky.
175 2.03 3) Features of the general-purpose method: This method does away with the existing These problems cannot be ignored in telephone switching systems. This method is not and other mission-critical systems.Total and popular because those who have long been unique network or system solution is required. engaged in the development of existing switching systemswilllosetheirjobs. The telephone network can solve relay system However, once the base functions of a failures by detour control.A local switching switchingsystemisconstructedona system, however, requires a unique solution general-purpose machine, this method is far because the system is connected directly to users. superior to the other two methods in terms of keeping up with the trend of downsizing and To replace the entire telephone network with a easiness of adding services.Disadvantages general-purpose system, the OS must support of this method arethe low processing measures against the above problems a) to c).It performance andinstability common to is not too far to say that an entire network can be initial general-purpose systems. established on general-purpose machines only if this kind of OS is developed. Among the above three methods, the general- purpose methods should be the best solution for 5.CONCLUSION efficient development of the basic system and quickadditionofservices,consideringthe To offer a network system suited to the new age, easiness of construction of the development thispaper proposedtheconstructionof a environment, the trend of downsizing, effective communicationssystemongeneral-purpose equipmentinvestmentandfuturesystem machines that could offer better and wider range continuity.If the low processing performance of services. At present,UNIX-based fault andinstabilitycommon togeneral-purpose tolerant computers (FTCs) are considered best for systems can be overcome, this will be the main construction of a media conversion network. form of system construction in the future. However, OSs for the network system will change over to Windows-based ones, due to increasing The recent advent of realtime UNIX and other Windows-basedterminals. Althoughsome high-speed OSs has enabled thehighcost Windows-basedFTCshavealreadybeen performance of a dedicated switching system to marketed, they are not as mature as the UNIX- be realized by carefully considering the software basedsystems. Introductionofmature configuration of the platform and application. Windows-based FTCs with the discussed media High reliability is obtained on a fault tolerant conversion functions is eagerly waited, so that we computer (FTC) by adding reliable software could provide new network systems to cope with functionstotheplatformtoallowfile the new waves of communications. replacement with uninterrupted system processing and instant software fault recovery.
However,processing performanceof current general-purpose systems is still low, with the following potential problems: a)System processing is interrupted for several hours when the OS (UNIX) files are replaced. b)The system fails in case of an OS (UNIX) panic. c) The systemisoften stopped when the hardware (CPU and I/O bus) needs to be expanded.
176 204. REFERRENCES Communications Systems. Member of the Institute of Electronic, [1] 1978 White Paper on Communications, Information Communication Engineers. Ministry of Posts and Telecommunications (1978) Graduated from Tokyo University with BS in [2] 1996 White Paper on Communications, Physical Engineering. Ministry of Posts and Telecommunications (1996) [3] Koichiro Hayashi: Networking Economics, Tadashi Enomoto NTT Publishing (1989) [4] Norio Shiratori: Communications Software Joined NEC Communications Systems in 1980. Engineering, Baifukan (1995) Has been engaged inthedevelopmentof [5] Shimazaki,Endo,Yanagawa,etal.: communications systems for packet transmission Ultimate Communications Services- Possibility and other data communications.Section Chief ofMultimediaCommunications,The7th in R&D Division,Ultra-high Speed Network Symposium of Communications Services, Society and Computer Technology Laboratory. of Electronic Information Communications (1993) Member of the Institute of Electronic, [6] Masahiko Shimazaki: Bird's-eye View of Information and Communication Engineers. Electronic Information Networking Graduated from Kyoto University with BS. Configuration and Subjects in the Multimedia Information Service Industry, Bulletin No. 5 by Development Engineering Department, Tokai University (1993) [7] 1996 White Paper on Information Media, Dentsu Institute (1996) [8] 1996 White Paper on Internet Business, Japan Applied Research Institute (1996) [9] Liberalization of Communications, General LaboratoryofInformationCommunications (1996) [10]G. J. Myers: Composite/Structured Design, Litton Educational Publishing (1978) [11] M. A. Jackson: System Development, Prentice/Hall International (1983) [12]Hiroteru Yanagawa: Interworking between MultimediaCommunicationsNetworkand ExistingNetwork, The5thMeetingof Communications Software Engineering, Society of Electronic Information Communications (1996) [13] 1995 Civilian Power, Asahi Shimbun (1995) [14] Information Communications Handbook '97, General Laboratory of Information Communications (1997)
Hiroki Yanagawa
Joined NEC in 1978. Has been engaged in the development of application systems for facsimile transmission and other data communications. Senior Manager of 2nd Software Department, DomesticNetworkSystemsDivision,NEC
177 205 Solutions for Remote Multimedia Access using Network Managed VSAT's and the International ISDN Standard
Keith Ramsay Senior DirectorNetwork Products Division EFData Corporation Tempe, Arizona. USA.
ABSTRACT
The majority of satellite based commumnications systems have been developed with telephony and low rate data in mind. Users are now demanding enhanced services not available in these systems. This paper will address a VSAT based ISDN system providing enhanced digital services via satellite.
Satellitebased Telecommunications Networks A Network Managed VSAT System based on the have been slow toprovideusers withthe ISDN Standard that provides all of the Enhanced enhanced services that are normally available in Services described above and at reasonable today's sophisticated terrestrial networks. VSAT costs, is long overdue. The VSAT System must systems have provided users with low-rate data provide a standard ISDN interface as well as and basic telephony services for many years with Software to deliver flexible Video Conferencing little,if any changes in the services offered. and other ISDN related services. The system Flexibility is definitely not a description that could must be simple to implement and at the lowest be applied to the majority of VSAT Networks that possible cost to the end user. are in operation around the World today. Satellite Bandwidth Managed ISDN Services are As users have become more sophisticated in their based on single or multiple BRI's. BRI interfaces uses of telecommunications technology, Countries are defined as a 4-wire point-to-point (T) or point- in areas such as Asia/Pacific have begun to to-multipoint (S) circuit. This interface can be demand Enhanced Telecommunications services. configured as a Network Terminator (NT) or The question of how to provide these services via TerminalEquipment(TE).An NTinterface satelliteinanenvironmentthathas been provides network functionality to an application. A structured based on basic telephony and low-rate TE is necessary to connect to an ISDN Network. data is of interest to everyone. EFData's Bandwidth Managed ISDN Network A Universal standard exists which will allow high- extends terrestrial-based ISDN Networks over the speed connection to the Internet, LAN-to-LAN satellite and allows interconnection between two connections, Video Conferencing, Distance- subscribers on the satellite network. Figures 1 and Learning and Standard Telephony. This standard 2illustratethedifferencesinthepossible is the ISDN standard. ISDN uses a Basic Rate configurations. Interface (BRI) that provides two (2) 64Kbps data pipes (B Channels). ISDN is extremely flexible in Reference: Figures 1 and 2. thepossible ways that the system can be configured. It can be configured as simply as one Network Management (1) 'B' channel or even a combining two (2) 'B' (NMS)is Channelsinone(1)directiontoprovide a A NetworkManagement System 128Kbps pipe. The ISDN Standard allows "dial- responsibleformanagingtheNetwork and up" connections to be established to provide all of bandwidth allocated to the network. The NMS the above services. An added advantage is the provides the operator interface for configuring and availabilityof"off -the-shelf"products(ISDN administering the Network. It maintains a log of all Modems) that will work with most standard PC's. network events, including Call Detail Records Modem costs in the low $100's are now typical. (CDR), Alarms and other Node reported events.
178 206 FIGURES/DIAGRAMS REFERENCE
ISDN ISDN (Network Side) (Subscriber Side)
DTM Satellite DTM Network Customer ISDN Data Unk EFData ISDN' Interface BRI EIA-422 EIA-422 BRI Equipment Converter modefn Modem. Converter (NT) (TE'y (TE mode) (NT mode() .'
U-Interface SIT- Interface SIT-Interface
Figure 1. ISDN Subscriber to Network (Network Extension)
ISDN ISDN (Subscriber Side) (Subscriber Side)
DTM Satellite DTIV Customer Link Customer ISDN EFData EFData EIA -422 ISDN ale Equipment BRI EIA-422 Equipment Converter Modem Modem Convener , (TE) (NT mode) (NT mode) (TE)
S/T-Interface S/T-Interface
Figure 2. ISDN Subscriber to Subscriber (Private_Network)
CLIENT TERMINAL V
1110 .1L.1 I.41-- 4MASTER CONTROL PPP MODEM PPP
NMS CONTROLLER
Figure 3. NMS Site
179 207 The operator can easily access these records to In this example, the Slave control Modem can monitor and analyze network performance. The manage multiple Traffic Modems. NMS can be configured a simply as required, or can integrated into an existing Hub. Figure 3 Reference: Figure 5. illustrates a simple Network Management System. Call Procedures Reference: Figure 3. The ISDN Converter emulates the basic functions Customer Site of the ISDN Network when subscriber equipment is connected and "on hook". When the remote A VSAT isinstalled at a customer site that equipment attempts to establish a call, the ISDN requires ISDN. The equipment at the customer Converter receives the signaling messages (D site consists of: Channel)andprovidesthepropernetwork response. The ISDN Converter sends the dialed e Radio Frequency Transceiver (RFT) ISDN number to the Slave Control Modem. The and Antenna Slave Control Modem then passes a request (via o Slave Control Modem satellite link) to the NMS to assign bandwidth for a Traffic Modem(s) (one per BRI) BRI connection to the destination specified by the * ISDN Converter(s) ISDN number. The NMS allocates the required bandwidth and informs the Slave Control Modems Two types of ISDN converters are available. The at both ends of the link of the allocated Traffic D.I.C.A. 6400 supports single or multiple BRI's, frequencies to be used by the Traffic Modems. while the D.I.C.A. 7300 supports a single BRI The Traffic Modems are tuned to the assigned extension. The ISDN converter functions like an frequencies and an ISDN circuit is established. ISDN NT emulating a CentralOffice to the connected customer TE. During the connection process, the originating ISDN Converter generates the proper messages As a low-cost solution for single BRI circuit, a to the subscriber equipment to maintain the link in remote node can be set up with a single Control an "idle" condition. When the connection is made Modem providing both the Control Channel and to the Converter on the terminating end, the 'B' Traffic Channel characteristics(internaltraffic and'D'Channels arecut through so that mode in EFData terminology). A D.I.C.A. 7300 is information can be sent transparently. used as the IDSN converter. Figure 4 illustrates and example of a low-cost single channel (BRI) Upon call termination by either end, the ISDN subscriber earth station. Converter informs the local Slave Control Modem, which in turn informs the NMS (via satellite). The Reference: Figure 4. NMS terminates the satellite circuit, releasing the bandwidth to the network. ISDN Hub Subscriber to Subscriber (Private Network) An ISDN node installed as an ISDN Hub provides an interface between the Bandwidth Managed The Bandwidth Management System (BMS) Satellite Network and the Public Switched ISDN supports full ISDN connections between ISDN Network or a Private Terrestrial Network. The subscribers (TE) on the network. The ISDN equipment used in this instance consists of: Converters generate allnetwork clocking and signalingfunctions required for the TE-to-TE o RF Equipment and Antenna connection. In this mode, the Phoenix Network link, and network o Slave Control Modem provides the physical, data layers for the 'D' Channel. oTraffic Modem(s) (one per BRI) o ISDN Converter(s) The BMS supports full ISDN functionality without The ISDN Converter presents itself as the TE to any connection to a terrestrialnetwork. This the Central Office NT. Figure 5., illustrates a site feature is particularly useful for Corporate Video setup to act as an ISDN Hub providing two (2) BRI Conferencing, Data Sharing or Intranets where no connections to a terrestrial network. terrestrial based service is available.
208 180 FIGURES/DIAGRAMS REFERENCE
Satellite Antenna
Slave Control Modern
EIA-485 EIA-422
4so,,,,,: Customer f,4,4,;.40:1 C A 73 4BRl IN.Equipment
Figure 4. Subscriber (TE) Site
Antenna
SlaveSlave Control Modem EIA-232 Local Operator Console (optional) EIA-485 EIA-485 Data Modem
EIA-485 Data Modem 9117:1412:11=ttriFigure 5. ISDN Hub Site.
BEST COPTAVAILABLE
181 209 SubscribertoNetwork Access(Network and the D Channel supports the Extension) signaling traffic and additional X.25/X.31 data traffic with a data rate The BMS also supports TE-to-NT connections of up to 9.6Kbps. from a subscriber to an ISDN Hub with a Terrestrial ISDN Network access. This mode is 2 B + D, X.25/X.31 commonly used for Internet access, Remote LAN 160Kbps connections and Telecommuting. In this case, the The two B Channels operateat network provides the clocking, protocol 64Kbps each and the D Channel translation, and other related functions provided supports thesignalingtrafficand by thenetwork andhigher Open Systems additional X.25/X.31 data traffic with a Interconnection (OSI) layers. The BMS provides data rate of up to 9.6Kbps. the physical and data linklayers for the 'D' Channel. The connection to a Public Network can Multiple BRI Access Modes and Data Rates be used to dial any location Worldwide, even where non-ISDN subscribers are located. Higher data rates than provided by a single BRI are commonly used for High Quality Video Call Control Protocols Conferencing, Compressed Video and similar applications. The BMS has the capability to There are different standards for ISDN D-Channel multiplex up to four (4) BRI's over a single satellite call control protocols in different regions of the circuit. The following data rates are supported: World. The ISDN Converter supports the two (2) most common protocols: National ISDN 1 (NI-1) 4 B + 2D, X.25/X.31 and the Euro-ISDN (DSS-1). NI-1is commonly 312Kbps used in North America. The DSS-1 standard is commonly used throughout most of Europe, Asia, 6 B + 3D, X.25/X.31 South America and Africa. 464Kbps
In addition, an ISDN switch at one site in a link 8 B + 4D, X.25/X.31 can be used to perform the conversion from one 616Kbps protocol to another. This allows satellite-based networks in which each side runs a different Multiple Destinations protocol.The switchcansupportGateway functions to other ISDN standards such as AT&T The ISDN standard supports multiple destinations 5ESS, Norte! DMS-100, German 1 TR6, French by establishing each B Channel call as a separate VN4,Japanese NTT, HongKong CR22, event. The BMS operates using SCPC Traffic Singapore FETEX, Australian TS-013, or others. Circuits that are fully allocated and established when the subscriber's ISDN device goes "off Single BRI Access Modes and Data Rates hook" and dials a number. This means that a 2 B + D call from a given BRI device can go to one The BMS provides several methods of accessing physical destination at a time. Two separate B ISDN Bandwidth across the satellite. The usual Channel destinations can be handled if the call is data rate of an ISDN BRI interface of 192Kbps passed through a Terrestrial Hubconnected to has been reduced to: an ISDN Switch, since the Switch can provide routing for the B Channels as required. 1 B + D, no X.25/X.31 80Kbps Network Topology One B Channel operates at 64Kbps and the D Channel supports the The ISDN Network has a full MESH topology with signaling traffic. links supported for subscriber-to-subscriber and subscriber-to-ISDNNetworktraffic.An ISDN 1 B + D, X.25/X.31 Gateway site will frequently contain a Switch or 96Kbps PBX for local management of B Channel routing. One B Channel operates at 64Kbps
2.1.0 18 2 A sample Network with two (2) BRI's at one customer site and one(1)BRIatanother customer site is illustrated in figure 6.
Reference: Figure 6.
Thisnetworksupportsmixedapplication-to- application and application-to-network connections. The call connection protocol conveys the information to define the required network functionality.If a callis made between ISDN application sites, the ISDN Converter acts as the network surrogate. If a call is made between an application (TE side) and a site that has a link to a Terrestrial Network (NT side), the ISDN Converter transparently passes the network functionality from the network.
Conclusion
ISDN offers users a variety of applications within the one standard. Users can utilize all the benefits of a standard telephone network and at the same time have complete "dial up" access to a wide variety of data based services. The cost of implementing a satellite based ISDN Network is now competitive with standard telephony offerings, with the exception of the bandwidth used percall.As users demand Enhanced Service offerings such as High-Speed Internet connection, Video Conferencing and Remote LAN connections. ISDN is able to deliver all of these demands today and at a reasonable cost for the service.
211 183 FIGURES/DIAGRAMS REFERENCE
PHOENIX NMS SITE .40011 LJ CUSTOMER SITE A CLIENT TERMINAL' SLAVE CONTROL MODEM U418111Mi 4111-11. MASTER CONTROL MODEM C A. BRI
! NMS CONTROLLER
GATEWAY SITE
SLAVE CONTROL MODEM CUSTOMER SITE B
(OPTIONAL) SLAVE CONTROL MODEM ISDN SWITCH BRI
D3DN BRI (IPUBUC)
SRI
Figure 6. ISDN Network
212 184 Multimedia network architecture for supporting the lifestyle in the twenty-first century
Yasuo Iwami, Yasufumi Nagayama, *1Masashi Nabeta, *' Hiroshi Fujimoto *2
*1 Fujitsu Limited,Musashi-kosugi Tower Place Bldg, 403, Kosugi-cho 1-chome, Nakahara- ku, Kawasaki 211, Japan *2Nippon University, Japan
1. Abstract
In this paper, we predict future work styles by modeling current enterprise organizations and determine the architecture that will be needed for smooth -communications.Specifically, we proposeatwo-layered multimedia network architectuie ..consistingof information and communication layers. The information layer uses decision-making agents, whereas the communication layer uses a communication agent.The decisiOn-making agents support.decision making that requires advanced types of communication, such as negotiation and persuasion, in a distributed-officeenvironment. The communicationagentsupportsbi-directional communication by managing positional information about communicating entities and selecting the optimum paths and media for communication.
2. Introduction A new work style stressing human considerations is Thetwenty-firstcenturywillseedemandsfor essential for creating a more comfortable life style. distributed office systems that are free of time and We have examined the features necessary for the new spatial restrictions, such as small and home offices work style, listing them below: (SOHOs). Thisdemandwillresultfromthe possibility thesesystemsofferinsolving urban (1)Individuals are the key to the efficient working of problems (such as highly concentrated populations an organization (Figure 3.1). and air pollution), in coping with demands for changes The traditional work style consists of two extremes. in the lifestyle of office workers, and in enabling Atoneextreme,individualsmustsubordinate higher work efficiency.Use of the Internet and themselves to the organization.At the other extreme, intranets is being promoted to establish information/ individuals are supreme, and the organization lacks communication infrastructuresin distributed-office cohesion.In the future, the organization must still systems.It is becoming technically possible for an function efficiently, but at the same time ensure that office worker to do the same work at any location. individuals fully develop their capabilities. To realize a comfortablelifestyle, however,itis necessary to produce aninnovativeinformation/ (2)Automating non-routine work (Figure 3.2) communication system that can smooth Non-routineworkwillincreaseinthefuture. communications among people.In this paper, we Whereas routine work is easily automated because forecast the work style of the twenty-first century each problem has a single solution, non-routine work using enterpriseorganization models. We also is difficult to automate because a problem has more examine multimedia network architectures that can than one solution.In the future, it will be important provide a more comfortable lifestyle by analyzing the forustodetermineautomaticallythe optimum necessities for smooth communication. solution from more than one solution.
3. New WorkStyleforCreatingaMore (3) Automatic acquisition of needed information Comfortable Life Style (Figure 3.3)
185 213 Organization
Work style in which the organization predominates
Organization fi
New work style
Work style in which the individuals predominate
Figure 3. 1WORK STYLE THAT ALLOWS INDIVIDUALSTO DEVELOP THEIR CAPABILITIES.
Solution lution auluif gr&ill n Solu Solution [ Solution]
Traditional work style New work style
Figure 3. 2WORK STYLE THAT EFFICIENTLY SOLVESPROBLEMS IN NON-ROUTINE WORK
214186 Inform- ation Inform- ation Inform- ation
-- Inform- ation Inform- ation
Inform- ation
Inform- Inform- Inform- ation ation Inform- ation ation
Traditional work style New work style
Figure 3. 3WORK STYLE IN WHICH REQUIRED INFORMATION IS EASILY ACQUIRED
Real world Virtual world (computer network) Real world
Inform- ation
e's rn
Figure 3. 4WORK STYLE LINKING THE REAL WORLD WITH A VIRTUAL WORLD
187 2 1 5 An enormous amount of time is usually spent finding hierarchicalstructure. Generally,eachrolein and selecting needed information. We need to specialized office work has a higher degree of switch to a push-type technology for information freedom and independence compared with routine contents, which will allow needed information to be work. Meanwhile, hierarchical structures can be delivered automatically. reconfigured to optimize them according to the goals of the enterprise. (4)Linkage with a virtual world (Figure 3.4) The real world, which we inhabit with other human To representanorganizationalstructurewhile beings, will need to be linked seamlessly to a virtual keeping each role in the office independent from one world on a computer network, where we will interact another, we paid attention to the configuration units with network resources as if they were living entities. of organizational functions and the links between For this interaction to be effective, the virtual world them. We definedtheconfigurationunitsof must be provided with mechanisms, or agents, that organizational functions by dividing them into smaller take into account our personalities as users as they functions, like department -> section -> project -> work on our behalf. group,as;.' role spaces. Figure 4. 1 shows the configuration of role spaces.A role space is a virtual This paper focuses on the characteristics of (1) above. object that realizes unit functions by dividing an Figure 3.5 locates the new work style graphically in enterpriseorganizationanddefiningtheunit thequadrantdefinedbyincreasedworkshop functions in detail.Each virtual object consists of distribution(rightonthehorizontalaxis)and elements such as a purpose, enterprise resources, and increased importance of the individual (up on the processes.In other words, a virtual object is a field vertical axis).Traditional office systems, on the where a given mission or duty is carried out in order other hand, have supported the work style defined by to achieve the goals of the entire organization.A the lower-leftquadrant. Theprogressof role space generates lower-order role spaces when it communication technologies such as the Internet and dividesitsfunctionsintosmaller functions and CTI have enabled today's office systems to support the defines them in detail in order to achieve goals.In a work style defined by the lower-right quadrant.The hierarchicalstructure,a rolespace(suchasa following chapters discuss the environment required department or section) has the authority to manage the to support the next-generation work style defined by purpose, enterprise resources, and processes of a role the first quadrant.This new work style will merge space (such as section or project) under it.At the communication and decision-making technologies to sametime,arolespaceinheritsthepurpose, focus on the individual without also losing sight of enterprise resources, and processes of the role space organizational efficiency. above it.
4. Enterprise Model and Functions Required for Meanwhile, in an actual enterprise organization, a New Work Style worker in a role space carries out the mission of the role space according to the processes and schedule 4.1Enterprise models defined by utilizing the enterprise resources in the role space. To determine a multimedia network architecture that supports a new life style, it is first necessary to model 4.2 New work style model an enterprise in order to understand the organization and activities of general enterprises.Generally, the Distributed offices are being used to solve urban organizationalstructure ofan enterprise is problems such as overcrowding, long commutes, and hierarchical, for example, department -> section -> air pollution.In a distributed-office environment, project. Enterpriseresources,suchasfunds, remote workers can work together without gathering facilities, and information, are assigned according to in one place.An example of this might include a the hierarchical structure of the enterprise. The satellite office, a local office, a resort office, a small chain-of-command and decision-making systems of office, and a home office. theenterprisealsofunctionaccordingto a
188 '216 Importance of individual Next-generation work style
Decision-making technology
Centralized Distributed workshop workshop
Communioaons technology
Traditional work style
Importance of organization
Figure 3. 5 RELATIONSHIP OF WORK STYLES
Department
1 Section
_fr" (-Project Project
11- .inheritance path
Figure 4. 1ROLE SPACE CONFIGURATION
189 217 We anticipate that in the future, individuals' sense of achieving goals.The term "work execution" means value and their view of work will diversify.This will to produce work output by utilizing the allotted lead to demands for work to adapt to suit their enterprise resources. lifestyles.In this new work style in which people are the central concern, work hours will vary between The work execution phase consists largely of routine workers.To put it in another way, the major work work, while the decision-making phase is mainly non- style trend in the future will be that offices are routine intellectual work, which will. increase in the distributednotonlygeographicallybutalso future.Collecting the information needed to make temporally. the best choice is fundamental to decision making. Group decision making willrequirediscussions, From the viewpoint of enterpriseorganizations, negotiations, and persuasion among the members or flexible, small-scaleorganizationsratherthan subgroups of the group. conventional large-scale vertical divisions will be needed to efficiency cope with an increase of jobs that In the prior section, we considered the distribution require a high levelof intelligence. Sharing and multiplexing of role spaces as features of an information equally among small organizations could enterprise model reflecting the new work style.Any make it possible to solve problems quickly and meet decision making related to these features requires the demands flexibly by adapting the configuration of the following functions (Figure 4. 3). organization to its environment.From the viewpoint of individual workers, this means taking responsibility (I)Role space distribution for a number of subdivided functions. Smooth communications between role spaces: This function enables smooth communications between Figure 4. 2 shows an enterprise model that suits the persons who are separated geographically and/or new work style explained above.In this model, role temporally. Italsoenablesthecollectingof spaces are subdivided at a level of individual workers. information from geographically remote places. The smallest unit of an organization is a worker. Individual workers have different goals and resources (2)Role space multiplexing to execute processes to achieve their goals. Extraction of information necessary in a role space: This function enables the exact information necessary (1) Role spaces are distributed both geographically to be extracted for carrying out duties in a role space. and temporally. The work placesof individualsaredistributed 5. Multimedia Network Architecture for geographically. In addition, they have different Supporting New Work Style work hours. Furthermore, the resources available to an individual worker are not necessarily in the same 5.1Architecture for supporting new work style place, hence the need for role space distribution. In the previous chapter, we clarified the functions (2) Workers belong to more than one role space. necessary for the new work style.In this chapter, we Each worker has more than one role in an enterprise propose a multimedia network architecture (Figure 5. organization.The worker carries out his or her jobs 1) to implement these functions.This multimedia simultaneously, hence role space multiplexing. network architecture consists of communication and information layers, which are established above the 4.3 Functions required for new work style physical layer of networks, media, and data.The informationlayeroffers the two functions The process of a role space is that executed to achieve (communicationbetweenrolespacesandthe the goals of the role space.Generally, office work in extraction of necessary information in individual role an enterprise could consist of two phases: decision spaces) explained in the previous chapter to solve making and work execution.The term "decision problems posed by users. These functions are making" means selecting the best choice from those implemented with decision-making agents. The available to solve potential problems in thecourse of communication layer is required to conceal locations,
190 218 Department
: Worker who has more thanone role
Figure 4. 2ROLE SPACES IN NEW WORKSTYLE
. Communication between epartment role spaces
-4"°' Ir*" : Extraction of information (Section)(ection) required in role spaces
Project Risour Ice+ - rro cc
Aorke-0 orkei)
Satellite office Home office Office Home office
Figure 4. 3FUNCTIONS REQUIRED IN NEW WORKSTYLE
191 21_9 Abstract
Information layer 4 Extraction of necessary information in individual role spaces Decisionmaking Smooth communication agent btwleeen roe spaces Communication layer Location concealment Modeling Address concealment Communication agent Media selection Media conversion
Network
Concrete
Figure 5. 1TWO-LAYERED ARCHITECTURE
I vestig agent_
Communication Communication Communication agent agent agent
Figure 5. 2DECISION-MAKING AGENTS
192 220 manage addresses, and to select and convert media. These functions are implemented with a Theadvisoryagentorganizestheinformation communication agent. collected by the investigation agent and presents itto theuser. Italsoopens a path for mutual 5.2Information layer and decision-making agents communications so that the user and an experienced salesperson can exchange ideas smoothly. Therearefourdecision-makingagentsinthe information layer, as shown in Figure 5. 2.These In this way, the new architecture. can collect the four are defined as follows: information necessary to solve problems and enable smooth communications among people, thereby firmly - Customer agent: Manages requests (or problems) supporting decision making in the new work style. from users. The communication agent in the communication layer - Advisory agent: Decides on actions necessary to isresponsible for mediating communications and solve problems. informationtransfersbetweenotheragentsand - Investigation agent: Collects information. communications between users and salespersons. - Data management agent: Manages information and provides it to the investigation agent. 5.3 Communicationlayerandcommunication agent Let's suppose that a user has to determine the price of a product.If the user assigns this problem to the The communication agent is located in a higher customer agent, the agent compares the problem with section of the communication layer, which supports problemstheuserhaspreviouslyassignedand theinformationlayer. Thisagentfacilitates identifies the user role and the target area to which the communications among the four agents as requested problem belongs.Having identified the target area, by them for the decision-making process.Figure 5. 3 the agent requests the advisory agent that covers that shows the functions of the communication agent. target area to solve the problem. - Location concealment: The locations of people and When assigned this problem, the advisory agent information are managed in such a way that the determines the actions needed to solve the problem. information layer need not be aware of the locations Information such as the development and production of communicating entities. costs of the product and the market price of similar - Address concealment: The addresses of people and products would be necessary to determine the price of information are managed in such a way that the the product.Information such as sales and profit information layer need not be aware of the addresses forecasts for specific prices might also be necessary. of communicating entities. Inadditiontothisnumericalinformation,the - Media selection: Media owned by communicating experience and intuition of salespersons that have entities are managed in such a way that the media best long been engagedinthe marketing of similar suited for a specific request from the information layer products may be important in determining the price of is selected. the product.Consequently, the advisory agent asks - Media conversion: If a communicating entity does the investigation agent to collect whatever pertinent not have the optimum media for a request from the information is available in the system. information layer, media conversion is performed so that the information layer need not be aware of the The investigation agent accesses and collects the media type of the communicating entity. desired information.The data management agent, responsible for information management, presents the Figure 5. 4 shows a communication layer model. The information requested by the investigation agent. communication agent is in the upper section of the Depending on its type, information required from communication layer, while the following control storage may have to undergo retrieval, analysis, and functions are in the lower section. computation beforebeingpresentedto the investigation agent. - Network management: Manages network switching
2 2 1 193 and routing. 6.1.3 Roles of the CTI server - Media management: Stores and reproduces sound, still pictures, moving pictures, and text data, and The CTI server has the following roles. converts them from one form to another. - Database management: Reads, writes, and searches - Telecommuter location concealment: Prevents the for common data. calling party from noticing that the called office worker is telecommuting. (Communication agent The communication agent implements the function) communication agent functions shown in Figure 5. 3 - Switching control: Automatically forwards calls to byfullyutilizingnetworkmanagement,media the telecommuter. management, and database management. - Obtaining the status of calls on extension lines retained in the PBX: Receives information on the 6. ApplyingAgentFunctionstoComputer calling party (such as the calling party number) and Telephony Integration the status of a PBX extension line via the CTI link, and sends them to the PC at the telecommuter. To verify the validity of the architecture described so - Sessioti control: Controls sessions to synchronize far, we applied the agent functions to developing switching control and LAN control as directed from systems based on computer telephony integration the PC at the telecommuter to control the various (CTI) technology. Given below are examples of services provided by the PBX. applying thecommunication agent. The first example is a telecommuting system.The other is an 6.2 Internet telephony gateway system utilizing Internet telephony gateway system in which map map information information is used. 6.2.1 System overview 6.1Telecommuting system Themapinformation-basedInternettelephony 6.1.1 System overview gateway system enables a user to initiate a call over the Internet telephone by clicking on a building or The telecommuting system offers the same person rendered on a map displayed by a web browser environment for a remote office as for the main office. instead of dialing the telephone number of the remote When an office worker is in a remote office, the PBX party.Using the Internet telephony gateway function and CTI servers working in cooperation automatically in the CTI server, the calling party can talk with the forward the calls received at the main office for that shop or person on an ordinary telephone without person to the remote office. The CTI server disconnecting from the Internet.Figure 6. 3 outlines provides workers at remote offices with information theInternettelephonygateway based on map on the calling party over the Internet. Figure 6.1 information. outlines the telecommuting system. 6.2.2 System configuration 6.1.2 System configuration Figure 6. 4 shows the configuration of the telephony Figure6.2showstheconfigurationofthe gateway system.In this system, the map information telecommuting system.In this system, a CTI server server sends map information to the web server over having switching functions is connected to a PBX, theInternet. The webserveraddspersonal which retains public telephone network lines and information to the received map information on a extension lines, via voice lines and a CTI link.The home page and sends it over the Internet. The CTI link is used to transmit application programming calling party's PC has a web browser and an Internet interface (API) information to control or monitor the telephone application and is connected to the web calls of PBX. The PC at the telecommuter is server and CTI server over the Internet.The CTI connected to the CTI server over the Internet. server is connected to both the Internet and the public, telephone network, thus enabling communications
194 2.22 Location concealment Address concealment
Media selection Media conversion
Figure 5. 3COMMUNICATION AGENT FUNCTIONS
Request from the ------____information layer
Communication Agent Location consealment -Media selection Address consealment 'Media conversion
Network Media Database Management Management Management
Figure 5. 4COMMUNICATION LAYER MODEL
195 223 Home Office Small Office
Internet
Figure 6. 1 TELECOMMUTING SYSTEM OVERVIEW
Calling party Teleconunuter
Extension line\P accommondatec - CTI Server in the PBX Teleconunuter location concealment Voice line (communication agent function) I...... Switching control Getting hold of the status of calls on extension lines accommondated in the PBX CTI link Session control (synchronization between line control and LAN control)
Figure 6. 2TELECOMMUTING SYSTEM CONFIGURATION
196 224 Internet Map information Server
Web Server with Agent
,'r4, -,;,'; ...`..,;" 2
Figure 6. 3MAP INFORMATION-BASED INTERNET TELEPHONY GATEWAY SYSTEM OVERVIEW
Called party
Map Web Server CTI information CTI Server j Flome page control Server i Server Communication line Personal information reservation control management Internet telephone -to- (communication agent function) Communication line existing telephone gateway function reservation control (communication agent function)
Figure 6. 4MAP INFORMATION-BASED INTERNET TELEPHONY GATEWAY SYSTEM CONFIGURATION
197 225 between theInternet telephone and the existing gateway function.We have confirmed that both telephone. systems have a sufficient communication system- grade performance compared with existing 6.2.3 Roles of the web server communication systems.
The web server has the following roles. 7. Conclusion
Home page control: Presents a home page on which Ournetworkarchitectureaimstopromotea personal information is added to the map information comfortable lifestyle in which people can work while received from the map information server. having optimum communications in any place at any - Personal information management: Displays detailed time. We thinkthesystemsintroducedfor information and presents information for Internet evaluation in this paper are the first step toward such telephone connections according tothe personal alifestyle,thoughtheylackmanyofthe information on the home page. (Communication communicationagentfunctionsrequiredina agent function) communication layer.We are planning to enhance - Communication line reservation control: When an thecommunicationagentfunctionsandinstall Internettelephoneconnectionisrequested,this decision-making agentsintheinformationlayer. searches for a CTI server that can be used to Thesesystemswilleliminatetheproblemof communication with the called party.It then sends commuting for disabled people and obstacles that face the telephone number of the called party and a request aged people in usual working conditions.We will be for line reservation to the CTI server and then sends satisfied if this paper is helpful to those who share the the IP address of the CTI server to the calling party. goal of realizing a comfortable lifestyle. (Communication agent function) 8. References 6.2.4 Roles of the CTI server (1) Nakamura, Takagi, and Kiyokane; "Practice and The CTI server has the following roles. Application of Teleworking--in Quest for New Work Style--," Fujitsu in-house paper, (1995). - Communication line reservation: This reserves all resources necessary to enable communications after (2) Etani, Kannda, Nakamura, Shitaji, Kitamura, Fujii, receiving a line reservation request from the web and Fujimoto; "Proposal of Enterprise Information/ server. Communication System Based on Office Work," -Internet telephone-to-existing telephone gateway Institute of Electronic Information/Communication function: Converts voice packets over a LAN to Engineers, (1995). conventional voice signals and vice versa to enable communications. (3) Takeuchi, Ohashi, Sato, Kono, and Fujimoto; "Method for Constructing Agent-Based Decision- 6.4 Evaluation Making System," Institute of Electronic Information/Communication Engineers, (1997). The telecommuting system links a PBX with CTI servers.It implements location concealment, which (4)Nakamura,Masuda,Araki,Furukawa,and is one of the communication agent functions, by using Kiyokane; "Role of Multimedia Communication in the existing PBX services and having CTI servers control Teleworking and Tele learning Field," PTC '94. the synchronization between a communication line and the LAN.The map information-based Internet telephony gateway system implements communication agent functions such as address concealment and media conversion in part by providing web servers with a personal information management function and a CTI server link function and CTI servers with a
226 198 Asian telecom deregulation over the next five years; looking to the past to see the future.
Charles Dodgson, Editor, Telenews Asia, Sydney, Australia ABSTRACT
What directions can be expected from Asian telecom sectors over the next five years? Will telecom de-monopolisation, deregulation and liberalisation be encouraged through user demand, reluctantly agreed to by governments because of international trade threats, or accepted as a the only means for national development?
These are broad questions and an informed opinion can be arrived at by looking at the history of deregulation and de-monopolisation in different markets and assessing why and how the process of liberalisation began.
multimedia applications and the Contrasts in Asian markets imperative to install a telecommunications network commeasure with this force is Through an understanding of the history of immense. deregulation in three markets: India, China and Malaysia, an understanding China remains a centrally planned can be developed that while the economy and under its five year plans has international pressures behind the the stated ambition to become a fully opening of telecom sectors has been industrialised nation. The Central similar, the driving forces behind that Planning Commission is at pains to liberalisation has been fundamentally achieve this while keeping control of different in each country. A simple point, economic and political objectives. In but one that is all too often ignored by contrast to India, user demands are not western-based telecommunications the driving force, rather central policy companies looking for business in Asia. objectives.
India and China have been chosen Malaysia serves as a counter point. because they are the largest markets in Malaysia was the first of the "developing Asia and because they provide the markets" in Asia to embrace market force broadest possible political and social economic principles and open up its contrasts. telecom sector. However, it took this path without a sophisticated regulatory In India, the world's largest democracy, framework in place and has suffered from the principle driving force for telephone having too many players in a relatively installation has become user demand. small market. And, as witnessed by the India has a current teledensity of less than currency and stock market turmoil which three percent with a population that characterised the last half of 1997, includes over 100 million English Malaysia is less able to isolate speaking educated middle class. As India emerges from a legacy of a centrally India - user demand opens the planned economy it is positioning itself to market become the world leader in Internet and
199 227 India has the distinction of having one of the few administrations brought to power Unrealistically high bids were entered in because of telecommunication issues. which few foreign telecommunication The present United Front government won companies participated. Only two out of 21 office in 1996 after a campaign in which it potential licences for fixed line services accused the previous Rao-led Congress . have so far been awarded, although government of corruption, specifically in letters of intent have been issued for a the licensing of private consortia to run further 12 circles. 34 licences have been telecommunication services in competition awarded for cellular services in the same with the government-owned Department 21 circles. of Telecommunications. Rao's communications minister, Sukh Ram, was The new United Front coalition arrested after the election when he failed government, with Beni Prasad Verma as to account for $US1.5 million in cash communications minister, has made the found in his house. Rao himself has been process of bidding for licences and charged with receiving bribes. equipment tenders more transparent. The government says that the Rao was required to open the Indian telecommunications sector is a priority infrastructure market to foreign sector and has budgeted large participation after India was close to expenditures for infrastructure upgrades in defaulting to international loans in 1991. the expectation that foreign capital will be Subsequently the telecom market was directed away from China where there is opened in 1994 with the National Telecom still an official ban on non-Chinese Policy (NTP), which set out a programme owning and operating networks. for the introduction of competition to DoT in 21 zones, which approximately The comparison to the China market is correspond to state boundaries (called often used in India and commentators circles) throughout India. point out that India has a similar population base of near one billion with a Under this programme, private companies lower teledensity at one line per hundred (P-telcos) would be allowed to bid for 21 people. But in contrast, India has a legal 15 year licences to build and operate fixed and political system based on the Western line local services and/or 42 15 year model, an English speaking middle class licences to build and operate mobile of around 100 million and a rigorously telephony services in these same circles. democratic government. And India has The P-telcos are allowed to include moved away from a centrally planned foreign investors, as long as the company economy and encourages foreign remains majority Indian owned. However, participation in infrastructure projects. through creative company structures, this can mean a consortium can have as little The question then arises, how will the as 13 percent Indian equity. Indian telecom sector develop from here? Will it continue to be driven by IMF Under the NTP, the auctions to determine demands, or pressure to address the licensees were to be held under the corruption? Or will the driving force be authority of the Telecommunications user demand from the burgeoning Internet Regulatory Authority of India (TRAI). and multimedia industry? However, government delays meant that TRAI was not mandated until 1997, after India's government says that it needs the tenders for both fixed line and cellular some $US66.5 billion in the five years to licences were closed. 2002 in order to provide telephones on
200 228 demand. This calls for DoT to install 47 can fund its huge telecommunications million lines and P-telcos to install 20.4 rollout plans without direct foreign million lines. Funding will come from the investment. Does the opening of markets retender of basic services licences, the necessarily lead to domination of a sector corporatisation and sale of DoT by 1999, by those foreign investors? and through revenue raised from line installation. Pekka Tarjanne, secretary general of the ITU, entered the long running discussion Are these objectives realistic? The growth when he told Asia Telecom '97 that China of the Internet and multimedia applications was an example of one of the world's most suggest that Indian users are uniquely dynamic telecommunication's sectors that placed to exert tremendous pressure on was achieving extraordinary growth its telecom industry to meet these without direct foreign ownership. Tarjanne objectives. said that in contrast to Latin American or African countries, where new telecom Consider the driving forces behind the operators tended to be majority owned by Internet and multimedia: programming foreigners, Asia - and specifically China ability, English language skills (because had an idiosyncratic approach, "which it the Internet is still very much an English seems is paying off", he said. media) and original content. Tarjanne's comments reflect those of India currently writes approximately 15 China watchers who dismiss the argument percent of global corporate software, a that, given the development demands of percentage which will have grown to 25 the Ministry of Posts and percent by 2002. India has the most Telecommunication (MPT) which has number of English speakers on earth. called for Y600 billion ($US75b) to be India has a diverse culture which invested in the sector over the next five encourages freedom of thought. A culture years, China can not avoid opening to which also created the world's largest film foreign investment. industry in MumbaiBollywoodwhich, through the pressure of satellite television, At PTC '97, Hong Kong-based academic is being turned into a world centre for the John Ure said that it is simply not valid to production of television advertisements, at say that China would not find these funds a fraction of the cost in western countries. itself. Ure said that, according to the current five year plan, China will have 170 And India is a democracy, which prides million subscribers on its PSTN by 2000 itself in this tradition. This in itself gives with 123 million telephones. However, Ure user demand far more potency than argued every five year projection has centrally planned administrations in which been short and the number of installed state benefit is given as a priority over end lines had consistently outperformed user benefit. forward projections.
India is one of the few countries in the Figures released by the MPT in July help region that has not attempted to control demonstrate the point. The MPT said that the Internet. the combined (telecom & posts) sector China - internal financing against had a turnover of Y81 billion ($US10b) for foreign borrowings the first half of 1997, a 33 percent rise from the same period in 1996. In the six month Drawing the comparison now the other period there were 5.7 million telephone way, China continues to debate whether if lines added to the national network which
201 229 is expected to reach 100 million lines by current transition towards a market August. The MPT also added 11.3 million economy, the telecom industry faces the telephone users during the period, 9.7 critical challenge of trying to compete in a million of which were mobile telephone deregulated and highly competitive global subscribers. From these growth figures it market. is clear the five year plan target of 123 million telephones will be well surpassed. It is foreseen by many government insiders that although China Telecom will In 1994, 42 percent of MPT's revenue still be mainly responsible for capacity came from installation fees, 34 percent, or growth and technology upgrades, only $US3.9b, from international and long through a transition from a distance traffic while foreign government bureaucratically administered basic loans and investment accounted for 17 service to a responsive commercial percent. Six percent came from domestic organisation will the Chinese telecom loans and one percent from China's state industry be qualified to compete in the budget. global market in the next century.
An employee of China's State Planning The government has signalled its Commission (SPC) argued inTelenews awareness of this circumstance with the Asia that second carrier China Unicorn's corporatisation of the Directorate General (Lian Tong) entry as a competitor to China of Telecommunications and the Telecom will lead inevitably to an increase establishment of Lian Tong as a in foreign involvement in competitor in 1993. telecommunication projects. The argument centres on the shrinking A shift of operating mechanism needs the indigenous capital base, the competing management expertise gained from a need for that capital and the need for each foreign partner as a stakeholder. There is carrier to differentiate itself in the market. an increasing concern within the government that an inability to transform In the absence of specialised the industry into a commercially efficient telecommunications legislation, foreign entity will unavoidably reduce the fear of involvement in the sector has been foreign domination to a second priority. As defined by the Chinese government and a result, it will not be long before the its regulators. This means that "the Chinese government has to reconsider involvement of foreign investors in the opening the operation of operations of telecom services is actually telecommunications for foreign judged on a case-to-case basis rather involvement, for example by allowing than a total ban", according to a highly foreigners to form joint ventures. placed official in the Ministry of Posts and Telecommunications (MPT). Sources cited Lian Tong's entry has dramatically the example of Singapore Telecom's changed the structure of China's telecom relationship with Lian Tong in running industry because of the emergence of GSM networks, notably in Suzhou. competition against a government monopoly. In the past 17 years, the foreign investment ban on the operations of the China Telecom's funding problems are a telecom industry has been circumvented feature of this new competitive by either the import of foreign technology environment. According to the ninth five- or the use of foreign capital for telecom year plan, a total of Y500 billion equipment manufacturing. However, in the ($US62.5b) should be invested in the
202 230 sector in fixed assets in order to reach would maintain its monopoly over total phone exchange capacity of 170 international traffic, effectively freezing million by 2000. In 1994, MPT planned Lian Tong out of the lucrative trade. Lian investment of Y80 billion ($US10b) to Tong had sought to gain international increase telephone exchange lines by 14 carrier status in order to finance the million. To achieve this goal Y600 billion buildout of its own alternative network ($US75b) has to be invested in the next infrastructure. five years, which means that the fixed asset investment has to grow at 50 Secondly, the machinations surrounding percent per year. Britain's Cable & Wireless selling down its interest in Hongkong Telecom have However, due to the increased further sidelined Lian Tong, which had competition driven by foreign participation, been widely tipped to take a strategic it is estimated that the revenue in the ninth stake prior to Britain's pullout from Hong five-year plan will only increase at an Kong. The move by MPT aligned annual rate of 20 percent. Even if companies to take the crucial stake subscribers' contributions maintain the appear to have further limited Lian Tong's current level, ie 50 percent of the total ability to differentiate itself and signalled cost, (informed sources say that this level that the Chinese government has no will drop considerably) the rate of increase intention of relinquishing control over an of MPT's outsourced funds will be 80 industry which is expanding faster than percent. expected, and without direct foreign equity participation. As a result, the industry will have an even stronger incentive to utilise foreign Malaysia - deregulation without due investment in the next five years in order consideration to reach its goals. In addition to funding problems, Lian Tong's incentive to Malaysia provides a contrast to the mega differentiate itself from China Telecom in Asian economies because it is a small the marketplaceand China Telecom will country and its political model may be said also need to differentiate itself from Lian to be half way between India's rigorous Tongwill be heightened. As a democracy and China's one party system. consequence, both carriers have strong incentives to cooperate with foreign Malaysia has a somewhat sycophantic partners more than had the MPT in the press and a modern history of inter-racial previous monopoly. violence and, although it has a Westminster-based parliament, political It may be argued that if the current debate is severely limited in the name of regulation remains unchanged this will not maintaining sectarian harmony. The be possible. However Lian Tong has political model in Malaysia may be best shown that rules can be broken and the described as consensual, rather than need to stay competitive will likely adversarial. encourage both carriers to seek further foreign assistance. This has both advantages and drawbacks for a developing economy. On the one However, two recent events seem to hand, the control on political debate diminish this argument and support Ure's allows single minded leadership, as has view that the State Council is in no hurry undoubtedly been demonstrated by the to alter its present policy. Firstly, in May feisty Prime Minister, Dr Mahathir. the State Council ruled that the MPT Mahathir was responsible for making
203 231 Malaysia the first Asian country to managed to attract commitments from introduce telecom reforms and open its such diverse companies as Japan's NTT, market to foreign investment. Furthermore, IBM, Microsoft, Sun Microsystems and Mahathir has aggressively courted Ericsson to have a presence in the MSC. international business to create a future telecommunications and information However, there has been little indication technology hub. as to the form of these multinational commitments. The vagueness of their However, the very means that created involvement is matched by the vagueness these circumstances has also created of the government and its agency, the problems for Malaysia. There has been Multimedia Development Corporation, as the tendency to ride roughshod over detail to how the MSC is being funded. The only in the quest to reach a national goal and clear announcement concerned NTT the Prime Minister's personality has all too partnering Telekom Malaysia to build a often taken centre stage and diminished 2.5 Gbits/sec fibre optic backbone with foreign confidence in the Malaysian ATM switching. market, as witnessed by his unsubstantiated claims during October The second result of Mahathir's relentless that a Jewish conspiracy was behind the marketing has been to push the issue of a run on Malaysia's currency (following the stalled telecom liberalisation process into fall of regional currencies after Thailand's the political background. A baht was floated against the US dollar on telecommunications masterplan was due 2 July). to be released in 1996 which was to clarify, amongst other issues, equal Despite these drawbacks - and the access rights, the optimum number of undoubted slowing effect on telephone licensed carriers and universal service line rollouts following the run on regional obligation. stockmarkets and currenciesMalaysia is achieving its goals. Each of these issues has been surrounded in a degree of confusion as a In June Mahathir took leave from office so result of the breakneck speed by which he could devote time to marketing his pet liberalisation was introduced into the project, the Multimedia Super Corridor Malaysian market. Mahathir was perhaps (MSC), a 15 by 50 kilometre tax free zone the first regional leader to recognise the extending south of Kuala Lumper and economic opportunities of a liberalised incorporating Malaysia's new capital city, telecom sector and he expedited Putrajaya, a new international airport deregulation: first with the 1987 which he claims will be the world's largest privatisation and breakup of Jabatan airport when complete, and Cyberjaya, a Telekom Malaysia (JTM) into Syarikat so-called intelligent city. Telekom Malaysia (STM, or more commonly referred to as Telekom Mahathir has aggressively marketed the Malaysia Berhad, or TMB) as an operator MSC to bring attention to Malaysia's and JTM as a regulator; and second with economic achievements, of near 10 the 1994 National Telecommunications percent per annum growth rates, and to Plan (NTP), which saw the sale of 33 steal the march on regional competitors, percent of TMB, and the licensing of eight notably Singapore and Taiwan, in the more carriers. establishment of a regional information technology hub. Mahathir's tactic has paid In 1995 Mahathir acknowledged that the off on two counts. Firstly, Mahathir has sector had been opened too quickly and
204 232 said that the government would issue no direction. During November the further licences until a rationalisation took communications minister, Leo Moggie, place. There followed a period of intense was quoted by the government lobbying in which Telekom Malaysia, newsagency Bernama saying that there Celcom, and Binariang were widely was no longer any reason to separate expected to retain their licences and Time, communications into telecommunications, Mutiara, Sapura, Mobikom, Telekom broadcasting and computing in terms of Wireless, and Malaysian Resources Corp technology development. "Therefore the Bhd (MRCB), were expected to either sell question is, should it not therefore be that off their assets or merge with one of the these subjects are covered under one other three companies. legal framework rather than too many legal frameworks?" he asked. However, after Swiss Telecom invested $US285 million in Mutiara and Deutsche Moggie said that a common regulatory Telekom invested $US560 million in body would be established to ensure the Technology Resources Industries (TRI), a smooth running of the Convergence Act subsidiary of Celcom, the communications upon its passage by Parliament. "The minister, Leo Moggie, said that the (Convergence) Act can only cover a very government would honour all nine general form including the legal context, licences and that it would be the carriers but the day-to-day management and own responsibility to rationalise. operation of such a convergence will need to be undertaken by an organisation Subsequently, Telekom Malaysia bought which should have some independence in MRCB and Time Engineering bought the way it operates," he said. Sapura to form Time Telekom. However, most analysts say that there are still too Moggie said it may not be time yet for the many players for a small market and that it regulator to be fully autonomous. "We are is likely further takeovers will take place thinking of somewhere in between where once equal access is granted and all the government has some say in it but at players are competing on a level playing = the same time leaving a lot of the day-to- field. day decision making to the body," he said. "That is why we in this country are actively However, all the carriers waiting to take on drafting the so-called Multimedia Telekom Malaysia are anxious to learn Convergence Act which is intended to what that playing field will look like. Time, provide a legal and regulatory framework Binariang and Mutiara have all expressed that would guide the industry in the future," frustration that their long term business said Moggie. plans are in limbo until the masterplan is released, or JTM clarifies some of these However, one week later Moggie said that issues. JTM refuses to comment and is the Convergence bill will be deferred notoriously difficult to contact. Even a because there were too many bills to be Telekom Malaysia official confided to the tabled at the moment. It is difficult to author that she finds JTM "unhelpful". escape the conclusion that, again, the However, her comments were qualified balancing of the demands of many players with the remark that JTM is waiting for in a small market has forced the regulatory government direction. framework back to the "too hard basket".
During 1997 the Multimedia Convergence Conclusion Bill, which includes guidelines for telecom regulation, was suppose to provide this 233 205 At the outset I asked whether telecom de- regulatory framework then this goal is monopolisation, deregulation and achievable. liberalisation will be encouraged in Asian economies through user demand, reluctantly agreed to by governments because of international trade threats, or accepted as the only means for national development?
In each case study a blend of history, social and political consciousness has created a unique market with forces that need to be individually understood by foreign investors. Despite these differences, India, China and Malaysia have the common theme that their telecommunication sectors have been identified as the principle means for achieving national development.
Each country has taken a different route to realise the potential through varied forms of deregulation. Malaysia opened its market quickly and now finds itself looking for new regulatory principles; India has committed itself to a slow deregulation process which is being hastened by increasing user demand; and China appears to reluctantly open small segments of its sector when it finds it has no choice.
A conclusion about the form of deregulation in these three markets over the next five years, and what this means for foreign investors, must be speculative. India's growing international economic relevance and the deregulation process will lead to increasing foreign investment opportunities. China's push to enter international trade organisations will lead to deregulation, however, whether this means an increase in opportunities for foreign investors must be considered against a history of complaint from many investors that it is difficult to realise promised returns. Malaysia wants to be the hub by which foreign investors control their regional business. If the government manages to unravel the intricacies of a
206 234 A Changingegulatory Framework for a Changing Telecommunications Landscape
ABDUL RAUF PARKER HEAD OF CORPORATE PLANNING QATAR PUBLIC TELECOMMUNICATIONS CORPORATION [Q-Tel] DOHA, QATAR
1.0 ABSTRACT: Thispaper explores the effects on the strategic choices and performance of a number of telecommunications organizations which have undergone deregulation. A regulatory framework has been developed which suggests that regulatory reach and regulatory incrementalism influence strategic choice and performance. This framework was empirically examined using a path analytic model.
2.0 INTRODUCTION: affect performance as measured in financial terms and The telecommunications industry is undergoing dynamic risk ( Reger, Duhaime and Stimpert, 1992). and dramaticchange such asglobalizationand deregulation which is transforming the global landscape Bothdirect as well as indirect effects of the environment of the industry.These changes are being driven by the were examined. Indirect effects of deregulation on convergenceoftelecommunications, data processing, performance and risk may occur due to the mediating broadcasting and multimedia industries leading to the effects of strategic choices.At the same time the emergence of information highways (Tarjanne, 1995). performance and risk of organizations in a industry can This globaltrendtowardsderegulationof the be influenced directly and indirectly by regulatory telecommunicationsindustryheightenstheneedto activity.Thepossibilitythatregulatoryscope and empirically study the intersection between deregulation, incrementalism may have both direct and indirect effects strategicchoice and performance(Miller,1994; onperformance and risk were incorporated into the Chandy,1995). framework.
Though the literature on privatization and liberalization is 4.0 DEREGULATORY DIMENSIONS: extensive,it however lacks a comprehensive detailed There are basically two types of regulation: description of the deregulation of the telecommunications 1. SocialRegulation whichtends to regulate non- industry (Miller, 1994). The literature does not provide a economic activities. viablestrategic model which could be used to guide 2. Economic Regulationwhich tends to be directed governmentsto transform their state-owned Telecom. towards the competitive dynamics of an industry. Operatorsinto privatelyowned andcompetitive Economicregulation has global implications as many enterprises. countries use such regulations to constrain competition in various markets in order to protect national firms. As Many vital questions remain un-addressed, such as: such thisresearch focussed on competition- constraining 1 What regulatory framework to apply in a dynamically regulation. changing industry landscape? 2. How does deregulation affect strategic choice? According to Reger et al (1992) the purpose or type of 3. Do Telecom.Operatorspursue riskier strategies regulationhoweverdoesnotcapture the extent of under regulation or under deregulation? influenceofregulationon strategicchoiceand performance. The REACH OF REGULATION more 3.0 DEREGULATORY FRAMEWORK: fully reflects the depth ofderegulation,which In the Deregulatory frameworktested in this research, encompassesboththescopeand the stringency of government regulation and deregulation are expected to regulation affect strategic choices which in turn are expected to
207 235 Mahon and Murray(1981)have suggested that when 4.2 REGULATORY INCREMENTALISM (THETA): examining regulatory effects at the organizational level, The rate and speed of regulatory change (incrementalism) the rate of deregulation must be taken into account. This variesfromcountryto country.For instance, the is becauseorganizations may have time to adjust their countries thatprovidethemoststableregulatory capital expenditure in anticipation of the environmental environments have made no changes to the laws relating changes to come. This has been encompassed in the to their telecommunications industry in the past ten years. REGULATORY INCREMENTALISM dimension which Onthe other hand somecountriesarerapidly is a processsimilar in nature to Quinn's(1980)concept deregulating their telecommunications industry in one or of logical incrementalism. two sweeping legislative changes while other countries are gradually implementing liberalization policies.The The framework thus encompassed two dimensions of slowertherateof change would allow incumbent regulation : Telecom. Operators with more opportunitiesto adjust 1. Regulatory Reach their strategies, thereby resulting in higher profits and 2. Regulatory Incrementalism. less risk.
4.1 REGULATORY REACH (REACH): Inconstructing an indextomeasureregulatory The telecommunications industry faces regulations which incrementalism, information gathered through telephone generallytend to constrain Telecom. Operators from interviews, mail surveys and literature search was used to engaging in certain activities. These regualtions have calculate the number of changes (THETA) in the five tended to be social in nature in order toprotect the years prior to1995.Higher the number of changes, faster interests of the consumer and to protect the interests of the level of incrementalism. the state, which is the "shareholder". The regulatory reach and incremetalism variables capture Even a superficial knowledge of the Telecommunications different aspects of deregulation. Reach is a measure of industry suggests that easing of restrictions will provide the absolutelevel of deregulation in a country at a given unequal strategicchoiceopportunitiesandimpact pointin time whereas incrementalismmeasures the rate performance differentially. of change in regulation over a given period. It is possible that these variables may co-vary, as such the correlation A regulatory reach index was developed to measure the coefficients wereexaminedbefore usingthem extent of regulation present in the sample countries and to concurrently in the path analytic model. reflect the differential impacts of regulations. Regulations for each country were coded in the following manner: 4.3 STRATEGIC CHOICE VARIABLES: For National Telecommunications :7= national limited- Theliteratureoffersaplethora of strategic choice liberalization, 6 = national full liberalization. variables (Reger et al,1992).It is difficult to include all thestrategic choice variables in one empirical study. For Mira-regional : 5=regional non-reciprocal, 4 = regional reciprocal, 0= not permitted. Hence in this studyit was deemed crucial to include For Global Operating companies: 3= unlimited access, strategicchoice variables which the literature and an 2=limited access, 0= not permitted. industryanalysissuggestedwould be influenced by deregulation and which would also have an impact on the The REACH of regulation index was then calculated as a performance outcomes. The strategic choice dimensions sum of the values for the national,intra-regional and usedin this study wereservice/ product provisioning globalcompanies. The greater the level of deregulation, mix, geographic and product diversification. the higher the values of REACH assigned to that country. This index does have some limitations but it was felt that In addition tothe importance of these dimensions in the it captures the differential effects of deregulation in a way strategicmanagement field, they are of high significance which prior studies have not been able to achieve. in the deregulation of the telecommunications industry and as such they are especially relevant to this study.
The key service/ product provisioning mix decision in the telecommunications industry is whether to focus on theprovisioningof residentialservicesand/or concentrate on the business oriented services (Valiance,
208 236 1995). Itis tempting to divide all telecommunications theratio of inactive subscribers to total subscribers. As activityintoprovisioning ofresidential or business thisis an area of risk that Telecom. Operators actively services. The Telecommunicationsindustry literature seek to manage, it was deemed themost appropriate and Industry experts however suggest that other major measure of risk in this study. Also data on this is widely servicessuchasmobileservices, provisioning of available. This variable was labeled TELECOM RISK. customer premises equipment (CPE) and value added services (VAS) are also relevant.
Twotypes of diversification based on the industry's 5.0 RESEARCH DESIGN AND HYPOTHESIS: historywere deemed to be important: globalizationand There isaglobaltrendtowardsderegulationof thetraditional service/market diversification. GLOBINV telecommunications,whichiscreatinga variety of is measure of a Telecom. Operator's diversification regulatoryenvironments. This trend towards greater outsideits country's borders whereas NONTELINV deregulation isgaining momentum and as such provides measures the extent of diversification into non-traditional an interesting and exciting area for research. telecommunications activities such as broadcasting. The [Insert Figure 1] measurements used for GLOBINV wasthe ratio of investment inothertelecommunicationsprojects/ Figure 1 presents the framework with the hypothesized organizations to total 1 investment. For NONTELINV relationships as being either positive or negative. the ratio of investment in non-telcom. related activities to total investment was used as a measure.
6.0 METHODOLOGY: 4.4 PERFORMANCE DIMENSIONS: The sample for this study consists of Telecom. Operators Where regulation prohibits excessive competition, higher in countries which deregulated their telecommunications profit levels are expected as a result of the favorable activitiesprior to 1995. This identified 34 countries. In industry structure (Porter, 1980;Scherer,1980). order to reduce the possible distortions arising from size Regulatory effects on performance inprevious studies variationinthepopulation, the study is limited to havetendedtobedefinedintermsof financial medium to large telecom. Operatorsthose with $500 performance.Asmost organizations included in the million or more in assets. This resulted in a sample of sample are still state-owned enterprises, it is not possible 112 Telecom. Operators ranging in size from $50 million tousemarket based performance measures such as to $51,250 million with a mean of $11,325 million in earnings per share or P/E ratio.Financial performance total assets. was therefore measured in terms of returnon - assets (ROA), asdata onthiswasreadilyavailable. 6.1 DATA COLLECTION: Furthermore Reger et al (1992), have pointed out that the Due to the geographic distribution of the countries, it was ROA tends to be ameasure that is closely watched by decided that the most cost-effective method of collecting industry analysts and organizations themselves. data would be initially through a mail survey. Mail surveysweresentout totheregulatory bodies However profitabilityis not the only component of responsible for the telecommunications sector in the 34 organizationalperformance. The degree of risk an countries in late1994. Responses were received from organizationis willing to take in order to achieve a 18 countries given a response rate of 53%. Another certainlevel ofprofitisanothercomponent of survey was sent out inthe middle of 1995, which was organizational performance (Bettis and Hall, 1982). Risk followedtwo weekslaterbya telephone contact, needs to be considered when studying regulatory impacts increasing the response rate to 85%. because regulation/deregulation tends tolimit strategic options which in turn can distort risk profiles. This is Inthe second phase of the data collection, the regulatory becausederegulation opens up new opportunities and bodieswho respondedwere contacted by telephone some organizations may seek to actively manage risk as during 1995 in order to clarify some of the answers well as financial performance (Reger et al, 1992). givenin the mail survey and to ask for any updates since the mail survey. One of the risks that a Telecom. Operator is exposed to is theasset management risk,thatis,the rate of asset utilization.One way in which this can be measured is by
209 237 The regulatory variables were then matched with the The findings that deregulation has both direct as well as strategic choice and performance data for 1995, the latest indirectinfluenceson TELECOM RISK and ROA available data. suggests that deregulation will increase rivalry and entry of new players,and this will lower ROA. The positive 7.0 RESULTS: relationship between ROA and TELECOM RISK The correlation analysis shows thatthere is moderate however provides incentivesfor Telecom. Operators to correlationbetween REACH and THETA which accept higher levels of risk under deregulation in order to suggests that these variables captured different but related maintainprofitability at or above the levels obtained aspects of regulation and arewithin acceptable levels. under regulation.The results show that REACH and These findings support similar findings by Reger et al THETA arenegativelyassociatedwith TELECOM (1992). RISK, indicatingthat Telecom. Operators in the sample arereluctantto choose this option.Some Telcom. The hypothesized framework illustrated in Figure 1, was Operatorsmight betemptedby the opportunity to tested by developing a thePath Analysis technique. A maintain profits through increased risk, which maybe path-analytic model isan ideal way to assess direct and attractive to managers whose rewards are based on short- indirect interactions (James, Mulaik and Brett, 1982). term financial performance. Telecom. Organizations and Policy makers should therefore be aware of the impact of [Insert Figure 2 here] incentives when formulatingstrategies for operating under a deregulated environment. The results of the final path model shown in Figure 2, support some of the hypothesized relationships illustrated The results show a positive influence of THETA on in Figure 1. The results show that REACH and THETA ROA,indicatingthat a gradual (incremental) shift have both direct and indirect influences on TELECOM. towards deregulationprovidesTelecom.Operators RISK and ROA. Also the strength of the direct effects is opportunitiesfor adjusting to the changing regulatory greater than that of the indirecteffects. REACH has environment.Similarly THETA is negatively associated negativedirectand indirectinfluenceson both with TELECOM RISK - here again incrementalism TELECOM. RISKand ROA, whereas THETA has allows Telecom. Operators time to adopt less riskier positivedirect and negative indirect effect on ROA and a strategies. The general findings indicate that deregulation negative directandapositiveindirecteffecton is least disruptive when changes occur incrementally TELECOM. RISK. providing affected organizations advance notifications of the impending changes. REACH alsoinfluencesstrategicchoices regarding Residential, Mobile,GlobalInvestmentand Non- Thenegative relationshipbetween REACH and Telecom. Investment. THETA influenced only choices TELECOM RISK suggests that deregulation either regardingResidentialandGlobalInvestment. The provides opportunities for Telecom. Operators to better strategicchoices Business, Value-added Services, Global manage risk they assume oritremoves incentives for Investmentand Non-Telecom. Investment influenced excessive risk-taking present under regulation.From the TELECOM RISK butnot ROA. Provisioning of dataitappearsthat deregulation provides Telecom. CustomerPremises Equipment (CPE) has a negative Operatorswithopportunities to adopt new strategies influence on TELEOCM RISK while TELECOM RISK which areless risky than strategies which are tied to the exerts a positive influence on ROA. vagaries of a particular geographic region.
While deregulation influences strategic choice, the impact 8.0 DISCUSSION: islessthanexpected. REACH influences choices Theresults of the final path model suggest that the regardingResidential, Mobile, Global Investment and influenceofderegulation on strategic choiceand Non-Telecom.Investment, but for three of these choices performance is more complex but significant for risk and the relationshipis only moderately significant. THETA performance. The results arenot only statistically influences only Customer Premises Equipment (CPE) and significantbutare of prime importance to both the Value Added Services (VAS), suggesting that regulatory telecommunicationsregulatory bodies aswellas incrementalism leads Telecom. Operators to reduce the Telecom. Operators operating or about to operate in a proportion of riskier Customer Premises Equipment and deregulated environment. Value Added Services.
210 238 Significantly the balance between residential and business could betoconsiderthepotentialforTelecom. service provisioningwas unaffected by Regulatory Organizationstoachievecompetitiveadvantageby Reachor Incrementalism. This finding was unexpected. formulating political strategies towardregulatory It may bethatotherenvironmentalfactorsnot agencies. represented in the framework affect this choice. In spite of the importance of regulation and deregulation, In addition strategic choice variables which were affected relativelyfewstudieshave examined the impact of bybothReach and Incrementalism, Value Added deregulation on strategy formulation and implementation Services(VAS)andCustomerPremises Equipment andsubsequenteffecton performance.This study (CPE)provisioning constitute smaller portions of the contributes to this new stream of research and offers a portfoliosof most of the Telecom. Operators in the frameworksuggestingthat regulatoryreachand sample. Thus it could be easier for most of the Telecom. incrementalisminfluence organizational strategies and Operators tosell these areas of their business in order to performance.Theresultssuggestthatderegulation change strategies thanit would be to exit from, or even significantlyimpactsonstrategicchoice,risk and significantly reduce Residential or Business services. performance. These relationships should be further explored infuture research as deregulation is increasing Anotherinterestingand unexpected finding was that in importance. five(5) out of the seven (7) strategic choice variables influence TELECOM RISK but only one influences One future research direction that could be considered is ROA directly.Oneexplanationthat supports these to study how Telecom. Operators are competing across findingsisthat,in response toderegulation, Telecom different regulatory environments. Operators adopt new strategies very quickly as evidenced bythefourstrategicchoicevariables significantly Thisstudy is limited in its scope as it examined only two influenced by THETA.The immediate impact of these dimensions of deregulation: reach and incrementalism. strategies could be to reduce RISK.However other Otherimportant dimensions may exist that were not research shows that the successful implementation of new incorporated in this research but should be considered in strategies, especially diversification, requires a developing a strategic management based deregulatory considerable amount of time and investment to exert a framework.One area that could be examined isthe significant influence on performance. This suggests that volatility of deregulation. Regulatory volatility refers to managers in the Telecommunications industry have taken changes in regulatory directions-for instance, first a cautious approach to deregulation, perhaps they have encouraging competition, then restricting competition, taken a more long-term view than they have been given thenrequiring it and so on. Regulatory volatility creates credit for. an "undulatingplaying field". Managers of Telecom. Organizations may findit extremely difficult to develop 9.0 IMPLICATIONS AND FUTURE RESEARCH strategies under these conditions. Thus, it is important to DIRECTIONS: examinein future research the positive and negative This study hasaddressed a number of important issues effects of volatility. concerningtherelationship betweenderegulation, strategic choice, risk and performance. As the trend in Future research should also examine the long-term effects the Telecommunications Industry is for greater levels of deregulation, such as the time lageffects between deregulation these are pressing issues. regulatory changeand strategic response and its impact on performance in order to provide greater insight. Thefindings presented in this study if replicated by furtherempirical research will be of a assistance to Subsequent research might also examine other variables telecommunications regulatorsin formulating regulatory not included in this study.The role of managers in policies. Strategic Planners and Consultants working in perceiving,framingandreactingto deregulation is the industry should take into account the results when promising. For instance, how managers assess the formulating strategic responses to deregulation. opportunities and threats posed by deregulation and how managerial interpretation and framingofthe Thefindings on the relationship between risk and environmentaldiscontinuity moderates the relationship performance lend support to the common sense notion betweenderegulationand strategic choice should be that managers should use caution when responding to researched further. deregulation.A fruitful direction for future research
211 239 ACKNOWLEGEMENTS: James,L.R.,S.A.Mulaik and J.M. Brett, Causal Analysis: Assumptions,models and Data, Sage, Beverly The author would like to Thank the Chief Executive Hills, CA, 1982. Officers(CEOs) of the ten Telecom. Operators who Mahon,J.F. and E.A.Murray(1981),"Strategic agreed to be interviewed by telephone, the 40 Industry Planning for regulated companies", Strategic experts who were contacted and provided valuable insight Management Journal, 2, pp251-262 on the issues and thein the 34 Regulatory Bodies in the Miller,A. (1994), "Privatization: Lessons from the sample countries who provided some of the data used in British Experience", Long Range Planning, 27, pp125- this research. 136 Porter,M.E.,Competitive Strategy, The Free Press Theauthor would also like to Thank, the General ,New York, 1980. Management of Q-Tel who provided the assistance and Quinn,J.B., Strategies for change: Logical support in carrying out this research. Incrementalism, Irwin, Homewood, IL, 1980. Reger, R.K., I.M. Duhaime and J.L. Stimpert (1992), REFERENCES: "Deregulation, choice,risk and performance", Strategic Bettis, R. and W. Hall (1982), "Diversification strategy, Management Journal, 13(3), pp189-204. accounting determined risk andaccounting determined Scherer, F.M., Industrial Market Structure and Economic returns", Academy of Management Journal, 25, pp254- Performance, Rand, McNally CollegePublishing 264 Company. Chicago, IL, 1980. Chandy,T. (1995), "Deregulation and Technological Tarjanne Pekka, "Breaking down barriers towards the change: Telecommunications in the US and UK (1948- global information society", StrategiesSummit, Vol.), 1983)", ProceedingsoftheFifthAnnual Bayer Telecom 95 Conference, Geneva, 1995. International Conference, pp 68-71. Valiance,Sir Ian, "Regulatory Convergence towards the Information Society", Strategies SummitVol.1,Telecom `95 Conference, Geneva, 1995
FIGURE I: DEREGULATORY FRAMEWORK
RES
BUS
MOB
CPE
VAS
-ye ...... *+ve
NOTE: Abroken line indicates two paths, with relationships forREACHabove the line and forTHETAbelow the line.
212 244 FIGURE 2: FINAL RESULTS FROM THE PATH ANALYSIS MODEL
-0.0854
0.0936 0.1132 -0.057
-0.0325 REACH -0.2006 -0.0917g THETA
......
0.1146
NOTE: A broken line indicates two paths, with relationships for REACH above the line and for THETA below the line.
213 241 Coping with Telecommunications Policy Change in Southeast Asia
Dr. Mark Hukill Senior Lecturer School of Communication Studies Nanyang Technological University Singapore
ABSTRACT
The development needs of each ASEAN country has led to a different set of priorities in establishing new policy regimes suitable to each country's unique political and social condition. An assessment of telecommunication policy based on development needs and priorities of the ASEAN countries reveals country and regional changes mitigated primarily by internal country motivations. As such, an evaluation of telecommunication policies of each country of ASEAN in the late 1990's and into the next century is made based on development priorities in that country. Bearing in mind as well the role of exterior forces, such as regional and international fota as well as technological and market externalities, gives added scope for policy change.
I.INTRODUCTION - ASEAN Ten Asia in mid-1997, a political turn of events in Minus One early July 1997 has delayed the accession of Cambodia to full membership.Nonetheless, The evolution of telecommunications the ASEAN grouping now includes nine structures and regulation in developed nations countries with the addition of Laos and may very well be beginning to focus on issues Myanmar as full members in July 1997. of technological convergence. However, From a dictatorial military regime in Southeast Asia has for the past decade formed Myanmar and an absolute monarchy in its own unique blends of development tracks Brunei, to the evolution of open, multi-party with regards to changes in industry democratic processes in Thailand and the competition, policy and market liberalization Philippines, ASEAN represents a complex as well as privatization of state enterprises to mix of varying degrees of authoritarian and some degree. The perceived development democratic politics.Development priorities needs of each ASEAN country has led to a can shift quickly and as often as governments different set of priorities in establishing new change in some countries while a glacial regimes of regulation suitable to each evolutionary process takes place in other country's unique political and social countries with entrenched systems. Yet condition. This policy evolution, while others attempt to be nimble and competitive, transforming the telecommunication landscape valuing economic reason and social of ASEAN as a whole, is nonetheless still cohesiveness to more liberal political primarily concerned with providing basic freedoms as a cornerstone to development services as well as taking advantage of new policy.And all of this with the cherished, if mobile and satellite services to supplement sometimes not altogether consistent notion of and in some cases supersede basic wireline non-interference in each other's internal service. In this regard, the regulatory affairs known in ASEAN parlance as evolution of each ASEAN country is taking 'constructive engagement.' on perhaps similar themes, but, the paths of implementation are divergent. With such diversity, is it reasonable or even possible to talk of ASEAN So too the political divergence in ASEAN and telecommunications policies as a single unit? hence a divergence of development priorities. While the specific cases of each country While the grouping had intentions of warrant separate attention and understanding, expanding to all ten countries of Southeast especially in terms of development priorities,
214 242 more recently, the shift in telecommunications policies in each of the countries of ASEAN is beginning to evolve, H. ASSESSING ASEAN REGIONAL at varying speeds, toward a more converged TELECOMS POLICY position. This is can be seen, inpart, as a result of the influence of goal-oriented An assessment of current and futurepotential agreements among the ASEAN countries such policies needs to focus on developmentneeds as the Asian Free Trade Area (AFTA), and priorities of each ASEANcountry. participation of several ASEAN economies in Development priorities are strikingly different the Asia-Pacific Economic Cooperation from country to country and reflectmore of (APEC) forum, membership of several the internal socio-political realities of each ASEAN countries in the World Trade country rather than some aspired ASEAN- Organisation (WTO), as well as the evolution wide commonalties. and expansion of regional "growth-triangles" [1], which combined are edging each In addition, internal definitions of separate country to begin to conform to development priorities shape significantly the common economic and trade liberalization extent to which outside participation is goals.Also within ASEAN more recently is structured and how each countrycopes with the idea of developing a regional "free external pressures. This includes investment area" by 2020. Such emphasis on participation at the regional as wellas global commonalty in markets and further trade levels.In the same way, therefore, such liberalization measures have the effect of internal diversity also means thatan entity beginning to shape policies of each country from one ASEAN country that wishesto do toward a common base in regulation of its business in another may find similarsets of telecommunications industries as well. difficulties to confront as many other entities from countries outside of ASEAN find in It remains to be seen if the added diplomatic dealing with a member country. strain of the now nine-member ASEAN,with one potential member still left out for now, Recent research (Ono, 1997) suggests that can continue with positive initiatives and from the point of view of lesser developed timely implementation in itsmany countries, main obstacles to committees. On a positive note, however, telecommunication development include the was the formation in 1994 of the ASEAN factors of inadequate, improperor even Telecommunication Regulators' Council inconsequential policy and regulationas well (ATRC). The Council has, as part of its as finance problems and overall country agenda, the formation of ASEAN consensus political factors. Beyond Ono'sassessment, views vis-a-vis international organisationsuch the degree to which such factors mask as the ITU and APT. The ATRC is nota unspoken, even taboo realities of corruption, formal mechanism of ASEAN and is not greed and mismanagement inmany lesser responsible to the ASEAN Secretariat. developed countries is experientially evident Rather, it is organised with the intent to form as well.Suggested strategies to overcome a common ASEAN position, where possible, these obstacles as pointed out by Ono's in matters of technical harmonisation and to research, again from the point of view ofless foster practical coordination and cooperation developed countries, include not only gaining in common telecommunication issues. access to better information to properly Currently, major issues under discussionby structure policy and regulation but the need the ATRC include harmonising thetype for recognized international and regional approval process and the build-up of organisations such as the International broadband networks, promoting Telecommunications Union (ITU) and the interconnection, developing human resources Asia-Pacific Telecommunity (APT)to take on expertise, as well as trying to find common a greater role at articulating- even advocating positions on the demands of recent - proper telecommunications policy. This developments in accounting rates, the would be with the view towardestablishing international telephone settlement ratesystem. cooperation with financial institutions and ASEAN is also committedmore recently, private investors leading to establishing"a through the ATRC, to intensifying solid regulatory body witha sound regulatory cooperation on international issues by joint framework.[ibid., p.27]" Again the implied coordination of a common ASEAN position. message is to establish a largely uncorrupted
215 243 and enforceable, law-based regulatory regime competitive players,is in evidence world- which is adhered to in as fair a manner as wide. Some countries such as Malaysia and possible without succumbing to individual or Singapore are further along in this policy institutional selfishness whether from the development arena, while others such as private or public sector. Where such external Vietnam, Laos and Myanmar remain firmly cooperative fora have been most effective in entrenched in old-style state-owned PTT influencing telecommunication policy monopolies. Yet others such as- Thailand and however is not perhaps in the Indonesia, continue to evolve along this telecommunication organisations themselves, inevitable policy development path with fits but the international and regional trade and starts in selected areas. organisations. This will be discussed further in the section IV. The main concern in most ASEAN countries is the structure, expansion and operation of In this regard, the policy evolution of each basic voice and data for domestic and ASEAN country can be placed against international services. That an overlay or benchmarks of self-admitted obstacles and extension of such services can be achieved strategies for improvement. As each country through wireless methods is also important. takes on similar themes, the manner in which Even in more advanced Singapore, the build- politicians are able to take charge of positive up of more basic services and infrastructure is policy objectives in removing obstacles is key a high priority. But for much of ASEAN, to explaining why paths of implementation are simply building reliable basic services to the divergent from country to country. While point where teledensity approaches a more perceived development needs and even developed status, remains an elusive goal. priorities are laudable in posturing for clearer Despite a plethora of so-called new and policy incentives, only through the actual converging technologies being introduced to a practice of clear and transparent regulatory limited extent in parts of the region, function can the widest possible development including building broadband networks and take place to the benefit of most. Only then ensuring their interconnectivity, development will the now proverbial "gaps" in of telecommunication policy still needs to telecommunications service provision begin to focus on the priority of providing adequate narrow. domestic and international basic services.
Such basic regulatory and policy foundations But, the development of basic services is can only be established in a reasonably stable strikingly different today than it was even ten political environment and in an arena where years ago. State monopolies are increasingly both public and private finance is looked upon under intense pressure to re-invest more as a legal and moral social contract by both heavily into the expansion of service, which politicians and industry players. undermines the political position of garnering Unfortunately, these preconditions are not state-funds for other purposes which have met by all ASEAN members at this time. been earned by telecommunications. As these Whether or not these needs are met in the telecommunication entities and governments future will depend, to a greater extent, on the find it increasingly difficult to self-finance manner that each country begins to implement telecommunications development at the level and continues to support a strong, largely needed and indeed now demanded, the cracks uncorrupted, legally enforceable and of liberalisation in the sector in terms of reasonably transparent policy regime.It is in investment policy re-alignment begin to this regard that the more developed countries appear. Private and government-linked of ASEAN must take a lead to "constructively entities outside each country, which see large engage" partner nations to achieve and share development potentials and new market their successes. opportunities, also add to the pressure toward policy evolution to some extent. By now, familiar themes of continued privatisation of state-owned Complicating the picture are those telecommunications companies, engendering developments outside the immediate control more private participation in of any one country, but with substantial telecommunication markets and the effects on them. These include shifts in advancement of regulation toward a more accounting rates (most recently the U.S. liberal scope of opportunity for multiple, Federal Communication Commission decision
216 244 to unilaterally reduce settlement payments), Nonetheless, placing a priority on efforts at market access demands, tariffmg re- policy reform for the development of plain- alignments and a host of technologically old-telephone-service (POTS) is still a major innovative applications such as call-back policy hurdle for several in ASEAN to services and Internet telephony. Therefore, overcome.According to the oft -quoted ITU getting the policy formula correct in the face statistic, we are apparently no closer to of an ever changing technological and getting more people of the world to within 2- entrepreneurial assault from outside each hours walking distance of a telephone than we country coupled with the increasing demands were some 10 years ago. This is indeed bad of growing business and residential needs news and is even worse when set against an from within the country for efficient services ever increasing world population. means that telecommunications is having to become a substantive priority.But The development priorities of each country of determining levels of allowed competition, ASEAN are indeed different. While all aspire levels and manner of foreign ownership and to economic growth on a broad scale, participation, as well as implementing developments toward a more open, market- transparent investment policies, comes based economy needed to achieve such primarily from overall internal development growth are taking place at very different policy guidelines. Only a few ASEAN rates.Of course each country. also places countries have taken on such development telecommunications, transportation, rigour and still fewer have coped with it education, health and so forth at different successfully to date. priority levels. Even within the telecommunications sector itself, development priorities differ. In Indonesia for example, HI. DEVELOPMENT PRIORITIES AND the priorities have been on providing adequate POLICY CHANGES telecommunications facilities and services for the manufacturing, tourism and government More importantly, domestic and international sectors while residential services pressures for change must also be seen in the developments are placed at a lower priority. light of continuing efforts to promote In the Philippines and Thailand, provision development priorities within each country. and expansion of adequate services for the Sometimes local needs will weigh-in lucrative private business sector has seen politically if not economically as the rationale greater attention in actual expansion works. to continue with various forms of protectionist measures, be they tariff or non-tariff in Such overall internal economic and articulated nature. This can be due to entrenched unions telecommunication sector development and civil service, difficulty in getting policies priorities have in fact been better indicators of changed and properly implemented in policy direction and rate of change than many politically volatile situations,entrenched outside pressures. For example, despite political incumbency unwilling to change, and intense outside pressure, notably from the the general perceived need to politically United States, Thailand's TOT and CAT control, on an exclusive basis, the telecoms have resisted privatisation moves for years. "cash cow", an important revenue generator Substantive development priorities within the in many countries. country coupled with political turmoil has simply meant that any rational move toward In reality, other major development needs put major telecommunication policy reform pressure on state funds to the extent that would meet with inaction. However, given telecommunications is not seen as a first this year's financial crisis in Thailand, such priority. While such short-sightedness in changes are being considered as a higher central governance continues in several priority. Southeast Asian nations, others have begun to see the more enlightened view that In all however, the overarching priority of telecommunications development has a providing adequate basic services, as well as multiplier effect, both tangible and intangible, newer technologies and services, are that far outweighs its initial investment and beginning to provide an imperative for yet the capacity of a closed PTT system to more structural re-arrangement. This is handle. especially true in Singapore and Malaysia overall as well as selected sectors of industrial
217 24 development in other ASEAN countries.For largely as the family or household economy example, the initiatives of Singapore for an and small private enterprise) and the joint ASEAN-wide police information exchange economy of the state sector with others system similar to Interpol meets with some known as the state-capitalist sector.It is difficulties when newer technologies and largely into the first category of state advance telecommunications systems are enterprise that telecommunications falls in inadequate or non-existent in other member Vietnam. Hence development of countries. Such regional cooperative efforts telecommunications is focused entirely around do add pressure to promote substantive the state sanctioned enterprises Vietnam Posts change. Nonetheless, each country must and Telecommunications (VNPT) and the make the priority commitments to change Military Electronics Telecommunication their own policies to help engender such Corporation (METC). These enterprises are developments and participate more efficiently then allowed to enter joint ventures with other in such cooperative efforts. partners, form subsidiaries, as well as form unicorporated joint ventures with foreign So what are the development priorities of the investors known as a Business Cooperation countries of ASEAN? And how do these Contract (BCC). Australia's Telstra was the priorities affect policy change in the domain first to enter this latter form of agreement in of telecommunications?While it is not telecommunications development in Vietnam possible to give a detailed description of all in the late 1980s, although over the years, nine ASEAN countries here, the examples of long-term risk and Vietnam's uncertain three countries, namely, Vietnam, Indonesia environment has dampened its edge. and Malaysia are provided as general examples of countries at low, moderate and The changes in Vietnam have been chronicled more advanced stages, respectively, of notably in these PTC proceedings and development. This is followed by an elsewhere (Petrazzini, 1995; Barlow, 1995; abridged version of current policy evolutions Gilbert 1997; Hudson, 1997). However, each and potential near future trends in the ends with no clear indication for future remaining six ASEAN countries. directions of telecommunications policy change in Vietnam. Given the somewhat 3.1 VIETNAM arbitrary nature of policy change and the lack of transparency in implementation processes, Vietnam has now seen a decade of progress this is understandable.More recently, since the promotion of the "doi moi" Murray (1997) suggests that there remains a (renovation) policy of 1986. In that decade, the reluctance amongst some Vietnamese officials American embargo to Vietnam was also lifted to allow foreigners into the giving rise to greater influx of foreign telecommunications sector as it is seen as investment as well as seeing much improved important to national security. Such attitudes trade relations. Vietnam also became a stem largely from the years of foreign member of ASEAN in 1995 and has been "resistance" struggle.This can be seen in making the effort to integrate into the thinking the process to secure a BCC which requires pattern of the group. approval from the State Committee for Cooperation and Investment in Hanoi.The On a macro-economic level, the major process to get permission has not been changes in Vietnam have been in renovating transparent and is largely tied to political links the economic structure in recognition of the with Hanoi. Telstra's bid for a $1.4b importance of market relations. Three main contract in mid-96 failed to materialize even objectives still permeate development policy after a year of negotiation. Swedish firm in Vietnam. These are,1) developing Comvik was recently awarded a agriculture, forestry, fisheries and the rural telecommunications BCC for a pager and areas (80% of population), 2) promoting the cellular service but only after the visit of the production of consumer goods, and 3) the Swedish Prime Minister to Hanoi in mid-97. export of goods and services through the Singapore Telecommunications International enlargement of external economic relations. (STI), Steamers Telecommunications (a unit of Keppel Corporation, Singapore) and Nonetheless, Vietnam recognizes is own set Shinawatra of Thailand were still in trial- of economic sectors as the state sector, the project stages (in Ho Chi Minh City) under collective sector, the private sector (defined the auspices of the Ho Chi Minh City Posts
218 246 and Telegraphs Department in early 1997. They were, for a time, unable to repatriate Telecommunication sector liberalisation will profits from investments without the granting therefore be very gradual with initially the of the BCC. That these latter companies further development of service area licenses were not tied directly through VNPT initially in joint venture with VNPT to expand basic may have contributed to the delay in granting services (with some emphasis on the the BCC despite already setting up trial development of a local wireless loop) to the systems. rural areas as Vietnam attempts to fulfill its stated goals of expanding to 5 million lines by More importantly, however, one must 2000, for a mainline density of six percent. understand the overall style of economic Beyond that, the target is to install an reform thinking in Vietnam. While ostensibly ambitious one million lines per year for 15 perched as market-driven reforms, such is years to provide a total of 20 million lines by always not implemented in what may be 2015 for a teledensity of 25%. regarded as the logic of the West. For instance, the Directorate-General of Posts and How all of this will be financed is not Telecommunications (DGPT) has been keen altogether clear. To date, financing has been to adopt various market slogans as rhetoric in achieved primarily through supplier credits, support of the reform process.For international loans and grants,. joint ventures telecommunications, it is recognized that and some BCC arrangements in addition to VNPT needs to be more customer-oriented. State funds. Given the scope and pace of But since VNPT is viewed as the main economic reform and development priorities, customer (buying and implementing it is likely that VNPT revenue will be directly technologies) for nearly all re-invested for telecommunications telecommunications development, a different development and that various revenue sharing meaning is given to the often quoted slogan shemes will be developed along the lines of the "customer is king." the experience in Indonesia andThailand. This will, in time, expand the scope of The structure of the joint economy of the state foreign investment and provide an additional sector is telling in forecasting future change needed boost to technical and managerial to telecommunications in Vietnam which expertise despite some misgivings about follows closely changes in other major foreign involvement. industrial and service sectors. For now, the major focus of change in policy is on price The internal development scenarios and reform, financial and banking sector reform, priorities of Vietnam do articulate much about revision of monetary policy and the legal the development direction of the country sector as well as reorganizing, to some which can give scope to the direction of extent, management apparatus. With such telecommunications policy and how Vietnam development reforms taking place at various will cope with change. Development for the speeds and effects, it is relatively easy to see rural population and agricultural the direction and pace of change to modernization, environment, banking and telecommunications. With reform of the finance, as well as industrial growth are previous mentioned areas in progress, it is primary. As each of these sectors develop, so simply premature to talk of the privatisation too will telecommunications policy adapt.It of VNPT. Perhaps as the company's is likely that the telecommunications sector business interests expand, corporatisation may will be given a priority of policy change be forthcoming in about 5-10 years, if developments in the future which could see financial and legal structures are in place. major structural changes in 2010 or later.
Telecommunications law change has been Perhaps the largest stumbling block toward rather ineffectual in Vietnam as several the development of telecommunications in efforts to form new statutory law have been Vietnam is the need for human resource bogged down in recent years. Instead, the development and the lack of preference still seems to be with issuing telecommunications expertise in the sector executive orders and regulation bureaucracy. The training of guidelines through the DGPT when telecommunications personnel at the necessary. These are in fact in line with the engineering and managerial levels has been progress of other sector reforms. given a higher priority recently and is the
219 247 focus of much cooperative efforts with the nearly every sector of the economy and in the ITU and APT.Regional cooperation in development of areas such as health and standardization ( especially needed in education. The Second Long-Term (25-year) Vietnam's confusing mix of system Plan of Indonesia which runs through 2019, is equipment) is also a priority.In addition, concerned with strategic development issues and in no small measure, is the influence of and emphasizes major areas of development ASEAN and the ATRC in helping Vietnam concern including resources (notably oil and set an agenda for regulatory reform and bring natural gas), agriculture and food it more in line with that of the more sustainability, and infrastructure development. developed countries of ASEAN following the With a rapidly increasing population expected overall agreements for the ASEAN Free to reach well over 200 million by the year Trade Area. 2000 and possibly 250 million at the end of the Second Long-Term Plan, concern in In addition, Vietnam has looked to China, Indonesia for national unity, sustaining Germany and to some extent France in economic growth and providing for food, anticipating the changes evolving in countries health and education needs are primary. In with more than 40 year histories of monopoly addition, Indonesia is also concernedover the PTT operations. It is therefore not unlikely long term with shifting its manufacturing base to see that sector reforms in Germany and toward more high-skilled, technology-based France, along with participation reforms industries, as well as developing the services similar to China, will be adapted to a certain sector. degree in Vietnam. Not surprisingly then, emphasis in Indonesia As Vietnam makes further progress toward on development of rural areas and trade liberalisation, telecommunicationsmay agriculture, the manufacturing sector, get an eventual fast-track for policy change if banking and finance as well as tourism rural development needs are also equally parallel the emphasis of telecommunications provided. The eventual streamlining and development. This is being accomplishedon making transparent approval processes in all several levels. First, the eventual trade will in the long-run eventually impact interconnection of all inhabited islands of telecommunications. But the long colonial Indonesia via telecommunications isa goal history and war periods have left Vietnam tied directly with national unity. This hasseen with the indelible impression of the need to greater success with Indonesia's four Palapa meet the basic needs of its people in a self- satellites on orbit (one owned by PT sufficient and sustainable manner. Socialist Satelindo) for broadcast services across the ideals are still strong in terms of concepts of archipelago rather than public point-to-point social equity and follow largely fromstrong telecommunications. Secondly, priority of traditional family values.While the the development of telecommunications economy moves toward more capitalist services has been focused on the underpinnings, it is important to understand manufacturing sector, banking and finance, that the politics of the country, whether and tourism. Expansion of networks for "communist" in name or not, will likely small business and residential service isat a continue to promote social level welfare and lower priority. equitable distributions for a long time to come. As such, the overall pace and Indonesia has gone from about 600,000 direction of change, as well as specific telephone main lines in 1983 to 2.7 million change to telecommunications, will takea line units by 1995 and is expected to reach 8 long view toward measured evolutionary million lines by the year 2000. Despite this progress as other processes are increase, teledensity will only be about four simultaneously "renovated" in Vietnam. telephone lines per 100 population at theturn of the century. Notwithstanding the needto 3.2 INDONESIA continually build basic service infrastructure, the sheer cost of providing each additional Development in Indonesia follows a pattern of percentage in teledensity in Indonesia isvery medium and long-term centralised high.As with many state-owned and development plans. The current five-year controlled telecommunications systemsaround plan, Repelita VI (to 1999) covers the the world, Indonesia has found itnecessary to government's official development plan in make some structural adjustmentsto its
220 telecommunications operations and regulation combined penetration level of 20% by the in order to accommodate a needed measure of year 2020. private investment (domestic and foreign) to achieve its development goals. Telecommunications policy in Indonesia is also concerned with facilitating an increased Changes to official telecommunications flow of private equity capital and management policies in Indonesia often come after the fact expertise into the sector along with that such structural changes are in defacto management reform of PT Telekom and the operation. Thus the policies of allowing for private and public placement listings of greater private participation [2] became law Telekom and Indosat in particular. after such practices had become more Telecommunications is in fact a leading sector commonplace. In addition, the structural in such reform under the development plans changes to the two major telecommunications of Indonesia. providers, PT Telekom and PT Indosat, are largely reflections of the manner in which Still, major disparities remain between urban telecommunications development could take and rural areas in Indonesia. By 1996, place under the current and future Repelita roughly 80% of telephone subscribers were in Plans. With partial privatization of both the urban areas, yet some 75% of the organisations and the corporatisation of their population lives in rural areas. -Policies to operations, each is now well positioned to address this disparity and to increase take advantage of expanding services and telephone penetration into rural areas cooperating with international entities in the including area service licensing as well as building of domestic and international build, operate and revenue sharing schemes services. are likely to continue in Indonesia.
Basic telecommunications policy strategies in The major policy hurdle of allowing for one Indonesia include the continuation of a re- or more direct basic service providers apart regulation process and opening of the market from Telekom is yet to be determined in structure to more private (principally Indonesia but a possibility after 2000 and into domestic) participation in order to provide for the next Repelita VII X plans to 2019.By basic services into the scattered island then, it is envisaged that Indonesia will reach provinces. One of the most visible results of 45 million telephone lines with a teledensity this policy is the development of the Wartel of.some 18%. The sheer magnitude of the (Warung Telephone). Wartel is a system of telecommunications development needs in private operators in conjunction with PT terms of both human and financial resources Telekom, managing a small public telephone may begin to force a more expansive policy service within a community for public access approach. The next level of policy structural as well as the addition of public payphones in adjustment, allowing for competing and many urban and rural areas.This has complementary private sector operators apart allowed for a bridge to cover the gap of from PT Telekom for local calls may come as Telekom's inability to provide full service early as 2005 (moved forward from the into rural communities and in some parts of original 2010 date of expiry of PT Telekom's urban centres as well especially with such monopoly license). PT Telekom's monopoly service coming at a lower development over domestic long-distance calls may be priority. Another example is the lifted even sooner, perhaps by 2001. establishment of Pasific Sate lit Nusantara (PSN) a private domestic Jakarta-based In addition to the overriding concern for basic company that sells and leases transponder services in Indonesia, plans are also underway capacity. This company has set up a satellite- to move forward with a new advanced based public pay-phone VSAT network that telecommunications plan. Called Nusantara should extend across the archipelago by 2000. 21, the idea is to connect the entire archipelago to the much vaunted information In addition, there are five major domestic superhighway. The project is to link the cellular service providers in joint venture with country's 27 provincial capitals with a PT Telekom including the international broadband backbone network and is seen as satellite service provider PT Satelindo which the next major step forward beyond the is part owned by Telecom and Indosat. These Palapa satellite system developments of the companies are also expecting to reach a past two decades. In order to accomplish
221 249 this, some changes to telecommunications and Malaysia at the leading edge of information broadcasting legislation have been anticipated. and communications technologies, yet A new broadcast law was signed in maintain some balance in socio-cultural September 1997 giving scope for private development. Attempts to maintain this television stations to provide nation-wide balance have been at times heavy-handed coverage. But this new law does not make including past policies favouring 'bumiputra' explicit the future levels of private (sons of the soil) interests which had the participation that might be expected in effect of developing equitable participation for broadcasting. [3]Such may be different, what has been seen as the somewhat however, in telecommunications in the near disadvantaged majority Malay population. furture. A review of the major telecommunication law (Law No. 3/1989) Through successive five-year development which provided originally for private plans (the latest is the Seventh Malaysia Plan, participation in the telecommunications 1996-2000) and the current ten-year sector, is now under review. The idea is to development plan (Second Outline Perspective "refurbish" this 8-year old law in anticipation Plan OPP2, 1991-2000), Malaysia had tried of further private participation and possibly to maintain a balance between setting the scope for competition and further industrialization and social development. liberalisation of the sector in order to meet Within each five year plan have -been specific domestic development needs. policies, strategies and programmes targeted for telecommunications development. These 3.3 MALAYSIA development plans have included the introduction of many new services as well as Perhaps in no other country of the ASEAN is an aggressive expansion of networks.Such the development of telecommunication plans have given directly to the more systems and services tied directly to liberalised licensing policies in order to meet articulated national development plans to the development targets with such licenses extent as in Malaysia. While Singapore takes favouring 'bumiputra' interests. a strong strategic government policy, planning and implementation view of Malaysia was the first in ASEAN to telecommunications to bolster national promulgate a telecommunications economic activity, Malaysia makes a more development strategy that included the partial direct attempt to link telecommunications with privatisation of the state-owned and controlled the objectives of national development monopoly operator in 1987 and later to through the mechanism of central plans. develop a more liberalised sector which included primarily, the introduction of National development in the previous and competition by locally-owned (and in some next decade in Malaysia means primarily the cases, government-linked) companies in both drive for technological competitiveness and basic and non-basic wireline and wireless industrialization. Growth is fueled by the services. twin engines of export-led activities and infrastructure development projects including On this score, Malaysia has led ASEAN in more recently, the development of "mega- the licensing of major system operators to projects" built around transportation, provide telecommunications services in the communications and energy. Much of this is country. There are now four basic network articulated in the Vision 2020 plan which licensees (two nationwide), three aims to make Malaysia a developed country international network (gateway) providers, by the year 2020. Vision 2020 has re-focused eight cellular services providers and 16 pager efforts to make Malaysia a market leader in services operators, each licensed for a telecommunications with for example the 421 localised service area. There are also metre Kuala Lumpur Tower, a leading multiple operators for trunked radio service, infrastructure symbol. value-added services, radio leased channel services and two nationwide pay phone However, there is also an overriding concern operators. The government has promised in Malaysia to develop equitable participation even more licenses as development needs of all of its citizens in accelerating the growth warrant. of the economy. A major challenge for development planners, has been to place
222 250 With so many licenses awarded so quickly, stockmarkets of Malaysia, the economy however, the government began to wonder continues in a very robust manner and is aloud in mid-1995 if it had in fact gone too likely to grow by some 7-8% again for each far in liberalising the sector and publicly of the next three to five years. The market encouraged some operators to merge in a currency devaluation has forced Malaysia to effort to stave off some negative effects of hold off on some mega-infrastructure projects over-competition that was seen to be for a short while, however plans for the developing. The market held firm however Mu lit-media Super Corridor will not be and no such mergers took place amongst the affected overall. major operators. The MSC gives a physical and virtual In the Sixth (1991-1995) and Seventh (1996- presence to high technology development in 2000) Malaysia Plans, information technology the domains of information technology and broadly defined as the convergence of micro- telecommunications. The physical portion of electronics, computers and the project is largely the development ofa 15- telecommunications as well as the utilisation by-50Icm track of land south of Kuala Lumpur of software technology have been given (to include the new administrative capital city prominence. Some RM 6 billion (US$2.4 and situated just north of the new airport) to billion) was allocated in the sixth plan as total locate various high-tech parks, research and expenditure for telecommunications development centres as well as 'tele-suburbs' development, and the current seventh plan and a 'cyber-village'. A high-capacity fibre- includes another RM6b. optic cable system will form the backbone of communications with new policies and In an effort to expand telecommunications 'cyber-laws" to make IT development projects development beyond terrestrial systems and attractive. The goal is to attract cutting edge similar to Indonesia and Thailand before it, corporations involved in areas ranging from Malaysia has also launched its own domestic custom-chip manufacturing to multi-media geostationary communication satellite, publishing. As of mid-1997 some 30 Measat. This was coupled with a relaxation companies had signed on to the MSC project on the ban on satellite dish operations as well. in some form or another including Sun Owned by Binariang Sdn. Bhd. which has a Microsystems, Siemans and Microsoft. nationwide basic services operating license, Applications for gaining MSC status stood at Measat provides broadcast television services about 500 in mid-1997 with about a 50-50 and data communications services in addition ratio of local and foreign companies to telephony services in Malaysia and expressing interest. regionally. Despite much hyped-interest in the MSC In addition to the national development plans project, major basic development in of Malaysia, the National telecommunications is still needed in Telecommunications Policy (NTP, 1994) Malaysia. Telephone mainline density stood encourages the utilisation of information at 11.6 per 100 population in 1993 and had technology networks for many new services. risen to 15 at the end of the Sixth Malaysia The plan spells out objectives, strategies, plan in 1995. Under the Seventh Malaysia guidelines for local operators, investors and Plan, telephone mainline density is targeted to government in areas such as technology rise to 29 per 100 population by 2000 and transfer, research and development and then upwards of 45-50/100 by 2020. human resource development. In 1996, the However, such figures mask somewhat the government articulated a further major urban-rural split. Currently, telephone development initiative following its density in rural areas is only about 4 per 100 conception in the 1994 NTP plan.This new population and is targeted to rise to 8.8 by the policy-driven initiative, known as the Multi- year 2000. Part of the lack of telephone Media Super Corridor (MSC) project is at access in rural areas is being addressed with once ambitious as it is vague.It is estimated the aggressive placement of rural publicpay that some RM40b (US$15b) will be needed phones. The target is to have nearly 70,000 for telecommunications infrastructure in the pay phones in rural areas by the year 2000, MSC which has total projected costs of up from the installed base of 22,500 at the anywhere between $20 and 40billion. Despite end of 1995. recent setbacks in the currency and
223 251 So where does all the money come from to the realities of internal development needs develop telecommunications in Malaysia? and political priorities than from any set of Certainly government allocation continues at a external pressures. The following sections high rate given Malaysia's impressive outline the range of development priorities of economic gains over the past decade. This is each of the remaining six countries of likely to continue despite recent setbacks in ASEAN and places their trends in currency speculation in mid-1997 as the major telecommunications in the context of their fundamentals of the Malaysian economy own development goals. remain strong.Also, the proceeds of the various successive tranches of partial Brunei privatisation of Malaysia Telekom have contributed back to telecommunications Re-establishing telecommunications development. Certainly Malaysia is looking development priorities in Brunei Darulsalam to private local licensees to provide the is evident in the 7th five-year development investment impetus for many new services. plan (RKN-7) from 1996-2001. Brunei's However, the need for the primarily recent push to somewhat diversify the oil government-owned Telekom Malaysia to raise economy (mainly by expanding tourism) has, additional funds to meet its ambitious local as a priority in the telecommunications sector, network development targets and international the development of broadband infrastructure expansion plans has also meant a need to look and services.In addition, Brunei may begin at more sophisticated funding mechanisms. moving toward a more customer-oriented As such, Telekom Malaysia announced plans service model for its telecommunications in April '97 to raise some US$350 million in operations which has a less than fully bonds. However, these plans were put on developed mainline teledensity of some 30 per hold as of late October '97 due primarily to 100 population despite the riches of oil the devaluation of the ringgit.Nonetheless, revenues to this tiny (300,000 pop.) state. as the Malaysian economy rebounds from its Plans are for teledensity to reach 40 per 100 1997 downturn, multi-billion dollar by the year 2000. investments in network and services expansion from a combination of future bond In September 1996, a cellular service which funds coupled with government direct was previously for the exclusive use of the allocation, joint ventures, supplier credits and royal family was made publicly available and foreign equity investment will continue. has some 7,500 users to date.
For the near future, telecommunications The next five years will see almost no change policy is likely to continue to be guided by the to telecommunication policy in Brunei with twin principles of infrastructure and socially exclusive operations accruing to Jabatan equitable development. A further Telekom Brunei for domestic wireline and liberalisation of the telecommunications international service and to DST market to include direct foreign operators is Communications, a local private company for therefore not in the offing at least through the cellular service. A corporatisation and partial next decade. However, a greater emphasis on privatisation of JTB may be possible for joint ventures with foreign participation largely financial reasons, however, this especially in the areas of human resource government department will continue to be development and technology transfer are the operator and regulator for some time. likely to be highlighted. In addition, as Some competition in non-basic services may Malaysia Telekom and other local operators be forthcoming over the next five years but seek to expand regionally, partnerships and the size of the market may not make such alliances will play a greater role and provide competition viable. Instead efforts may be for new market opportunities. directed at making JBT more efficient and to improve the quality of services provided. 3.4 ASEAN COUNTRY-BY- COUNTRY POLICY TRENDS Laos
From the examples of Vietnam, Indonesia Seventy-five percent of the 4.7 million people and Malaysia, it is clear that the change in of the Lao, PDR live in rural areas with no policy in telecommunications that continues in telecommunication services. The economy is each of these countries is driven more from mainly subsistence and its land-locked and
224 252 remote geography contribute to make Laos the world. There are only about 150,000 the least developed of the ASEAN countries telephone mainlines in Myanmar of which (admitted along with Myanmar in 1997). some 67,000 are in the capital Yangoon. Major development projects now revolve Some exchanges are still using 35-year-old around the provision of electricity througha cross-bar switches. There are some 400 series of 20 controversial dam projects along manual switches still in use. Scant the Mekong river. But with influential government interest and expertise-over the neighbor Thailand's recent economicwoes, past several years has pushed telecoms such plans may be slowed down for now. development off the priority page. All Other than these major hydro-electric telecommunications operations are the projects, scant development is occurring in exclusive domain of Myanmar Post and other major sectors including Telecommunications (MPT) under the telecommunications. A major hurdle will Ministry of Communications, Posts and need to be crossed in transforming froma Telegraph. Since 1993 the government has centrally planned economy to one that ismore installed a small PC computer network for in line with the rest of ASEAN. This will be administrative purposes to replace telegraph very difficult despite the official endorsement instruments and anticipates the development of jintanakan mai or "new thinking", the of a packet-switched data network between Laotian euphamism for economic reform Yangoon and Mandalay. Several.foreign similar to Vietnam's doi moi.Today, most suppliers including Ericsson Australia as well Laotians still do not have electricity, running as Nortel and Nokia supplying through Loxley water or paved roads in their villages. of Thailand are starting to provide cellular (amps) service in Myanmar. ETL (Enterprises de Telecommunications Lao) is the state-owned operator (government Nonetheless, development of basic services department) that was established in 1995 after are likely to continue to be neglected over the a split of telecommunications and postal next few years. services. Following successive New Zealand and German consultant projects, ETL isnow Can ASEAN make a difference to overcome beginning a process endorsed by the World the lack of internal development policy Bank to raise capital through the international advancement and nudge Myanmar towarda marketplace as the government does not more responsive development plan for expect to commit funds to ETL. The telecommunications? establishment of a legal framework to make this possible continues in Laos althougha The Deputy Prime Minister of Malaysia, general regulatory morass still exists. Major Anwar Ibrahim, has suggested a policy of projects to begin to expand network services "constructive involvement" as an ASEAN outside the capital Vientiane have begun and cornerstone. Could this be a precursor to the next development plan period for Laos more active ASEAN involvement in from 1998 will include a number of supplier Myanmar to pressure for political change? It and foreign operator credit projects. With remains to be seen if such efforts can trickle- only about 1 telephone mainline per 100 down to telecoms policy in particular. population in Laos in 1997 and nearly all of those in Vientiane, plans are to increase to 3 Philippines lines per 100 by 2000 with a focus on helping achieve modest development objectives of Telecommunications operations in the improving conditions in the provincial and Philippines have long been in private hands district capitals. Rural telephony service with the Philippines Long Distance Telephone access appears however to still be many years (PLDT) by far the dominant player. Inrecent away. years, the structure of telecommunications operations has been better rationalized Myanmar through a series of presidential executive orders and a number of circulars of the The dictatorial military government of Department of Transportation and Myanmar was admitted to ASEAN under the Communication (DOTC) and the National policy of constructive engagement in 1997. Telecommunications Commission (NTC) Myanmar's small, dilapidated telecoms which respectively act as the policy-making systems are near the bottom of teledensity in body and regulatory arm, the latter which also
225 253 provides some limited services in under- (NTDP) or Telecom Master Plan for 1996- served rural areas. 2015. Other projections are not so optimistic. Some private analysts see mainline growth The telecommunications development plan of only reaching 5.5 million lines by the year 1993 saw an aggressive re-orientation of the 2000 or a teledensity of 7.5 per 100 telecommunications market in the Philippines population. in terms of moves to provide interconnection of all operators with PLDT and with an In addition, the DOTC has embarked on a aggressive satellite programme which saw the program to develop the Philippines national launch of the Agila (Eagle) geostationary information infrastructure (PII) with a major domestic satellite for telecoms and broadcast policy review of issues such as universal services in August 1997. access, timing, finance, competition and content. The main arena of economic and political development in the Philippines might be For the near future, continued moves by characterized as a "psyche of struggle" which DOTC and NTC will be to further deregulate has permeated structural evolution in many the market (meaning allowing for further domains. This almost feisty character of competition in selected services) and to national development focus sees aggressive continue to privatize some government- stances taken in many domains including installed facilities. There will also be a recently PLDT's success at getting the United continued focus on seeing fair and equitable States FCC to order two callback services to interconnection access for the nine major stop operation to the Philippines. [4]But local carriers as the Philippines struggles to plans for the development of basic services make serious progress in a major mainline from 1996 to 2000 are seeing this political build-out. 'struggle' process being replaced by more rationale economic market-oriented policy Singapore developments. The introduction of competition in The establishment of the Republic Act 7925 Singapore's drive toward a high degree of in March 1995, the "Philippines advanced networking in its deliberately Telecommunication Policy Act", provided for controlled environment is seen as key to this process change. The Act established a continuing its own self-styled success. The framework for a liberalized sector and to continuation of basic fixed and mobile promote an open and competitive systems infrastructure along with accelerated telecommunications environment. This also development of advanced systems and set the stage for the Philippines to offer a services top the development priorities in liberalized position vis-a-vis the WTO telecommunications as the island state strives agreements. to build a strategic and sustainable position in world trade. Through the exercise of dividing the nation into service areas and the allowance of up to The introduction of a second mobile phone 40% foreign ownership in domestic carriers, operator, and three new pager operators came the Philippines is now well on its way to in April 1997. For the first time, the making significant progress in increasing Telecommunications Authority of Singapore mainline teledensity and removing service (TAS), the regulator, finds itself in a major demand backlogs as a priority.This is being regulatory role in mediating between disputes done through the establishment of extensive of competing operators. While decision- backbone systems, the establishment of a making has usually been swift, owingmore to second inter-exchange carrier in addition to the pride of efficiency in Singapore, the PLDT, and the plans of each basic service transparency of that decision making process provider to contribute to building Mainlines. is still somewhat lacking. The goal is to reach 7.3 million lines for a teledensity of 10 per 100 population by the Singapore has recently embarked on a major end of 1998. Beyond that, goals have been structural market re-orientation which is set to reach some 25 mainlines per 100 by seeing significant competition introduced for 2015 as outlined by the updated National the first time. A current tender is in progress Telecommunications Development Plan for up to two licenses for basic services and
226 254 up to two licenses for cellular mobile telephone services to begin commercial Thailand operation in 2000. This will effectively end Sing Tel's monopoly on basic services seven Continuing development indecisiveness in years earlier than their original license expiry Thailand resulting in a defacto policy of date. In addition, TAS announced, through tolerating increasing free-market local players the current tender document for the public with government and military connections in basic telecoms services license, that there will an inadequately regulated environment be more licenses for basic service operators in characterises Thailand today. In addition, the 2002, without giving a number. Such a economic downturn and currency devaluation strategy will allow for maximum of 1997 has meant that several infrastructure expansion (although duplication telecommunications companies in Thailand is a concern) and for a competitive are putting the brakes on new investment environment. However, the overall combined while others are reeling in additional debt competitive effort of the new licensees will be caused by being caught heavy in foreign loans carefully designed so as not to over-erode the with short-term payback.This situation position of Sing Tel. means that many of Thailand's more ambitious telecommunication development The new licenses for basic and wireless goals will be pushed back for several more services will of course go to local operators years. This is exacerbated by the delay in who have been quick to establish consortia of drafting the Telecoms Master Plan that was to partnerships with foreign operators. Foreign be presented in 1997. That delay will mean equity participation of up to 49% is allowed that further market liberalisation moves, for the provision of basic telecoms service. especially in terms of additional market Also, the resale of leased circuit services has competition in basic services with the been allowed since Feb. '97 for intra- Telephone Organisation of Thailand (TOT) corporate communication defined as internal may be put off yet again.Thai authorities communication between holding and say that it remains committed to its WTO subsidiary companies. The government's agreement to open up the market by 2006. move to allow for significant competition in telecommunications services in Singapore is On the insistence of the IMF as part of the seen as a response to act reciprocally as it financial rescue package offered in the second expands internationally.It is also aimed at half of 1997, the Transport and continuing the push to build up local Communications Ministry submitted, in mid- infrastructure to meet future business September 1997, plans for the privatisation of opportunities and allow for market TOT. These plans include first the competition to provide for improved services incorporation of a limited company with TOT and assumed lower costs. as the major shareholder and then the offer of a 25% stake to a strategic international The development of Singapore ONE (One partner. Next, 22% of the equity will be Network for Everyone) is the latest offered in private placements before an infrastructure development plan to build additional 23% is sold in shares to the public. major broadband open network facilities in It remains to be seen when these plans are to Singapore to meet the needs of information be implemented. By law such changes must delivery services, business applications and be approved by the Thai parliament which has multi-media developments. This government- in the past not been in a position to give such led project is a consortia of numerous approval. There is some reason to believe organisations to install a broadband network that perhaps a royal decree can circumvent to homes and businesses throughout the island the parliamentary process this time to move with overlays on the existing the TOT privatisation forward. telecommunications and cable television networks. The project is expected to be Therefore it can be concluded that the implemented in two phases with major prospects for the development of a good basic network backbone facilities and pilot projects telecommunications infrastructure in Thailand developed to 1999 and a second phase of is to be delayed yet again.Further, the development from 1999 onwards with a focus growth and competition in cellular services on commercial interactive multimedia has made the cost of calls less expensive than services to be made available. through wireline services, making further
227 255 expansion less attractive. One of Thailand's Similarly, the APEC forum, with its three basic service providers, Telecoms Asia Telecommunications Working Group (APEC Corp. Plc., has installed 2.6 million lines in TEL), seeks to educate officials of member the Bangkok area, but only about half have economies and explore mutually reinforcing been subscribed. areas of cooperation. Lately, the focus .of the Working Group as directed by the APEC Possible parliamentary changes to pave the Ministers has been on identifying-the needs of way for a new telecoms industry structure are the information sector as well as users of unlikely to proceed until Thailand's economic information infrastructure. juggernaut gets back on track in perhaps two Telecommunications in this regard is seen as to three years.Even so, it will only be a "model" sector in achieving the goals of the within yet another ten years under any new "Bogor objectives."As the APEC process legislation and a master plan that matures, it may eventually adopt a similar liberalisation will begin in earnest. process of agreement formation as the WTO. Meantime, local service area licensed private telecommunications firms (Thailand's The Information Technology Agreement of definition of deregulation) and firms under the WTO which came into effect in July 1997 contract with CAT and TOT to provide and the Telecoms framework agreement infrastructure development are likely to see a which came into effect in January 1998 are temporary slowdown. As of Oct 1997, there indeed substantive. The fact that meetings to were 6.1 million basic telephone lines in negotiate approval for these agreements were Thailand for a ratio of about 10 lines per 100 held in Singapore in December 1996 (and population. The government has stated that it concluded in Geneva) is also not without intends to expand by another 6 million lines substantive importance and symbolism for the after 1999 in order to achieve the target of ASEAN region. In effect, the agreement will 18.5 telephones per 100 population (with help guarantee stability in government policy nearly half of all telephones in Bangkok which makes telecommunications investment alone) at the end of the Eighth National Plan attractive. But as far as the larger ASEAN is (1996-2001). concerned, will the agreements form a means for fostering further development? The question should be who benefits with the I.V. ASEAN, APEC AND THE WTO adoption of such agreements and to what degree and at what pace will such agreements While internal development priorities are be implemented in each country according primary to understanding policy positions and their own development goals. possible future changes, some external influences, including participation in the Asia Not all ASEAN members are WTO members. Pacific Economic Cooperation (APEC) and While this should not necessarily be a the World Trade Organisation (WTO), are stumbling block toward policy reform, it is worth special mention. As clear that accession to the Reference Paper on telecommunication development becomes a Regulatory Principles for example, would higher priority in many countries of the help to ensure stability for investment of ASEAN, investment capital from outside state additional and competing systems and services coffers will be sought because of the huge through existing network interconnection. capital investment needs which cannot be But even WTO member countries will meet solely from state sources. However, in implement such accords in differing ways order to attract needed outside investment, be while still adhering to the principles of the it from domestic or international sources, agreement. This can be seen in the current many conditions need to be in place. This is tender process for up to two basic service where the agreements of such organisations as licenses in Singapore to begin commercial the WTO can become important in the services April 1, 2000.Already, the ASEAN region. In fact, it is the WTO Government of Singapore has indicated that agreements which have, in part, given favour will be given to bidding consortia ASEAN itself impetus to formulate regional which can provide substantial new policy in a likewise manner through the infrastructure. While still providing for fair recent promotion of the idea of a free interconnect with the incumbent as prescribed investment area. by the WTO, the new operators will be licensed for facilities-based competition and
228 -256 are expected to build infrastructure that nations of Southeast Asia, to coping with employs the latest technology. The market stepping into the league of the technologically opening is not for entrants that would simply developed for others, understanding the free-ride on Sing Tel's infrastructure. transformation of telecommunication policy due to each country's own development needs Nonetheless, the WTO process itself, which and priorities is key for both incumbent and helps foster policy change among agreeing new interests in the region as a whole. At the countries, can also be seen as a lever to same time, the possible formation of a hasten, in some cases, that change process. consensus of direction for the scope of But not all ASEAN countries are prepared to economic development and political priorities move at the same pace. There is, as yet, no of ASEAN as a whole might begin to move ASEAN consensus toward the WTO. Not each member country toward a more common all ASEAN members that are also a part of base in the evolution of telecommunications the WTO would agree en-bloc to the same regulations. Certainly accession to WTO implementation timetable let alone the agreements, despite differences in specific interpretation and scope of change required. implementations, is important in this In addition, at least one ASEAN country, endeavor. So too, however, will be Myanmar does not even have normal trade ASEAN's ability to cope with the diversity of relations with some of its fellow ASEAN its own members in setting common priorities members let alone others outside ASEAN. and goals in terms of agreeable cooperative efforts at telecommunications reform and The pressure brought to bear on each country development.Nonetheless, internal that desires to accede to the WTO agreements development priorities and socio-political means they must formulate internal policy in environments of each ASEAN country will a general alignment with other countries. continue to be the major determinant in Nonetheless each ASEAN country will take a telecommunications development in each different view toward the degree of accession. specific country for many years to come. This makes the prospects for a unified ASEAN position vis-a-vis the WTO unsure in The telecommunication environment in many the near future. Such a unified position of the ASEAN countries is such that those remains in the realm of possibility, however, allowed to profit through investment and if ASEAN begins to move toward the benefit through service development are still formation of a trade union with for example few. Efforts to move from a stagnant major substantive progress on the formation situation will become a major challenge for of the ASEAN Free Trade Area.If efforts ASEAN as a whole as to whether its more such as those sought by the ATRC in enlightened governments can indeed providing a common telecommunications constructively engage its fellow members to regulatory position vis-a-vis the ITU begin to garner the political will to enlarge the spill over into more general economic telecommunications pie, to include more matters, then a more convergent ASEAN players and be required simultaneously to position toward the WTO may be spread the incumbent largesse. That ASEAN forthcoming. More than likely, ASEAN will countries should look to their more successful for the near future, emphasize only those members for guidance is a challenge yet to be areas of existing commonalty vis-a-vis the met.It is also an opportunity not to be WTO such as the newly proposed free missed. investment area which focuses on the specifics of investment regulation reform NOTES rather than overall trade policy. With the addition of the two newest members, Laos [1] Growth Triangles refer to the and Myanmar, finding a consensus within cooperative arrangements between three ASEAN on smaller, more manageable issues bordering countries in Southeast Asia to seems more likely. engender economic growth by taking advantage of each countries different strengths to combine into one development V. CONCLUSIONS plan. Growth triangles and telecommunication development in Southeast Asia is discussed by From the priority of beginning to get the the author in a chapter in the forthcoming regulatory house in order in some developing
229 257 book Communication and Trade (Lamberton, Ed.), Hampton Press. Idris, Naswil, "Mapping Telecommunication Needs and Priorities in Indonesia from [2] Private participation in a National Development Perspective." telecommunications projects in Indonesia is Unpublished paper. Singapore: largely through domestic joint ventures. AMIC, Oct. 1994. Foreign capital investment is through the PMA (Penanaman Modal Asing) "Mapping Telecommunications Need and arrangements of joint ventures with Priorities in Vietnam from a National Indonesian national companies and the KSO Development Perspective." (similar to build, transfer operate) Unpublished paper prepared by the arrangements for joint operation. Directorate-General for Posts and Telecommunications, Hanoi. [3] Indonesian companies providing Singapore: AMIC, 1994. broadcasting distribution services may also provide telecommunications services with a Murray, Geoffrey, Vietnam: Dawn of a New license from the Ministry of Tourism, Posts Market. Richmond, Surrey, UK: and Telecommunications and approval from China Library (Curzon Press Ltd.), the Ministry of Information. 1997.
[4] Several carriers in the Philippines, Ono, Ryota, "Obstacles to and Strategies for including PLDT, have also filed a motion for Telecommunication Development", the FCC to reconsider its unilateral decision Pacific Telecommunications Review, on the reduction of settlement fees and have Honolulu: Pacific Telecommunications not been keen to sign new agreements. Council, March 1997, p.20-34.
Petrazzini, Ben A, and Tung X Bui, Cautious REFERENCES Reforming (Vietnam Report), Asian Communications, Vol. 9, APT Telecommunications Yearbook, Bangkok: No. 5, May 1995, p. 41-45. Asia Pacific Telecommunity, 1997. Sinha, Nikhil, "Telecommunications, Barlow, Roger, "Telecommunications in Capabilities and Development: Vietnam," Tel-Asia 1995, p.41-43. Towards an Integrated Framework for Development Communications," Media Gilbert, A. Lee, "Wireless Infrastructure in Asia, Vol. 22, No. 1, 1995, p.17-25. Vietnam: evaluating an emergent leapfrog strategy," PTC 97 Telecommunications Regulatory Environment in Proceedings, Honolulu: Pacific APEC Member Economies. Telecommunications Council, Singapore: APEC Secretariat, 1996. p. 62-70. "WTO and the Asia-Pacific Region" [issue Hashim, Ramah, Mapping Telecommunication subject; includes 8 articles] Needs and Priorities from a National APT Telecom Journal, Vol.9, No. 3, Development Perspective: Malaysia". July 1997. Unpublished paper, Singapore: AMIC, Feb. 1995. Vu Tuan Anh, Development in Vietnam: Policy Reform and Economic Growth. Hudson, Heather E., "Restructuring of the Singapore: Institute of Southeast Asian Telecommunications Sector in Studies, 1994. Southeast Asia: Policies and Pitfalls," PTC 97 Proceedings, Honolulu: Pacific Telecommunications Council, p. 87-98.
230 58 Policy and economic considerations in the auctioning of spectrum
Robert K. Yates and Johanne Lemay LEMAY-YATES ASSOCIATES INC.
The authors would like to acknowledge contributions from Mike Connolly, Director of Spectrum Management Operations, Industry Canada
Abstract
With the large amount of money collected during the auctioning of spectrum licenses in the US, administrations around the world have become increasingly interested in properly managing the wireless licensing process. It is important to strike a balance amongst a number of interrelated and complex factors, including how much spectrum should be licensed, for what applications, and who should be eligible to hold licenses.
Bands of spectrum are organized by licensing Spectrum bodies inindividual countries and are also coordinated on an international level (thisis The electromagnetic spectrum islike a large particularly importantforsatelliteservices, tract of land. It can be divided up and managed. airline communications, etc.). The World Radio As technologies evolve and new capabilities Conference (WRC), under the auspices of the becomeavailable,differentpartsofthe United Nations,isused asthe forum for spectrum can be"farmed"out."Owning" governmentsto coordinatetheuseof spectrum is similar to owning land. frequencies. Countries with close geographic proximity also have extensive coordination Lower frequencies were the first to be exploited requirements along theirborders, and their commercially as technologies were more readily respective uses of spectrum bands tend to be available. With the development of high speed quite similar. processors and semiconductor devices, higher frequency parts of the spectrum have become The following table shows the types of services available. While it is true that no new spectrum typically found by groupings of spectrum (in can be created, portions can become usable as the North American context), as well as the new technologies are developed. "newer" uses that are present in the market or are developing. The electromagnetic spectrum of interest (and that one typically thinks of as being related to "radio" communications) consists of frequencies that are higher than audible but lower than visible. This covers a huge range from around 30,000 Hz (cycles per second) to over 300 billion Hz.
2'59 231 Table 1 - Overview of spectrum applications
Bands Existing services Newer service uses
Below 30 MHz AM radio broadcast Maritime mobile Telegraph Shortwave broadcast Time signals
VHF TV broadcasting Digital TV allotment (US) (30 to 300 MHz) (channels 2-13) Interactive voice/data (200 MHz - US) FM radio broadcast Paging Air traffic control Public safety, PMR Dispatch (SMR)
UHF TV broadcasting Enhanced SMR (900 MHz) (300 MHz to 1 GHz) (channels 14-69) 900 MHz Paging and NPCS Public safety, PMR Digital TV allotment (US) Cellular telephony Rural wireless local loop (pending) Air to ground service
UHF Mobile satellite (MSAT) PCS (1.9 GHz) (1 to 3 GHz) Wireless cable (MMDS) WCS (2.3 GHz - US) Low capacity fixed links LEO satellites (1.6 GHz, others) Digital MDS, MCS (2.5 GHz) (wireless cable, Internet) Digital audio broadcast (satellite)
SHF Satellite services Direct broadcast satellite (DBS) (3 to 30 GHz) (C, Ku bands) New mobile services (4.6 GHz) Common carrier (telcos) Ka band satellite (19/23/29 GHz) Wireless local loop (3.4 GHz - UK) Unlicensed internet access (5 GHz) (US) MCS and LMCS (wireless cable, Internet) Wireless CAP (23 GHz)
EHF Radionavigation Wireless CAP (38 GHz and (30 to 300 GHz) Radio astronomy proposed 41 GHz) Intersatellite communications New 43 GHz (US)
Note: scattered in many bands are industrial, scientific, and medical (ISM) applications, unlicensed consumer electronic devices, military radio and radar systems.
232 260 Value of spectrum interaction of consumer/public, commercial and policy interests. Spectrum is a publicly-owned resource, and hencethepublicshouldbeentitledto The difference in the market perceptions of compensation from entitiesthat exploit the spectrum values is clear in the US, where the resource for commercial benefit. The many FCC completed fourteen auctions over a 4 year different uses of spectrum, as outlined in Table period.Theseauctions resultedin the 1, indicate that there are many different values assignmentofover4,300licensesfor that can be attached to it. spectrum-based services, and raised a total of $23.1 billion for the US Treasury.' Thus the compensation that the public may expect from different spectrum applications will TheresultsofseveralUSauctionsare vary. Since governments can also impact what summarized in Table 2, below. type of services are offered and by whom, spectrum management becomes a complex
Table 2 - Summary of US auction results
Auction results' US$ per pop. per band'
PCS band" $3.5 to $5 PCS C band $17 to $19 PCS D/E/F band $3 to $4 MDS" 86¢ WCS"' 5¢
There are two notable issues in these results, MDS and WCS were perhaps perceived as thedifferencebetweenPCS. and"other" beingusefulforaddressingsmallerniche applications, and the difference between the markets, which would thusbe of lower various PCS bands. There are likely many economic value. reasons for these differences, some of which are discussed below: Differences amongst the PCS bands. PCS bands A, B and C are technically identical, Differencesbetween PCS andtheother in that they provide the licensee with 30 applications.Biddersclearlysaw PCSas MHz of spectrum. There is no intuitive offering a higher commercial value than the reason as to why the values would be MDS or WCS applications. PCS is similar to perceived as being significantly different. cellular service in that it offers mobility and At the time of licensing, the A and B roaming. Based on the success of the cellular bidders knew that the C band would be business, bidders likely assumed that PCS licensed, and similarly when the C band would have similarly high values relative to was licensed, the A and B values were other non-cellular-like businesses. PCS also is readily known. The higher C band result is thus playing into a market which essentially likely due to differences in financing terms exists and which has been growing rapidly. offeredbythe FCC(lowerupfront
233 261 payments, and installment terms) which provide an estimate of the license value to the may have been factored into the bidding. "" industry as a whole. The resultant value of each model is expressed as "net present value per As part of work completed for Industry Canada, headofpopulation"orNPV/pop.This LEMAY-YATES ASSOCIATES INC. normalizes the models for comparison on a developed six operating models to estimate the common basis. market value of thedifferentlicenses(all considering national coverage), considering the Overall cellular/PCS penetration was estimated different entities that make up the Canadian to grow to some 40% of the population by market: 2004. For each of the cellular and PCS models, two forecasts of subscriber penetration were 1. Cellular service alone used to reflect differing views as to market 2.PCS service alone evolution. In the "base case" forecast, cellular 3.ESMR service alone was assumed to capture the lion's share of the 4.Cellular and PCS services combined market; in the "alternate case" forecast PCS 5.PCS and ESMR services combined was assumed to do so. 6.Cellular,PCS and ESMR services combined The estimated market valuations are shown in the following table (in Canadian $): To the extent possible, the models grouped licensees ina particular segment so as to
Net present value of market models .(NPV/pop.)"1"
Model Base case forecast Alternative forecast (PCS > Cellular)
1 Cellular service $ 245.44 $ 148.36
2PCS service $ 12.19 $ 29.32
3 ESMR service $ 11.49$ 11.49
4Cellular and PCS $ 280.23 $ 267.52
5PCS and ESMR $ 22.23 $ 49.08
6Cellular, PCS & ESMR $ 305.59 $ 292.88
The results for cellular service alone and in (other than the net asset base assumed to be combination with other services are very high acquired at the outset). Hence the going forward relative to the other cases. It should be kept in incremental investment is minimal. mind that the cellular model is artificial in the sense that the major investments,and the associated risks, have been treated as sunk costs
262 234 Approaches tolicensing CanadaIntroduced an amendment to the Radiocommunications Act in 1996 The "traditional" method of selecting licensees providing for auctioning as an alternative hasrelied on governmentsmaking a to the traditional administrative comparative selection from amongst a number pricing/comparative selection regime. of applicants. The winning licensee would then Canada plans to auction LMCS bands in pay an annual fee intended torecover the 1998, and plans others in the future.' government's cost of spectrum management. Australia - Has begun auctions, having There are three basic types of competitive completed a first auction for 500 MHz allocation processes currently in use by various range spectrum. PCS and LMDS auctions administrations, in particular:'" are also in development.
In a comparative process, proposals are New Zealand In June 1990, New Zealand judged on their merits with spectrum being auctioned three cellular licenses allottedtoapplicants who bestmeet simultaneously using a sealed bid. It used a predetermined criteria. One can tailor the second price sealed-tender auction, which criteria to emphasize those concerns of meant that the highest bidder won the relevance to the issuing authority,e.g. license, but only paid the amount bid by previousrecordin providingsimilar the second highest bidder." services, financial backing, research and development investment.' United Kingdom - Continues with a mixed environment for award of licenses. Some In a lottery,the Government identifies licenses with administrative fees may be availablespectrumandprescribes,as adjusted .based on "best alternative use" required, minimum qualificationcriteria pricing''; licenses may also be auctioned. and conditions of authorization. Applicants participateina random draw forthe Germany Licenses for ERMES paging available spectrum, in the expectation that services were auctioned in September 1996 equity is achieved if each applicant has an usinga simultaneousmultiple-round equal chance of winning. system based on the US model. There were three national licenses awarded as well as a In an auction, the Government identifies 15 regional channels.'" theavailablespectrum and invites applicantstosubmitbids,withthe India - In August 1995,India held an underlying assumption being that awarding auction for two GSM licenses in each of the spectrum to whoever values it the most 20 regions. The rules allowed consortia to willresultineconomicallyefficient bid in any and all of the regions. The outcomes and resource rent capture by the highest bidder won the first license in each public. region and had to pay the amount it bid in an up-front payment and subsequent annual Auctioning payments. The second highest bidder had to match the highest bidder ifitwanted to Many countries are reviewing and/or receive the second license. If it declined, implementing auctions. A few examples are the right to the second license fell to the discussed below: third highest bidder, which had to match the highest bidder in order to receive the US - The US, as discussed above, has license. If no bidder matched the highest made extensive use of auctions replacing a bid, then the second license would be re- systemoflotteries.Lotteriescreated auctioned.' windfall gains to the lottery winners. With auctions,the excess now goes tothe government instead.
235 263 Hybrid licensing number of each bidder for each license area was the sum of the two indexes. With this In some cases a hybrid approach can be used. method, the Brazilian government could Hybrids can consist of a combination of a hope to obtain the maximum amount of comparative evaluation with either an auction, money possible while ensuring that the a lottery or some other form of bidding process. tariffs offered would be no higher than A hybrid approach can also be expressed as a thoseofthecurrentanalogA-band single number representative of both license fee operators. and some other criteria(see Brazil example below). A hybrid approachisusefulto Socio-economic and policy motivate bidders to deploy their operations to considerations meet specific government objectives such as population coverage, lowtariffsfor mass Spectrum licenses have inherent value to their market appeal, etc. Some examples of the holders, and radio license fees should thus approaches used are discussed below: reflect these values in order to compensate the public for the use of spectrum resources. There Poland -In early 1996, Poland licensed arealso many socio-economic andpolicy two GSM providers to compete with the considerations which go into developing an incumbent analog cellular operator. The effective spectrum management process. Some process used was a competitive bid wherein of these are discussed below. thePolishgovernmentestablisheda minimum initial fee, as well as ongoing Consumer impacts fees per subscriber per year. Bidders had to committopaytheyearlyfeesper With the high amounts of money collected by subscriber for every subscriber part of their the FCC duringits PCS license auctions, business planirrespectiveofifthese many administrations are of the opinion that numbers were achieved or not. In addition, current fee-based spectrum prices are too low.' the price per subscriber increased with In many cases, these "administrative prices" time. This approach motivated bidders for a were set to recover only the direct costs of the rapid and massive launch as well as for licensing effort. increasing number of subscribers as rapidly as possible. As recenthistoryshows, There is a prevailing view that higher prices GSM is a resounding success in Poland can be charged to licensees with no negative with more than 300,000 subscribers in impact on consumer prices; i.e.that higher approximately 6 months. spectrumpriceswillsimplylowerthe operating profits of the licensees. In the US, as Brazil - In early 1997 Brazil accepted one- auction prices have increased, the price to the time bids for B-band cellular licenses for consumer have in fact decreased. each of 10 regions in the country. The bidders were provided with a formula to Consumers can also be protected by other calculate a number of bid points. The bid means. Auctions or bidding (in a case of a pointformulawastheresultofa hybrid licensing process) can be conducted combination of an upfront price as well as where the winnerisdetermined basedon proposed tariffs. The formula calculated a "points" rather than dollars.Ina "points" price index based on apre-determined formula, bidders could gain higher scores by minimum license fee for each license in its setting lower tariffs, for example."" first part. A second index was calculated using the difference between maximum Nature of the license tariffs which could be submitted by the bidders and the actual amount. A specific For there to be a resource rent which can be basket of services, presumably extracted from an industry, there must be a representative of usage, was developed for positive value in using the resource. Hence the each license being awarded. The final bid concept of charging a rent for use of a resource
264236 is intended to transfer the "excess" value from with no ongoing fees, increasing the cost of the user tothe people (as proxied by the wireless licenses could distort market forces."' government)."'" Uncertainty in the amount of spectrum to be A parallel is sometimes made with mining licensed rights, wherein a winning bidder has the right to mine a particular material in a defined area. The US approach toauctioningspectrum Once the license is obtained, this right excludes appears to be that if the industry continues to "competitors" from mining in the same area.''" be willing to pay, then there must be value in If the world market price for the resource in the spectrum. Hence the USislikelyto question declines, a licensee may choose to not continue conducting auctions until such time as mine the resource andwaituntilmarket there is no interest from bidders. conditions improve. Unlike the mining rights example, the exclusive use of a particular band This approach appears to have some validity in of spectrum does not necessarily guarantee that the market.Pricespaidforlicenseshave another party will not offer an identical service increased as more spectrum has been licensed, in the same geographic area using another band. while at the same time consumer prices for Thusevenifonecoulddelaynetwork wireless services have been declining. Cellular implementationduetochangingmarket license values (based on prices paid for tradable conditions(somethingoftenprecludedby licenses won in FCC lotteries) from 1985 to license conditions), the value of the resource 1989, for example, prices increased from $12 being "mined" (i.e. wireless subscribers) may per POP to $136 per POP."' During the same simply disappear. period, the average revenue per subscriber per month dropped from $186 to $89."'" Wireless versus wireline competition At the time of licensing, investors make a set One philosophy underlying the setting of a of assumptions and evaluatethebusiness price for spectrum isthat the price should opportunity accordingly. The more clear the reflectthevalue of making the spectrum licensing policy, the better the investors will unavailable for other users. be in developing estimates of potential value in exploiting the licenses. If wireless service is to compete with wireline, then the costs of wireless will have to decline Foreign ownership toa pointwhereitiscompetitivewith wireline. However, since wireline service is by Canada's foreign ownership restrictions keep its definition a fixed service, the value of using telecommunications services industry largely in spectrum resources to address this market could Canadian control. be questioned. On the other hand, given the potential synergy available if fixed and mobile The valuations in this paper were done from the services are integrated (i.e.if the consumer perspective of the investment required and the ultimately can use the same service for both ultimate market penetration available, applications), then thesizeof the market considering typical costs of capital for the increases, affording greater economies of scale licensees. Given an equalunderstanding of and scope to the licensees and ultimately lower markets and investments, foreign or domestic prices for consumers. investors should arriveat much the same conclusion with respect to the potential value If greater license fees were to be imposed on of a license. On the other hand, the cost of wireless services, then this could distort the capital of different entities, as well as their economic equation of wireless versus wireline, objectives, going-in assumptions and even if the underlying technology of wireless perspectives on market strategies, will be quite declines tothepointwhereitcouldbe different. This could lead to different valuations. competitive." Since wireline service comes
237 265 In general, foreign ownership restrictions limit investors and delaying capital plans. One way who can participate in a licensing process. In of mitigating the possible adverse effects of the interest of promoting global trade, many large upfront payments is to permit firms to countries have committed to lifting restrictions amortize these costs over the license period. aspartof OATS agreements. As many There are risks in doing this, however, since countries have realized, the lifting or relaxing advantageous financing terms can be factored of foreign ownership restrictions also has a into bids, increasing the amount that bidders beneficial impact on economic development and would be willing to pay (i.e. there may be no on the development of the domestic industry. net benefit). An influx of foreign capital brings expertise and new ideas, ultimately leading to a more Conclusions dynamic domestic industry and the potential for future exports. These trends can be seen in There are many means by which governments developed countries (e.g. cable television in the trytoreceiveanappropriatelevelof UK and New Zealand) as well as developing compensation for the use of spectrum. On one countries (e.g. wireless services in Brazil and hand, governments can auction licenses,in India). which case the value paid isentirely inthe hands of the bidders. On the other hand, upfront Treatment of existing licensees and/or ongoing fees can be set that reflect spectrum values. In this latter case, itis a There are existing licensees in many service complexexercisetofullyunderstandand categories.Fortheseparties,therewill evaluate the amounts to be charged. undoubtedly be a view that the license has already been paid for. Increasing fees and/or Whethergovernmentschooseto conduct using auctioning to establish fees could provide auctions, or implement a hybrid approach to a disincentive forlicensees to make licensing, spectrum management has important investments. impacts on the development of the wireless industry. These can include re-allocations of Since the business plans, and risk of their spectrum to more valuable uses,providing implementation, are being (or already have incentivesforlevelsof deploymentand been) dealt with in one context, changing the consumerpricing, broadening coverage, rules of the game can create uncertainty. This introducing competition, stimulating could lead to increased costs of capital for the technology development, etc. licensees, since relicensing would be similar to government appropriation of all or part of the For developing countries the issues are even value of the business. more important. The development of a viable industry, and ensuring the greater deployment If new spectrum is auctioned, existing licensees and availability of services at affordable prices, may outbid others because of their market are factors as important (or more so) than poweradvantagesifentryis prevented. raisingmoneyfromauctioning. Hybrid Limitationsontheamountofspectrum approaches tolicensing have proven to be capturedbyexistinglicenseesmay be effective in stimulating industry and service appropriateinordertogenerateamore development in a number of countries. competitive market even though the government's proceeds from the auction could The authors be lower as a result. LEMAY-YATES ASSOCIATES INC., based Up-front payments in Montreal (Canada), was founded inearly 1993. We are a management consulting firm The problem with high up front payments is specializing in the telecommunications, that they have the potential of increasing wirelesstelephonyandcabletelevision capitalcostsandrisk,thusdiscouraging industries. We provideservicessuch as
238 266 business plans, due diligence, market research, Telephony, Personal Communications Services tariffdevelopment, license applications, (PCS) and Enhanced Specialized Mobile Radio economic and policy analysis, expert (ESMR) Licenses" for Industry Canada (the testimony, technology assessment, Canadian government department responsible technical/economic regulatory support, strategy for spectrum management) as part of its process development, evaluation of investment of introducing spectrum auctioning. Parts of opportunities. Robert K. Yates and Johanne this paper are based on the work completed for Lemay are Co-Presidents of LEMAY-YATES Industry Canada. ASSOCIATES INC.
In January 1997, LEMAY-YATES ASSOCIATES INC.completedthereport "Assessment of the Market Value of Cellular
' Public Notice FCC 97-232 July 2, 1997; COMMISSION OPENS INQUIRY ON COMPETITIVE BIDDING PROCESS FOR REPORT TO CONGRESS Docket No. WT 97-150
" Estimated from information obtained from the FCC.
"l Note: "$ per pop." refers to the amount of money paid for the license when spread over the population that the license covers. For example, a license costing $10,000 which covers an area with a population of 1,000 would be stated as $10 per pop. i" PCS - Personal Communications Services using the 1.9 GHz mobile bands; A, B and C bands are 30 MHz each; D, E and F bands are 10 MHz each.
" MDS - Multipoint Distribution Services; used for wireless cable applications in the 2.5 GHz range.
"i WCS - Wireless Communications Services; a flexible use band in the 2.3 GHz range.
"ii Note: It is important to realize that there could be other more "exogenous" factors in explaining the differences. For example, the C band auctions were "hyped" by many promoters and this may have inflated values. There are also questions as to the auctioning process itself. See Public Notice FCC 97-232 July 2, 1997.
Net present values of the pro forma business plans were calculated using weighted average cost of capital figures typical for entities in each segment of the market.
Notice No. DGRB-001-96 Review of the Comparative Selection and Radio Licensing Process - Findings, Industry Canada, February 1996
" In Canada, for example, many wireless licensees are required to spend a pre-determined % of revenues on research and development which has helped to boost investment by the licensees in Canada.
" LMCS- Local Multipoint Communications Systems (also referred to as LMDS in the US and Australia); LMCS provides a multitude of services in the 28 GHz ranges. Canada awarded two licenses in 1996 based on a comparative selection process, but plans to auction more licenses in 1998. The existing licensees may see an adjustment to their fees, depending on the outcome of the auction.
267 239 xi' See "International Survey of Spectrum Assignment for Cellular and PCS", Martin Spicer, Wireless Telecommunications Bureau, FCC, September 1996
This approach would increase the fees to low value applications if the spectrum could be put to better use by other applications. In this way, spectrum could be reallocated. x'" See "ERMES - Auction in Germany", Alfons Keuter and Lorenz Nett, Telecommunications Policy, Vol. 21, No. 4, 1997, pp. 297-307
" See "International Survey of Spectrum Assignment for Cellular and PCS", Martin Spicer, Wireless Telecommunications Bureau, FCC, September 1996
"i High bid prices in the US should not necessarily be viewed as being an industry consensus on the value of spectrum. Different bidders have different backgrounds, assumptions and objectives. In addition, the auction results are very recent; the market not yet being mature enough to confirm the prices paid. Some winning bidders have also defaulted on payments.
"ii A points system could also incorporate other non-monetary objectives, such as for coverage, timeframe for introduction of service, etc.
"ill Also, if auctions are considered, the value of the resource has to be high enough in absolute terms to make the auction worthwhile. The costs of running the auction could be higher than the fees collected.
'ix The US Department of the Interior has auctioned tracts on the Outer Continental Shelf for oil and gas production. Parties bid for the right to explore and develop a specified tract. See FCC OPP Working Paper Series no. 16 "Using Auctions to Select FCC Licensees", May 1985.
" In the context of running an auction, the initial auction fee paid would become a sunk cost and thus not influence going forward investment decisions. Auctions would reduce the potential for distortion of wireless versus wireline economics.
"i License fees are not the only way competition may become distorted. Cellular carriers are currently treated as if they "attach" to the wireline network and therefore they pay the cost of interconnection. On theother hand, local telcos do not charge for handling each others' local traffic. Competition is also distorted by subsidized local wireline rates, wherein local wireline services are priced below cost.
xxu Hazlett, Thomas W., Michaels, Robert J., "The Cost of Rent-Seeking: Evidence from Cellular Telephone License Lotteries", Southern Economic Journal, Vol. 39, No. 3, January 1993, pp. 425-435
"ill Estimated from the Cellular Telephone Industry Association (CTIA), Wireless Factbook, Spring 1995
240 268 Assessing Knowledge of Telecommunications Development in the Asia-Pacific Region, 1995-1997 Ryota Ono School of Communication Studies Nanyang Technological University Singapore 1. ABSTRACT This study analyzes papers relevant to telecommunications infrastructure and services development in less developed countries in the Asia-Pacific region, presented at the past PTC conferences from 1995 to 1997. It investigates how systematically we have been learning, what useful knowledge we have acquired and sheds some light on the future study of telecommunications development in the region.
2. INTRODUCTION however, not only in the economic arena but also in the political, societal and cultural arenas. In thelate20thcentury,advancementof telecommunications infrastructure and services is The Pacific Telecommunications Council (PTC) becoming one of the most crucial topics in both carried out a study in 1994 that forecast both public and private sectors. The ever increasing positive developments and potential problems in speed of technological advancements in thetelecommunicationsandcommunication telecommunications and communication technology field in the Asia-Pacific region. Survey technologieshascloselylinkedwiththe participants in the region unanimously pointed restructuring of human relationships, out that the biggest problem in the coming organizations, and national frameworks. decadewouldbeslowtelecommunications development in less developed countries. They Telecommunications and new communication worried that slow development would cause technologies have brought about a number of problems in overall development of the global changes to societies. The changes range from information network (Wedemeyer, 1994). That societal structure, economic framework, media study aimed at removing some of the uncertainty structure,government'sroles,employment, surrounding the region's future so that desirable education, health care, city structure and culture developments could be promoted and undesirable (Marien, 1996). These changes are made possible consequences could be inhibited. bylinkingcommunicationtechnologieswith telecommunications networks (Baer,1996,p. Considering that the above problem has been 357; Freeman, 1996, p.22). Because of the wide regarded as very pressing and cannot be resolved variety of effects and significant impacts on the over a short time period, it will be of importance existing frameworks and institutions,growing to continue to accumulate useful knowledge to attention has been paid to the future direction cope with it. This study will investigate how and extent of development of these systematically we have been learning and what telecommunications and communications useful knowledge we have acquired. technologies. This study willanalyze papersrelevantto Baer (1996) analyzed the economic costsof telecommunications infrastructure and services delaying key policy measures in the developmentinless developedcountries, telecommunications sector and argued that the presented at a conference in the region. The greatest cost of the delayisisolationfrom objectives of the study are to:1) find out how innovation andinternationalmarkets.The comprehensively the issue of telecommunications disadvantage of being left behind can be seen, infrastructure and services development in less
241 269 developed countries was addressed; 2) examine based in the United States and five were from what useful knowledge were provided; and 3) Hong Kong, Singapore and Thailand. Authors of shed somelightonthefuturestudyof the remaining 45 papers (71%) were telecommunications development in the region. telecommunications carriers, consultants, researchers, lawyers or project managers in the 3. METHOD private sector. A couple of regulators in one Asian country also contributed. Fourteen were from the As part of a larger project, this study will look United States and 31 papers were from such into the collective output of study papers related Asia-Pacific countries as Australia, Hong Kong, totelecommunicationsdevelopmentinless India,Indonesia,Japan,Singapore,South developed countries published in the PTC annual Korea, Sri Lanka and Taiwan. It is thus seen conference proceedings from 1995 to 1997. The that more academics from the United States and PTC annual conference has increasingly become more practitioners (i.e., non-academics) from the an importantplatformforknowledgeand region studied and addressed the issue. informationexchangeamongavarietyof telecommunicationsprofessionals,government officials, business people and academics in the Asia-Pacific region. Thus, study papers presented Academics 13 5 at the PTC conferencesconstituteauseful U.S. Asia-Pacific information resource. The time frame of the three Practitioners 14 31 years is determined because the PTC forecasting study was carried out three years ago, in 1994, and also because this study is to attempt to 10 20 30 40 50 review the most up-to-date information on the Number of papers issue reflecting the rapid changes of telecommunications scenes in the region. Figure 1 Authors This study will focus on telecommunications Collectively, about 50% of the knowledge was development in less developed countries. It will provided from the authors based in the United examine who investigated the problem, what States and the other 50 % came from countries in facets of the problem were studied, how those the region. This distribution may be partly due to facets were examined, what conclusions, if any, the fact that PTC is held in the United States. were drawn, and what knowledge was learned. Given that the issue is the most crucial for some oftheAsia-Pacificnations,however,more While all papers in the proceedings addressed contribution from the region would definitely be telecommunications-relatedissues,thisstudy desirable. selectedpapersmoredirectlyfocusingon telecommunications development in less 4.2 Nine Facets of the Development Issue developed countries, that is, in the non-OECD countries of the Asia-Pacific region. The1995 While a wide range of topics relevant to the issue proceedings contains 15 such papers, the1996 of telecommunications infrastructure and services proceedings has 24papers,andthe1997 development in less developed countries was proceedings includes 24 such papers. This study discussed from different points of view in the will analyze contents of these 63 papers. papers, those topics were categorized into nine groups based on what facet of the issue was the 4. OVERVIEW OF THE PAPERS focus in each paper. The grouping and the proportion of each group are shown in Figure 2. 4.1 Authors Since some papers addressed more than two facets, the total number of papers became 82 in The distribution of the authors is presented in the figure. Figure 1. Among the 63 papers, 18 papers (29%) involved authors from academia. Thirteen were
242 270 36 One or two papers discussed such facets as Pol & Reg growthprojection,information economy and Technology 16 research and development, respectively. Industry Planning To repeat, the distribution of the nine facets Finance clearly shows that significantly more attention Hum. Res. has been paid to the policy and regulation facet Projection _M2 of the problem. Inf. economy R &D 4.3 Geographical Scope
0 5 10 15 20 25 30 35 40 Thirty seven papers (59%) chose a single country Figure 2 Nine Facets of the Issue as the geographical scope of this study. The countriesmoststudiedwere Chinaand The most heavily studied facet was policy and Indonesia. Nine papers on China focused on regulationof thetelecommunicationssector either the policy and regulatory facet or the and/or industry in the concerned countries. Thirty industry facet.Five papersabout Indonesia six papers (44%) focused on this facet. Most of outlined the technology facet and planning facet those papers dealt with the on-going instead. This contrast may reflect the attention including telecommunications reforms to differentfacets oftelecommunications privatization, competition and foreign companies' development in these two countries. participation. A few other papers among the 36 studied strategies for rural network development, The other countries dealt with were Hong Kong, the institutional context surrounding a India, Malaysia, Mexico, Palau, the Philippines, telecommunications reform, visions of APII (Asia Singapore, South Korea,Sri Lanka, Taiwan, PacificInformationInfrastructure)andGII Thailand, and Vietnam. The number of papers (GlobalInformationInfrastructure),andthe discussing these countries was, however, only Internet regulations. two or three respectively. More papers about these countries would be desirable to understand Sixteen papers (20%) dealt with the technology them from multiple perspectives. There is a need facet. Among topics were the architecture of for papers on other missing countries in the broadband networksand/ordatanetworks, region, including many of the Pacific islands intelligent management systems of networks, countries. undersea cable installation projects, and wireless systems. Three papers(5%)studied more than two countries. Two of them focused on Pacific Island The third facet was industry. Ten papers (12%) countries and one of them dealt with Latin outlined the industry status in either a single America.Fifteenpapers (24%) discussed country or several countries in the region. Most of telecommunications develop-ment related issues them discussed the market of certain services at the global level without referring to any such as cellular and VSAT, and a few discussed specific country or region. the status of telecommunications servicesin general. 4.4 Study Questions
Seven papers (9%) were giouped under the Onlythreepaperspresentedtheirstudy planning facet. A majorityof these papers questions at the outset of the paper. Most other emphasizedthe importance of thestrategic authors started outlining, describing, assessing, planning for telecommunications reform and/or examining, or reviewing the topic concerned and telecommunications projects. Five papers (6%) ended with a summary of the discussion. While discussed the finance facet of the issue and there is no doubt that studies taking the latter providedsomeadvice.Fourpapers (5%) approach can be informative, this study found it addressed the human resources facet such as difficult to synthesize knowledge by consolidating technology transfer and/or training methodology.
243 271 information and/or isolatedfactsfrom those paper can be a good informative resource for the papers. Future conference papers can increase topic studied, and in that sense, these 31 papers their contributions by stating simply and clearly enhanced our understanding of the topic. One the study question or problem at the beginning of common shortcoming of these descriptive papers the paper.Kerlinger (1986) statesthat"... was,however, that the description wastoo adequate statement of the research problem is closely entwined with the unique context or one of the most important parts of research," and conditionof thecountry studiedtoprovide that "Questions havethevirtueof posing externally applicable lessons for other contexts .problems directly" (pp. 15-17). and other countries. Readers of a descriptive study hope to extrapolate lessons or insights for Learning of facts can beeasily achieved by their own countries. Thus, authors of descriptive reading or listening to information about the studies can enhance the importance of their work facts. Learning about an issue, however, is more by discussing implications and application of productive when searching for answers to the theirstudiestoothercontextsandother problem. If a paper is to tackle the issue of countries. telecommunications infrastructure and services development in less developed countries, it needs Why dolessonsneedtobelearnedfrom to clarify the problem in question and then to conference papers? The PTC forecasting study in provide answers to it as straightforwardly as 1994 identified that for the coming decade the possible. issue of greatest concern in the Asia-Pacific region would be the slow telecommunications 4.5 Approaches to Topics development in less developed countries. Why did most of the survey participants in the study point Reflecting the tendency of developing a paper out this issue? The fact that they had not yet without posing a clear study question, only five found appropriate solutions to the issue puzzled papers (7%) took the preferred problem-solution them. approach in which some problems relevant to telecommunications development were identified, Anystudyaddressingthisissue should analyzed, and then solutions were proposed. The contribute to solutions applicable to most of the proportionsof the fourapproaches are countries suffering from that problem. Even summarized in Figure 3. Since six papers used though concrete solutions cannot be provided in a two approaches, the total number of papers single study, at least some lessons that might be became 69 in the figure. helpful in a collective way need to be provided. Thirteen papers (19%) took an approach of Prob-Sol providing guidance to some targeted people or Descriptive 48 entities. The advice included a methodology to estimate demands, the planning of a corporate 13 Guidance privatenetwork,aprojectformation,and Extrapop2 strategic planning for a privatization process. Other Most of these papers were presented by authors from the private sector. Two papers (3%) took an 0 10 20 30 40 50 extrapolation approach and discussed projection Figure 3 Four Approaches ofgrowthpotentialoftelecommunications services and infrastructures in selected countries. A majority of the papers took a descriptive approach to the topic. Some papers described 4.6 Implications of the Papers certain policy, plans, regulations, reform process, or telecommunications infrastructure and service Most of the papers, which chose a single country status in a single country or in selected countries. astheir geographical scope,did not discuss Othersoutlinedcertaintechnology,market implications of their study. Those papers were environment, or specific project. A descriptive complete by themselves. The main focus of those 2'72 244 papers seemed to inform readers of what was resources in countries in the Asia-Pacific region. going on in the policy or regulation arena, the One case study in Taiwan suggested that policy technology arena, or the industry in that country makers put more effort on human resources only. development and infrastructure development. A study in Thailand suggested that the government The authors of those papers may well have give a higher priority on strategic planning. One assumed that their readers could easily derive paper suggested the establishment of a new usefulknowledgefromthepapers.That mechanism for regional cooperation for APII. One assumption might hold true for a few people , but paper argued for building of learning alliances in not for most readers. If a study is done to provide order to close the telecommunications readers with something new as well as useful, developmentgap. Two papers suggested the usefulness should be clearly depicted in the frameworks to understand problems of the slow paper.An accumulationofsuchexplicitly telecommunications development and to figure constructive papers will definitely contribute to out possible solutions. Two papers emphasized our knowledge on the issues concerned. the importance of understanding institutional arrangements in telecommunications Papers addressing issuesat the regional or development. Although these 15 papers were global level tended to discuss implications of the identified under as "suggestions" type, actually study. This does not mean that the larger the the statements of suggestions were buried in a geographical scope of the study is the more likely sentence or a paragraph in the paper and were itsimplicationsare presented.Instead,the not so explicit. author's intentions seem to have determined the extent of the implications of the paper. The third type of conclusion was projection of the occurrence of some kind of events or conditions in 4.7 Conclusions of the Papers the near future. Five papers (8%) were identified in this type. Some examples of those projections Four types of conclusions were observed in the 63 were furtherliberalizationin Taiwan,more papers as presented in Figure 4: no conclusion, participation of private companies in suggestions, projection and caution. Thirty seven telecommunications reform inSriLanka,a papers(59%) didnotofferanydefinite promising opportunity in Latin America, and conclusions, but simply reiterated what had been prospect of a new R & D strategy in South Korea. discussed in the previous sections of the paper. The fourth type of conclusion was a statement of caution to government policy makers and/or to a Nill 37 nation itself. Five papers (8%) were in this type. In China, the lack of policy and technology Suggestions 15 coordination indeveloping theInternet was Projection M5 pointed out as a major obstacle and it was cautioned that the current policy environment Caution M5 would fragment the national development effort. Other At the regional level, one paper argued that only those countries with an attractive regulatory and 0 10 20 30 40 operational environment could bring in necessary capital. Figure 4 Types of Conclusion 5. SYNTHESIZED KNOWLEDGE The second type of conclusion was suggestions. Fifteen papers (24%) offered suggestions as part The rich information in the 63 papers was of their conclusion. One paper called for a greater examined from different angles in the preceding extent of foreign participation in China. Three sections. In this section, this study will now papers suggested the introduction of attempt to summarize, reorganize and privatization,competition and privatesector synthesize the, information so that something 273 245 useful for and adaptable to the readers' unique In order to implement a competitive safeguards situation can be comprehended. The synthesized regime to allow the market mechanisms to work, information is presented in accordance with the Hong Kong's case demonstrates that important nine facets of the issue of telecommunications regulatory measures include: 1) the establishing infrastructure and services development in less of OFTA (Office of the Telecommunication s developed countries discussed in section 4.2. Authority);2)controlling over the numbering Certain facets and countries, however, will be plan; 3)mandating number portability;4) emphasized in this section by reflecting the determining terms and conditions for overall focus and coverage of countries in the interconnection;5)thetransparencyofthe selected 63 papers. dominant carrier's operation; 6) regulating the prices of the dominant operator; 7) keeping watch 5.1 Policy and Regulations on anti-competitive behaviors in the market; and 7) facilitating access to customers. In India, the government introduced competition not in long-distance services but in the local loop. In Vietnam, the government seems to have found The government avoided privatization of the a solution to overcome managerial, financial and government PTT which would compete with the technical problems faced by itsstate owned private telecommunications operators. Another telecommunicationsoperator.Itisseeking unprecedented feature of Indian partnership with large foreign companies who telecommunications reform is the absence of an detain capital and expertise required to develop independent regulator. The government its telecommunications infrastructure through the mandated that 10% of all new lines should be Business Cooperation Contract (BCC), which is installed in rural areas and all villages should an agreement between a foreign and Vietnamese have access to at least a public call office by the partner for the mutual allocation of end of 1997. The government wants to establish responsibilities and sharing of product, internationally competitive telecommunications production or losses without creating a joint equipment manufacturingindustry,thusit venture enterprise or any other legal entity. encourages the licensees to install domestically manufactured equipment by allowing the world's InSouthKorea, policy and regulatory leading telecommunications equipment restructuring is needed in addition to industry manufacturing companies toset up shop in restructuring. The separationof policy from India. regulation, of regulation from ownership, and of ownership from management is critical. In China, MPT has mainly resisted structural Fundamental regulatory processes and reform and allowances will be made for new methodologies need to be critically examined. As service enterprises that meet a market need that oneexample,measures to preventanti- MPT cannot immediately fill. Wireless systems is competitive behaviors should not unduly limit the one area where private, though notforeign, capabilities and competitiveness of operators equity is allowed in services operations today. beforehand. Further, the guidelines should not be Another exception to MPT's monopoly role in detailed enough to eliminate room for commercial services is found in satellite services, managed negotiations and decisions between the parties networks and CATV. China needs to institute a involved. consistent and enforceable regulatory regime for telecommunications services. In terms of content And finallyin Mexico, the government will regulations,itisquestionablewhetherthe provideincentivesforcellularandtrunking current control of the Internet content will be licenses to install more rural telephones under feasible and maintained for a long time. The the footprint of coverage. In Sri Lanka,the current environment of ambiguous guidelines, government has decided to liberalize the wireless arbitrarypolicyexceptions,andcompeting local loop service by issuing two licenses to the interestsseverelyfragmentsthenational private operators for an island wide service. A development efforts. study in Taiwan shows that the enhancing the level of national technological capabilities leads
246 274 to a higher level of national IT use and to interconnect fees,the participation of foreign economicdevelopment.Amongtechnological firms, the involvement of state owned operators, capabilities, human resources in science and and the introduction of new wireless operators. technology and telecommunications infrastructure are the keys. 5.2 Technology For the majority of less developed countries, a New wireless technology in the local loop and strong decision-making body and a concerted down-scaled cellular systems are emerging and governmental commitment to telecommunications they make flexible and affordable connections of development are essential to the success of any new customers possible. The rapidly growing use privatization reform program. In addition,a ofwirelesstechnologiestoprovidebasic gradual liberalization isneeded to ensure a telephone services brings about an opportunity successfultransitionfrom monopolytofull forthedevelopmentofanextgeneration competition. The effectiveness and credibility of operation support system. the regulatory system depends on: 1) a political process and thepolitical system;2)formal In China, deployment of VSATs for voice has institutionalrules(i.e.,thenatureofthe slowed down since1995astheresultof contractual system andthepropertyrights improvements in PSTN (10 million lines/year), regime); and 3) the nature and effectiveness of and in response, the VSAT market has shifted to safeguarding institutions like the judiciary and data communications and integrated services. In most importantly, the regulatory agencies and Indonesia, the network management problem of instruments. Development of an independent connecting multiple typesof switching was regulatory agency has proven crucialtothe resolved by first making a conversion protocol for successful introduction of competition and to X.25 and then by developing and implementing a facilitate a level playing field for all participants. standard interface recommended by the ITU to The success or failure of the agency is strongly create the Integrated Management System (IMS). linked to institutional arrangements (i.e., a fixed The study on Palau's inter-island fiber optic and detailed legal instrument,transparency, systemprovidessolutionstoashort-cable autonomy) that underlie the agency's operation installation with numerous shore landings in and resources. remote places in shallow water.
Governments must act to preserve competition in 5.3 Industry three areas:in interconnection and technical standards, inlicensing and in tariffs. In the current Asia-Pacific market where a Interconnection issues should be addressed prior capital seller can choose the most prospective to the licensing of new carriers. One approach to buyer, only those countries that provide an ensure universal service is to tie the grant of attractive regulatory and operational license to provide service on lucrative routes with environment are going to attract the necessary the obligations to provide basic service on remote capital. and ruralroutes. The framework, with 12 categories of obstacle and 23 obstacle factors China's telecommunications market will become developed in one study, is of importance as a the largest in the world in years to come. Paging guiding tool to investigate the potential obstacles and cellular have expanded greatly. Wireless totelecommunicationsdevelopmentinless Local Loop (WLL) has a great potential to grow developedcountries.Furthermore, thestudy considering China's unused switching capacity. suggests that the existing misunderstandings of Equipment supply is the hottest area for foreign the problems between developed countries and companies. In China, foreign VSAT vendors, by lessdevelopedcountries shouldnot be localizing product design and manufacturing, overlooked. One study presents six key elements have demonstrated that technology transfer is to form governmentpolicy for wireless key to winning the market in the long run. telecommunication: the level of competition, the Especially, joint venture has been taken as the bandwidthofspectrum,thetreatmentof most effective means for technology transfer.
247 275 Some of the future growth prospects of VSAT are: Thesourcesofprivatecapitalaresales, VSAT video will be the next growth area; VSATs concessions and market entry. One type of sale is can be a viable contender for national and local the sale of shares to the public or to strategic network solutions; VSATs are appropriate for investors through a bidding process. Another type rugged terrain and dispersed population; and may involve setting up a state-private consortium MSS and PCS are expected to open new markets or a private consortium to undertake stock or for VSATs. assets. 5.4 Planning Public/Privateinvestmentpartnershipscan make it possible to allocate the funds of each In Indonesia, efforts have been centered on three group of investors to the specific objectives of each main goals: expanding customer access; participant. For example,development bank modernizing public networks; and, introducing funds can be targeted at supporting regulatory advanced services. Along with N-ISDN, TELKOM reform and increased government transparency. plans to commence Intelligent Network Services Private and governmental funds can be used to in early 1996. assist privatization and infrastructure development. Privatization is becoming a global phenomena and is increasingly competitive. 6. TOWARD A MORE SYSTEMATIC Telecommunications operators can offer different LEARNING incentives and messages to global investors. It is thereforecritical that a nation managesits This study looked into the designs, methods and privatization processstrategicallytoattract contentsofthe 63 papersrelevantto investors. telecommunications infrastructure and services development in less developed countries with the The ability to learn fast and learn together with aims of finding out how comprehensively the diverse global partners is potentially the golden issue had been addressed and of examining what keyforemerging anddevelopingcountries. useful knowledge had been provided. Learning organizations pay attention to at least five component disciplines. They are Shared While certain knowledge could be derived from Vision, Personal Mastery, Mental Models, Team them as presented in section 5, a diversity of Learning, and Systems Thinking. approaches to the issue made itharder for readers to grasp any collective knowledge. Thus Several factors need to be taken into account in it may be necessary to study the issue in a more planning a successful financing of systematic and comprehensiveway.Several telecommunications installation projects. They suggestionsforthisdirectionarepresented are: Participants; Their commitment; below. Government license and consent; Government other support; Structural fluidity;and,Inter- First and foremost, those who study the issue of creditor arrangements. slowtelecommunications developmentshould aim at providing information useful to solve the 5.5 Finance problem and should make that aim explicit in the study. Even if the study deals with a single New private sector telecommunications operators country, it needs to look at the bigger picture of need to prepare sound commercial plans to gain telecommunications development at the regional adequatefinancing.The newoperatorcan or international level and should try to link the achieve this by:1)selecting an experienced study to that bigger picture. operating partner; 2) paying as much attention to commercial strategy as to technical strategy; 3) Second, the study should digest the nature of the overcoming regulatoryshortcomings;and,4) problem, identify what facet of the problem developing a diverse financial strategy. should be examined, and make it clear why that examination isimportant. To facilitatethis
248 276 process, a clear statement of a study question is paper. Hawaii: Pacific Telecommunications the first step to take. In general, learning takes Council. place by asking questions and finding answers to them. The same rule holds true for papers for the BIBLIOGRAPHY sake of the readers' learning. PTC'95 Proceedings: Third, though related to the second point, it is Anderson, D., & Heller, M. Wireless platforms for suggested that more papers take a problem- developing nations: proliferation drives next solution oriented approach to the issue. When generation of support systems. 405-411. the study takes a descriptive approach instead, Brillson, P. V., Daffner, G. Telecommunications it needs to relate the description of the topic to deployment in a converging world: An the bigger issue in the region as well. examination of infrastructure and regulatory strategies in the Asia Pacific region. 551-556. The problem ofslow telecommunications Dube, V. L., & Partono, R. The installation of development cannot be resolved over a short time knowledge. 569-572. period, but many workable solutions that could Gilbert, A. L., Neo, B. S., & Soh, C. The evolution be adapted by others have been experimented of telecommunications as a strategic element and/or implemented in many parts of the region. in the national information system: Three eras A more synthesizedapproachtoknowledge in the development role of telecommunications building from theseexperiencesisdefinitely in Singapore. 445-452. neededinthefiledoftelecommunications Kim, H. Korea telecommunications reform: The development. third round hitting the mark?. 557-563. Kularatna, A. D. V. N., Gunawardana, G., REFERENCES Williams, C. Value added services and private sector investment in new telecom projects in Baer, W. S. (1996). Telecommunication Sri Lanka. 440-444. Infrastructure Competition: The costs of delay. Ogden, M. R. Widening the chasm or closing the In W. H. Dutton (Ed.), Information and gap? Converging information technologies & Communication technologies: Visions and Pacific island Microstates. 592-599. Realities. (pp. 353-370). Oxford: Oxford Olmer, L. H. Privatization, competition and the University Press. development of telecommunications in the Asia-Pacific region. 459-464. Freeman, C. (1996). The two-edged nature of Parker, P., Owen, A., & Kelly, M. Financing new technological change: Employment and telecommunication systems as competition unemployment. In W. H. Dutton (Ed.), increases. 661-665. Information and Communication technologies: Petrazzini, B. A., & Bui, T. X. Vietnam Visions and Realities. (pp. 19-36). Oxford: Oxford telecommunications: On the road to reform. University Press. 111-118. Rao, J. R. Telecom investment and tariff Kerlinger, F. N. (1986). Foundations of strategies in India. 101-109. behavioral research (3rd ed.). Fort Worth: Savage, J., & Maddox, W. Looking at Latin America: Analyzing the region's Harcourt Brace Jovanovich College Publishers. telecommunications development and growth. 95-100. Marien, M. (1996). New communications Shina, N. Regulating telecommunications in technology: A survey of impacts and issues. developing countries: An institutional Telecommunications Policy, 20(5). 375-387. analysis. 370-377. Tan, Z. China's information superhighway: What Wedemeyer, D. J. (1994). Emerging is it and who controls it. 600-606. developments analysis: Telecommunication in Zita, K. The policy of exceptions: Liberalization of the Pacific Hemisphere, 1994-2004. Unpublished China's telecommunications service market. 295-299.
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251 2'79 How to Build an Information City: A Case Study of the Hays USA Information City Initiative
Jay E. Gillette Department of Information Networking and Telecommunications Fort Hays State University Hays, Kansas, USA
But this is that which will indeed dignify and exalt knowledge, if contemplation and action may be more nearly and straitly conjoined and united together than they have been.
Francis Bacon, 1605 (1)
ABSTRACT
This paper presents a report and case study of the "Hays USA: Information City Initiative."It shows how a midwestern USA city is adapting to the complex, transforming environment of the information economy in the global knowledge society. This paper examines the factors that encourage the development of information cities, and warns of drawbacks that impede the potential for growth into this new environment. The author provides conclusions and recommendations for community leaders, researchers, information architects and telecommunications vendors to assist in developing information cities around the world.
1. INTRODUCTION: THE COMPLEX adapting to the complex, transforming INFORMATION ECONOMY DEMANDS environment of the information economy in the COMMUNITIES ADAPT global knowledge society.
The information economy is here, now.It is the In a far-sighted move, the City of Hays, a driving component of and a reflection of the community of about 21,000 people on the Great knowledge society. Peter. Drucker calls this era Plains of North American in western Kansas, "the age of social transformation.'It is a complex declared several ambitious goals in its 1994 era. Complexity theory(3) and common sense Strategic Plan: warn us that communities that want to thrive, here and now, must adapt. Hays will be a city with special adaptation and skill in using information in networks to increase We already may know that, in theory. Yet as economic, cultural, medical, and educational Francis Bacon wrote in 1605, living in the opportunities. Hays will contribute to our complexities of the English Renaissance, what we regional community through leadership as an know is dignified and exalted if we can "more "Information City." nearly and straitly" conjoin and unite theory "contemplation"and action. And as a warning of The City of Hays will be a community where how old the problem is and how hard it is to join knowledge is valued with lifetime education and them together, he gently chides and calls for the sharing of knowledge understood to be the uniting them more together "than they have been." means of instilling that value.
Therefore the challenge for communities, and the To realize this vision, the City mobilized a task thesis of this paper, is how to build an information force to make recommendations on how to build city appropriate to the knowledge society. This itself into the information city it saw as its role. paper presents a report and case study of the Enthusiasm drew 120 information professionals to "Hays USA: Information City Initiative." The the effort. A community-based organization paper shows how a midwestern USA city is evolved, named the Information City Advisory
252 2 Group (ICAG). Under the direction of a 20-person Economic Development - Information Citizenship steering committee, with executive leadership will bring about a balanced regional economy with provided by a "four-wheel drive" team of four emphasis on knowledge work through good paying ICAG Co-Chairs (called the "C-4 Panel"), the jobs and prosperous businesses. organization set forth a remarkable Agenda for Action for the community. It opens with this Education - Information Citizenship will allow preamble: Hays to continue developing its position as a leader for the delivery of educational opportunities We believe that an Information City is created and services throughout the community, region by, for and of, Information Citizens. An and state. Information City, then, is built through Information Citizenship. An Information City will Health Care - Information Citizenship will sustain provide an environment where an Information Hays as the leading regional health care Citizen can flourish. Information Citizens use community by ensuring accessibility to up-to-date information, information networks, and medical information, continuing to attract top information technologies to improve their quality professional health caregivers and by empowering of life as well as the lives of their neighbors. patients with the knowledge for preventative self Information Citizens expand their horizons care. through information sharing. Information Citizens have a passion to use information to Human Services - Information Citizenship will serve the greater whole.(4) provide the framework to support the information sharing necessary for people to take care of one This is the charter of a community positioning itself another.(5) to survive and thrive in the information economy that increasingly drives the knowledge society of The long term vision in each area led to a set of our era. The long-term strategic vision and short- five Action Item goals, for a total of 25 Action Item term practical steps taken by this Kansas, USA, goals for the community. For quick reading, these community can serve as a model for others were abstracted and listed together, by area, in a throughout the world. two-page spread in the Agenda for Action 12-page summary document. The complete Agenda for Hays USA is a small town in a geographically- Action carried appendixes with extensive reports isolated rural environment. Its Agenda for Action from each of the five task forces, which outlined focuses on five key areas that can transform a the deliberations, research and conclusions that community through the imaginative use of led to the Action Item goals. information: civic & cultural; economic development; education; health care; and human Finally, the Information City Advisory Group services. The Hays USA Information City (ICAG) produced a set of five immediate "Short experience can be transferred into similar places Term Goals," essentially representing each of the and parallel cultures such as Pacific island five areas of emphasis. Guidelines for these communities, rural Asian and American towns, and representative goals were that they were enclave cultures worldwide. reasonable, reachable, and practical, to demonstrate a first year's results of the experiment Here is the Information City Advisory Group's for the initiative: strategic vision, from the initial 1996-1997 Agenda for Action : The Short Term Goals for Hays. USA: An Information City The Long Term Vision for Hays, USA: An July 1996 - June 1997 Information City ICAG believes that the first step to Information Civic & Cultural - Information Citizenship will Citizenship is Information Literacy. Therefore, preserve and enhance the quality of life in Hays Information Literacy will be measured, via public and also provide Hays citizens opportunities to surveys, the first year by: become worldwide citizens through information exchange.
253 281 10% of all computers in Hays will be connected to information-community approach appears networks (on the Internet or local area beneficial and truly innovative. networks.) On the other hand there may lie ahead unforeseen 10% increase of citizen usage of the Hays Public drawbacks. Consider the question posed in the Library Internet computer terminals. article title "The Informatization of Japan: Creating an Information Society, or Just Good 50% of all new jobs in Hays will be information- Salesmanship?" Jonathan M. Jaffe, in his study of related jobs. Japanese government initiatives for the Informatization° (Johoka) of the country, warns 10% increase of citizens having electronic mail that such an effort may emerge as merely a (Email) addresses (on the Internet or local cynical recasting of conventional economic and area networks). development approaches, wrapped in new packaging.(8) 10% increase in non-traditional student enrollments (outside ages of 18 to 22) in area Another view of drawbacks comes from British classes.(6) analyst Mark Hepworth, in a forward-looking article titled "Information Cities in Europe 1992.° He The information city initiative met each of these locates five potential "areas of concern- from the short-term goals in the first year. The ICAG next development of "structural change and local policy developed a second, less extensive 1997-1998 initiatives° of information cities: Agenda for Action which is currently being carried out. While the project and community experiment 1. Labor force social polarization (growth in is still underway, we can already discern some information and lower-order service overall benefits of success, and potential occupations; education inadequacies drawbacks of failure. hampering labor mobility and supply )
2. BENEFITS OF SUCCESS; DRAWBACKS OF 2. Interurban competition diversion of public FAILURE authority and finance "towards major economic development initiatives whose benefits may The Information City initiative represents a classic flow to consumers and firms respectively living trade-off of benefits and drawbacks to the or located outside the jurisdiction." community. The trade-off is even more acute for the cadre of information professionals and 3. City-imposed charges for previously-provided influence leaders who drive the effort, bear the information servicesa form of regressive burden of the work, and who gain only indirectly by taxation on lower-income groups. success, since it is the community as a whole that most benefits. For the leadership cadre, the effort 4. Intense rivalry between cities threatens waste illustrates Mark Twain's conclusion about the of public information technology resources, pursuit of the Holy Grail: "there's worlds of when in fact intercommunity linkages and reputation in it, but no money."(7) alliances are required, especially for infrastructure development. On the one hand, the community benefits are a package worth pursuing. Rural areas in Kansas 5. Spatial centralization of economic power that and worldwide face significant challenges in marginalizes less-favored regions(9) ("the moving off natural-resource economies. 'Euromegalopolis' concept-).(10) Alternatives such as tourism, travel hospitality, and regional trade can contribute important Nevertheless, there are significant benefits, streams of outside revenue and cultural exchange. particularly for communities that are facing But the jobs and community experience from imminent changes of conditions, such as cutbacks those activities are often relatively low-wage and of agricultural subsidies; natural resource low-skill. And significantly, the competencies they commodity shifts; or population migration in or out. call for are not necessarily new knowledge-value- Based on the Hays USA experience, below are added the community needs for its future. Thus an summary analyses of the benefits of success and
254 282 drawbacks of failure of the information city pro bono, without consulting fees. The advisory initiative: group estimates hundreds of thousands of dollars worth of professional time have been 2.1 BENEFITS OF SUCCESS donated to the community through the initiative.
Community survival and prosperity through 4. RESULTS OF THE EXPERIMENT adaptation. New information-based computer services Increase in the community's quality of life company located in community-300 new, skilled (through mobilized knowledge power). jobs.
New source of good jobs, that have strong career Ellis County Internet home page developed; paths. Information City home pages developed.
Attraction of the information economy Fifteen local Internet service providers (ISPs) professionals that the community sees as its doing business in the community. future. City of Hays beginning to serve as a model for Adds to diversity of local economy (spreads other communitiesinquiries answered and resource base and adds growth area). presentations being made which enhance the City's reputation. Most important: building community competencies (knowledge, skills and attitudes). Focus on whole-community strategy is successful; "width of participation versus spike of 2.2 DRAWBACKS OF FAILURE innovation" approach works.
Diffusion of community effort into a difficult Sykes Enterprises Incorporated moved to Hays morass of complexity too new to be well- with 300 jobs. Hays and the State of Kansas understood anywhere. provided significant incentives in a effort led by Mark Bannister of Fort Hays State University, Reputations and community influence of many building on a strategy outlined pro bono for the professionals and some political leaders are at community by Dr. William Charland, a widely- risk in the visionary proposal they present, and published workforce consultant and Senior Fellow represent, to the citizens. of the Center for the New West in Denver.
Increase in citizen cynicism, fear, illusion of The fifteen ISP organizations in Hays are nearly powerlessness in the face of change if the half as many as in the metropolitan Seattle area, project fails; if the Imperial Guard is thrown and compare to 24 ISP organizations in back, the battle of Waterloo is lost. metropolitan Kansas City. This is a remarkable level of Internet service activity in a town of 3. COST-EFFECTIVENESS OF THE PROJECT 21,000 people.
Because a volunteer effort, cost to the taxpayers 5. HOW TO BUILD AN INFORMATION CITY has been minimal. Key theoretical concepts (Bacon's "contemplation") Real cost has come from the work time donated must be united with action to build an information by information professionals across the city. First, the city must work as a community. At community; in turn they have benefited from the foundation, "community" means "share increased professional interaction through together." A community shares the work. common community projects. Therefore a community organizes.
Project catalyst has brought information Even though the size of this particular community professionals into the forefront of community seems to be on an understandable, "human" scale, public policy as resident volunteer consultants we found that the city is fundamentally complex.
255 283 The local experience proves a key pointall communities are complex. Thus theories of 6. Five Task groups appointed the first year complexity can help communities understand and (civic & cultural; economic development; develop themselves by recognizing complexity, education; health care; and human adapting to it, and tolerating the uncertainties of services)(14) real innovation and the unclear pathways to positive change.(11) 7. Four Task groups formed the second year (community access and equipment; To organize citizen action in a complex community education; institutional community, means a refraction of mass effort into development; economic development) a workable participation structure. Think of a prism refracting what appears to be one beam of 6. CONCLUSIONS: FACTORS THAT visible light into the rainbow spectrum it's made ENCOURAGE OR IMPEDE FORMATION CITY from. In Hays, this kind of prismatic participation DEVOPMENT structure has worked. The deliberately large population of participants was refracted into Infrastructure development is a foundationa workable teams, to carry out the actions of the necessary but not sufficient basis to build an information city initiative. information city
The process was guided by the best-practices Because of real complexity, the community approach of the information professionals who put must deal with uncertainty, "thriving on chaos" it together, based on their collective experience. as Tom Peters declares. Those who can, do. However, ultimately the °error and trial" method Tom Peters advocates(12) drove much of the Voluntary professional mobilization can make a outcome. The process worked as described difference in a community, providing the below: initiative for cultural change.
1. City strategic plan led to leadership initiatives Volunteerism can only begin the process. from the strategic planning implementation Institutionalization of the information city group concept has to lead the community to the next level. 2. Leadership initiatives led to a community meeting The information city effort is scaleable; but as it can grow, so it can also shrink. 3. Community meeting led to Information City Advisory Group (ICAG) forming 7. RECOMMENDATIONS: BUILD INFORMATION CITIES THROUGH WHOLE- 4. ICAG led to an approach characterized by COMMUNITY FOCUS "width of participation versus spike of innovation." Dr. Bob Cox, then Rural Medical Vendors need to participate by working with Director at Hays Medical Center, introduced information communities to innovate as a whole medical virology theory; to infect an entire community. This is different marketing than community, you need 13% of population to be selling to an individual enterprise. Vendors carriers. ICAG therefore set a membership goal must become community partners; they must in of more than 200 people (currently it has effect join the community as an information reached about 120 members).The Information citizen. City Advisory Group began calling itself "The Horde? Researchers must focus more deeply on community innovation in the complex world of 5. Actual management group of 20 activist the information economy. The uncertainties volunteers formed, called the °Steering need to be taken as research challenges to build Committee? Steering Committee appointed an an anthropology of community innovation and a ICAG leadership panel of four chairs called the sociology of information citizenship. °C-4 Panel."(13)
256 284 Information professionals need to expand their not just a matter of resources but also of scope, moving beyond the extraordinary courage, resolution, will. And part of that intensity of their daily work to give and take as resolution, that courage, is also the information citizens in appropriate public policy decisiveness to leave the market when actions for their communities. increasing returns are moving against one.
1. .1 Information architects must provide structures Technology comes in successive waves. for information-citizen participation in the civic Those who have lost out on this wave can sector, not just the private sector and the position for the next. Conversely, those who government sector. have made a killing on this cycle should not become complacent. The ability to profit Community leaders must adapt to the under increasing returns is only as good as the complexities of the information economy in a ability to see what's coming in the next cycle knowledge society, beyond a capital economy and to position oneself for ittechnologically, in the industrial society. psychologically, and cooperatively. In high tech, it is as if we are moving slowly on a ship, 8. MASTER PARADOX IN COMPLEX with new technologies looming, taking shape, RENAISSANCE TIMES: THE TECHNOLOGY through a fog of unknowingness. Success CASINO AND INFORMATION CITY goes to those who have the vision to foresee, LEADERSHIP to imagine, what shapes these next games will take.(16) I have previously used the term "The Information Renaissance" as a metaphor. This is meant to Those who wish to build information cities of their help us comprehend the complexities of our own communities can apply almost every part of Brian era, by looking to and from the multiple eras of Arthur's insights to their work. the European Renaissance (about 1450-1620). Those eras were characterized not just by the It's not just about companies, it's about utility of printing and the sweetness of art that communities. "Those who have lost out on this forever altered the world's contemplation, but also wave can position for the next... . by history-changing actions of social dislocation, technologically, psychologically, and paradigm demolition, and civil war. cooperatively." Communities worldwide can regain opportunities past by repositioning We find ourselves in the same kind of paradoxical themselves as future information cities. "Success renaissance time. Our era appears goes to those who have the vision to foresee, to simultaneously. bright and clouded, with peace imagine, what shapes these next games will take spreading and conflict breaking out, full of opportunity and danger. As the poet sings, "The slow one now/Will later be It is not enough just to contemplate the fast/As the present now/Will later be past/The information renaissance that is unfolding.If the order is rapidly fadin.' "(17)In today's guiding premise of leadership is to master renaissance, here and now, we can build an paradox,(15) then, through action, we must adapt information city. We can adapt, and thrive on masterfully to the complexities of our own era. complexity.
Brian Arthur shows us how. He adapts the REFERENCES paradoxes of complexity theory in practical advice to technology leaders, beginning with a (1) Francis Bacon. (1605.) Of the Proficience striking metaphor he calls "the Casino of and Advancement of Learning Divine and Technology": Humane (First Book, V, 11). Reprinted in Mortimer J. Adler, Ed. (1990.) Bacon, Descartes, Mhe Casino of Technology requires several Spinoza. Volume 28, Great Books of the Western things: excellent technology, the ability to hit World (2nd ed.). Chicago: Encyclopedia the market at the right time, deep pockets, Britannica, Inc., pp. 16-17. strategic pricing, and a willingness to sacrifice current profits for future advantage. All this is
285 257 (2) Peter F. Drucker. (1995.) The age of social (13) The leadership panel consisted of Brad transformation. Atlantic Monthly (November Boyer (Sensory Perceptions Internet, Inc.).; 1995). Robert Cox, M.D. (Hays Medical Center); Jay (3) The leading economist in the complexity Gillette (Fort Hays State University); Gary theory movement is W. Brian Arthur. His LeCount (Jefferson Elementary School, Hays theoretical work in the following representative Unified School District Number 489). articles can add knowledge-value to the practice (14) Task Group Chairs were drawn from of information community development: volunteer information professionals from Competing technologies, increasing returns, and throughout the community. Most Task Groups lock-in by historical events. The Economic selected co-chairs to spread the leadership Journal 99 (March 1989): 116-131; Positive burdens and provide backup team management if feedbacks in the economy. Scientific American one co-chair could not be available. Generally 17 (February 1990): 92-99; W. Brian Arthur. information management and systems specialists, (1996.) Increasing returns and the new world of ICAG members were characterized as "the business. Harvard Business Review (July- busiest people in town." Their donation of August 1996): 100-109. hundreds of hours of their time was extraordinary (4) City of Hays, Kansas, USA, Information City (more than 60 meetings took place throughout the Advisory Group. (1996.) Hays USA: An community from November 1995 through March information city: 1996-1997 agenda for action, p. 1996). See "Where We Came From: History of 4. The related 1994 Strategic Plan goals quoted the Information City Initiative," Hays USA: An above are also reprinted in this Agenda, on pages information city: 1996-1997 agenda for action, p. 4 and 6 respectively. 6. (5) City of Hays, Kansas, USA, Information City (15) Tom Peters. (1987.) Thriving on chaos: A Advisory Group. (1996.) Hays USA: An handbook of management revolution. New York: information city: 1996-1997 agenda for action, p. HarperCollins, pp. 472-480. 5. (16) W. Brian Arthur. (1996.) Increasing returns (6) City of Hays, Kansas, USA, Information City and the new world of business. Harvard Business Advisory Group. (1996.) Hays USA: An Review (July-August 1996): 108. information city: 1996-1997 agenda for action, p. (17) This classic prophecy is from Bob Dylan, 5. "The Times They Are A-Changin,'" reprinted in his (7) In Mark Twain. (1889.) A Connecticut Yankee 1973 Writings and Drawings. New York: Alfred A. in King Arthur's court. New York: Charles L. Knopf, p. 85. For a thoughtful scenario analysis Webster and Company. on this point, see Peter Schwartz and Peter (8) Jonathan M. Jaffe. (1996.) The Leyden, "The Long Boom: A History of the Future informatization of Japan: Creating an information 1980-2020," Wired Magazine (July 1997): 115- society, or just good salesmanship? Pacific 129,168 -173. The magazine's table of contents Telecommunications Review (June 1996). summarizes the article in this typical Wired style: (9) I have discussed similar global hegemony "We're facing 25 years of prosperity, freedom, issues at length in Jay E. Gillette (1996) "The and a better environment for the whole world. information renaissance: Toward an end to rural You got a problem with that?"I am grateful to information colonialism." Pacific visionary telecommunications consultant Chris Telecommunications Review (December 1996). Hoy for underscoring the importance of the article (10) Mark E. Hepworth. (1991.) Information cities to me and my students in a leadership in Europe 1992. Telecommunications Policy 15 presentation he made on 05 November 1997 at (June 1991): 181. Fort Hays State. University. (11) The City of Littleton, Colorado, USA is a leader in adapting complexity theory to the needs BIBLIOGRAPHY of community development. See Littleton's annual reports and the sections on complexity Arthur, W. Brian. (1989). Competing theory written by Chris Gibbons. technologies, increasing returns, and lock-in (12) Tom Peters. (1987.) Thriving on chaos: A by historical events. The Economic Journal handbook of management revolution. New York: 99 (March 1989): 116-131. HarperCollins.
258 286 Arthur, W. Brian. (1990). Positive feedbacks in Hepworth, Mark E. (1991). Information cities in the economy. Scientific American 17 Europe 1992. Telecommunications Policy 15 (February 1990): 92-99. (June 1991): 175-181.
Arthur, W. Brian. (1996). Increasing returns and Jaffe, Jonathan M. (1996). The informatization the new world of business. Harvard Business of Japan: Creating an information society, or Review (July-August 1996): 100-109. just good salesmanship? Pacific Telecommunications Review (June 1996). Braman, Sandra.(1993). Harmonization of systems: The third stage of the information Peirce, Neal R. (1993). Citystates: The true society. Journal of Communication 43 economic communities of our time. Denver (Summer 1993): 133-140. Center for the New West.
City of Hays, Kansas, USA, Information City Peters, Tom. (1986). Thriving on chaos: A Advisory Group. (1996). Hays USA: An handbook for management revolution. information city: 1996-1997 agenda for action. Sakaiya, Taichi. (1991). The knowledge-value City of Hays, Kansas, USA, Information City revolution, or, A history of the future. Tokyo Advisory Group. (1997). Hays USA: An and New York: Kodansha Publishers. information city: 1997-1998 agenda for action. Sakaiya, Taichi. (1993). What is Japan? Tokyo City of Hays, Kansas, USA. (1997). and New York: Kodansha Publishers. www.infocitv.net [Hays USA Information City website] Winslow, Charles D. and Bramer, William L. (1994). Future work: Putting knowledge to City of Littleton, Colorado, USA. (1995). work in the knowledge economy. New York: Littleton, Colorado's new economy program: Free Press. 1995 annual report..
City of Littleton, Colorado, USA. (1996). Littleton, Colorado's new economy program: 1996 annual report..
Drucker, Peter F. (1993). Post-capitalist society. New York: HarperCollins Publishers.
Drucker, Peter F. (1995). The age of social transformation. Atlantic Monthly 274 (November 1995): 55 ff.
Ellis County, Kansas, USA. (1996). www.ellisco.com [Initial Hays USA Information City website]
Gillette, Jay E. "The information renaissance: Toward an end to rural information colonialism." Pacific Telecommunications Review (December 1996).
Hepworth, Mark E. (1990). Planning for the information city: The challenge and response. Urban Studies (August 1990).
259 287 Electronic Commerce Opportunities for the Telecommunications Industry
RICHARD KEENAN PRESIDENT, CASHEL COMMUNICATIONS USA
This paper will discuss the opportunities in the electronic commerce industry for telecommunications companies.
As we all know, the worldwide transactions can include anything from a purchase telecommunications industry is changing daily. with a credit/ATM/debit card, accepting credit With changes in competition, regulations, payment over the Internet, to using prepaid phone technology, and cultural issues to worry about, cards and completing international monetary telecommunications companies need to look at transfers. The one thing all of these transactions new ways to generate new customers in new have in common is they all need some form of markets. As the world continues into the transmission media (telecommunication service) information age, we will be exchanging vast to complete the process. amounts of data. To successfully manage all of this information, the proper networks, equipment The worldwide financial electronic commerce and technical expertise will be needed. All of this market was estimated at 100 billion US dollars in preparation and build-up will be capital intensive, 1996. By the year 2000, it is expected to pass 300 and will require telecommunications companies to billion US dollars according to some industry acquire new revenue sources. experts. These estimates do not include internal banking industry funds transfers. Of the many forms of information exchange using additional bandwidth, the fastest growing sector is Three sectors of the electronic commerce industry electronic commerce. Electronic commerce can be will require the availability of significant new defined as simply as using electronic means to telecommunication services as they continue their transmit information between trading partners. rapid growth. The prepaid telephone market is Trading partners can be customers, vendors, expanding at a pace that will require great divisions or departments, or any group of people expansion of residential, business and wireless who exchange information. This concept is not service capabilities. Usage of prepaid cards new, as companies have been using Electronic continues to grow all over the world, but the Data Interchange (EDI) for years to transfer advent of prepaid wireless and prepaid residential electronic information. For most people today, and business service will quickly outstrip the use electronic commerce is fast becoming a term that of cards in traffic minutes. In many countries, signifies an exchange of financial information. statistics show that as many as 35% of wireless or The most popular understanding is an electronic residential service applicants are turned down for form of payment for products or service, usually credit reasons. Prepaid products will allow these in the form of credit or debit card purchases. potential customers to become active consumers of service. The global prepaid The industry professional, however, understands telecommunications market segment has grown to that financial electronic commerce involves an estimated 10 billion US dollars in 1997. This accepting, transmitting, validating, processing, number is virtually all card traffic. storing and auditing payment transactions. These
260 288 On the Internet, the volume of financial electronic commerce is already larger than most people realize. Recent studies in Japan and Singapore show that 15% to 20% of Internet users buy goods and services via the Web. In the U.S. and Europe, the percentage is close to 25% for home Internet users and almost 20% for business users. In more than half the transactions, actual payment is made via the Web. Three-quarters of these transactions are business-to-business related transactions. Industry experts estimate that financial electronic commerce on the Internet will reach 1 billion US dollars in 1997, and that it will grow to 3 billion US dollars in the year 2000. This growth will be supported by sales of Internet commerce software estimated at 3 billion US dollars by the year 2000. The telecommunications industry will provide all of the new transmission services needed to allow this growth.
International electronic monetary transfers is a market segment which is also experiencing rapid growth. Today, the global market moves an estimated 10 billion US dollars in value between private parties. With the new developments in electronic commerce servers and stored value card products, new alliances between banking institutions and private companies will make domestic and international transfer of funds easier and less expensive for the end user. According to industry experts, the volume of transfers is expected to grow by 50% in the next two years.
These and other varied industry segments will be responsible for significant new demand on the global telecommunications infrastructure. The opportunities are great for companies who are able to carry traffic as well as those who may wish to participate in the growth as direct providers of service.
299 261 Native Americans' Options in the Global Telecommunications Services Industry
Ross Chaney MA , MA
The Wisdom Group, Inc. Tulsa, Oklahoma USA
For centuries Native Americans have conformed with U.S. economic development policy. They have done this with the desire to preserve language and cultural identity. Now non-conforming opportunities have emerged in electronic services that provide security and privacy with a demand from domestic and foreign clients. This paper examines Native Americans in the framework of U. S. Federal Indian Policy. It will also analyze the impact of regional and global trading in telecommunications equipment and services.Using telecommunications equipment as the base for economic growth and services as the engine for that growth.
As the next phase of the global economy takes basisfordefininga form of federaltrust shape in the world of information technology and responsibility for Native Hawaiians as well. change sweeps through much of the United States,Native American leadersareasking In fact it is now conceivable that the future of themselves whether and how the new technology Hawaiian sovereignty will determine the next can empower Native communities.Willthe phase of aboriginal issues for the mainland. A technology serve to bring together or further strong case for Hawaiian sovereignty can be disconnect Alaskan and Hawaiian Natives from made under international law,says professor their continental and island homelands? At the Francis Anthony Boyle....Itis more likely, time of the American Revolution, what is now the though, that the issue of Hawaiian sovereignty UnitedStateswas hometohundredsof will become a federal question that may be indigenous peoples with a variety of forms of answered with in the context of extensive body of self-government, organized at the tribal, village, laws and Supreme Court decisions governing or islandlevel.Today's Native Americans Indian tribes in the continental United States. American Indians, Alaska Natives, and Native Those laws generally have not been applied to Hawaiiansarethedescendantsofthese Native Hawaiians.How those laws might be indigenous peoples.' Over the last 200 years, applied in carving out sovereignty for Native indigenous peoples have struggled to maintain Hawaiians could create important precedents for their cultures, sovereignty, and self-determination some 550 tribes on the mainland and in Alaska. in the face of population pressures and ever- With a total population of some 2.1 million, they expanding national and state governments. themselves have often felt the constraints of limited sovereignty.2 The established framework of federal Indian law recognizes tribalsovereignty,afederaltrust Thereisalsoincreasingagreement among responsibility for those tribal lands and resources sovereigntyadvocatesthatwhilethetribal ceded to or taken by the United States, and a reservation structure that exists under federal law commitment totribalself-determinationover on the mainland provides some precedent for programs and services vital to tribal well-being. their movement, it is not a viable model.Even Federal law and policy apply this framework to Mililani B. Trask, a leading advocate of a "nation the 550 federally recognized Indian tribes within a nation" approach that many compare to including about 220 Alaska Native tribalor tribal status, insists she does not favor seeking village governments (Indian, Aleut, or Eskimo). status equivalent to that granted to American Federal policy on Native Hawaiians is more Indians. "The government cannot shove us into a ambiguous,althoughthe UnitedStateshas mold for continental Native Americans," she apologized for its role in the overthrow of the says. "We do not want to be placed under the Hawaiian Kingdom. A deeper analysis indicates, Bureau of Indian Affairs."The main problem, however, that the many parallels between Native she says, is that federal law does not convey the Hawaiian and American Indian history provide a
262 290 level of political and economic self-reliance to recent years. This reflects the current emphasis Indian tribes that Native Hawaiians are seeking.3 on the national information superhighway, and the further transition of the United States into a Eventhoughtherearedifferencesinthe post-industrial information economy and society. sovereignrelationship of the various Native One way for Native Americans to be proactive on Americangroupsmostshareverysimilar the issue of Telecommunication on Native lands, statistics. Over half live in rural areas, with some calls for Native entrepreneurial activity. The having the highest poverty, suicide, incarceration, formationof Nativeownedandoperated and substance abuse rates in the United States. businessesandespecially telecommunications Telecommunicationstechnologyoffersmany businessesis one of the best ways to: 1) opportunities to help Native Americans deepen develop grassroots expertise and leadership in their cultural roots, empower their communities, telecommunications; 2) create new jobs on Indian strengthen Native governments,andaddress reservationsand in Native villagesand these and other daunting challenges such as very communities; 3) stimulate the Native economy; high unemployment and poor health conditions. and 4) potentially open up new opportunities for The promise of telecommunications is by no Nativebusinessestocompeteinregional, meansassured,however.Indeed,if Native national, and international markets.5 Americans,collectively,donotgainbetter understanding and control of this technology, the Environmentally Sound Economic Development result could be to further undermine Native culture,community,sovereignty,andself- In an area were expertise and capital are limited determination. how can Native Americans advance a viable strategy for economic development? Tribal telecommunications law isinitsinitial phase.Precedents from Indian law suggest that Economic developmentinNative American those tribes that wish to assume some degree of communities,villages, and tribesisgenerally telecommunications authority and responsibility predicated on a requirement toprotectthe now vested in the states and the FCC could environment and honor the earth.Technology legally do so.Some tribes may wish to operate affords opportunities to conduct business without under current authorities; others, may choose to the destruction of resources.Computer net- establishtheir own tribaltelecommunications working is rapidly becoming an important tool of agency or authority. A fundamental question is successful businesses in the major metropolitan theextentoftribalauthorityovertele- areas and telework centers. This is likely to be communications on tribal lands (e.g., physical true as well for Native owned and operated infrastructure: and in the air over tribal lands businesses, especially those located in remote ( e.g., frequency spectrum). areas. Illustrative applications include tracking private-sector businessopportunities using No single technologicalsolutionwill address computerized trading, sales, and marketing data- Native American needs. A varietyof tech- bases; exchanging market leads with other Native nologies, working together or complementing enterprises; identifying venture capital, banking, one another, will best meet their diverse needs. and government funding sources for minority Computer networking, satellite video enterprises; and marketing Native products and conferencing, computers and software, facsimile, services over the rapidly growing electronic digital switching, broadcast radio, cable TV, and enterprise networks. cellular or wireless communications all have a roletoplay.Even thebasictelephoneis Effective use of computer networking by Native important because many (perhaps one-half) rural business people would require significant training Native homes do not have a telephone today.4 on both the conceptual and technicallevels. Providing affordable access to technology and WhileNativeAmericantelecommunications resolvingintellectualpropertyissues(e.g., activities are increasing, the rate of change in the copyright and trademark protection) that concern majoritysociety has accelerated markedly in
263 291 electronic entrepreneurs would also need to be important to the well-being and survival of tribes. addressed. It should also be considered in the evaluation of Universal Access. Many other tribal businesses may want to use an information system or establish a local area net- The governmentalorganization that has the work to support company operations. responsibility of thistrust agreementisthe Commercial systems for small businesses without Bureau of Indian Affairs (BIA) under the United in-housetechnicalexpertiseareincreasingly States Department of Interior.Some 56 million available at declining costs. Tribal companies may acres of tribal land is held in trust for the Indians also consider connecting to wide area net-works, by the BIA. This arrangement may have kept the such as the Internet, for electronic commerce or reservations intact. But it has definitely helped telemarketing.Whilethiscurrentlyrequires keep the Indians in their place because they have technical assistance, in the future it should be as been unable to use the one physical asset they easyasestablishing and usingatelephone havetheir landas collateral for loans to more connectiongiven a modern telecommunications efficiently exploit the land, or start businesses, or infrastructure. even improve their homes.1°
U.S. FEDERAL TRUST RESPONSIBILITY Less tangible and much more important is a mental change. Like other prospering tribes One major problem concerning Native Americans around thecountry,theOneida Nationis is the issue of trust responsibility with the federal rebelling against decades of socialism imposed government.The essence of the federal trust upon them by planners and administrators at responsibility is to ensure the survival of Indian Washington'sBIA. They'retakingtheir communities.Underthetrustresponsibility, economic affairs intotheir own hands. As Indians possess rights as a group, in addition to Deborah Doxtator, the OneidaNation's rights as individuals. The unique status of Indian thoughtful tribal chairwoman, puts it:"We are tribesis based on the historicalrelationship using the same concepts those Asian nations used between tribes and the federal government.6 The to kick start their own economies."" federal trust responsibility includes serving as trustee of tribal lands and natural and financial The Apache tribe is now running more of its own resources, and providing services necessary to the social program and schools without the BIA. health and welfare of Indian tribes.' The Apaches definitely aren't taking any chances with their hard earned money. Wells Fargo bank, A continuing challenge is updating the scope and not the federal government, manages their nest definition of the trust responsibility to reflect eggof about$8millionsmartthinking, modern life. In original treaties, for example, the considering the BIA's scandalous mis- federal government often promised to provide management of Indian funds over the years. teachers, doctors, and annuities (in the form of What's going on atthe reservationsisnot food and supplies) to tribes in return for cession capitalism at its most individualistic. Most of the of tribal lands.8 enterprises are owned by the tribal governments The next step, say forward-thinking tribal leaders If the trust responsibility is to have meaning, it and people who have studied Indian economic must keeppace withchangingsocialand development, is to get more private Indian - economic realities.This adjustment has been owned businesses started.But raising capital made in areas such as health, education, and land poses a vexing problem.12 and resource management as tribes and the relevant federal agencies have gained experience One new direction being proposed has been as partnersin the government-to-government brought about by thefederalgovernment's relationship.9 Includingtelecommunications mishandling of more than $2.4 billion of tribal within the trust responsibility would seem a trust funds and millions, if not billions, more in logical nextstep because ensuring adequate Individual Indian Moneys (IIM) funds. telecommunications services and infrastructure, is
264 2 9 2 Paul Homan, a prominent bank regulator called in Were do Native Americans go to find capital for (by the president) to help clean up the BIA's trust economic development? If tribes cannot receive fund mismanagement problem, has a plan to their trust money that is legally owed and the make more capital available to all the tribes. He government refusesto change an out-dated proposes that Congress fund an Indian credit system to fulfill its trust responsibility, then it is bank similar to the World Bank and other up to the Native Americans themselves to realize internationalaid banks that have played an change.In this article I will use one particular important role in funding private enterprise when example to show how tribes can not only break private banks were reluctant to make loans.13 away from the socialism of the United States government but also capitalize on their exclusive Homan says it could be done with $500 million rights as sovereign nations. from funds already in semipublic banks. The American Indian Trust Development Bank would NATIVE SOVEREIGN BANK lend to Indian-owned banks, or directly to private projects on reservations. "It could be the The First Lenape Nation Bank was chartered in engine of economic growth on reservations for December of 1996 by the sovereign Delaware the next century," Homan avers. Previous trust Indian tribe in Oklahoma.It is the first bank in fund and IIM funds audits uncovered a "serious the US that can keep bank account activities a breach of trust,"according to Mr. Homan. secret because it does not fall under U.S. federal Billions of dollars are missingor unaccounted regulations. for, and a completely detailed audit is impossible because of missing or lost records, according to So what makes the First Lenape Nation Bank an the General Accounting Office.14 offshore bank? The answer is tribal sovereignty. First Lenape is owned by the Delaware tribe of One concern presented to Mr. Homan was western Oklahoma, a sovereign Indian Nation whether this was infacttermination of the whose independence from U.S. state and federal government'strustresponsibility. "Itmost authority has been federally recognized since certainly is not in my view. In fact there's been a 1934. So in return for getting their land stolen, steady erosion of the government's ability to the Delaware's, who were originally from their fulfill its trust responsibilities.The number one namesake state and were exiled to Oklahoma, get problem is the persistent lack of funding in the to operate a bank that can guarantee Swiss-style BIA over the last 20 to 30 years, which has banking secrecyto bothtribal member and renderedtheirsystemsandtheirpeople nonmembers.That means numbered accounts, essentially obsolete and incapable of running a full nondisclosure of account information, no modern trust system." Mr. Homan said." compliance withsnooping lawenforcement, protection from civil court judgments, and no He holds out little hope, however, that his plan reporting of interest to the IRS or of cash will be developed because of the cost. He said it depositsover $10,000totheTreasury would take between $80 and $100 millionto Department.17 implement the plan, which Congress would have to appropriate. The plan would take two years to The government's concerns are certainly worthy. implement,buttheadministrationhasnot Too bad they have little power to act on them. indicated it would support the funding at that Broadlywrittentribal-sovereigntylawsthat level. Mr. Homan said the president's long term mandate equal, government-to-government budget includes no more than $15million. negotiations with tribes put Native Americans in Secretary of Interior Bruce Babbitt is opposed to the unique position of being the only Americans Mr. Homan's plan.Mr. Babbitt said the special who can basically tell the government to go to trustee went considerably beyond his mandate hell. Sure, authorities can attempt to wield and established anentirely new government influence over tribal government or modify tribal agency, which takes most of the responsibilities law through congressional action, but given the from the BIA.16 sad history of relations between the government and Native Americans,bullyingIndians just
293 265 doesn't look good. The one piece of leverage the This is where the combination of cutting edge regulatory authorities do have is that First Lenape technology and the tribes ability to utilize their needs their blessing to establish relationships with sovereignstatusto overcome 200 years of other banks.I8 bureaucraticmishandlingand500yearsof cultural erosion, sheds light on this dark future. Whether the Delaware's canreally do this remains to be seen.Since there's no U.S. tribal Internationaltelecommunicationsprogressively law relating specifically to banking and no tribe opened world markets for financial institutions, has ever attempted to build a little Cayman Island but have also had a more immediate and darker in the middle of Indian country, this pugnacious effect on world banking, encouraging many banks bank is entering virgin territory."' tolocateofficesor branches "offshore"in countries where there are few or no regulations What does all this mean for a Native American or taxes.Information technology also makes economicdevelopmentstrategy? Atfirst possible new types of crime that victimize banks examination one might conclude that this is just and subjects them to possible data loss, system another scheme praying on Native Americans and failure, and other vulnerabilities.21 using their status as Sovereign Nations to commit crimes. When outside influences control the fate Banks operate communications systems; of Native Americans this will always be the case. telecommunications firms offer financial services. This examples does show a real peed and a But themarket encroachmentisone-sided. possible solution to the failedU.S.Federal Telecommunications companies are increasingly strategy. When tribes are not allocated moneys including financial services among information owed them, they are forced to make alternate services they intend to offer, and are also creating strategies. There are tribes like the Oneida subsidiaries for leasing, financing, and investing. Nation that have a $100 million a year casino Banks are more limited in the range of activities operation. Theyhaveproventhatself- that they may conduct. determination does work. BANKS NETWORK CAPACITY Figuring that the gambling windfall won't last forever, the Oneida nation has been diversifying In most countries, banking and telecommunica- its economy by moving into manufacturing and tions have both been highly regulated, and institu- services. Two years ago the tribe paid about $40 tions that engage in both have borne a double millionfora49%stake in Airadigm burden. Banking regulation controls the financial Communications, a mobile telephone company services that can be offered and the activities that serving Wisconsin and Iowa. Another $22 banks may engage in. Communications regu- million bought a minority interestin Oneida lation controls the technology by which services nation Electronics, a joint venture with Plexus, a are delivered and, with respect to many local and publicly traded circuit-board assembler. The long-distance network services, the rates that Oneida's also own one-third of the state -charted may be charged.Both affect the classes of Bay Bank, and are negotiationing to set up a customers to whom financial services are offered. medical products manufacturing company and a metals fabrication company. The ambitious goal Financial institutions operate corporate is to have non-gambling enterprises bring in communications networks and share with other about $70 million a year in revenue by 2007.20 financial institutions the ownership and management of value-added networks. They may So far I have examined very specific areas of also make itpossible for their customers to Native American's relationship to the United accesstheirnetworksandthey may offer States government.I have proven that the trust enhanced data communications services.To a responsibilityisnotbeingrealizedforthe limited extent, they are thus competing in the betterment of Native peoples. The only way for telecommunications services market. Native American's to break out of institutionalized welfare is to do it themselves.
266 294 Estimates are that the average use of private These financialinstitutionsarecurrentlyre- networks by financial institutions varies between assessing the comparative advantages of Private 10 to 30 percent of capacity. This overcapacity vs. Public communications networks in light of came about because in the booming 1980's new telecommunications technologies and financial institutions overestimated their future services.The results are often hybrid systems, traffic to allow for growth, and also regarded with a mix of services, providers, and managers. some overcapacity as insurance in case of circuit U.S. banks increasingly see the need for close failures.Their gusty traffic also results in excess cooperation with telecommunications providers capacity, particularly during certain off- periods of to support their overseas activities. the day.This raises the possibility of financial institutions reselling the excess capacity on their Now imagineSovereignTelecommunications private networks. 22 Networks with a Native Sovereign Bank as the main financial muscle. There is no specific U.S. In the United States, for national banks and federal regulation that prohibits the existence of federally regulated banks, both banking law and Native American banks.If financing of such a communications law govern resale of project came into existence, why couldn't this telecommunications capacity. Under banking same corporation become a common carrier, by- regulations, a bank may operate a network only passing the Bank Holding Company Act and for financial data.Under communications law, approval of the Federal Reserve Bank? resale requires a "214 certificate" issued by the Feral Communications Commission (FCC) (under Another possibility for a Native Sovereign Bank section 214 of the 1934 Communications Act) would be to utilize The Edge Act of 1929. This that would subject the bank to common carrier act allows national banks to conduct foreign regulation.23 Banks can make some excess lending operations only through Federal or State capacityavailabletootherinstitutionsor charteredsubsidiaries. TheseEdgeAct customers for limited purposes but only if the corporations, unlike domestic banks, can own excess is "genuine, not manufactured excess." banks in foreign countries. Only very large banks They may not routinely resell capacity.24 tend to have Edge Act subsidiaries that can provide international services. This factor should In evaluating network capacity, and the resale of not be overstated, however. While a bank must telecommunications capacity one question arises. be fairly large to sustain overseas activities, it is After purchase of network capacity, what would not clear that greater size and diversity would stopa Native American telecommunication- guarantee successful international operations. financialinstitutionfromroutinelyreselling excess capacity? U.S. banks have also been hurt in recent years by the large trade deficit, the low savings rate, losses Banks have traditionally served as intermediaries on developing countries, debt on commercial real andescrowagentsbetweenlendersand estate, and a migration of retail deposits to non- borrowers by holding deposits and dispersing bank competition such as mutual funds.The loans, or linking buyers and sellers and handling Federal Deposit Insurance Corporation currencytransactionsforthem. Now tele- Improvement Act of 1991 (Public law 102-242) communications companies are moving into this may further inhibit international banking because market. Although U.S. banks are prohibited from it requires U.S. banks to increase capital reserves operating telecommunications systems except for and foreign banks to undergo more stringent financial services use, telecommunications supervision.25 companies are offering financialservices and becoming competitors to banks. This may be the case for a regulated and evolving U.S. banking system.But again there are no A global marketplace for financial services has specific federal laws that state a Native Sovereign developed.It was made possible by international Bank cannot use its network for both carrier and telecommunications networks and liberalization financial services.This bank would overcome or deregulation of banking and financial markets. overlapping and confused regulatory jurisdictions
267 295 resulting from competition between banks and telecommunications companies. Today,thenumber of Native owned and operated telecommunications companies is very Internationaltransmissionlinesaregenerally small -a few telephone and cable companies and provided by the joint investment of telephone radio stations.Native entrepreneurs wishing to companies or PPTs in two or more countries form telecommunication companies must using the facility, with switching remaining in overcomesignificantfinancial,technicaland national hands at either end of the transmission humanresourcebarriers. SomeNative line.26 communitiesmayfind thatneededtele- communications are accessible and affordable In some countries, electronic fund transfer (EFT), fromnon-nativecompanies. Many native creditcardauthorization,andswitchingfor communities may not have a market large enough automated teller machines (ATM) are considered to justify and sustain the formation of new telecommunications services, withvarying telecommunications providers. Contiguous or degrees of regulation.Banks often operate cash adjacent Native communities could,in some netting services for multinational corporations. cases, join forces to create a larger market. These services enable the corporations to make fund transfers and settlements among subsidiaries This larger market could be capitalized with around the world, from a personal computer that either federal trust funds, or more likely through ties into the banks' networks. Most such systems a network of Tribal Governments, Multinational accommodate some message transmission in the corporations, and institutions. One area this from of instructions or explanations. network could derive its economic power is through Native owned banks. There is a history If payment systems are viewed as of lack of financial institutions that are located on telecommunications networksratherthanas Native lands or that even serve Native interests. banking networks, any third party can provide A pool of Native funding and private investors switches to route money transfers from one could create a legitimate, fully functional Native location to another across national boundaries, Sovereign Bank. although ultimately, transfers must show up on the books of depository institutions.In the U.S. This bank would first have to be connected to a banks now have to compete with money market Native American network, serving the needs of funds for deposits and non-bank institutions may it's members.The next stage of maturity would process and switch monetary debits and credits. be to cateritsservices to the international Regulators are increasingly less able to monitor, markets. One which could conduct business on measure and perhaps, control money supply. U.S. soil.Thus, guaranteeing the security and stability of the currency and the political system. U.S. telecommunications and banking law have not been established for Native Americans.It is Since there are no test cases or even a conceptual ironic that the oldest people of North America model featuring a Native telecommunication / now look to the latest technology to preserve financial institution, the future of the Native their way of life. The rise of a new world American Global Telecommunications services economy driven by Information Technology has industry is unclear.However, after viewing this just recently given Native Americans options in report,I hope this paradigm will make the not only regional but also international trade. possibilities a little brighter.In order to have a North American tribes proved that the gaming soundenvironmentaleconomicdevelopment industrycould provide self sufficiency.Now strategy;issuesofcosteffectivenessand Natives look to the next economic phase of the feasibility should be addressed by a consortia of 21' Century. So what are the fundamental Native American economic development experts. questions we must ask ourselves to overcome an uncertain future?
2 9 6 268 BIBLIOGRAPHY
Dar lin, Damon; "Rebellions on the reservation: one of the last bastions of socialism- the Bureau of Indian Affairsis finally beginning to crumble " Forbes, May 19, 1997 v159 nI0 p88 (7).
Eubanks, Walter W., "Banking reform and international banking," Congressional Research Service, February 20, 1992.
Greene, Majorie; "Public policy and international telecommunications technology in financial markets- an overview," OTA contractor report, February 1992.
Melmer, David; "Analysis: Reform of federally mismanaged tribal trust funds unlikely" Indian Country
Melanie Warner, "Who needs the Cayman Islands?" Fortune, June 23, 1997 v135n12 p38.
Morton v. Mancari, 417 U.S. 535 (1974). See generally Sharon O'Brien, American Indian Tribal. Governments (Norman, OK: University of Oklahoma Press, 1989).
Office of Technical Assessment (OTA) report on Telecommunications Technology and Native Americans: opportunities and challenges 1995
Podgers, James; "Greetings from Hawaii," American Bar Association Journal, June 1997 p. 74-79
Pommersheim, Frank; "Tribal-State Relations: Hope for the Future," South Dakota Law Review, Vol.. 36, 1991, pp. 239,245.
Suagee, Dean B., "Selfdetermination for Indigenous Peoples at the Dawn of the Solar Age," University of Michigan Journal of Law, vol. 25, 1992, pp. 701-712.
A few were reported during the summer of 1992 in the course of investigations of the activities of BCCI. The Daily Telegraph, August 3, 1991, p 2.
297 269 END NOTES
1 Native Americans are defined in this report to include American Indians, Ajaska Natives (Indian,Aleut, and Eskimo), and Native Hawaiians who are descendants of indigenous peoples who lived in geographic areas now comprising the United States. 2James Podgers, "Greetings from Hawaii," American Bar Association Journal, June 1997 p. 74-79 3Ibid. 4OTA report on Telecommunications Technology and Native Americans: opportunities and challenges 1995 5Ibid. 6Morton v. Mancari, 417 U.S. 535 (1974). See generally Sharon O'Brien, American Indian Tribal Governments (Norman, OK: University of Oklahoma Press, 1989). 7Frank Pommersheim, "Tribal-State Relations: Hope for the Future," South Dakota Law Review, Vol.. 36, 1991, pp. 239,245. 8Ibid. 9See generally Dean B. Suagee, "Selfdetermination for Indigenous Peoples at the Dawn of the Solar Age," University of Michigan Journal of Law, vol. 25, 1992, pp. 701-712. 10Damon Darlin, "Rebellions on the reservation: one of the last bastions of socialism- the Bureau of Indian Affairsis finally beginning to crumble." Forbes, May 19, 1997 v159 n10 p88 (7). 11 Ibid. 12 Ibid. 13 Ibid. 14David Melmer, "Analysis: Reform of federally mismanaged tribal trust funds unlikely" Indian Country Today, March 10, 1997 p31. 15 Ibid. 16 Ibid. 17Melanie Warner, "Who needs the Cayman Islands?" Fortune, June 23, 1997 v135n12 p38. 18Ibid. 19 Ibid. 20Damon Darlin, "Rebellions on the reservation: one of the last baStions of socialism- the Bureau of Indian Affairsis finally beginning to crumble." Forbes, May 19, 1997 v159 n10 p88 (7). 21A few were reported during the summer of 1992 in the course of investigations of the activities of BCCI. The Daily Telegraph, August 3, 1991, p 2. 22Majorie Greene, "Public policy and international telecommunications technology in financial markets- an overview," OTA contractor report, February 1992. 23In December of 1991, the FCC proposed to permit resale between the U.S. and other countries with equivalent opportunities. 24In 1982 Citicorp applied to the FCC for permission to provide a common-carrier service focusing on banking, financial, economic data. The FCC refused on the ground that under the Bank Holding Company Act, the approval of the Feral Reserve Bank would be required for Citicorp to engage in common-carrier communications. (Citibank does not resell capacity, an says that it now has not interest in being a common carrier.) 25Walter W. Eubanks, "Banking reform and international banking," Congressional Research Service, February 20, 1992. 26The transoceanic cable systems have consortium ownership that traditionally reflected the degree of national use of the cable. Satellite transmission facilities are collectively owned and operated by the world's governments through Intelsat with shares proportional to nationally use of the system
2702 Global Personal Roaming beyond regional system boundaries Yoshihiko Itb, Masayoshi Ohashi, and Fumio Watanabe KDD R&D Laboratories 2-1-15 Ohara Kamifukuoka-shi, Saitama, 356-8502, Japan E-mail: {yosihiko, ohashi, watanabe} @lab.kdd.cojp
AbstractThis paper discusses global per- (International Telecommunication Union Telecommuni- sonal mobility support amongdifferent cation) and ITU-R (International Telecommunication cellularsystems.There arethreeregional Union Radiocommunication) [4]. The third generation standards for MAP (Mobile Application Part) system was initially expected to provide a global access for existing second-generation digital cellular capability with a unified single radio interface and an systems. These cellular systems lack interop- advanced backbone network.However,regionsare erabilityamongdifferentstandards.The evolving their mobile systems towards third generation proposedmethodwith roaminggateway based on their existing infrastructures. Therefore, it is absorbs the incompatibilities among cellular not likely that there will be one unified mobile system standards and resolvesthe problem of inter- even in the next generation, and global personal mobil- system operations.It willinterconnecthet- ity beyond system boundaries isstilla challenging erogeneous mobile networksandextend target. In order to overcome this limited mobility within subscribers'personalmobilityallover the one system, a novel interworking technology is neces- world. sary. In this paper both service concept and network archi- tecture are discussed which enable global roaming I. INTRODUCTION between such different mobile systems. Our approach for global personal roaming adopts the concept of smart card World mobile communication systems are now in for subscriber identity and roaming gateway for signal- the process of evolving from second generation to third ing conversion. This roaming gateway can provide a generation. In the second generation era, each region has global personal roaming service that enables a smart card its own standard system and regional radio interfaces are holder to use the same directory number during inter- not compatible with each other,i.e., GSM (Global system roaming in the different mobile telecommunica- System for Mobile communications), PDC (Personal tion networks. Roaming gateway will be located at Digital Cellular), and IS-95 (Interim Standard 95). Each intermediatepointsofmobiletelecommunication digital cellular system has a different standard for net- networks, where they will deal with the conversion of work protocol called MAP (Mobile Application Part) signaling protocol and user information. [1][2][3]. There exist three regional standards for MAP We also report a prototype of a roaming gateway for in North America, Europe and Japan. The method of a roaming service between GSM and PDC. This node mobility management and call control specified in each with interworking function can absorb inter-system standard is different and not transparent. differences and provide interoperability between GSM Cellular networks provide terminal mobility for mo- and PDC mobile networks. bile users within regions of the same standard. The standards divide service coverage into three domains and restrict their terminal mobility within the countries that II. OVERVIEW OF REGIONAL STANDARDS adopt the same cellular standard. However GSM remov- able smart card as subscriber identity module (SIM) and In this section we present an overview for regional GSM MAP provides user international SIM card roam- cellular standards from a viewpoint of personal roaming. ing over GSM networks. A. North American Cellular Standard The third generation mobile telecommunication sys- tem named 1MT-2000 (International Mobile Telecom- IS-41 (Interim Standard 41) is the mobile network munications 2000) previously known as FPLMTS standard forcellular and Personal Communications (Future Public Land Mobile Telecommunication Sys- Services (PCS) networks in North America. It supports tems)isunder development byboththe1TU -T cellular inter-system operations and automatic roaming
271 299 among analog cellular or AMPS (Advanced Mobile C. PDC Standard Phone Service), digital cellular and PCS systems. These PDC is the TDMA-based standard in Japan. The digital systems include IS-54 or IS-136 based TDMA Telecommunication Technology Committee (TTC) has (Time Division Multiple Access), and IS-95based standardized TTC MAP (PDC MAP) for PDC. PDC CDMA (Code Division Multiple Access). MAP is based on TTC SS7 used in domestic telecom- Signaling specified in the IS-41 standard is based on munication networks in Japan. Fig.3depicts the the American National Standard Institute (ANSI) Signal- network configuration and interface reference points in ing System number 7 (SS7), and X.25 protocol is the PDC standard. VLR is not used in PDC networks. specified as an alternative for SS7. Fig.1 depicts an Instead of VLR, Gateway Location Register (GLR) is example of the configuration model of the IS-41 public specified for inter-PLMN roaming users. land mobile network (PLMN) except Message Center The number and ID will be stored in the PDC mo- and Short Message Entity.It also shows interface bile station (MS). The Association of Radio Industries reference points of B, C, D, E, F, and H. The Home and Businesses (ARIB), formerlytheResearch and Location Register (HLR) is a data-base of subscriber Development Center for Radio Systems (RCR) standard- information. The Visitor Location Register (VLR) is a ized the technical specification of the interface between data-baseof roamingsubscriberinformation.The Subscriber Information Module (SIM) and mobile Authentication Center (AC) is used to verify a mobile equipment (ME). It was incorporated in the revision F of station's identity. Equipment Identity Register (MR) is a RCR STD-27 in February 1997. data-base for the mobile equipment related data but F interface is not standardized in the revision C of IS-41. Majority of IS-41 networks use Signaling System No.7 to transfer the data and information of PLMN applica- tions. SS7 network consists of signaling points (SPs) Public and communication links. Land Mobile GMSC MSC MSC Netwo 7c 7c
Public ITU-T Land MSC SS No.7 Mobile Netwo Network
Fig. 2. Configuration of GSM PLMN. ANSI SS No.7 Netwo
Public Land Mobile GMSC MSC MSC Fig. 1. Configuration of IS-41 PLMN. Network
B. GSM Standard GSM is the TDMA-based digital cellular standard in Europe. A GSM MAP based network supports its key-n-c SS No.7 feature of international roaming. GSM supports SIM Network card roaming for GSM variants operating different radio frequencies. GSM MAP is based on ITU-T SS7 protocol used in many countries and theinternational SS7 network. Fig. 2 depicts the basic configuration of the GSM network except Interworking MSC (IWMSC). Fig. 3. Configuration of PDC PLMN.
272 III. COMPARISON OF SYSTEMS Subscriber Number) and MSI (Mobile Station Identifier) in nationwide PDC networks Table II summarizes the differences among specifica- A. Comparison of Identification and Net- works tions concerning roaming number and inter-system signaling. The mobile station roaming number defined Table I compares the parameters of the identification in E.213 is a number allocated to a roamed MS to numbers among three cellular standards. A user of an IS- reroute calls to that station[18]. It would have a country 41 cellular is identified by a unique Mobile Identification code. PDC MAP specifies that RON (ROaming Num- Number (MIN). It is a 34-bit number that represents a ber) is a number used within PDC PLMNs. Therefore, 10-digit directory telephone number assigned to MS. RON is unsuitable for direct routing of a call to the The directory number of the North American Numbering roaming MS [3]. Plan (NAMP) is stored in the mobile terminal. As for a The definition and allocation timing of roaming CDMA-based cellular, IS-95 revision A specifies that number assignment will impede interoperability of call MS operating in the analog mode use MIN and operat- routing with user foaming in different networks that do ing in the CDMA mode use International Mobile not conform to the standard of a user's home network. Station Identity (IMSI)[21]. TABLE III TABLE I Comparison of security arameters. Comparison of identification parameters. ID IS-41 GSM PDC Number or ID IS-41 GSM PDC secret key 64-bit A-key 128-bit a pair of user ID MIN IMSI MSN Ki 64-bit (IMSI) keys terminal ID - MSI authenticati64-bit SSD-A128-bit a pair of serial number ESN IMEI MS Serial on key Ki 64-bit No. keys telephone MDN MSISDN MSN random 32-bit RAND 128-bit 64-bit number number for RAND number numbering for NAMP international national authenticati MS on personalization user SIM stored in signed 18-bit 32-bit 64-bit entry MS (SIM response AUTHR SRES number option) for authen- tication ciphering 64-bit SSD-B 64-bit Kc64-bit key TABLE II key (VPMASK, Comparison of inter - system signaling. SMEKEY) ID IS-41 GSM PDC roaming TLDN MSRN RON B. Comparison of Security Aspects number The definition of the secret key, random number, numbering NAMP international national for roaming signed response and ciphering key differs in configura- number tions and generation algorithms among the three sys- tems (Table HI). For IS-41, a calculation program for a allocation of per call per call basis location security algorithm named Cellular Authentication and roaming basis update Voice Encryption (CAVE) is implemented in the MS. It number basis provides securityfunctionsof MS authentication, signaling ANSI SS7 ITU-T SS7 TTC Signaling Message Encryption, and Voice Privacy. The or X.25 SS7 MS executes CAVE and generates Shared Secret Data (SSD-A and SSD-B) derived from a primary key called GSM user is identified by GSM IMSI (International A-key (Authentication key) stored in the MS. Mobile Subscriber Identity) in accordance with E.212 In GSM, in order to support the security features of IMSI (International Mobile Station Identity). PDC user authentication and ciphering, SIM provides the algo- and terminal are identified by the pair MSN (Mobile rithms A3 (authentication algorithm) and A8 (cipher key
273 301 generator) [15]. These algorithms produce the security A. Smart Card for Global Roaming vectors of signed response (SRES) for authentication and A mobile station must consist of a removable SIM ciphering key (Kc) from the two input parameters of and a mobile equipment (ME). The basic characteristics random number (RAND) and Ki[16]. The differences of the interface between SIM and ME must be compati- among security features of cellular systems cause severe ble. problem for personal roaming. Fig.5showstheconfigurationof amulti- application card for global personal roaming. Itis a C. Comparison of Subscriber Identity Mod- triple-mode ID-1 card and contains applications support- ule ing IS-41, GSM and PDC cellular standards. This multi- application card can contain plural independent cellular In GSM, a subscriber's identity is stored in the Sub- numbers assigned to a user. scriber Identity Module (SIM). Security applications It is desirable that this triple-mode card should con- including related data and algorithms for authentication tain three international mobile station identifications in and ciphering are supported by SIM. Two physical types accordance with ITU -T recommendation E.212.If a of SIM (smart card) are specified in GSM and PDC subscriber can be assigned the same number as an E.212 Standard[9][10]. These are the "ID-1 SIM" (credit card IMSI, the number identifies the subscriber and home sized SIM) and the "Plug-in SIM." Physical characteris- network all over the cellular markets. As an alternative tics, electronic signals and transmission protocols of method a number as an IMSI to identify the HLR in the both SIMs will be in accordance with the International roaming gateway uniquely may be assigned. If IMSI or (ISO)standards OrganizationforStandardization MSI is independently assigned in accordance with current [11][12][13]. regional standards, a user will be identified by two or To extend the capability of GSM SIM and PDC three IDs. This case does not impact the existing cellular SIM, these applications can be incorporated in a multi- infrastructures, but all identification numbers must be application card. Mobile telecommunication services prepared in the SIM personalization process. Thus, we may be one of the applications of the smart card. An recommend that one unique ID number assignment will application consists of a set of security mechanisms, be the best solution in the future. files, data and protocols. Mobile equipment is specified to be able to accept ID-1 cards in GSM. On the other hand ID-1 card support is an optional feature in PDC mobile equipment. Fig. 4 illustrates a simple logical directory structure IMF I IS-41 cellular and PCS application of the Master File (MF), Dedicated File (DF) and Elementary File (EF) on the GSM and PDC SIMs. IMSI Dedicated files of DFos, and DFF.Dc contain the applica- CAVE authentication program A-key tion for GSM and. PDC [9][10]. All these files can GSM application coexist under a MF on a multi-application card. IMSI GSM authentication program Ki Kc MF 1 EF PDC application MSN DFppc MSI PDC authentication program secret keys EFMSN EFMSI EFIMSI EFKc EFMSISDN IDFADM Common telecom application
Commonservice features Fig. 4. Directory Structures of GSM and PDC SIMs.
IV. PERSONAL ID FOR GLOBAL ROAMING Fig. 5.Multi-application smart card for three cellular We assume smart card roaming for global personal systems. mobility over different systems.
302 274 B. Addressing Support exchange signaling information related to the lo- cation of the subscriber and to the management of In GSM, VLR must derive the HLR address from the the subscriber [14]. D interfaces for inter-systems IMSI from a mobile station in its location updating between HLR and VLR will transform MAP procedure [2]. The result of a global title translation on messages and its parameters. the Signaling Connection Control Part (SCCP) will be Mapping of number and identificationroaming a format of an SPC or an E.214 Mobile Global Title gateway will support the function of mapping the user's (MGT) [19]. An MGT number can be also translated mobile telephone number and IDs inthe systems into an SPC as well as an E.164 number. Both E.164 because user ID definitions in the standards are different. number and SPC (Signaling Point Code) are used as a Home Location Registers in the roaming gateway will SCCP addressing for destination in the existing SS7 store the relations of user's number and IDs in its data- networks. base. For the purpose of a subscriber's single personal In IS-41, revision C describes MIN-based inter- identification, the set of IS-41 MIN, GSM IMSI and system operations but has not yet included IMSI-based PDC MSN for a subscriber should be bound logically in operation, although IS-95 has adopted IMSI as an the data-bases of roaming gateway. identity number in the digital mode. Mobile telecommunication systems will introduce the features of IMSI introduce into their standards as IS-41 PLMN GSM does. The requirements of IMSI may modify the SC standardsassociatedwithinter-networkoperation (MAP), Um interface between base station and mobile station, and A-interface between MSC (Mobile Switch- SS No.7 ing Center) and base station. In order to provide global Network personal mobility for the user with an IMSI number, support of transparency and translation of an E.212 number will be necessary throughout digital cellular networks. Roaming Gateway
V. INTERWORKING FUNCTION AMONG HET- EROGENEOUS NETWORKS MSC We describe in this section, interworking functional- ity for global personal mobility support and service portability. A. Personal Mobility Support Mobility support between cellular systems has been discussed [5][6][7][8]. Fig. 6 depicts the arrangement and configuration of a roaming gateway thatprovides interoperability and inter-system roaming service among D IS-41, GSM and PDC cellular systems. This roaming gateway consists of location registers and an optional MSC. Principal functions for personal mobility and call establishment in the node are as follows: 1) Multiple signaling interfaces for plural MAP MSC standardsroaming gateway should be equipped HLR: with interfaces of three standards of SS7. It may have an X.25 interface instead of ANSI SS7 for GSM PLMN PDC PLMN IS-41. 2) Location registers and D interfacesThree HLRs in the roaming gateway permanently store sub- Fig. 6. Roaming gateway among three regional cellular scriber information for global personal roaming standard systems. services. The interface between HLR and VLR is defined as a D interface. This interface is used to
275 1) Routing number managementThe Roaming VI. PROTOTYPE DESIGN AND EVALUATION gateway supports the functions of routing num- ber allocation and routing information retrieval at In this section, we present the system configuration the interrogation of routing information because and technical features of the roaming gateway for in- routing number or roaming number definitions in teroperability between GSM and PDC. This roaming the standards are different. When an incoming call gateway is designed to provide a GSM and PDC roam- to an inter-system roaming user occurs, roaming ing service. We study the case of interoperability and gateway provides an inter-system routing number inter-system. In this case, roaming gateway consists of a between home and visited PLMNs. Some sys- simple subset of functional entities for global personal tems do not support international routing. In this roaming. The device for the user's personal identification case the function of translating routing numbers is a dual-mode application smart card for GSM and is required for roaming gateway. PDC. 2) Authentication centerThe roaming gateway We designed the configuration of a roaming gateway stores and generates the data related to authentica- prototype and network service logic for inter-system tion and ciphering in the functional entity of an operations in detail [20]. This includes authentication, authentication center. It manages GSM Ki, IS-41 locationregistration,locationcancellation,routing A-key, and PDC secret keys. Also, it has the information retrieval for roaming incoming calls, etc. authentication and ciphering programs of GSM A fault-tolerant computer is used as a platform to A3/A8, IS-41 CAVE, and PDC algorithms. develop and execute the prototype software. We have 3) Interconnection of circuitsThe Mobile Services evaluated the designed protocols and service logic on the Switching Center (MSC) in the roaming gateway prototype in test environments connected to network does not constitute the interface for the radio sys- simulators. We have made experiments on the prototype tem, buttheinterfacesfortransit exchange and examined service operation combined interworking among PLMN, ISDN, and the public switched with GSM and PDC network simulators. telephone network (PSTN). A switching system The feasibility of interworking technology has been will be necessary optionally, and it will provide confirmed through the evaluation of the roaming gate- call routing to the roamer if SS7 ISDN User Part way prototype. or Telephone User Part messages or parameters need modification. For example, it will need a 1-GSM Network p-Roaming Gateway DC Network switching center if a called party number parame- ter of an Initial Address Message (IAM) is not
appropriate to reroute a call over international MSC MSC MSC public switched telephone networks. -7c B. Service Portability D D Mobile service definitions are different and incom- SP / /ITIT -rrc c) patible among cellular standards. When the roaming SS No.7 SS No.7 Network Network gateway receivesinformationabout asubscriber's service from an HLR in a home network, it will trans- late and transfer it to the VLR (GLR in PDC) in the Fig. 7. Roaming gateway between GSM and PDC. visited PLMN. The roaming gateway provides inter- system operations to transfer the subscriber's service VII. CONCLUSION information via D interfaces from the home network to roaming gateway, and from roaming gateway to visited This paper provides the concept of global personal network. If the roaming gateway is expected to invoke a roaming, and proposes the combination roaming gate- service, it will execute an appropriate kind of service way and smart card roaming. We designed roaming logic as a substitute for HLR or VLR. gateway to collaborate with second generation mobile Examples of features of service portability over inter- telecommunication systems, and confirmed the feasibil- system networks are as follows: ity of inter-system mobility support and service port- Sharing of provision status of services ability through this development of the roaming gate- Sharing of registration status of services way. Sharing of registration information for supplemen- The approach using roaming gateway is available for tary services realization of a global personal roaming service among Automatic call barring
"J04 second generation systems. The roaming gateway adopts IMT-2000 International Mobile Telecommunica- network interfaces of regional standards in order not to tions-2000 impact the network standards and infrastructures of many IS Interim Standard existing cellular systems. Even third generation systems ISDN Integrated Services Digital Network will need thisinter-system roaming operation. The ISUP ISDN User Part (SS No.7) roaming gateway technology will be able to link hetero- ISO International Organization for Standardi- geneous mobile networks, and to make them into a zation logical single plane network. ITU International Telecommunication Union Third generation system will be an evolution of sec- IWMSC InterWorking MSC ondgenerationnetworks,and maintainbackward- Kc Ciphering key compatibility considering the growing second generation Ki Individual subscriber authentication key markets. If the three current regional standards divide MAP Mobile Application Part third generation standard systems, it will cause differ- MDN Mobile Directory Number ences among third generation systems and the feature of MIN Mobile Identification Number inter-system operability would be mandatory. ME Mobile Equipment The proposed interworking technique will also be MF Master File applicable to the global personal roaming service over MS Mobile Station third generation mobile networks as long as the next MSC Mobile Switching Center network architecture and protocol are based on the MSI Mobile Station Identifier current ones. MSISDN Mobile Station International ISDN Number MSKY Mobile Station authentication KeY ACKNOWLEDGMENT MSN Mobile Subscriber Number MSRN Mobile Station Roaming Number We would like to express gratitude to Dr. H. Mu- NAMP North American Numbering Plan rakami of KDD R&D Labs for his encouragement in PCS Personal Communications Services this work. PDC Personal Digital Cellular PLMN Public Land Mobile Network ABBREVIATIONS PSTN Public Switched Telephone Network RAND RANDom number (used for authentica- A3 Authentication algorithm A3 tion) A8 Ciphering key generating algorithm A8 RAND RandomVariable AC Authentication Center RANDU RandomVariableUniqueChallenge (24- ANSI American National Standards Institute bit RANDU) AuC Authentication Center RON ROaming Number AUTHR Authentication Response SCCP Signaling Connection Control Part CAVE Cellular Authentication and Voice SBKY mobile SuBscriber authentication KeY Encryption SIM Subscriber Identity Module CDMA Code Division Multiple Access SMEKEY SignalingMessageEncryptionKey DF Dedicated File SP Signaling Point EIR Equipment Identity Register S PC Signaling Point Code ESN Electronic Serial Number SRES Signed RESponse (authentication) FPLMTS Future Public Land Mobile Telecom- SS7 Signaling System No. 7 munication Systems SSD SharedSecretData GLR Gateway Location Register TDMA Time Division Multiple Access GMSC Gateway Mobile-services Switching TLDN Temporary Local Directory Number Center TTC Telecommunication Technology Com- GSM Global System for Mobile communica- mittee tions VPMASKVoicePrivacyMask IAM Initial Address Message IMEI International Mobile station Equipment Identity IMSI International Mobile Subscriber Identity IMSI International Mobile Station Identity
277 305 circuit(s) cards with contactsPart 3: Elec- REFERENCES tronic signals and transmissionprotocols," ISO/IEC 7816-3, Sept. 1989. TIA/EIA, "Cellular Radiotelecommunications [14] CCITT, "General aspects of PublicLand [1] Mobile Networks," CCITT Recommendation Intersystem Operations: Automatic Roaming Q.1001, Nov. 1988. Information Flows," TIA/EIA IS-41.3 Rev. C, [15] European Feb. 1996. Telecommunications Standards Institute, "European digital cellular telecom- [2] European Telecommunications Standards municationssystem(Phase2); Institute, "Digital cellular telecommunications Subscriber system (Phase 2+); Mobile Application Part Identity Module (SIM) Functional characteris- (MAP) specification," ETSI GSM 09.02, tics," ETSI GSM 02.17, Sept. 1994. [16] European Telecommunications Aug. 1996. Standards Institute, "European digital cellular telecom- [3] Telecommunication Technology Committee, "Mobile Application Part (MAP) Signalling munications system (Phase2); Security related System of Digital Mobile Communications network functions," ETSI GSM 03.20, Sept. 1994. Network Inter-nodeInterface(DMNI)for PDC," TTC Standard JJ-70.10 Ver. 1, Nov. [17] CCITT, "Identification plan for land mobile stations," CCITT Recommendation E.212, 1993. 1988. [4] ITU-R, "Future Public Land Mobile Tele- communication Systems (FPLMTS)," Rec- [18] CCITT, "Telephone and ISDN numbering plan for land mobile stations in public land mobile ommendation ITU-R M.687-21990 -1992- networks (PLMN)," CCITT Recommendation 1997, 1997. E.213, 1988. [5] Y. Nodera et al., "Interworking between GSM and PDC through IC Cards," Proc. ICC'95, [19] CCITT, "Structure of the land mobile global titlefor signalling connection control part Seattle, pp.761-765, June 1995. (SCCP)," CCITT Recommendation E.214, [6] A. Yamaguchi et al., "Interoperability of PDC 1988. with GSM," Proc. ICUPC'95,Tokyo, [20]A. Yamaguchi et. al., "Inter-system mobility pp.452-456, Nov. 1995. and service management in GSM/PDC roam- [7] J. Lanto, "Towards a global cellular service," Proc. ICUPC '95, Tokyo, pp.457-461, Nov. ing," Proc. IEEE GLOBECOM '97, pp. 694- 698, Nov. 1997. 1995. [21]TIA/EIA,"Mobile Station-BaseStation [8] Y. Uchiyama et al., "Network Functions and Compatibility Standard for Dual-Mode Wide- Signallingfor Personal Roaming between band Spread SpectrumCellularSystem," Digital Cellular Standards," Proc. ICUPC '95, TIA/EIA IS-95 Rev. A, May 1995. Tokyo, pp.447-451, Nov. 1995 [9] Association of Radio Industries and Businesses (ARIB), "Personal Digital Cellular Telecom- munication System," ARIB Standard RCR STD-27 Rev. F, Feb. 1997. [10] European Telecommunications Standards Institute, "European digital cellular telecom- munications system (Phase2); Specification of the Subscriber Identity Module-Mobile Equipment (SIM-ME) interface," ETSI GSM 11.11, Nov. 1994. [11] ISO, "Identification cardsIntegrated circuit(s) cards with contactsPart 1: Physical charac- teristics," ISO 7816-1, July 1987. [12] ISO, "Identification cardsIntegrated circuit(s) cards with contactsPart2: Dimensions and location of the contacts," ISO 7816-2, May 1988. [13]ISO/IEC, "Identification cardsIntegrated
278 306 Seamless Roaming between IS41-based CDMA Cellular Network and GSM-based Iridium Network
Jungkeum Shin and Jae W. Byun SK Telecom, Digital Cellular Business Division 267-5, Green Building. 9th Floor Namdaemoonno, Chung-gu, Seoul, Korea
1. ABSTRACT
The emerging GMPCS (Global Mobile Personal Communications by Satellite) service is widely believed to be a cost-effective way of providing global mobile communication service due to its global service coverage and internationally standardized subscriber identity and air interface. GMPCS, however, has two inherent drawbacks: limited satellite link capacity and "no service" spots such as in-building and underground areas. Therefore, GMPCS carriers are seriously considering the implementation of roaming with terrestrial cellular networks to secure competitive service quality and to increase financial opportunity to participate in a much larger cellular market. In this paper, we review technical issues related to roaming between mobile satellite and terrestrial cellular networks and then propose the implementation of roaming between IS41 cellular network and Iridium GMPCS network. Since Iridium protocol fully complies with GSM standard, the proposed roaming scheme can be applied to an international roaming between 1S41 and GSM cellular networks.
2. INTRODUCTION these two heterogeneous networks has many issues to be resolved. The arrival of global mobile telecommunication era This paper is organized as follows. In section 3, we is expected to be much accelerated by the launch of first address major technical issues related to satellite mobile communication service such as roaming between Iridium and 1S41 networks, which Iridium, Globalstar, Odissay, and TeleDesic. In includes subscriber identification, protocol these emerging new mobile communication services conversion, call delivery, and authentication. We which are usually referred to as GMPCS, tens of then introduce and describe the functionality of satellites circulate in the earth orbit and serve as Interworking Node. In section 4, network base stations. Therefore, cost-effective global configuration, roaming scenario, and call procedures mobile communications service becomes possible is proposed as well. Finally the conclusion is given not just in overseas countries but also in remote in section 5. areas such as the Mount Everest, Amazon jungle, African safari, and Pacific Ocean. GMPCS network, 3. MAJOR ISSUES RELATED TO ROAMING however, has its own drawbacks inherent in its SERVICE satellite communication technology: (1) limited communication capacity between satellite and A heterogeneous roaming is defined as a roaming mobile handset and (2) service unavailability at between networks that have different network underground and in-building areas where satellite protocols and in many cases non-compatible air signal is hard to penetrate. In order to solve these interfaces as well. In this section, we address issues problems, GMPCS carriers are seriously considering in heterogeneous roaming: uniqueness of subscriber the roaming service with terrestrial cellular networks, identity, protocol and signaling conversion, especially with GSM and IS41 networks because reciprocal authentication, and support of multiple air they are the two major standards in the present interfaces by handset. Based on the solutions cellular markets. discussed in this section, we will propose an In this paper, we propose an implementation of a implementation of roaming service between Iridium roaming service between Iridium network and and 1S41 networks in the following section. IS41/1S95 based cellular network. We do not discuss Iridium-GSM roaming because both 3.1 UNIQUENESS OF SUBSCRIBER IDENTITY networks are based on identical GSM technology and thus the roaming is quite straightforward. IS-41 Various network entities require a means of uniquely standard is, on the contrary, different from GSM identifying each subscriber. Therefore, the first standard in many aspects that a roaming between necessary condition for a roaming is to guarantee
279 307 the uniqueness of a roamer's identity at all visiting Mobility management, call delivery, and other networks. The representation of subscriber identity activities in mobile network are accomplished by is usually different from one network to another. exchanging a sequence of messages between Figure 1 illustrates two types of subscriber identity network entities over signaling channels[1][2]. formats, IMSI (International Mobile Subscriber When a large number of networks are Identity) and MIN (Mobile Identity Number), that are interconnected for global roaming, it is cost-effective defined in GSM and IS41 standards, respectively. to lease well established existing signaling network MIN was designed without taking consideration into from the signaling hub network operators such as roaming with other networks and thus has two UWCN (Universal Wireless Communication problems. The first one is that it has no MCC Network) or GTE rather than constructing a private (Mobile Country Code) field. Therefore, global signaling network of its own. For a correct routing of uniqueness of subscriber identity is not always these messages between network entities of both guaranteed. For example, a subscriber in Asia may home and visiting networks, the MGT(Mobile Global have the same identity as another subscriber in Title) can be used. The MGT is retrieved from the North America. The another problem is that its subscriber's IMSI[3]. length is limited to 10-digits. Therefore, there is no Similar to the subscriber identifier described in simple way to represent GSM roamer's 15-digit IMSI subsection 2.1, MAP(Mobile Application Part) in 10-digit MIN format. protocols are greatly different from one network to The obvious solution to this problem is to introduce another. Therefore, the message from one network the IMSI structure into IS41 network. However, should be appropriately converted before being considering the amount of work required to modify forwarded to the other network. The usual way to IS41 network entities, interim approach of assigning perform message conversion is to use an IMSI (or MIN) to each IS41 (or GSM) roamer Interworking Node between home and visiting whenever 1541 (or GSM) subscriber roams in GSM networks as shown in Figure 2. (or IS41) network would be a more feasible solution for the time being. The subscriber's own IMSI (or 3.3 CALL DELIVERY MIN) then identifies his or her GSM (or IS41) identity at home network and MIN (or IMSI) does at the An incoming call is terminated as the following steps. visiting network. The interim solution, however, has First, the network locates and acquires "routing some disadvantages: (1) two subscriber identities number" from the serving MSCNLR with a help from for a single subscriber results in an inefficient usage HLR. It then establishes call path from originating of number, (2) assignment of IMSI and MIN pair MSC to the serving MSCNLR. The structure of should be coordinated to guarantee its uniqueness, routing number is also different from one network to (3) subscriber identity should be translated from another. Routing number used in GSM network is IMSI to MIN and vice versa at the Interworking Node. MSRN(Mobile Station Roaming Number) which is a part of E164. And the most commonly used routing MCC MNC MSIN number in IS41 network is the Temporary Local Directory Number (TLDN). Both the MSRN defined 4-3 digits2 digits. 15 digits or less in GSM and TLDN defined in IS41 Rev. C support MCC : Mobile Country Code the call delivery between overseas networks over MNC : Mobile Network Code PSTN but IS41 Rev. A and Rev. B, however, do not. MSIN : Mobile Subscriber Identity Number Therefore, roaming between GSM and IS41 (a) IMSI(Intemational Mobile Subscriber Identity) networks with Rev A. or Rev. B requires a conversion between 15-digit MSRN and 10-digit NPA NXX XXXX TLDN by the Interworking Node. Upon receiving 4-3 digits -3 digits.4 digits translated TLDN from the Interworking Node, IS41 MSC "retrieves" international routing number and NPA : Numbering Plan Area NXX : Mobile Exchange code then terminates the call over PSTN. For that, TLDN XXXX :telecommunication number within mobile exchange prefix assignment should be coordinated between (b) MIN(Mobile Identity Number) service operators.
Figure 1. Subscriber Identifier Structure 3.4 AUTHENTIFICATION
3.2 MAP PROTOCOL CONVERSION AND Authentication provides a secure means of SIGNALING NETWORK preventing illegal access to the mobile network. As
280 3 fraud becomes prevalent and causes a severe [Table 1]The Comparison of Authentication damage to the cellular operator's revenue, the authentication increases its importance in the IS-41 GSM cellular market. The authentication is generally A-Key : 64 bits Ki : depends on parameter SSD : 64 bits service provider performed in two steps. First both mobile station and size RAND : 32 bits RAND : 128 bits Authentication Center (AC) execute an "identical" AUTHR : 18 bits SRES : 32 bits authentication algorithm using "identical" input parameters: (1) the secret authentication key which computation AC or VLR AC is unique to each subscriber and (2) the non- system computation Same as Different from predictable random number. Second, the result time point authentication authentication process computed by the AC is compared with the result process time point time point sent by the mobile station. If these two values are initiating MS VLR the same, the subscriber is granted to access the part network[4]. comparison AC or VLR VLR system As summarized in Table 2.1, the authentication in computation AKey RAND GSM and IS41 CDMA networks are basically the process same but are quite different in procedures, MrKi RAND messages, and input parameters. Making use of Unique Challenge Procedure defined in IS-95 SSDA RAND IrdWr standard and implementing additional MAP SRES message within IS41 network, we can resolve differences in the procedures and messages[5]. The AUTHR difference in parameter sizes, however, requires a modification of IS-95 air interface specification, which implies the recall of existing customer's 4. ROAMING SCENARIO handset. Therefore, a feasible way of authenticating roamer would be to assign two authentication keys In this section, we describe the network to each roamer: a "home authentication key"anda configuration and call procedures for reciprocal "roaming authentication key." If a subscriber is roaming between IS-41 and Iridium networks. This roaming in other network, the Interworking Node scenario assumes that the IS-41 network can authenticates the roamer using the roaming process IMSI. If the IMSI can not be supported, The authentication key. Otherwise, home AC method using two-identifier described in the authenticates subscriber using home authentication previous section, can be applied without any change key. to this scenario. 3.5 MOBILE STATION 4.1 NETWORK CONFIGURATION All kinds of communication service in mobile The overall network configuration for roaming is networks require a data exchange between mobile illustrated in Figure 2. The Interworking Node handset and base station. Therefore, a roamer's performs all kinds of interworking functions handset should support air interfaces of both home mentioned in the previous section and a call is and visiting networks. In case of roaming between terminated via PSTN by making use of the routing geographically "overlapped" networks as in the case number acquired from serving VLR through the of Iridium and CDMA networks, the unique solution Interworking Node. The advantage of PSTN as a for roaming is to carry a dual mode/dual band means of call delivery in comparison with private handset because the handset automatically decides interconnection lies in PSTN's ubiquitousness. its operation mode based on the received air signals. If the detected Iridium signal is strong enough, the 4.2 INTERWORKING NODE handset operates in Iridium mode. Otherwise it operates in CDMA mode. When both signals are This section classifies and describes the functions strong, the handset's operation usually depends on performed by the Interworking Node. For the pre-programmed service mode priority. If the SIM simplicity of presentation, we denote an IS41 card is available, SIM (Subscriber Identity Module) subscriber who is roaming in the Iridium network as card based "plastic roaming" becomes an efficient outbound roamer and an Iridium subscriber roaming alternative to carrying a dual mode handset[6]. in the IS41 network as inbound roamer.
281 309 roamers are illustrated in Figure 3 and 5, respectively.
D. Routing Number Translation for IS-41 Rev. A or B Networks Unless IS41 network applies Rev. C or higher revision of1541, the Interworking Node is required to convert routing number between 10-digit TLDN and 15-digit MSRN as mentioned in section 2.3. Since there is no international standard regarding the
W. link conversion between MSRN and TLDN, the No.7 link conversion mechanism depends on an agreement between IS-41 and Iridium service providers. Figure 2. Network Configuration for roaming service A.Protocol Conversion 4.3 CALL PROCEDURE MAP messages that are exchanged between home In the previous section, we described the network and the visiting networks should be converted at the configuration and the role of the Interworking Node. Interworking Node as mentioned in the previous In this section, we present the registration and section 3.2. The conversion of termination procedures for outbound and inbound "MAP_UPDATE_LOCATION" message to roaming. "Registration Notification" shown in Figure 3 is an example of MAP translation performed by the 4.3.1OUTBOUND ROAMING FROM IS41 TO Interworking Node. IRIDIUM NETWORK
B.Virtual HLR and VLR functionality International roaming through Iridium network is an When an IS41 subscriber roams in an overseas example of outbound roaming. As roamer leaves his Iridium network, his dual-mode handset home network and travels overseas countries, communicates with Iridium satellite and initiates a Iridium satellites circulating in the earth orbit begin to registration procedure as shown in Figure 3. Once keep track of the roamer's whereabouts by sending his home HLR is informed of subscriber's roaming in "location update messages" to the Interworking Iridium network, the Interworking Node begins to Node as shown in Figure 3. Once the Interworking operate as a VLR from point of view of IS41 network Node informs IS41 HLR of the subscriber's roaming entities and as an HLR from point of view of Iridium in Iridium network, all subsequent location update network until the roamer returns back to his home messages from Iridium VLRs are not forwarded to IS41 network. Consequently, the Interworking Node home HLR due to the nature of virtual HLR is required to acknowledge all "location update functionality of the Interworking Node. When roamer request" from Iridium VLRs and to validate all calls returns back to IS41 network, serving VLR is originated by the roamer. As a serving VLR in the changed from the Interworking Node to a newly light of IS41 network, the Interworking Node is created VLR. As a virtual AC for roamer, the responsible for providing the routing number at the Interworking Node performs "authentication process" request from IS41 network so that calls are upon request by IRIDIUM network as shown in terminated on the roamer. For an inbound roamer Figure 3. Therefore, there is no need to transmit the visiting IS41 network, the Interworking Node authentication message to the home AC. similarly operates as a virtual VLR in the light of All calls destined to the roamer are first routed to Iridium network and as a HLR in the light of IS41 IS41 home network. They are then rerouted over network. PSTN from "Home Gateway" to a serving Iridium Gateway. This call delivery makes use of the routing C.Virtual Authentication Center functionality number acquired from the serving Gateway through for roamer the Interworking Node. Figure 4 illustrates this As mentioned in section 2.4, the Interworking Node termination procedure and the MSRN-to-TLDN authenticates the roamer while he is roaming in conversion at the Interworking Node. When a visiting networks by making use of roaming roamer places a call, the Iridium Gateway authorizes authentication keys and other relevant parameters the roamer and then setup the requested call. obtained from the subscriber's home network. Authentication procedures for outbound and inbound
282 31 0 Visiting IRIDIUM Side, I. HOT!? IS-41 Side - light of IS41 network and VLR in the light of Iridium
MS GatewayNLR network. The authentication of the roamer, however, may be slightly different from that of the outbound LOCATION UPDATE -._._._. roamer because there are two types of lion Process MAP_SEND_AUTHENTI Authentic CATION_INFO authentication in IS-95 based CDMA network: "non
MAP_SEND_AUTHENTI sharing" and "sharing." If IS41 operator prefers to CATIONINFO_Ack use its own authentication algorithm rather than Security Iridium's CAVE algorithm, non-sharing type of Di RAND RAND authentication should be used. Otherwise, either SAES type of authentication can be used. Figure 6 shows AF_LTP5AYEt:66Aiiii that call termination procedure of inbound roaming is gistration Notificatio similar to that of outbound roaming. If the IS-41 isttation Notification R p MAP INSERT SUBSCRIBER_ network uses Rev. A or B, 10-digit TLDN from MAP_IN ERT_SUBSCRIBER_DA A_Ack serving VLR should be converted into 15-digit
M _UPDATE_LOCATION ck MSRN and then transmitted to originating MSC in Location_Update_Ack Iridium network.
IN : Interworking Node Visiting /S -41 Side HOMO IRIDIUM Side
MS BSS/MSCNLR IN Gateway/HLR Figure 3. Registration procedure of the IS-41 subscriber roaming in Iridium network Authendca Ion Procedure With Registration SSD-A RAND RAND
thTT'in Home IS-4I Side H Visiting IRIDIUM Side. Registration Request RUINS (RAND, AUTHR, Count] Authentication Request SSD -A RAND Gateway MSC HLR IN Gateway
AUTHR Call Setug AiVntication Request Ack Location Request Routing Request Registration Notification MAP PROVIDE ROAMING NU =ER UPDATE LOCATIO MAP NSERT_SUBSCFUBER_D TA MAP>R OVIDE_ROAMING_NU BER_Ack 4- (MSRN] MAP IN ERT_SUBSCRIBER_DA _Ask Routing NrimPirl Translation UPDATE LOCATION A Registration Notification Ack Routing Request Resp 4Registration Request Ack 4 Location Request Resp (TLDN] (TLDN] MSRN Retneyal! Figure 5. Registration procedure of the Iridium subscriber roaming in IS-41 network Call Setup Through PSTN
Home IRIDIUM Side .. Visiting IS-41 Side
Gateway/MSC BSS/MSCNLR IN VLR/MSC : Processed only if IS41A or B Call Set MAP ND ROUTING INFORMATION Figure 4. Termination procedure of the IS-41 VAP4PROVIDE_ROAMING NU +ABER subscriber roaming in Iridium network Routing Request pouting Request Resp [TLDN) 4.3.2INBOUND ROAMING FROM IRIDIUM TO FrOPting NuMber 1841 Tran lation MAP PRVVIDE ROAMING NUME ER_Ack MAP SE D ROUTING INFORMATION_Ack (MSRN] Inbound roaming occurs, for example, when an [MSRN] Iridium subscriber enters into underground areas where Iridium signal is not available. The registration Coll Setup Through PSTN procedure for inbound roaming is similar to that of outbound roaming and it is shown in Figure 5. The IS41 VLR which first notices the existence of an Processed only if IS41A or B Iridium roamer initiates the registration procedure. Once this registration procedure is complete, the Figure 6. Terminating call procedure of the Iridium Interworking Node operates as virtual HLR in the subscriber roaming in IS41 network
283 311 5. CONCLUSION
As people all over the world become increasingly mobile, global roaming between various types of mobile networks has a potential to become a highly profitable business and a powerful weapon in the future telecommunication market. In this paper, we took an example of roaming between Iridium mobile satellite network and IS41-based terrestrial networks and reviewed technical issues inherent in the roaming between heterogeneous networks. We summarized major differences between Iridium and 1S41 networks in terms of subscriber identity, MAP protocol, call delivery procedure, and authentication procedure. Finally we proposed the implementation of roaming service by introducing an Interworking Node. Since Iridium protocol complies with GSM standard, proposed roaming scheme is easily applied to terrestrial international roaming between GSM and IS41 cellular networks without any modification of GSM network.
REFERENCES
[1]TIA/EIA/IS-41 Rev. C, "Cellular Radio telecommunications Intersystem Operations". [2] GSM 09.02, "European digital cellular telecommunication system(phase 2, : Mobile Application Part(MAP) specification'. [3]ITU-T White book E.214, "Structure of theLand Mobile Global Title for the Signaling Connection Control Part". [4] M. Mouly and Marie-B. Pautet, "The GSM System for Mobile Communications", 1992. [5]IS-95A, "Mobile Station- Base Station Compatibility Standard for Dual-Mode . Wideband Spread Spectrum Cellular System ". [6] GSM 02.17, "European digital cellular telecommunication system(Phase 2) : Subscriber Identity Modules Functional Characteristics"
28812 Benefits of using Microwave Radio Links in Wireless Networks by Ross Lunan, P. E. Harris Corporation, Farinon Division Redwood Shores, California, 94065 USA
ABSTRACT:
The purpose of this paper is to highlight the current advantages of using microwave radios to provide infrasystem connections by reviewing technical and economic analysis of the various transport alternatives: copper, fibre, microwave. The paper will also preview new radio, antenna and packaging technologies which will provide network designers with increased flexibility, reliability, speed, and cost effectiveness in implementing microwave alternatives in their future wireless infrastructures.
INTRODUCTION networks requiring capacities of 1Gbit/s or greater. In the face of rapid change and complex technologies, However, a major impediment to fiber is its cost of wireless service providers responsible for choosing installation, including the costs of right-of-way facilities network transport must balance economics, security, and civil engineering. A second disadvantage of fiber performance, efficiency, and existing network issues is its vulnerability to route damage over long service against the pressures of market expansion, times. Microwave transport offers technical and technological change, unpredictable subscriber economic advantages when availability, cost- preferences and competition. To a large extent, the effectiveness, implementation time, security, and/or profitability and competitive advantage of each difficult terrain are significant system design company will hinge on the choices of these key considerations. decision-makers. TRADITIONAL LEASED LINES The proliferation of transport technologies also requires wireless service providers to assess the Leased lines typically include two basic components: merits of several transport technologies in order to the access portion (also known as the loop) and the develop successful intrasystem connections. This interoffice portion. In most cases, these facilities are paper outlines the economic and technical challenges provided by the local serving company (known as of creating a wireless network transport infrastructure RBOC or Independent Telco in the USA). The costs for and demonstrates how microwave can meet these these facilities are set by tariffs filed with the local requirements more effectively than traditional leased regulatory agencies for a particular local access and line solutions. transport area (LATA). The cost, quality and service offerings provided vary widely depending on the This discussion will also describe new radio, antenna, geographic area. Costs, for example, can range from and packaging technologies that provide wireless $175 (U.S.) per month per T1/E1 to well over $1,000 network designers unequaled flexibility, reliability, per month2. speed and cost effectiveness in implementing microwave in their wireless infrastructure. Upon first examination, a $175/month T1/E1 line may look like a real bargain; however, there are several INFRASTRUCTURE OPTIONS: LEASED LINES VS. factors that must be considered when comparing the MICROWAVE various aspects of digital transport facilities provided by leased lines and microwave radio: Network operators have three basic infrastructure choices: copper, lightwave or microwave. In the past 2 These tariffs are for Inter-LATA circuits. Systems that copper was traditionally used for new networks, but require transport across LATA boundaries require the user today's bandwidth-hungry applications make it to lease facilities from an inter-exchange carrier in addition unsuitable for expanding multiservice networks. to local access facilities. The total costs for this kind of Lightwave transport over fiber is an excellent choice for system can be considerably higher.
285 313 and international performance objectives. The medium 1. Transmission Quality and Reliability has long been the transport technology of choice for 2.Circuit Availability and Reliability meeting low- or medium-capacity needs using 3. Protection Plesiochronous Digital Hierarchy (PDH). In addition, 4. Short-Haul Costs microwave technology fulfills high-capacity requirements in the wireless market with Synchronous These factors will be examined later to explain their Digital Hierarchy (SDH), and also provides backbone effects on overall leased line circuit quality, access for Asynchronous Transfer Mode (ATM) accompanied by a comparison with microwave multimedia applications. facilities. While the specific needs of each service provider will ultimately determine the appropriate choice of MICROWAVE: A PROVEN CONCEPT transport, fiber spans and microwave links are often deployed synergistically as interconnected elements The emergence of small, low- cost high-frequency throughout many large networks. Fiber's high capacity radios (13 to 38 GHz) now permits network planners to makes it a good choice for traffic on the Internet. use microwave for short-haul network applications. Microwave's ease of installation, security, and cost- For the backbone or high-reliability backup to fiber, effectiveness make it a good choice for carrying modern high-capacity SDH microwave is also diverse media and lower throughput outside of the available. Digital microwave consistently provides the backbone and over spur routes. As a general rule, the flexibility, reliability, and cost-effective rapid installed cost of 10 km of fiber may be about the same deployment characteristics critical to a wireless service as a link of radio that may extend over 50 km. A provider's infrastructure backbone. common guideline is to install fiber when the link bit- rate requirement exceeds about 1Gbit/s (16,000 This level of reliability has been achieved through strict equivalent voice circuits). adherence to a clearly defined set of North American
The following diagram illustrates a typical application of different microwave capacity and frequency choices for access and backbone:
PCN/Cellular Site Interconnection
MicroStar 23 MicroStar Plus MicroStarrG%kilo - 26 GHz (n x El) MicroStar Plus MicroStar ,14 MicroStar Plus
X14 286 FOUR FACTORS TO CONSIDER WHEN By comparison, properly engineered digital microwave COMPARING LEASED LINES AND MICROWAVE systems typically operate virtually error-free in the RADIO absence of high-level interference or severe rain attenuation3. A typical microwave system can operate with an RBER of 10-11 or better. 1) TRANSMISSION QUALITY AND RELIABILITY 2)CIRCUIT AVAILABILITY AND RELIABILITY The Residual Bit Error Rate (RBER) of a leased T1/E1 facility can vary widely depending on the condition of Circuit availability is defined as the percentage of time the serving company's plant. Generally, the during which the circuit is available for use. Availability interoffice portions of the trunk will have higher is the complement of long-term outage (% availability = transmission quality than the loops. Most interoffice 100 % outage) that causes traffic disconnects and transmission facilities are provided by fiber or digital downtime. For a leased facility, an outage begins microwave, which typically provide a very low RBER when the transmission quality degrades to a point usually 10 -10 or better). where it is considered unusable for transmission (usually a BER of 10-3 for a duration of more than The loops are the "Achilles Heel" of most leased three to nine seconds). At this point the circuit is facilities. Local loops are usually provided via copper, released to the serving company for maintenance. which can provide sub-optimum transmission The disconnect period ends when the repair is depending on the length (distance from the central complete and the circuit is returned to the customer. office) and age. It is not unusual for old copper facilities to exhibit an RBER of 10-9 or worse. One prevalent service offering, the AT&T Accunet® T1.5, has a one-way availability objective for customer Loops of several thousand feet may also include cable premises-to-customer premises circuits of 99.7 repeaters, which can exacerbate this situation. RBER percent, which equals more than a day (26.3 hours) of accumulated traffic disconnect time during a one-year values of 10-7 are not unusual on loops containing poorly maintained repeaters. This quality level, while period. The 24-hour performance (short-term satisfactory for voice applications, can prove severely errored second outage and circuit quality) unacceptable for data or teleconferencing. objectives are as shown in the following table:
3 Digital Microwave Link Engineering (Sections l-V), Richard U. Laine, P.E., and Wiley Quan. Harris Corporation, Farinon Division, Redwood Shores, CA.
287 315 Table 1 Accunet® T1.5 Performance: (end-to-end)
Circuit Length Errored Seconds % Error-Free Seconds Severely Errored (Airline Miles) /Day Seconds/Day < 250 2246 97.40 44 250 to 1000 2506 97.10 4 > 1000 2765 96.80 4
Interoffice facilities are usually protected, and long- quality limits can prove unacceptable for many term outages (traffic disconnects) do not usually critical applications. result from failures in this portion of the circuit. A loop failure, on the other had, usually does result in a By comparison, current ITU-R and Bellcore one-way circuit disconnect. (See the section below on outage and reliability objectives for microwave protection.) These short-term SES outage and systems are summarized in the following table:
TABLE 2 ONE-WAY QUALITY OBJECTIVES, INCLUDING THOSE FOR A TYPICAL 25-MILE DIGITAL MICROWAVE LINK
Very Shorts Bellcore CCIR Haul Short Haul (ITU-R) Long Haul System Length < 125 mi. 125-250 mi. 1500 mi. 4000 mi. End-End Reliability 99.995% 99.995% 99.986% 99.995% Per-hop outage SES/year 320 160 70 20 Annual per-hop reliability 99.999% 99.9995% 99.9998% 99.99993%
Close attention should be paid to the per-hop critical applications for decades. Protection, on the objectives in this table. These values are equivalent other hand, cannot be taken for granted in leased to the level of performance to be expected from a facilities. The availability and cost of protection for typical well-engineered microwave link used as an leased facilities varies widely depending on the alternative to leased T1/E1 facilities. The numbers geographic area. In many locations, protection is demonstrate that even the very short-haul microwave simply not offered in the standard tariff. In those objectives are orders of magnitude better than the areas where it is, it usually results in higher costs -- leased line objectives. often more than double the standard (non-protected) tariff. 3) PROTECTION 4) SHORT-HAUL COSTS The only way to improve the availability of any transport system is to utilize some form of protection, Fiber lines offer considerable capacity, but fiber isn't or redundancy. Periods of unavailability (traffic always available. As a user goes higher in capacity, disconnect) are often unacceptable if not disastrous, microwave becomes much more cost-effective than to users. Protected (monitored hot standby) and ring leased lines. For most microwave users, the basic (loop) microwave systems have been standard in all product offering is a four T1/E1 system, and the
5 No standards exist for Very Short Haul ( < 6 hop) microwave systems, but typical objectives are shown.
4 Interim standard -- includes 4 SES/day for each access link.
288 316 installation includes one to four T1s/E1s for the same must be multiplied by four. The following chart shows cost, with the next three T1s/E1s provided at no a simplified cost comparison of leased line vs. additional cost. With leased lines, the customer must financed microwave for short-haul purposes lease three more trunks, and the cost of the facilities
COST COMPARISON LEASED LINES VS. FINANCED MICROWAVE (Short Haul)
$120,000
$80,000
- - - LEASED LINE CUMULATIVE EXPENDITURES $60,000 MICROWAVE CUMULATIVE EXPENDITURES
$40,000
$20,000
YR. 2 YR.3 YR. 4 YR. 5 YR. 6 YR. 7
LEASED LINE CALCULATIONS:
Years 1-2 Years 3-4 Years 5-7 Total No. of T1 lines: 1 2 4 Hook-up Costs: $1,000 $1,000 $ 2,000 Mo. Lease Chg/T1: $ 550 $ 500 $ 450 Total Costs: $14,200 $25,000 $66,800 $106,000
MICROWAVE RADIO CALCULATIONS:
Years 1-2 Years 3-4 Years 5-7 Total Monthly Lease Chg: $333 $425 $455 Monthly O&M Cost: $250 $250 $250 Total Costs: $14,000 $16,200 $25,380 $55,600
Leased Lines Vs. Microwave: Additional facilities. If a telco or serving company does not have Considerations digital facilities in a particularly area, it may take months to provide a leased T1/E1 facility. In some Construction time can be a factor in some cases with cases the customer may have to share a portion of the leased lines, depending on the area and availability of construction costs to provide the facility. Microwave
289 317 systems are also deployed quickly, particularly in metropolitan areas where roof-top attachments are Low-cost leased T1s/E1s are available in some areas, used in place of towers. but they are invariably non-protected, non-clear channel, single T1/E1 facilities.In most applications, CONCLUSION: MICROWAVE IS THE BETTER microwave remains the clear choice for expanding CHOICE network needs.
On first examination, leased T1/E1 facilities may Digital microwave systems provide unequaled appear less costly than microwave in some LATAs. transmission quality and reliability to meet the complex However, when circuit quality, availability and reliability needs of wireless service providers. Point-to-point are considered, properly engineered microwave microwave radio systems have delivered effective systems have been shown to be clearly superior. services for a wide range of applications since their Protection, a standard feature of microwave systems, first use more than 50 years ago and continue to offer cannot be taken for granted in leased facilities -- and a compelling and cost-effective alternative to other can increase the cost of these facilities. Clear channel transport media. As the industry moves forward, facilities, a necessity for many present day radical new antenna designs (e.g. Micro Star® Plus applications, are standard on virtually all current from Harris Corporation, Farinon Division) will emerge microwave equipment but are not available on all to provide unparalleled flexibility, reliability, speed and leased lines. Where CC is available, it invariably cost-effectiveness in implementing microwave into a comes at an increase in cost. wireless infrastructure.
318 290 Tuesday, January 13, 1997
NOTES:
319 The Market Trend for Cellular Mobile Phones and Its Impact on the Life of the Chinese People
Gui Fang Nian and Yong Chang Zhao Shanghai University Shanghai, China PR
ABSTRACT
It is relatively late for the cellular mobile phone to be a favorite for Chinese users. However, with its advantage in portability, it is welcome to more and more Chinese and gradually becomes a hot commodity in the society. This paper discusses the market trend for Cellular mobile phones and its impact on the live of the Chinese people.
As is shown in human history, the level. With the rapid, continuous and stable development of any society is largely subject development of the national economy, the to the means people use in their cellular mobile phone is highly welcome to communication. It is almost clear to all that the Chinese people because of its advantages the skills in paper making and the advanced in its portability, applicability at any time and technologyinprintingonce made great space. It has definitely become one of the hot contributionstotheachievement of the commodities in the current society of China ancient Chinese civilization. However in the and the end of this trend is hardly to be lastcentury orso,China was relatively traced. backward in many ways compared with the In China the application of cellular more advanced Western civilization. Now mobile phones started in 1980's. The nation's China is again experiencing a period of fast first TACS- 900 ME-IZ simulation cellular development and this is of course being done mobile phone system was opened in Guang with the matching progress in the means of Zhou in 1987. After that, Shanghai, Beijing communication. One of the most impressive and othercitiessuccessively opened the in this communication revolution is the recent service for cellular mobile phones. In 1988, growth in people's use of the Cellular Mobile the number of the phone users were only Phones. about3000,with30000capacityof exchangers, and total information channels of 1. An analysis for the Current Market 381. At the end of 1993, phone users Situation of Cellular Mobile Phones amounted to 646000, with 1560000total capacity of exchangers and 29325 information 1.1 Growth Situation channels. In 1996 the phone users in the The Cellular Mobile Phones, popularly network went up to 6500000, with 13717000 known as "Dageda", "Hand Phone",or total capacity of exchangers. (The Statistics "Portable Phone", though relatively late to Year Book of China, 1994, 1995, 1996) get started, have entered the market at a high
293 320 700 600 500 400 300 200 100
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
Fig. 1 The growth of cellular mobile phone users in China
350 300 250 200 150 100 50 0 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
Fig. 2 The yearly growth rate of cellular mobile phone users in China
321 294 As shown from the above, the yearly decisions on making choices as to which growth rate of the cellular mobile phone brand of products to buy when they buy users before 1993 had been kept over 200%. home made phones. Although the growth rate after 1994 has not 2. The acceptance and prevailing of been as high as those before 1993, its growth cellular mobile phones varies noticeably with rates are still very impressive. areas. Customers in different areas favors At present the cellular mobile phones different brands of products. For example, in China are classified into two categories: the users of the Changsha analogue network The digital system and the analogue system. system favor NEC, while those of the Beijing Judging from the market trends in analoguenetworksystem arelargely China, it can be estimated that at the end of Motorola lovers. Causes of such thiscentury,thetotalcapacityofits phenomenon are rather complicated: Apart installations would be well over 50000000 from theChinesepeople'spsychological units. With more and more people who have tendency of "it is safe to follow the crowd", purchased the phone, the growth rate would the time for a brand to enter the market, the gradually drop to about 30% at the turn of forcefulnessofitsadvertisementand the next century. Despite the great strides in publicity, and the product quality, etc. are itsdevelopment,thedensityof cellular also significant factors. Among them quality mobile phones in the nation's communication plays a major role in acquiring the market system would still maintain at a low level of share. about 2%. It is estimated that in the year 3. The style of a hand phone is,in 2000 the population of China would reach many cases, very important to the customer. 1300 million, so that the demand in terms of The survey tells us that 19% consumers take itsnumber of units wouldstillon the style as their first priority in selecting their increase. hand phones. Now people generally are fond of good looking, easy handling, small sized 1.2 Market Analysis phones. More specifically, the uniqueness in 1. The domestic market of China is its design proves to be a good feature to now largely occupied by foreign cellular attract particular groups of customers. mobile phones, with domestically 4. The price level to a certain degree manufacturedoneslittleknown tothe affectsthepurchasingbehaviorof the consumer. Most Chinese users have their customer. The survey tells that for about preferences to foreign brands. 14% customers the first priority is given to A popularity survey on brands reveals price terms. On the whole those with such that foreign brands enjoy high popularity. ideas do not account for a high percentage. The most important factor for the customer However, incertainparticular areas, the to make their decision as to which brand of percentage of such peopleisvery high, cellular mobile phones to purchase proves to showing that in some areas the level of price bethequalityof theproduct.Many is still a key factor for certain customers. This consumers tend to equalize the choice of a also has something to do with the fact that foreign brand of cellular mobile phone to that there are more and more people who have of the product quality. Some customers care become users of this commodity. With the less of its price, but are ready to pay more for intensifying competition in the market place, good quality products. This tendency, to a the price competition is gaining in importance. certain extent,isalso seen in customers' Itis clear that those who can offer high
295 322 quality products with competitive prices will important role in China. finally become the market winners. From theanalysisof themarket 5. The digital hand phone presents conditions, the major current problems which good sign of development, but the analogue hinder the progress of movable type is not out of date. The survey shows that communication system in China are in the inChina analogue anddigitaltelephone following: networks enjoy their respective advantages. 1. The networking among different Therefore both have their own strengths in systems offered by different manufacturers; 2. themarketandenjoydifferentmarket Thelackof unifiedadministrationand demands. The digitalstyle has become a frequency programming,resultinginthe favorite because of its advanced performance waste of frequency resources due to poor and remarkable featureinconfidentiality coordination;3.In the coastareas,the while the analogue is welcome for its wide problem in base positioning makes it difficult coverage and high stability. Further efforts in for the increase of the system capacity promoting the analogue hand phone will still though the demands are high and the capacity keep its market thriving in the days to come. for user application is expanding rapidly; and 4. The market competition for cellular mobile 2. A Trend Study phones has forced the business sectors in telecommunication network to promote their 2.1 Trend analysis and prediction new services with new technologies before Theadventanddevelopmentofany its due time really comes. Now it has become communication service are subject to the a fact that in the coast areas the GSM availability of a certain technology which is technology has been adopted to speed up the able to support it, and to the availability of process of digitalization. the market condition required. In terms of It is rather clear that in the recent years technology, the analogue mobile both the analogue and digital cellular mobile communicationtechnologyhasalready phone systems will experience a period of reached its maturity stage. The digital mobile development. After that, the growing speed communication technology, GSM, is now of the analogue cellular mobile phone will moving towards its maturity stage and has slow down and then gradually be replaced by gone into operation in China. The CDMA the digital system. technology will soon become stable and step 2. The acceleration in localization into commercialization in a matter of years. Experts estimate thatin 2000 the The digit-based second and half generation annual sales of cellular mobile phones in products, such as, PCN, PCS, DETC and the China will reach 100 billion yuan RMB thirdgenerationpersonalcommunication (Renmimbi).At presentthe marketfor technology as FPLMTS, etc., will see great cellular mobile phones isin a period of advances in the next 5-10 years. In view of growth, offering a largeroomfor the technology development, the next five development in the manufacturing sector of years will seethespeedingup of China. This is a good opportunity in the digitalization of cellular mobile phones. It is competition arena for the mobile certain that the GSM and CDMA technology telecommunicationindustry. Now inthe will be further applied and expanded. During home market of China manufacturers from thisperiod,the movable cellular mobile both home and abroad are competing with phone communication system will play an each other. At this stage, 98% of the market
296 323 share is covered by foreign made products. In manufacturers, the increase in the localization order to enhance the competitive position rate of the product and the effect of Hong many domestic companies are seeking to Kong's return to China. form joint ventures, to introduce production For now the promotion policyof lines and technologies, and to develop home certain areas in China is based on the cost made products. These efforts will gradually price of the hand phone. The market share result in the commercialization of new brands oriented rather than profit oriented of home made cellular mobile phones. promotion policy is gradually accepted. It is 3. More intense competition among estimated that in the years to come the post the brands and communication departments will adopt With the approval of more styles of the strategy of leasing and selling at lower hand phones by the Post and Communication than cost prices.Itis very similar to the Department, in the our limited market space situation with the BP phone market where the competition between different brands in the majorincome comesfromthe their efforts to secure the users will be more communication charges instead of profits intensethaneverbefore.Thefuture from telephone sales. competition in the market will be multi- Besides the application fee to enter the dimensional--manufacturers of different network will also decrease by large amounts brands will compete with each other in such and the service will be charged from one side respects as, quality, design, price, after-sale instead of two sides. service etc.. In the future, the hand phone will be characterized by multi-application, 3. Estimation of the Total Market Demand small size and high powered batteries. 4. Further decrease in price The market includes the three factors, At present the hand phone sales price namely, the population, its purchasing power varies,with the general trend presenting and the want to purchase. The relationship is further decline in its price. There are several shown as follows: reasons for this trend: Market = population x purchasing power x (1) With the rapid growth of the joint customer want companiesinthecellularmobile phone Chinaisalargecountrywitha market and the participation of the military populationof over1200million.Itis sector, their competition with the post and estimatedthatatthe end of 2000 the telecommunications organizationswillbe population will reach 1300 million. In terms more intense. Apart from the competition in of purchasing power there are substantial quality and after saleservice,the major differences between the eastern and western competition will be that in price. This will areas due to the geographically unbalanced make thepriceof hand phones further developmentofthenation'seconomy. decline. Statistics show that the Engel coefficient has (2) The price will further drop due to droppedtobelow 30%inthemore theintensifyingcompetitionamongthe developed easternareas, 30-50% inthe foreign companies in the domestic market of middle areas, but in the western areas it still China, the enlarging of its production scales, remains somewhat over 50%. and the decrease in tariff barriers. In a competitive market thereare (3) The decrease initsprices also various factors influencing customers' comes from the mushrooming of domestic demand. The relationship can be expressed in
297 324 the following function: telecommunications industry in China Q = f ( P, T, I, Pc, Ps, E,, a) will grow in great strides and this in turn will where, have a substantial positive impact on the Q--market demandforaparticular development of the nation's economy, and commodity, also the life style and quality of the Chinese P--price people. T--taste of the customer Pc--price of substitute commodity The entering of cellular mobile phones Ps--price of supplementary commodity into thelifeof many Chinese peopleis E--estimated variation in price broughtaboutbythedevelopmentof w --savings of the customer communication technology. The significance of such change is beyond the scope of the a --other factors domestic market itself. The progress enjoyed The above equation states, the market by the Chinese people in the ease of their demand of thecustomer foracertain communication has changed andisstill commodity is a function of many variables. changing the social and cultural aspects of Economists say, for a particular commodity the Chinese people in many ways. Culture is in aspecificmarket,mostvariables defined as a shared perceptions. The sharing influencing the demand will change very little. may stem from common experience For example,thecustomertaste,their produced by ethnicity or nationality, but it income level and the prices of substitute couldalso stemfrom anycommon commodities will change gradually and their experience.(Fontaine, 1989) Now in big impactonthedemandisnotdirect. cities like Shanghai, people's possession and Therefore, they are negligible in our level of use of hand phone has become a scene analysis as well as in study of the market anywhere--in the street, at a public location, demand. Given that other factors remaining in the car, in the office and even in school unchanged, the calculation can be done with classrooms. Many people, especially those the following simplified equation: who are doing business, would prefer to have Q = nqr a hand phone with them because they do not where, want to miss the prompt information which n--total population might be important to the success of their q--average purchased amount per person businessorcareerdevelopment.Many r--modification coefficient people interviewed have expressed to the As in the case of China, author and interviewer, saying that they are Q= 13 x 1 x 0.02 = 36 (million will to pay a large bill for the cost of keeping units) themselves better informed. Generally large The calculationtellsus,thetotal expenses in telephone bills imply one's social market demand of cellular mobile phones status or success in the society, or both. would be 36million units, about ten times (Fang, 1997)Althoughwecan not as much as it was in 1996, leaving great room understandthatthe relationship between for further development. Even if this comes one's success and his/her bill in true, the rate of average possession would communication is always positively only be 2%, well below the over 25% level proportional, there is something that we can for developed countries. In a word, required see from what is in those people's mind. The by the national economic development, prevailing of cellular mobile phones is not
298 325 only a cultural phenomenon in China today, but also is contributing a lot to the formation of a new revolutionized culture in the future. What the end picture will look exactly like is still remaining unseen.
References: Fang,Jun,AnunpublishedInterview, conducted by David Zhao in Shanghai, China, 1997. Fontaine,Gary,ManagingInternational Assignments: The Strategy for Success, Englewood Cliffs, Prentice-Hall, 1989. NationalStatistics Bureau, The Statistics Year Book of China, China Statistics Press, 1994, 1995, 1996.
326 299 Regulation Policy of Mobile Communications in Korea: Retrospect & Alternatives
Han-joo Kim*, Hong-jae Lee*, Jae-keun Lee**, Seok-ji Park*
* ETRI, Techno-Economic Department, Taejon, Korea ** NCA, IT Policy Planning Team, Seoul, Korea
1. Abstract
The deregulation policy of mobile communications in Korea could result in privatization and mitigation of entry restriction. But the radio spectrum was hardly recognized as a resource until early 1990s. With the amendments to telecommunication-related laws and new grants of mobile communication carriers, some important changes have been under way. The mandated contribution to R&D fund by newly licensed carriers appears to be an effective way of diverting the economic rents of the radio spectrum from the carrier. The present dual radio spectrum allocation system, licensing of new carriers and authorization of radio station, hinders efficient utilization of scarce radio spectrum resources. This paper proposes a new regulation scheme for efficient use ofradio spectrum in the era of more competitive and open economies.
makers. And the results of this study could provide the 2. Introduction guideline of the alternatives of spectrum management policy. The mobile communication industries in Korea have grown rapidly since mid 1980s. With the growth of 3. The deregulation processes since 1980s industries, there have been also some changes with respect 3.1 The legal systems to regulations. They are the several amendments to related laws and introduction of competition and privatization. The modern legislation in the telecommunication fields This paper reviews the features of deregulation policy in has arisen from the Telecommunications Law initiated in terms of legal systems and market from mid 1980s to mid December 1961.Itgoverned the telecommunication 1990s. This retrospect could provide the basis for the policyandserviceprovisionandprescribedthe evaluation of deregulation policy from mid 1980s. And telecommunication services as administrative affairs. At this paper contemplates the meaning of new carrier that time, the basic telecommunication facilities were selection procedure, the R&D contribution systems from insufficient. The immediate problem was to increase the the viewpoint of spectrum management. Through this basic telecommunication facilities such as telegram and study, it is possible to make clear the cause of the conflicts telephone. In early 1980s, the.Ministry of between the mobile communication carriers and the policy
304377 Communications (MOC) divided the Telecommunications industry were not solid. Law into the Telecommunications Basic Law and the Until early 1990s, the mobile phone service has been Public Telecommunications Business Law. The former recognizedasasupplementaryservicetogeneral described subscribed wireline telephone. The mobile phone service thefundamentalstopromotethedevelopment and was classifiedasa mobile subscribed telephone of efficient management of telecommunication matters. The wireline telephone services. latter governed the management of public With the economic growth in mid 1980s, the needs for telecommunications business, service carriers and service mobile communications have been rapidly increased. For utilization. In conformity with this legal change, MOC the purpose of promoting theradio communication separated its communication service part as the Korean industry and mobile communications services, the Radio Telecommunications Authority (KTA). Wave Regulation Law was amended and renamed as the After these laws were amended twice as a whole in Radio Wave Law in December 1991. To the amended August 1991 and April 1995, the current Radio Wave Law,someimportantchangeswere Telecommunications Basic Law and Telecommunication introduced.Theywerethedeclarationof MOC's Business Law were created forming the legal structure to responsibility for security of newly available spectrum handle the telecommunications policy and business. [4] band and the reallocation of radio spectrum. This was Besides these two laws, there was another law related to viewed as a reflection of the importance of radio spectrum radio spectrum. The Radio Wave Regulation Law was management. The policy makers began to consider radio established in 1961. This law was mainly comprised of the spectrum as an essential intermediate good for the mobile surveillance of illegal radio spectrum utilization and communication services. With this view, the mobile administrationof portoperationservicesforsafe communication services were defined as 'communication navigation. Especially under the tension between South services using theassigned spectrum frequency'in and North Korea, the inspection of trans-border radio amending the Telecommunication Business Law in April frequency was its main purpose. The backgrounds for the 1995. It was the first time to use the terms of assignment development of the radio communication services and andfrequencyinthedefinitionofthemobile
Table 1. The Changes in regulations on the Mobile Communications Carriers since 1980s
Dec. 1983-Aug. 1991 Aug. 1991-Apr.1995 Apr. 1995 - Law Telecommunications Basic Law Telecommunications Basic Law Telecommunications Basic Law Public Telecommunications Law Telecommunications Business Law Telecommunications Business Law Radio Wave Regulation Law* Radio Wave Law Radio Wave Law Type of public common carrier Specific Service Provider Network Service Provider provider Definition Designated suppliers who are A common carrier, who owns A common carrier, who owns authorized to supply mobile telecommunication networks and telecommunications networks and communications services provides the technically and provides the services using the assigned geographically limited services with radio spectrum with the approval of MIC the approval of MOC Entry Designation Approval Approval Procedure *) The Radio Wave Regulation Law was in effect till December 1991
301 328 communication services. In accordance with the amendmentsto the telecommunication-related law in 1995 and new grants of 3.2 Deregulation: privatization & mitigation of mobile communications carriers in 1996, some important entry restrictions changes have been underway. Especially, the mandatory R&D contributionssystemsareintroduced. The With the establishment of the Telecommunications procedures of selecting new carriers consist of two stages. Basic Law and Public Telecommunications Business Law The first is to evaluate the proposal of each applicant. The in 1983, MOC started to consider the telecommunication second is to evaluate the R&D donation plan. The first services as business. But the deregulation was introduced stage is evaluated according to 6 factors, ® feasibility of in 1990s. There were some reasons for this delay: firstly, telecommunications service provision, OO efficiency of the the basic telecommunications facilities were absolutely telecommunications facilities, 0 financial background, insufficienttilllate1980s;secondly,thepolitical R&D achievements and plans, 0 technical capacity, and confrontation between South and North Korea restrict the reasonability of consortium. The criteria for the second "radio communications strictly. stageevaluationistheamount of proposed R&D MOC decided to deregulate the mobile communication contributions. The more R&D contributions are given, the services in July 1990.[11] The content of deregulation was higher grades are. But the amount of R&D contributions tointroducecompetition andprivatization.For the could not exceed the predetermined cap. If the proposed introduction of competition, MOC did intend to approve amounts were equivalent, the lottery method would be new mobile communications carriers and to place the utilized. As there was a concern about lottery method, the monopolized mobile communications carriers of Korea Ministry of Information and Communications (MIC) (2) MobileTelecommunications(KMT)underprivate decided to enforce the first stage in selecting unique management. The deregulation process has brought the candidate. And the selected candidate should fund the political and economical power games. The Taehan same amount of pre-determined R&D contributions. [14] Telecom, a subsidiary of SunKyung (SK) Group, obtained The amounts of R&D contributions are in variation. In new approval. But the Taehan Telecom returned the case of PCS, the R&D contributions were approximately license for some political reasons in August 1992. After 129M$; in the case of TRS, they ranged from 1.29M$ to some compromising processes, MOC approved Shinsegi 8.25M$ according to service area. Through this new Telecom; the sole consortium composed of 246 companies, system, 19 new mobile communications service carriers as the 2nd mobile phone carriers. The SK Group was were approved as of June 1997. rewarded as being a large stockholder of KMT"). (12) The incumbent mobile communications carriersare Shinsegi Telecom commenced the commercial digital summarized in table 2. Code Division Multiple Access (CDMA) mobile phone The features of deregulation in mobile communications service in April 1996. The mobile phone services entered fields could result in privatization and mitigation of entry into the competition era onlyafter April1996.In barriers. By privatization, SK Telecom could be a private comparison with the stumble and delay in the mobile enterprise owned by SK group. By the mitigation of entry phone service, paging service began its competitions as barriers, large companies such as LG group and Hansol scheduled in May 1993. could enter the mobile communications service market. But the line-of-business regulations still remain. Therefore,
329 302 the new carriers could provide only one service except are realized through the process ofauthorization of each paging carriers. radio station. The new common carriers regard the R&D contributions as payments for the value of spectrum band. 4. Evaluation of deregulation policy Therefore, they think that they have the usufructuary right of spectrum band simultaneously with the remittance of the proposed R&D contributions. The government decides The evaluation criteria for regulation policy are the that the rights are in effect from authorization of each considerations of spectrum resources as an essential radio station. These conflicting views stem from the intermediate good for mobile communications services ambiguity of the definition of rights of spectrum. and the economies of scope as the characteristicsof Through the new carrier selection procedure in June mobile communications services. [1] 1996, MIC declared that the incumbent mobile phone The recognition of spectrum as a scarce resource was servicecarrierscould notenter PCS market.The introduced firstly in April 1995 through the amendment of government also announces that there may be additional the related law. For fair use of radio spectrum, there spectrum assignment for PCS to them after successful should be plans to restore economic rents. The R&D commercialization of digital CDMA mobile phone service. contribution systems seem to be a method of restoring The government's decision does not seem to reflect the economic rents of the radio spectrum. And the amounts of economies of scope as the. characteristics of mobile R&D contributions might be regarded as the shadow price communications services. [1] of spectrum band. As we can see the spectrum assignment principles However, the Korean spectrum management policies depend mostly on the discretion of the government. And still focus on the management of radio stations. Under this the carriers' rights of spectrum are ambiguous. spectrum management system,thepresent approval procedure of new mobile communication service carriers is just to select the subject of spectrum assignment. MIC 5. Alternatives states that the substantial spectrum frequency assignments
Table 2. The incumbent mobile communications carriers in Korea asof Dec. 1997 Service Introduction Competition service area Carriers SK Telecom, Shinsegi Telecom Mobile phone 1984 Apr. 1996 nationwide SK Telecom Paging 1984 Aug. 1993 nationwide local (8) Local paging carriers (8) Korea TRS, Anam Telecom TRS 1988 1997 nationwide local (8) J.ocal TRS carriers KT CT-2 1997 From Beginning nationwide local (8) Localpaging carriers KT Freetel. Hansol PCS. LG Telcom PCS 1997 nationwide Airmedia. lntech. Hanse Telecom Mobile Data 1997 nationwide * The underlined are new carriers after the introduction of competition.
303 330 Thepresentspectrumassignment mechanismis technology round. These new rounds focus on the suitable for traditional private mobile communications. intermediate goods such as labor and technology. In the From theviewpoint of traditionalprivatemobile long-run perspectives, these trends would influence on the communications, the radio spectrum is considered as a pursuit of the global generality of resource allocation common property resource and a public good. Under that mechanism. And the new trans-border services of the concept,anyonewhoobtainstheradiostation system and the global coverage such as GMPCS' also authorization could be a co-user in the spectrum band. require commonness in the regulation schemes. These This is the open access method. At that time, the main environmental changes also request the transparent and role of the spectrum management was to manage the distinct regulation schemes. radio stations. But the commercial mobile communications industries are different in the utilization 6. Conclusions mechanism of spectrum band. The spectrum band assigned to a certain mobile carrier could not be shared This paper reviews the deregulation policy in mobile with other carriers. This means that the carrier has the communications in Korea since 1980s and proposes new exclusive rights to the assigned frequency band of policy schemes. The contents of this new scheme are the spectrum. Therefore, to clarify the definition of carriers' development of spectrum management system suitable for rights of spectrum and the management scheme of commercialmobilecommunicationsservices.There spectrumband ismoreimportantinspectrum should be compromise and cooperation among the management. These environmental changes require the government, mobile communications industry and users. spectrummanagement developmentofanew The ultimate object of spectrum management policy is to mobile mechanism suitable for commercial derive a method of maximizing the social welfare. communication services. Under this new mechanism, the carriers' right of the spectrum band could be clearly defined. The rights of spectrum could span from tenure of the U.S. to property rights including transfer rights or References loan rights of the New Zealand and Australia. And the authorization process of radio station should function as [1] Amendola, G. and A. Feraiuolo (1995) "Regulating the process of service coverage expansion. Under this Mobile Communications," Telecommunication Policy 19 spectrum management system, the new carrier selection (1), 29-42. procedure would function as a resourceallocation [2] Baumol, W. J. and R. D. Willig (1985) "Telephones process in reality. For the introduction of this new and Computers: The Costs of ArtificialSeparation," system, itis a prerequisite to conceptualize the radio Regulation (March/April): 23-32. spectrum as economic goods. [3] Brennan, T. J. and K. Palmer (1994) "Comparing the Thetrendsof globalopennessalsorequirethe Costs and Benefits of Diversification by Regulated establishment and practice of fair and transparent rule in Firms," Journal of Regulatory Economics 6, 115-136. regulation policy. After the inauguration of WTO, it [4] Chin Cho, et al (1996) "Restructuring the Korean seems that the market opening discussions focus on the telecommunications market; Evolution and Challenges intermediate goods. The examples are the blue round and ahead" Telecommunications Policy 20 (5), 357-373.
304 331 [5] FCC (1995) Regulatory Treatment of Mobile Services, 3rd Further Notice of Proposed Rule Making (May 5). contribute to the preparation of GMPCS MoU. The [6] Huang, D. C. (1993) Managing in the Spectrum: Win, Korean representatives take charge of the leader of Project Lose or Share, Center for Information Policy Research, Team 3 (Custom Arrangement and Access to Traffic Harvard University Press. Data) and vice chair of GMPCS MoU Meeting. Especially, [7] Minasian, J. R. (1975) "Property Rights in Radiation: the Korean representatives assume the important role of An Alternative Approach to Radio Frequency Allocation," compromising theconflictingopinions between the Journal of Law and Economics 18, 221-272. developing countries and the developed countries. [8] Ministry of Commerce New Zealand (1994),Radio Spectrum Management, Available at http://www.govt.nz/com/rsp/pib17.html [9] Ministry of Commerce New Zealand (1995), Radio Spectrum Management 1994-95. Available at http://www.govt.nz/com [10] Ministry of Communications in Korea (1990) The restructuring plan of communications industry forthe introduction of competition, originally in Korean. [11] Ministry of Communications in Korea (1994) The Annual Report of Telecommunications,originallyin Korean. [12] Ministry of Information and Communications in Korea (1995) Request for Proposal of New Common Carriers, originally in Korean. [13] OECD (1993) The Economics of Radio Frequency Allocations, OECD, Paris. [14]U.S.(1995),code of federal regulations47, Telecommunication, revised as of October.
'1) KMT was renamed as SK Telecom-in April 1997. According to the government reforms, MOC was reorganized as MIC in December 1994. (3) Numerous Korean Companies participates in GMPCS. business. Korean Telecom, Samsung Electronics, Shinsegi Telecom in ICO, Dacom, Hyundai Electronics in Global Star, KumHo Group in Odyssey, and SK Telecom in Iridium. The Korean representatives comprised of the Governments, Research Institutes and related industries 332 305 Selection of Modern Telecommunication Media and Dynamic Route Guidance System for Intelligent Transport System
Sung-Soo Kim and Hyoung-Wook Kim
Logistics Systems Development Team Multimedia Technology Research Laboratory, Korea Telecommunication Seoul, Korea
1. ABSTRACT
The objective of this paper is to help organizations select a suitable telecommunications media and dynamic route guidance system(DRGS) for an intelligent transport system (ITS) taking into account both cost and functionality.The media selection criteria and wireless communications for an ITS are discussed along with various DRGS. We describe which kind of telecommunication media and DRGS are suitable.The strategy of an ITS in Korea is described in regards to telecommunication media and DRGS. Advanced Traveler Information System (ATIS), (3) 2.Introduction Advanced Public Transportation Systems (APTS), (4) Commercial Vehicle Operation (CVO), and (5) Advanced The objective of the traffic management system in ITS is Vehicle and Highway System (AVHS). ATMS involves to promote safe and smooth flow of traffic by naturally traffic control, incident management, electronic toll distributing the flow of traffic, which is done by guiding collection, and heavy vehicle monitoring systems.ATIS cars to the appropriate routes in accordance with drivers involves traffic and road information, en-route driver instinctive desire to reach their destinations quickly by information, route guidance, traveler service information, avoiding traffic congestion.Based on information and pre-trip traveler guide systems.APTS involves gathered from street network, this system can help public transportation information and public transportation driversfind the optimal traffic flow.The aims of the management systems and gives transit priority to public, system are to promote safe driving, to lower the pollution transportation vehicles by setting priority signal control and to provide shorter travel time to the drivers.The and priority lanes, thereby improving travel convenience messages given to drivers are the results of the of bus commuters. CVO involves commercial-vehicle optimization.Such traffic management system can be electronic clearance, freight and fleet management, implemented by using two-way communication.Future hazardous material monitoring, on-board safety monitoring, road traffic systems must use an existing communication and automatic roadside inspection systems. AVHS infrastructure, so that the cost can be reduced.Two- involves vehicle and highway systems (5, 6, 11). way communication enables cars to work as sensors. Cars measure their own travel times and locations and These systems are to be implemented one by one in Korea. send the location and travel time on the uplink to the At this point, ATIS and CVO are being developed and are traffic control center.This allows better traffic focused on in this paper because of ITS's marketability. modeling, prediction, and route calculation.On the So, this paper introduces the wireless communications and downlink the vehicle equipment receives new traffic media selection criteria for implementing these systems. information from the traffic management center.There We describe various telecommunication media for various are several prerequisites to be considered.The first environments and users for developing these systems. prerequisite is to keep the costs of information, provision Another purpose of this paper is also to help organizations of this information, and number of onboard devices as select the correct DRGS using advanced low as possible.The second is to adopt several telecommunication media because DRGS is the most methods of information provision to encourage the important part of ATIS.Several kinds of DRGS are development of onboard devices to suit a wide range of discussed to decide the suitable DRGS for ATIS in Korea. driver needs, and to provide information via several Finally, the strategy of ITS is discussed based on the different media to enable drivers to select the medium for selection of telecommunication media and DRGS.It is which each was developed (4, 9). expected that we can reduce the national cost of logistics and raise the operation efficiency.Also, we can build There are five ITS systems to be developed in Korea: (1) national competitiveness and improve the logistics service Advanced Traffic Management System (ATMS), (2) for the people.
306 Radio Service (GPRS), and wireless data communication. Section 3 discusses the modern wireless ESMR uses advanced digital vocoders to provide telecommunication media for ITS.Section 4 introduces enhanced services.Typically, it can provide telephone, several kinds of DRGS.Section 5 describes the strategy dispatch, paging, fax and data services.Power at the of Korean ITS based on the suitable selection of base stations is limited to enable frequency reuse.It is telecommunication media and DRGS.The system available, according to vendors, throughout most of the configuration of ITS is also introduced in this section. country and is a competitor in rural areas to cellular service due to its lower infrastructure cost in available 3.Modern telecommunication media of ITS spectrum.In the original concept GSM offers a point-to- point connection especially for handling large data volume The telecommunications media have different (e.g. file transfer).However, in an road traffic implementations and running costs depending on the application small data volume usually occur.It is much requirements of the area (urban, interurban, rural, and more efficient to transmit these small size ofinformation remote), users (road authorities, emergency services via a packet-oriented service.Therefore, GPRS has an providers, fleet vehicles company, vehicle passengers, advantage over the existing data services of GSM. and pedestrians), and message classifications (fixed, Wireless data communication is the cellular packet- semi-static, dynamic, and traffic management switched data network, in which the data stream is information).The system depends on the requirements separated into shorter units called packets. to determine where the networks will operate from, what infrastructure exists now, and how the networks will be Cellular telephone provides links to both analog voice and controlled.Modern wireless communications are data.For ITS services, Cellular Digital Packet Data introduced and considered for telecommunication media (CDPD) is envisioned to provide the datalink for the of ITS in this section.The following are the discussion cellular system.Personal Communication Services for the telecommunication media as shown in Table 1 (1, (PCS) is very similar to the cellular telephone service. 3, 7, 8). The coverage is almost complete in many urban areas and extends well into rural areas surrounding these urban The coverage area of AM subcarrier is limited more by centers. interference and propagation than by terrain. AM has been envisioned to provide roadway conditions over a Dedicated Short Range Communication (DSRC) is defined large geographic area using ground wave propagation. as a short range communication system, using The data AM subcarrier could supply information that electromagnetic waves to provide either one-way or two- does not change rapidly.The coverage area of FM way communication, between a fixed roadside transceiver subcarrier is limited more by terrain and multipath effects. and transponders mounted onboard moving vehicles.By FM subcarrier could provide a similar service as AM definition, DSRC provides localized coverage with gaps subcarriers but over a smaller coverage area or it could which are not covered by roadside transponders. A be used to provide real-time traffic and roadway DSRC system consists of a fixed/transportable conditions, advertising, and a host of other information roadside/railside radio frequency (RF) reader (i.e., a over a short to medium range (30-50 mile radius). transmitter and receiver, with significant information storage and processing capability), as well as a RF Low Earth Orbiting Satellites (LEOS) and transponder on moving vehicles/trailers/cars which Geosynchronous Satellites (GEOS), can provide data or communicate by electromagnetic waves using a band of voice communication over a very large area.They are RF spectrum to provide various services.DSRC systems not limited by terrestrial infrastructure requirements. are normally used in a line-or-sight mode and are The commercially available systems are expensive for dedicated to transportation applications. individual users, but medium to large companies that require communication with individuals may find them 4.Dynamic route guidance systems beneficial in rural areas.In urban areas, the systems are good complement to terrestrial systems and may offer ATIS eases traffic flow by providing drivers with some advantages when the terrestrial systems reach appropriate information on congestion, accidents and capacity. travel time to a particular destination.DRGS is the most important function of ATIS. DRGS enhances travel The cellular radio networks include Enhanced convenience by recommending to a driver the optimal Specialized Mobile Radio (ESMR), Global System for route to his destination: DRGS can also reduce congestion Mobile Telecommunications (GSM) or General Packet by diversifying travel routes.There are several kinds of
307 334 Table 1. THE COMPARISON OF ADVANCED WIRELESS TELECOMMUNICATION MEDIA FOR ITS Type Data rate up to ureCostinfrastruct for vehicleCost for In- wayOne or Two Scope of service Characteristic TRSGSM ESMRGSM18kbps, 19.2kbps 2.4kbps- low mediummedium Two-wayTwo-way area)citylimitlimit(ESMR and rural is GSMCircuit Circuit switched, switched, Service GPRS for voice Packet and switcheddata (Size of packet CommunicationGPRSWireless Data 9.6kbpsGPRS 9.6kbps low medium Two-way limit structure.hierarchicalPacket128bytes, switched, high Servicespeed access, for data. point-to-point Mobitex: Open point-to-multipoint) protocol and structure DataTAC: Open protocol and LAN BeaconFM FM1Mbps 100-3800bps highlow low Two-wayOne-way aroundsmallrangeshort to beacon medium area DSRCradius 46-77km 03O TelephoneCellularPCS 9.6kbpsatCDPD least 19.2kbps8kbps lowlow mediummedium Two-wayTwo-way limit (city area) digitalcommunication.popularCellular voice inphone logistics and can messaging be business. used servicefor voice and data. CDPD is used for only data CDPD will be GEOSLEO 4.8kbpsLittleBigGEOS, LEO 21.33 2.4kbps, kbps, LEO 2.4- high high Two-way wide area service for wide area communication. GeostationaryPersonalGlobalTrunked PacketSystem RadioCommunication satelliteRadio forSystem Mobile System (GEOS) (TRS) System Telecommunication (GPRS) (PCS) (GSM) 335 CellularDedicatedEnhancedLow Earth Digital Specialized ShortOrbiting PacketRange Satellites Mobile DataCommunication (CDPD) (LEO) Radio (ESMR) (DSRC) 336 DRGS: local DRGS, broadcast-type DRGS, interactive equipment is relatively cheap.However, since it is the DRGS, and mixed DRGS (2, 5, 10). vehicle which must select the route, it has the same disadvantage as local DRGS mentioned above. The local DRGS can use any type of communication media.The traffic center collect information and send There are two kinds of interactive DRGS.One of them is that to cars.The in-vehicle unit decides the optimal interactive DRGS using beacon as shown in Figure 2. path based on the information.However, the in-vehicle The other one is interactive DRGS using satellites as equipment is relatively expensive.The local DRGS has shown in Figure 3.Therefore, it can assign vehicles the advantage that the driver can select a personally along road networks according to traffic conditions and so preferable route and it is effective method while the level has the potential in the future to contribute to easing of of diffusion of in-vehicle units is still low.However, if traffic congestion.On the other hand, the beacons must each vehicle individually selects its own optimum route, have high performance in order to provide route there is the likelihood the vehicles which have the same information to in-vehicle units.The ultimate aim of this origin-destination may select the same route.In the system is system optimization, but until in-vehicle units future, when in-vehicle units are more common, there is become popular enough, it will provide the optimum the risk that the vehicles will become concentrated on routes to vehicles individually.In the case of beacon, the empty routes, causing congestion. beacon is used for telecommunication media and location of cars within limited small area.Although the In broadcast-type DRGS, the center determines the installation cost of beacons is very expensive, in-vehicle optimum route to various points based on collected equipment is not.In the case of satellites, in-vehicle information and provides these routes regardless of the equipment is relatively expensive.The maintenance cost destination of a particular vehicle by a FM subcarrier of satellites is also expensive because the life expectation using radio frequency as shown in Figure 1. of a satellite is about 5-10 years and it must be replaced.
Traffic information Traffic information Local Hi: service center Localmilli service center authoritieg GPS satellite authoritiet '- Information Sensors Sensors 4 Police 4:1P 4'4' Police liggb Information Weather Positioning station Weather information station
Route guidance Information from system cars senso 'V Route guidance system Users Broadcast base station 011#01, Beacons Users Several Optimal optimal routes route
Collecting information Figure 1. BROADCAST-TYPE DRGS Position of car
The vehicle then selects a suitable route to its destination Figure 2. INTERACTIVE DRGS USING BEACON from several optimal paths received from center.Each car decides its own optimal path.This system does not Mixed DRGS can provide convenient route guidance by require a high performance telecommunication media. skillfully combining information provided by the Thus, it is economical for the reasons that existing interactive DRGS with the local DRGS function provided telecommunication facilities can be used and in-vehicle
309 337 by the in-vehicle units.Local DRGS can select a route or cellular network facilities can be used.Since cellular from the road network including local streets using only phone uses existing telephone networks, travelers can the in-vehicle database and if it has travel time check the traffic condition by telephone prior to departure information which is provided by the center, it can take from home or office.Even on their way to the this into consideration when selecting a route.However, destination, they can obtain the updated traffic information it cannot select a route based on predicted conditions. real-time with a mobile telephone while in their car. On the other hand, the interactive DRGS does not include regional roads or local streets which have little traffic. Second, it is expected that cellular radio network or It handles major roads which are covered by the traffic satellites will be used for communication when these control systems.Therefore, route guidance by the systems are available and reliable and many people need to interactive DRGS is suitable for long-distance routes, use these systems.The cellular phone currently cover while local DRGS is more suitable for short-distance most urban areas and look like the most promising routes offew kilometers. prospect for mobile offices in Korea, but the data exchangecosts will need to be considered as a significantly negative factor for the users of ITS.
Third, urban areas with well-developed highways can Traffic information support beacon networks using DSRC relatively cheaply : E A Service centeLIr, they can be connected to their longitudinal cables and Local PS satellite powered by the main supplies readily at all traffic signals authoritiesqll and street lighting posts. Sensor A Fourth, the packet-switched network is more suitable for Yo. ITS than circuit-switched network because small data Police glifrtA 1 nformatiort volumes of 10 to 200 bytes usually occur in road traffic application.The data stream is separated into shorter Weather osition Route guidance units called packets in packet-switched data network. station of car system The circuit-switched network offers point-to-point connection and is better suited for handling large data Information from volumes (e.g. file transfer).Traffic messages can be sent V cars as sensors to the in-car equipment using one of the defined data channels of circuit-switched network to update the Users Optimal dynamic navigation systems periodically or,on demand, route but in this mode every car equipment must be individually dialed. Base station Finally, one telecommunications medium will not be enough.We need to implement technically versatile and Figure 3. INTERACTIVE DRGS USING SATELLITE interoperable network options that are comprehensive and competitive, and encourage the development of low-cost future applications. 5.Strategy of ITS in Korea 5.2. Selection of DRGS The selection of telecommunication media and DRGS are described in Sections 5.1 and 5.2.The system Based on our discussion on DRGS in Section 4, we have configuration of an ITS is explained in Section 5.3. several ideas selecting a suitable DRGS for Korean ITS business.DRGS is the major key function of ATIS. 5.1 Selection of telecommunication media Upon calculating the optimum traffic allocation as a measure to achieve policy objectives, through information We have some idea on how to select the best bulletin boards, traffic signals, and in-vehicle unit an telecommunication media for Korean ITS business. unspecified number of automobiles are given First, FM subcarrier and cellular phone can be used to recommended routes and directions for proceeding.For provide real time traffic and roadway conditions in the this purpose, the route guidance must be processed by first stage of ITS, since existing broadcast base stations centrally interactive DRGS center in Korea.
3a60 Considering the infrastructure, different types of in- As shown in Figure 4, the Korean traffic information vehicle units will be clearly distinguished.It may take system processes its information in four stages: First, the several years to popularize these systems.It may be traffic information is collected from the police difficult to grasp both the origin and the destination and headquarters and Korean road traffic information also to predict the traffic flow satisfactorily.As the rate committee is collected according to the specific of popularization of high level service in-vehicle units administrative objectives of each source.Second, using interactiveDRGSgrows, traffic allocation and Integrated Logistics Information Network System (ILINS) guidance routes compatible with traffic management makes raw data from information sources classify and policy may be calculated more effectively.It is process for users.Third, ILINS distributes and transmits necessary to examine guidance algorithms if they the information to users within acceptable range of cost. correspond with the rate of popularization of in-vehicle The wireless data communication network, FM subcarrier, units.The accuracy of guidance routing calculation by andGPSsatellites are supposed to be used in Korea. this system at an earlier stage may not be much different Fourth, ILINS makes the usage of information be used for from that of a stand-alone in-vehicle unit using local promoting the safe, smooth flow of traffic for users.To DRGS.Therefore, drivers may not find any advantage achieve this goal, it will be necessary to get as many to the system and the popularization of high level service drivers as possible to begin using the system as quickly as in-vehicle unit will be delayed.Therefore, for the possible.It is also encouraged for manufacturer to propagation of high level service, attractive services need develop cheap and different kinds of information reception to be offered. devices.
5.3.System configuration of ITS 6.Conclusion
The Korean ITS master plan focused on the use of The wireless telecommunications technology and various cellular radio as the main carrier of traffic information DRGSfor ITS are introduced in this paper.It is andGPSsatellites for positioning and navigation of cars. implemented to make the structure of communication The functionality of a system based on the master plan infrastructure andDRGSin Korea. was demonstrated at test site.Particular attention was given to the use of duplex communications. FM broadcast type media using radio frequency or cellular phone is used for communication media providing real This system investigated the application of cellular radio time traffic and roadway condition and the broadcast type to improve road traffic informatics.All information is DRGSis supposed to be used in the first stage of route processed by a regional traffic information center. guidance in Korea.It is expected that trunked radio Along with historical data, the gathered data are used for system(TRS),wireless communication, beacon using traffic modeling.The traffic is predicted for the next DSRC,and satellites are used for communication and the few hours.Based on the prediction, suitable messages GPSsatellites are used for positioning and navigation of are generated to inform the in-car navigation system of cars when mobile communication environments are relevant traffic incidents and to control the traffic to available and reliable. avoid the development of congestion. InteractiveDRGSusing beacon, cellular radio network or The Korean ITS (especially, ATIS and CVO at present) satellites will be used when mobile telecommunication is a system utilizing wireless communication network; infrastructure is stable to collect much more correct scheduled deployment for commercial use in the spring information and when there are many users.The mixed of 1998.In order to increase cost effectiveness and DRGSusing combinations of localDRGSand interactive efficiency, the service will be launched first in major DRGSare also considered to be adapted. metropolitan areas where there is a greater need (e.g., due to chronic traffic congestion).Then the service will We will strategically pursue the Korean ITS based on the include other service areas as facilities.This system following criteria: feasibility of ITS basic objective, may be designed to provide real-time traffic information combination of public and private enterprise, marketability, to drivers by three communication media: wireless data making realization, reception of advanced technology, and network, cellular phone network and wide-area FM equally developing different area. multiplex broadcast.
311 339 National Infrastructure Network GPS System Car or truck satellite Police Goods owner 1,-674 p Wireless data Korean road traffic Transport information commitee Integrated Satellite company Logistics s; 1 Information?. Network Control Road traffic System I. Information FM -7 Center system Broadcast
Collection traffic information Classifying and Distributing and Usage of processing transmitting of information of information information Figure 4. THE CONFIGURATION OF KOREAN TRAFFIC INFORMATION SYSTEM
Reference UTMS news, Issue 5, October 1996, pp.1-8. 1. Arnold, James A., "Rural versus urban a 7. Vijay M. Patel and Carl W. Kain, communication infrastructure perspective", "Deployment of ITS/DSRC Application: Proceedings of the 1996 Annual Meeting of Status, Issues, and Options", Paper for the ITS AMERICA 6th, Vol. 2, Houston, Texas, World Congress, 1996. April, 1996, pp.1045-1051. 8. Wingfield, Paul A., Atkins, WS, 2. Atsushi Kawami, Hironao Kawashima, "Telecommunications Media for Transport Toshihiko Oda, and Taka Sugiura, "The Telematics", IEEE Communications Magazine, analysis for dynamic route guidance system October 1996, pp.62-67. considering the influences of intersections on 9. Yamada, Shinsaku, "The stategy and ordinary road network", The 3rd Annual deployment plan for VICS", IEEE World Congress on ITS at Orlando, Florida, Communications Magazine, October 1996, October, 1996. pp.94-97. 3. Elliott, Scott D. and Dailey, Daniel J., 10.Yoshimi Tanaka and Kouhei Takeuchi, "Wireless communications for intelligent "Dynamic route guidance systems and public transportation systems", 1995, Artech House, transportation priority systems in UTMS", Inc. Proceedings of the annual meetingofITS 4. Schulz, Wolfgang, "Traffic management America 6th, Vol. 1, 1996, pp.18 -24. improvement by integrating modern 11.Korean Construction & Transportation Bureau communication systems", IEEE and Police Bureau, "Intelligent Transport Communications Magazine, October 1996, System Master Plan", 1996, July pp.56-60. 5. UTMS Japan, "Establishing the Universal Traffic Management Society of Japan", UTMS news, Issue 1, November 1993, pp.1-8. 6. UTMS Japan, "Special issue for the third annual world congress on ITS '96 Orlando",
312 340 Call Origination and Termination Strategies for Mobile Satellite Systems
Rob Frieden Professor of Telecommunications Penn State University 201-D Carnegie Building University Park, Pennsylvania 16802 (814) 863-7996; rmf5®email.psu.edu
1. ABSTRACT
To achieve the global ubiquity promised, Mobile Satellite Service ("MSS") carriers will need to resolve many terrestrial issues including: a user friendly dialing regime that integrates MSS networks into the existing direct distance dialing system, transborder use of transceivers, and low cost interconnection of gateway facilites with the public switched telephoe network. This paper will examine call origination/termination strategies of several representative MSS operators with an eye toward identifying exposure to unanticipated expenses, particularly that imposed by the accounting rate settlements process used by carriers to divide international toll revenues. The paper concludes that users must have unlimited opportunities to use their MSS telephones across political boundaries, dialing must work seamlessly with the preexisting numbering system and MSS operators will have to confront the financial impact of the accounting rate regime.
2. Introduction
Mobile Satellite Service ("MSS") ventures 2) how to reach establish a user- like Iridium,' Globalstar 2 and ICO, Ltd. 3 friendly dialing regime that have triggered substantial interest and integrates MSS networks into scrutiny. However, little attention has the existing International focused on terrestrial network integration Direct Dialing ("MD") system; functions, i.e., how MSS operators will secure and seamless linkage between their satellite constellations and earthbound call originators 3) what worldwide configuration and recipients. To deliver the much touted of gateway earth stations will ubiquitous access, MSS carriers have to reduce traffic routing costs confront and resolve three major issues: without triggering expensive cross-border toll revenue 1) whether nations will grant division obligations. licenses and operational authority so that users can This paper will examine call origination and originate calls using terminals termination strategies of several acquired, possibly without a representative MSS operators with an eye license, in another country; toward considering how best to integrate MSS operations with conventional
313 341 international message telephone services telecommunications services that can be made ("IMTS") in a user friendly way and at the available to the American people. lowest cost to MSS operators. The paper concludes that MSS operators will benefit Satellite footprints, even from fast moving from a growing consensus reached under the space stations in low earth orbit, provide a auspices of the International near immediately available infrastructure Telecommunication Union ("ITU") to provide serving remote villagers and peripatetic "road a shared country code for IDD access to MSS warriors" alike. Despite substantial upfront networks and to promote cross-border use of costs ranging into the billions of dollars, these MSS transceivers. On the other hand, the ventures need only secure single digit paper concludes that MSS operators have penetration in each market segment to located their gateways primarily to satisfy succeed. However, the MSS system technical requirements of the satellite architecture is costly, complex and requires constellation, or as financial inducements for most of the budget to be expended before the investment in their ventures. Accordingly, if first minute of revenue generating traffic the current accounting rate settlement process OMITS. used by carriers to divide international toll revenues applies to new MSS ventures, then MSS networks require the construction, long and costly terrestrial links to and from launch and management of a constellation of gateways may impose substantially and not numerous satellites capable of providing fully anticipated costs. "service links" to receive traffic from handheld transceivers. The satellites also must process 2.1 MSS Basics "feeder link" traffic generated from earth stations, also known as "gateways," Technological innovations in mobile interconnected with the Public Switched communications have evolved to the point Telephone Network ("PSTN") so that where one can envision ubiquitous subscribers of the wireline telephone network communication network access provided via can originate and receive MSS calls. Typically handheld terminals: service and feeder links operate over different frequency bands, and some MSS The increasing availability of constellations use a third allocation to provide mobile communications over "inter-satellite links," i.e., transmission of the past decade is freeing traffic from one satellite to another onward business and residential toward a satellite overhead the gateway consumers from the physical situated closest to the intended call recipient. constraints of a wholly wired telecommunications network.. The number of required gateways in a MSS ..The revolution in mobile and network largely depends on whether the portable technologies has satellite constellation uses inter-satellite links. continued unabated in the As large distances may separate caller and call decade since cellular first was recipient, MSS operators have two basic authorized. Significant options: technological advances have expanded substantially the number and types of wireless
314342 1) install many gateways for 3. Four Types of MSS Satellite Ventures earth-based processing of traffic and routing to the 3.1 Incumbent Geostationary Orbiting gateway closest to the call Satellite Cooperatives recipient (Globalstar has opted for this option); or The traditional model for telecommunications via satellite involves space stations in 2) use inter-satellite links for geostationary orbit ("GSO") 22,300 miles space-based processing of above earth transmitting very large footprints traffic and routing to a smaller that can illuminate more than one third of the number of gateways (Iridium earth's surface. These satellites primarily has opted for this option). provide point-to-multipoint services, like video program delivery, with some point-to- Having numerous gateways reduces point applications, like telephone service, complexity and cost in satellite manufacture, particularly for sparse routes, locales well but increases earth station expenses and costs inland from where undersea cables make their incurred in switching and routing traffic landfall and mobile applications. among multiple gateways. Using inter- satellite links increases satellite cost and The International Mobile Satellite complexity, but reduces the ground-based Organization ("Inmarsat") 5 operates GSO investment as multiple satellites can route the satellites for maritime, aeronautical and land traffic to fewer, geographically dispersed mobile services. It operates as a cooperative earth stations. In either scenario, the network combining commercial goals with a universal also must include data processing and service mission that promotes cost averaging intelligent peripherals capable of: among dense and sparse routes, and affirmative efforts to recruit participation by identifying and locating call developing nations. Given this mission originators; Inmarsat has secured from national governments a special status with privileges determining their credit and immunities that, for example, exempt the worthiness and whether they organization from tax liability. have authority to originate calls from their current The traditional GSO satellite model has location; undergone some revision with the onset of private MSS ventures like the American originating and terminating Mobile Satellite Corporation ("AMSC") who MSS via conventional lack the cooperative structure and mission. In domestic and international response, Inmarsat seeks to privatize, despite switched telephony networks; having already spun-off ICO and Communications, a commercial MSS venture. 6 billing calls and updating data bases that provide registration information about subscribers. 343 315 3.2 New Satellite Orbits and Operators Because LEO satellites will operate in orbits much closer to earth, they can communicate Three new satellite system models have with handheld transceivers instead of the evolved: somewhat larger (2 kilogram) terminals now needed to communicate to GSO space 1) "Little" LEDs, a constellation stations. However, the closer proximity to of very small and relatively earth reduces the size of the satellite footprint inexpensive satellites operating and also eliminates synchronization with earth on Very High and Ultra High meaning that the satellites speed across a frequencies and providing non- particular location on earth from one horizon voice, data and position to the other in a matter of minutes. location services. Ventures in this model include Orbcomm LEO satellite networks will require a and VitaSat; constellation of space stations to provide global coverage. Because the satellites move 2) "Big" LEOs, a constellation of quickly over any single point on earth, the more numerous, complex, and operator must find a way to hand off traffic expensive satellites operating from one satellite to the other, or build such in the L-band (1.5-2.5 intelligence into the way earth stations track GigaHertz) and providing and manage the flow of traffic. In either voice, data and position scenario, LEO satellites present a moving location services to fixed and target thereby requiring greater network mobile users. Ventures in this management functionality than needed for model include Iridium, GSO satellite systems. Globalstar ICO, and Odyssey, a venture organized by TRW Consider LEO system architecture as the and Teleglobe of Canada; and opposite of wireless mobile systems like cellular radio. For terrestrial systems, 3) "Broadband Overlay mobility lies with the user who must be Satellites," a constellation of tracked using fixed transmitters on towers. LEO or GSO satellites With LEO systems the key mobility factor lies operating in the Ka-band (20- in the speeding satellites rendering user 30 GHz) to create a seamless movement comparatively insignificant. web capable of providing wideband capacity primarily to 3.3 Terrestrial Risk Issues fixed users. Ventures in this model include Much of the MSS risk assessment has Spaceway/Expressway, involved conventional cost and market Teledesic,8 Cyberstar, 9 analysis coupled with an examination of the Astrolink I° and technological challenges presented by Celestri. erecting, launching and managing a large "constellation" of satellites.
316 344 MSS entrepreneurs have presented business continue to provide cost-effective service cases demonstrating that their ventures will solutions. Whether they provide additional become profitable during the lifetime of the services to a larger number of user groups in first satellite generation based on traffic geographically diverse locales depends on the projections, estimates on user average breadth and scope of terrestrial options. If minutes of use ("MOU"), cost to launch and the concept of "plain old telephone service" operate the satellites and end user charges of expands though infrastructure development between $1.00 and $1.45 per MOU, plus a initiatives, and if mobility, ubiquity, bandwidth monthly access fee of $25-45 for AMSC and on demand and other concepts stimulate $1.75 per MOU, plus all domestic termination market development, then satellites will costs for Iridium voice services. 12 Globalstar become an even more significant factor by has announced a wholesale space segment complementing terrestrial opotions and by charge of between $0.35 and $0.53. 13 filling in gaps created by inadequate or non- existant terrestrial options. Assuming that a robust market exists for MSS even with a $3.00 per minute charge and that In support of the view that MSS will play an the operators can resolve all technological increasingly significant role in the global challenges, other risk factors bear telecommunication infrastructure a study consideration. group operating under the auspices of the ITU has proposed an amendment to the 3.31 Transborder Roaming Telecommunication Standardization Sector Recommendation E.164 to allow for the Subscribers of MSS will expect to use their shared use by MSS operators of the 881 transceivers across international borders. country code with an additional digit identifier However, transborder cellular roaming has to access a specific carrier. 15 Seamless proven difficult and costly, with some nations integration of MSS networks into the existing balking at the prospect of allowing use of international dialing regime will help promote transceivers licensed in another country, or user friendly, ubiquitous MSS. Additionally possibly not licensed at all. The ITU has many nations have supported a Memorandum organized conferences to consider ways for of Understanding facilitating the right of MSS nations to recognize the licensing or users to operate handsets across national authorization granted by another nation. 14 borders. 16 Absent such a mechanism for multilateral coordination, users may not be able to To facilitate PSTN access, MSS organizers operate their MSS transceivers in some need a globally dispersed set of partners, and countries, or they may experience probably would prefer that they have clout inconvenience, customs and immigration with their governments, or better yet, that problems, and delays in border crossings that they possess a monopoly telecommunications can reduce traffic volumes and the perceived franchise. From the perspective of resolving value of MSS. terrestrial network access issues, the ideal set of investors would have been Public Satellites provide telecommunication Telecommunications Organizations functionality where wireline and other administrations, or the government franchised terrestrial options are economically infeasible, INTELSAT/Inmarsat carriers as these or technologically inferior. Satellites will enterprises have the expertise, access to
317 345 markets, possibly exclusive current satellite apparently to shift the accounting rate cost franchises, clout with government and the risk totally onto users. Iridium now proposes potential to thwart market access and to offer a $1.75 per minute space segment competition. For the most part ventures, charge supplemented by a recurring $50 other than ICO have not established many monthly usage charge and all long distance alliances with incumbent satellite operators charges from gateways to call recipients. 17 and PT0s. Instead they have secured In the United States, an access charge regime investment primarily from manufacturers, exists in which MSS operators would recent market entrants in wireless terrestrial qualify' to receive and have terminated telecommunication markets, investment traffic over inter-exchange and local exchange groups, and launch providers. Accordingly, carrier facilities at no more than 10-15 cents a access to markets, licenses and authorizations minute for interstate service, with very long or and the opportunity to compete with intrastate routes ranging up to 20-30 cents a incumbents may be delayed, rendered more minute. costly, or denied in some nations. In other nations the routing of traffic to and 3.32 Gateways: The Weak Link in MSS from a gateway via switched facilities may cost substantially more. If MSS operators MSS operators need to fashion a workable have to route traffic as if it were conventional technical and financial plan for integrating IMTS, retail charges can range up to several their gateway earth stations with the dollars, particularly if the routing carriers conventional public switched telephone apply established international toll revenue networks throughout the world. The terms division agreements, known as the accounting and conditions of such access must not upset rate settlement process. MSS operators may MSS operators' business cases, including the have assumed that gateway operators can ability to offer a complete retail service at less secure agreements with non-investing national than $3.00 a minute. In sustaining this figure carriers to exempt gateway traffic from MSS operators must convince PSTN application of conventional high IMTS and operators that MSS traffic will not siphon off accounting rates. On high volume routes, traffic existing revenue streams through private line routings should solve the problem. bypassing conventional toll revenue division However, less dense routes may not generate agreements. enough traffic to load a private line efficiently, thereby resulting in the use of conventional MSS operators assume that domestic tail switched lines, customarily subject to circuits from and to international gateway accounting rate settlements. In either facilities will not present a major financial scenario, routing traffic exempt from an burden. Iridium initially included a $0.90 rate accounting rate settlement may trigger claims element in its end user $3.00 per minute that MSS operators have reneged on their charge to cover gateway expenses, promise not to bypass incumbent carriers' compensation to national carriers for networks. permitting calls to originate and terminate and domestic tail circuits. Subsequently it revised its business plan to factor in greater than anticipated geographical penetration by terrestrial cellular radio services and
318 346 3.4 Accounting Rate Basics August, 1997 the FCC yet again finetuned its accounting rate policy by revising its Until recent market liberalization decisions by settlement rate benchmarking system that national legislatures and regulatory agencies, prescribes a average cost settlement rate26 a single facilities-based international (one-half of an imputed accounting rate) that telecommunication carrier typically negotiated-. U.S. licensed carriers must strive to negotiate an "operating agreement" with other national with their foreign correspondents on a timely monopolists to arrange for the basis. The Commission calculated lower interconnection of lines, and the division of benchmark rates, but established a generally toll revenues for calls between nations. This longer transition time based on national arrangement provided for a correspondent income with an even longer transition for relationship between a select and limited set nations with fewer than one telephone line per of players for routing calls. The carriers' one hundred inhabitants. It created different operating agreements included an "accounting benchmarks and a variable timetable for rate" ostensibly identifying the approximate reaching them based on a nation's level of per minute costs the carriers would incur to economic development, as defined and link two international "half-circuits"' and for classified by the World Bank and the ITU. the two domestic "tail" circuits running to and from international gateway facilities." For The four levels of economic development routings involving two carriers,21the under this classification scheme are: (1) low correspondents typically would agree to a income, GNP per capita of less than $726; (2) 50/50 "settlement rate" whereby the carriers lower-middle income, $726-$2,895 per capita; would divide equally the accounting rate (3) upper-middle income, $2,896-$8,955 per based on the view that they equally capita; and (4) high income, $8,956 or participated in routing the call.22 more. 27 For upper income countries the FCC set a 15 cents per minute settlement rate The accounting rate regime has increasingly benchmark, down from a 1996 "upper end" generated anger and contempt among those rate of $0.154 rate and a calculated range of 9 carriers and users who incur higher than to 22 cents per minute. For both upper necessary costs as a result of the use of middle income countries and lower middle accounting rates as an accepted proxy for income countries the Commission set a 19 carrier costs and in turn a price floor below cents per minute settlement rate benchmark, which carriers are disinclined to price retail slightly down from the Commission's previous services. The failure of carriers to negotiate benchmark of $0.191 and a 12 to 26 cent lower accounting rates and commensurately range. For lower income countries the FCC higher end user charges' runs counter to set 23 cents per minute rate, slightly down substantial cost reductions accruing from from the Commission's previous $0.234 technological innovations and economies of benchmark and range of 13 to 33 cents. scale.24 The adopted transition schedule gives While retail charges for domestic and U.S.-licensed carriers operating on routes to international services significantly differ, the upper income countries one year from the FCC recently determined that actual cost of effective date of the Commission's Order service differences are "no more than a few (until January 1, 1999) to reach the applicable cents."25In a Report and Order released in benchmark rate. The carriers have two years,
O 319 347 or until January 1, 2000, to negotiate streams; or accounting rates at or below the benchmark with upper middle income countries, and until not participated in, or has not January 1, 2001 to reach the same benchmark endorsed the consensus with lower middle income countries. They reached at ITU-sponsored have until January 1, 2002 to reach the meetings designed to promote benchmark with low income countries, and an Global Mobile Personal additional year, until January 1, 2003, to do Communications by satellite. so with countries with telephone line penetration ("teledensity") of less than one Heretofore MSS operators have gone on per one hundred inhabitants. record with summary conclusions that terrestrial network integration will present no 3.41 The Accounting Rate Challenge problem." However, they appear not to have vigorously addressed this matter in view of MSS operators must address the immediate concerns like satellite construction consequences of having traffic subject to the and finance. MSS operators appear to have accounting rate regime when traffic to and assumed that a consensus will be reached from a gateway traverses international under the auspices of the ITU, 31 or that borders. 28 For its part the FCC has signalled investors and gateway operators can negotiate a willingness to support preferential or routing agreements on favorable terms. ITU different treatment of MSS traffic. The documents recognize the complexity in MSS- Commission exempted MSS traffic from its PSTN integration, but no concrete plan or International Settlements Policy 29 that consensus view has evolved. 32 requires equal division of accounting rates, equal treatment of all U.S. carriers and 3.5 The Worst Case Scenario: proportionate return of inbound U.S. traffic. Space Segment + Gateway Charge + Accounting Rate However, it remains to be seen whether and how over one hundred national governments Absent an exemption for traffic injected into will address the issue, particularly in countries IMTS traffic streams, having sufficient traffic where the incumbent international or to route traffic via private lines or operating a domestic carrier has: gateway in every country, MSS operators may find gateway-to-call recipient charges not invested in any MSS well exceeding the rate earmarked for that venture; portion of the overall route. The worst case MSS pricing scenario would entail a invested in one MSS venture summation of space segment (ranging from and desires to help its partner approximately $0.35 for Globalstar to$1.75 capture a monopoly or for Iridium) plus payments to the terminating dominant market share; gateway operator (assume $0.10) plus the applicable IMTS international accounting rate expressed concerns about the from the gateway country to the country of potential for bypass of the call recipient (as much as $3.00 for some preexisting routing routes). 33 Despite some downward trajectory arrangements and revenue in international accounting rates, many routes
320 348 still require more than what MSS organizers accounting rates overall, or where the most may have assumed their gateway operators likely call terminations will trigger the lowest would have to pay for routing traffic to possible accounting rates compared to relatively nearby, but cross-border adjacent nations. 36 destinations, e.g., U.S.-Guyana: $1.70; U.S. - Honduras or Panama,$1.20; U.S.-Mexico However, it appears that MSS operators have $0.70 34 and United Kingdom-Armenia: consider neither option in their gateway siting $2.00; U.K.-Moldova: 0.714 SDR ($1.10); plans. Gateway franchises constitute a major U.K.-Belarus: 0.483 SDR ($0.74); U.K- argaining chit an MSS organizer can use to Spain: 0.422 SDR ($0.65); U.K.-Portugal enhance the financial attractiveness of a 0.415 SDR($0.64). 35 venture as gateway operators accrue revenues from systemwide space segment utilization 4. Conclusion and for every call traversing their gateway facilities. Accordingly, the prospective MSS operators largely owe the spectrum investor seeks a large exclusive gateway allocation success achieved at the ITU on service area to maximize traffic streams and representations that the networks will not financial returns. The gateway investor may bypass incumbent carrier facilities, or concentrate on geographical scope of service otherwise reduce existing revenue streams. exclusivity, and may not have considered the Traffic carried by MSS operators in large part potential for high accounting rate settlements should generate a new revenue stream rather and perhaps the belated recognition that than cannibalize existing ones. However, additional gateways may be necessary to abate accounting rate avoidance strategies might the consequences of long and costly tail generate opposition even if the use of a circuits. 37 special MSS country code for dialing and other automatic number identification MSS operators may come to find terrestrial technologies could make it possible to call management and logistics pose challenges distinguish MSS traffic from "conventional" no less daunting than constructing, launching IMTS traffic. Because MSS gateway and managing a large constellation of operators probably will route traffic into satellites. MSS organizers and their investors IMTS trunks, MSS traffic will be commingled will need to devote as much time on ground- with "conventional" IMTS traffic and carriers based issues as they have devoted to their in the call recipient's country probably will future satellite constellations. insist that the applicable international accounting rate apply to all such traffic.
If application of an accounting rate proves inevitable, MSS operators having chosen to deploy a comparatively larger number of gateways may accrue a competitive advantage. With MSS architecture plans well along and given the significant expense in constructing gateways, construction costs, the second best alternative lies with installing gateways exclusively in countries with low 349 321 NOTES
1. Iridium will operate a $5 billion global constellation of 66 LEO satellites, about 400 miles above earth, able to provide voice, data facsimile and position determination services to handheld transceivers. Motorola created the Iridium concept and has spent almost five years and several hundred million dollars developing the technology and soliciting investors to form a global consortium. In 1993 an initial Private Placement of $700 million created a consortium comprised of a geographically diverse set of investors representing different aspects of space, telecommunications and venture capital industries: Khrunichev Enterprise, builder of the Russian Proton launch vehicle, China's Great Wall Industry Corp., operator of the Long March launch vehicle, Iridium Nippon, a Japanese investment group led by Daini Denden, a major cellular radio operator and Kyocera Corp., a diversified manufacturer, two venture capital groups, Mawarid Group of Saudi Arabia and Muidiri Investments BVI, Ltd. of Venezuela, incumbent carriers, BCE, Inc. of Canada, Sprint of the U.S. and STET of Italy, manufacturers of Iridium network equipment, Lockheed and Raytheon, and telecommunication enterprises in developing nations, including United Communications Industry of Thailand. In 1997 the venture raised $223 million through initial public offering of Iridium World Communications and sold S. Pacific gateway rights for $100 million. Total assets and investment totaled $2.9 billion.
2. Globalstar plans on operating a LEO constellation of 48 satellites in 8 orbital planes. With fewer satellites operating in orbits about 800 miles above earth, the $2.5 billion Globalstar network is projected to provide service at a cost of less than $0.50 a minute plus a monthly service charge of $60-70. However, less in-orbit resources means that the network will rely heavily on the widespread availability of gateway earth stations to route calls. Globalstar initially was organized by Loral/Space Systems, a satellite manufacturer and Qualcomm, Inc. an innovator in code division multiple access mobile radio technology and provider of vehicle location services via GSO satellites. In 1994, the venture announced that it had secured the infusion of several hundred million dollars from new investors including, Alcatel, a major French aerospace and telecommunication equipment manufacturer, France Telecom, the country's monopoly telecommunication carrier, Alenia, an Italian aerospace manufacturer, Deutsche Aerospace and DASA, aerospace manufacturers in Germany, Hundai, a major diversified Korean manufacturer, Dacom, Korea's second telecommunication carrier, Air Touch, the cellular radio spin-off of Pacific Telesis and Vodaphone, a British cellular radio operator.
3. ICO Global Communications was spun-off from the Inmarsat global cooperative in January 1995. It operates as a private company and plans on providing personal mobile global communications services in the year 2000. The venture has raised over $1.5 billion from 47 investors from 44 countries. The investors include many Inmarsat signatories, but also telecommunications and technology companies like Hughes Communications. The ICO space segment will comprise ten operational satellites and two in-orbit spares operating in middle earth orbit. The first launch is scheduled for 1998.
4. Amendment of the Commission's Rules to Establish New Personal Communications Services, GEN Docket No. 90-314, Notice of Proposed Rule Making and Tentative Decision, adding ET Docket No. 92-100 7 FCC Rcd. 5676, 5678 (1992).
322 350 5. See International Maritime Satellite Organization Convention, done at London September 3, 1976, entered into force July 16 1979, 31 U.S.T. 1, T.I.A.S. 9605.
6. See Rob Frieden, "Privatization of Satellite Cooperatives: Smothering a Golden Goose?" 36 Virginia Journal of International Law, No. 4 1001(Summer, 1996); Rob Frieden, "Should Intelsat and Inmarsat Privatize?" 18 Telecommunications Policy, No. 9, 679-686 (December, 1994).
7. Hughes Communicatioris, Inc. submitted the Spaceway broadband Ka-band application to the FCC in December, 1993. The company anticipates a first launch in late 1999 culminating in an 11 satellite constellation. Initially the Spaceway network will provide coverage to approximately 90% of the world's population segmented into four overlapping regions each with two geostationary satellites.In 1997 Hughes proposed the $3.85 billion Expressway satellite network, the first commercial proposal to use the 40-50-GHz frequency band. The Expressway proposal calls for 10 orbital slots, with two satellites each. Hughes plans to launch the first Expressway satellite 50 months after FCC approval.
8. Rather than provide ubiquitous narrowband (less than 4800 bits per second) capacity to mobile users, Teledesic will offer a global overlay of wideband functionality using Ka-band frequencies (20-30 GHz). The system will offer throughput rates in excess of 2 Megabits per second initially from 288 refrigerator sized satellites at a total cost of $9 billion. Like its visionary backers, which include Bill Gates and Craig McCaw, Teledesic pushes the envelop with an eye toward providing a ubiquitous, broadband Global Information Infrastructure. The system will commercialize a technology, developed as part of the Strategic Defense Initiative, that deploys observer ("Brilliant Eyes") and interrupter ("Brilliant Pebbles") satellites into a seamless, global array. In 1997 Boeing agreed to invest up to $100 million in the venture for a 10% share.
9. Loral Space and Communications Ltd. has proposed a comparatively modest three- satellite Ka-band system with an eye toward being the first to commence service in 1999. The company teamed up with Alcatel in 1997 to propose a $3.9 billion video and data venture called Sky Bridge, comprised of 64 LEO satellites.
10. Lockheed Martin Telecommunications has proposed a network of nine satellites operating from five orbital locations providing global coverage. The first satellite is scheduled for the first quarter of 2000 with complete deployment by 2001.
11. Motorola has proposed a $13 billion, Ka-band satellite network comprised of both geostationary and low earth orbiting satellite. Unveiled in June, 1997 the Celestri system will provide high-speed data and video transmissions to 99% of the globe beginning in 2002. The proposed system folds in parts of two previously-proposed Motorola satellite projects, Millennium and M-Star. The initial backbone of the system will be one GEO and 63 LEO satellites. While the LEO spacecraft would provide high-speed interactive communications around the globe, the GEO component would broadcast to users in a send-only mode. The total Celestri system will have capacity to transmit 80 gigabits per second. 351 323 12. Iridium initially proposed to offer a single, flat rate of $3.00 per MOU plus a monthly recurring cost of $50 for voice services. Variations in domestic termination costs and the possibility of having to pay a high settlement payment may have prompted the change in pricing strategy.
13. Douglas G. Dwyer, "Policy Challenges and Opportunities for Global Mobile Personal Communications by Satellite: The Globalstar Viewpoint," presented to the World Telecommunications Policy Forum (Geneva, 1996), available at http://www.ituint/pforum/ paper3-e.htm [hereinafter cited as Globalstar World Telecommunications Policy Forum Presentation].
14. See International Telecommunication Union, Informal Group--Memorandum of Understanding-GMPCS, Chairman's Report (Feb. 18, 1997) available at http://www.itu.int. pforum/ gmpcs-mou/report-e.htm; Memorandum of Understanding to Facilitate Arrangements for Global Mobile Personal Communications by Satellite, Including Regional Systems (Feb. 18, 1997) available at http://www.itu.int.pforum/gmpcs-mou/mou-e.htm.
15. See International Telecommunication Union, Telecommunication Standardization Sector, Study Group 2, COM 2-R53, Report of the Meeting of Study Group 2, Geneva, 14-24 May 1996-General Issues of Concern to the Study Group as a Whole, Sec. 11.2, Shared E.164 Country Code for GMSS Service Providers (June, 1996).
16. See International Telecommunication Union, Informal Group, Memorandum of Understanding to Facilitate Arrangements for Global Mobile Personal Communications by Satellite, Including Regional Systems (GMPCS-MoU) (Februaru 18, 1997); available at http://www.itu.ch/GMPCS/gmpcs-mou/final/mou-e.htm.
17. See Quentin Hardy, "Iridium Creates New Plan for Global Cellular Service," available at Wall Street Journal Interactive Edition, Company Briefing Book, Aug. 18 1997.
18. Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, Transport Rate Structure and Pricing and End User. Common Line Charges, CC Docket Nos. 96- 262, 94-1, 91-213, and 95-72, First Report and Order, FCC 97-158 (adopted May 7, 1997).
19. The half-circuit concept operates on the presumption that carrier correspondents achieve a "whole circuit" by linking two half-circuits at the theoretical midpoint of a submarine cable, or at the satellite providing the transmission link. In the submarine cable scenario, each carrier has responsibility to secure access to circuits linking transmission facilities on its territory to the location where the cable makes its landfall (referred to as the cablehead), possibly located in a different nation, and onward to the midpoint. For more background on international telecommunications operations and policy see Rob Frieden, International Telecommunications Handbook (Norwood, MA: Artech, 1996).
20. For a complete history of accounting rate regulation by the Federal Communications Commission, see Rob Frieden, "The Impact of Call-Back and Arbitrage on the Accounting Rate
324 352 Regime," 22 Telecommunications Policy, No. 1 (1997); Rob Frieden, "International Toll Revenue Division: Tackling the Inequities and Inefficiencies," 17 Telecommunications Policy No. 3, 221- 233 (April, 1993); R. Frieden, "Accounting Rates: The Business of International Telecommunications and the Incentive to Cheat," 43 Federal Communications Law Journal No. 2 111-139 (April, 1991).
21. One or more additional carriers participate in calls requiring "transiting," the use of an intermediary carrier. For example a carrier in the United Kingdom might use transit facilities of a United States carrier to route calls destined for Hong Kong. For conventional International Message Telephone Service ( "IMTS") traffic, a single transiting carrier would receive up to one- third of the applicable accounting rate, i.e., United Kingdom-Hong Kong in the above example.
22. The accounting rate system operates largely independent of the manner in which carriers invest in international satellites and submarine cable capacity.Carriers pool investments in satellite cooperatives like Inmarsat and submarine cable consortia. Such pooling should result in similar costs between nations using the same transmission facility, e.g., direct dialed international message telephone service between the United States and Sweden vis a vis calls between the United States and Finland. However, accounting rates may widely vary even for nearby or adjacent nations. In the above example, the United States-Sweden per conversation minute accounting rate is 0.12 Special Drawing Rights ("SDRs")($0.16 USD), but the United States- Finland accounting rate is 0.35 SDRs ($0.48). See United States Federal Communications Commission, International Bureau, Telecommunications Division, Policy and Facilities Branch, "Consolidated Accounting Rates of the United States (May 1, 1997), available at http://www.fcc.gov/ib/td/p6consolar.xls (Excel file).
23. A variety of factors impact the retail "collection charges" imposed on end users by carriers. They include the scope of competition, degree of regulatory oversight of rates and the applicable accounting rate. Carriers do not want to price services below the accounting rate, but may have to do so out of competitive necessity. Under such a scenario the carrier expects to recoup outbound traffic loses with inbound traffic subject to the above-cost accounting rate.
24. Accounting rates and retail charges have declined for many routes and have dropped significantly for some routes, particularly ones with facilities-based carrier competition on each side, i.e., more than one carrier owning and operating international transmission facilities. However, the rates still vastly exceed cost as evidenced by the existence of arbitrageurs who can exploit the difference between the actual cost of service and what carriers can charge.
25. International Settlement Rates, IB Docket No. 96-261, Notice of Proposed Rulemaking, 12 FCC Rcd. 6184, ¶9 (1996), Report and Order, FCC 97-280 (rel. Aug. 18, 1997)[hereinafter cited as 1997 Accounting Rate Report and Order]. The FCC reports that United States consumers pay on average $0.13 per minute for a domestic long distance call but $0.88 for an international call. See also Organisation for Economic Co-Operation and Development, Committee for Information, Computer and Communications Policy, Refile and Alternative Calling Procedures: Their Impact on Accounting Rates and Collection Charges, OCDE/GD(95)19 (1995), available at http://www.itu.int/intset/dot/dot.htm. 353 325 26. In calculating benchmarks the FCC used a version of Total Service Long Run Incremental Cost calculation to establish a "Tariffed Components Price" that uses the three specific network elements identified in ITU-T Recommendation D.140 as the recommended basis for establishing cost-oriented settlement rates: (1) international transmission facilities; (2) international switching facilities; and (3) national extension (domestic transport and termination). 1997 Accounting Rate Report and Order at ¶45.
27. Id. at ¶90. The FCC based its national income classifications on Social Indicators of Development, (Washington, D.C.: The World Bank, 1996).
28. Alternatively, the MSS operator may have assumed that the accounting rate issue does not present a grave problem, because 1) accounting rates will quickly trend downward to cost; or 2) most call terminations will occur on low accounting rate routes (primarily high volume routes to developed countries) thereby offsetting calls subject to high accounting rates and making it possible to offer an averaged and fixed "postalized" rate for all terminations.
29. Regulation of International Accounting Rates, CC Docket No. 90-337, (Phase II), Fourth Report and Order, FCC 96-459, 1996 WL 691815 (F.C.C.) at ¶73 (rel. Dec. 3, 1996)(permitting carriers to negotiate alternatives to the traditional settlement rate system for routes where effective competitive opportunities exist for U.S. carriers).
30. "Calls made via the Globalstar system are routed through the existing national infrastructure, ensuring that PTTs will receive their fair share of the revenue stream, and be able to exercise their customary authority. ...The Globalstar system, for example, will be fully integrated with existing fixed and cellular networks, and does not by-pass the PSTN. It will therefore fully comply with national service preferences, and the system can deny service to unauthorized users." Globalstar World Telecommunications Policy Forum Presentation.
31. Key officers of the ITU have made consensus building for Global Mobile Personal Communication Systems a priority. ITU forums have developed a set of principles and recommendations "reflect[ing] an emerging common understanding among policy makers and regulators and GMPCS operators about their common interest in achieving the early deployment of GMPCS systems, and realizing the full economic benefits of deployment, in a manner consistent with the goals of national policy in each ITU member country." International Telecommunication Union, World Telecommunication Advisory Council (WTAC) Report to the Secretary-General on GMPCS, (Jan 19, 1996), available at http: / /www.itu.int/ pforum/ wtacrepe.htm. However, the most concrete consensus document addresses the transceiver portability and the willingness of nations to permit use of such devices even if they have been licensed by another national government.
32. "Rapid deployment of GMPCS on an economically viable basis will only be possible if GMPCS operators are able to interconnect with the pre-existing public network, and if they can do so on technically and commercially reasonable terms. Further work on interconnection policy is desirable to clarify policy alternatives and assess the feasibility and desirability of achieving compatibility of national regulatory policies concerning GMPCS." Id.
326 354 33. Additional payments might be due the "host" PTO of country where a handheld transceiver call originated. If a call originated via one or more terrestrial networks, then the wireline carrier probably would receive an access payment as would the originating gateway operator. Some routing scenarios can involve both an originating and terminating gateway operator.
34. An FCC compilation of U.S. accounting rates is available at http://www.fcc.gov/ib/td/ pf/consolar.xls (excel file).
35. The Office of Telecommunications has compiled United Kingdom accounting rates and has made them available at http://www.oftel.gov.uk/feedback/interacl.htm.
36. While international accounting rates are positively correlated with distance, the degree of competition has the most significant impact on the accounting rate for any particular route.
37. The system architecture of Iridium limits the number of gateways with which a satellite can communicate possibly limiting or prohibiting subsequent constructionof additional gateways.
327 355 Mobile Satellite Services: Service Implementation will Determine Winners and Losers
Leslie A. Taylor, Betsy Ku lick Leslie Taylor Associates Bethesda, Maryland Pacific Telecommunications Conference Honolulu, Hawaii January 1998
ABSTRACT
In 1998, commercial mobile satellite services (MSS) will become available through IRIDIUM and possibly Globalstar. Other entities are building mobile satellite systems for commercial availability in the Twenty- first century. The regulatory and service challenges of delivering MSS to millions of customers are of such a magnitude that the technical risks in building and launching multiple satellite constellations will appear minimal by comparison. Service delivery will be challenging and complicated because it will be carried out by various entities not under the control of satellite owners.
INTRODUCTION efforts of other entities for marketing, pricing and Sometime this year, assuming continued success in sales support. implementing mobile satellite systems, commercial mobilesatelliteservices(MSS)willbecome Following a summary of projections for the mobile available through at least IRIDIUM and possibly satellitemarket,thispaperwillexplore the Globalstar. ICOGlobalCommunicationsis different approaches being used by the leading progressing toward commercial service by the year mobile satellite service providers to deliver their 2000. Regionalgeostationarysystemsare services. As will become apparent, there are completing their financing and building their myriad details and complexities that each operator systems. As the satellites are launched, increased will need to control and manage in order to realize attention turns toward the ground segment.It is revenue streams in the billions of dollars. apparent that the challenges of implementing the ground segment necessarytodelivermobile WHAT'S AT STAKE: THE SIZE OF THE satellite services to millions of customers are of MARKET such a magnitude that the technical risks involved inbuildingand launchingmultiplesatellite Over the last five years, Leslie Taylor Associates constellations will appear minimal by comparison. has closely studied the developing market in Service delivery particularly the way the MSS mobile satellite services. Last year, we released a providers have structured itwill be challenging comprehensive look at both the voice and data-only and complicated because it will be carried out by MSS market which included market projections for various and diverse entities not under the control global voice MSS market. Our study revealed a of the satellite system owners. potential worldwide market of some 11 million voicesubscribers by 2004,generating annual Each Big LEO mobile satellite service provider is revenues of $30 billion.By the year 2000, there planning to offer mobile satellite services on a will be at least two Big LEO systems in operation. wholesale basis.Each provider must arrange to One will be providing communications services sell capacity to cellular operators or other wireless primarily to the high end of the market and the providers who in turn will retail to the consumer. second will focus on extending the terrestrial fixed As a result, MSS operators will be to some extent and mobile infrastructures in countries around the dependent on the motivation and world. By 2002, a third Big LEO is likely to enter themarket,creatingadditionalcompetitive
328 36 pressureonbothBigLEOandregional Revenue figures for the mobile satellite systems geostationary MSS systems. vary considerably depending on the assumptions made. For the sake of simplicity, we assumed, in To fill in cellular and terrestrial communications our study, retail prices of $3 per minute for the infrastructure gaps, there will also be two regional first Big LEO and prices of $1 per minute for the (geostationary)systemsovertheAsia/Pacific second big LEO and regional mobile satellite market.They benefit from the ability to launch systems.Throughout the projection period, LTA and build their systems rapidly, and provide assumed a constant average number of minutes primarily cellularfill-in and regional roaming per subscriber for each mobile satellite system, and services possibly- at lower prices than the Big a constant average for per minute price.Our LEDs. results show a potential annual revenue of some $30 billion by 2004. One of the key populations of the MSS market segments is the "International Business Traveler." However, market projections are meaningless if How large is that segment? In 1995, almost 600 the service is not available on a retail level. As will million people traveled beyond the borders of their become apparent when we explore further the respective countries.That figure is expected to myriad details involved in actually delivering grow to at least 700 million by the year 2000. Of mobile satellite services, there will be a number of the total number traveling internationally, almost challenges to be faced in implementing mobile one-fifth do so on business, resulting in a total satellite services. These customer and revenue addressable market for mobile satellite figures will not be realized unless the MSS owners communications, in the year 2000, of some 119 are successful in building, launching, marketing million travelers.Even a segment of the non- and delivering MSS on a timely and cost effective business travelers will be interested in continued basis and have committed, and motivated end- easy access to mobile telecommunications and also service providers promoting use of the service. will be customers. THE GROUND NETWORK: THE LINK Lookingspecificallyatthe USrevealsan BETWEEN SUBSCRIBER AND NETWORK addressable market of 3 million Americans who travel beyond US borders, on business, to places The ground network is the link between the with inadequate terrestrial communications. They subscriber and thesatellitenetwork. While will form the main target for the US portion of the subscribers are not concerned with the number or global MSS market. type of gateways, or even with their location, they will be sensitive to quality of service and cost Another significant market segment for the MSS issues,bothofwhichwillaffectgateway industry is telecommunications infrastructure in operations. developing countries. Even in certain urban areas of developing countries, there are long waiting lists As arule,thespace segment owners have to receive telephone service.And, while cellular contracted out the design and development of the services are widely available in all major cities ground segment, and in two cases out of three, around the world, the rural build-out is proceeding havedecidedagainstowningthatsegment. at a much slower pace than has been experienced IRIDIUM and Globalstar, for example, expect their in the United States and Europe.Indonesia, for investor service providers to own and operate the example, has a cellular penetration rate of 0.15%. gateway network.ICO, however, will own its The Philippines and Thailand have slightly higher "Satellite Access Nodes (SANs)," contracting with rates, 1.2% and 2.4% respectively, but both are certain investors to manage and run the facilities. substantiallybelowlevels inindustrialized countries where 20% and up penetrationis Design and development ofthe ground common. The MSS operators are, quite correctly, infrastructure was an integral part of the overall targeting this market of underserved consumers. system design of the Big LEO systems. However, all three MSS providers contracted out, to other parties, the responsibility of ground system design
329 357 and manufacture. IRIDIUM contracted with This brings up the third area of complexity, which Motorola for development of the IRIDIUM ground is the need for different business relationships for infrastructure. In Globalstar's case, Qualcomm the MSS operator.Each MSS operator needs designed the earth station network. For the ICO partnership agreements with either investors or network, an international consortium, led by NEC other entities interested in providing MSS service Corp., is developing the ground segment design in their respective countries.In addition, service and equipment. agreements arerequired with cellularand/or wireless service providers to deliver the service to With the ground network now designed and theconsumerorbusiness. Interconnection manufactured, the satellite operators now face agreements are needed between the gateway threemajorchallenges,includingtechnical, operator and the operator of the country's PSTN. regulatory and commercial, to ensure that service Roaming agreements are needed to enable the is implemented and marketed. customer totravel unfettered,connecting via satellite or cellular system regardless of location. From the technical perspective there are various issues,including finding an optimalsitefor A further complication is the concern on the part of gateway earth stations, building thestations, many governmentauthoritiesoverpotential obtaining the appropriate export/import licenses, revenue bypass posed by these mobile systems. and procuring and installing switches and other Some form of revenue-sharing agreements will no equipment. Otherconsiderations include doubt be required in many countries. In general, developing the softwareto run the network these agreements will be between the local service (including operations, billing, customer service and provider and other telecommunications providers other functions); the software must be capable of (local and long distance) and in some instances running in many countries and must be flexible with government entities. enough to accommodate local needs while still meeting corporate requirements. IRIDIUM, in a The MSS operators have taken slightly different September 1997 filing with the US Securities and approaches on this issue.IRIDIUM, with its Exchange Commission, acknowledged that the complex space segment, has placed its technical development of the software for its system was sophistication on the satellites to accomplish some "one of the largest and most complex software of the connecting and switching. Accordingly, it is creation and integration tasks ever undertaken in planning a network thatwill need only11 a commercial satellite communications program." gateways, all owned by investment partners, to Finally,the gateway must besupplied with provide commercial, global voice communications reliable, continuous power supplies, and these services. Globalstar, on the other hand, is differ from one country to the next. building a less complex satellite system and thus requires at least 35 gateways, again, owned by Then there are regulatory issues: each system investors, to provide global commercial service. By needs government approval to operate the gateway the time the Globalstar system is completely built control stations in the appropriate frequencies; to out, there may be almost 100 gateways working usetheterminaluplinkspectrumL-band with its satellite network. ICO is building a 12- frequencies for mobile satellite services; to enable gateway network, which it will own.Operations consumers to operate the subscriber terminals for will be contracted to certain of its investors to mobilesatelliteservices;toserveasan operate. international carrier, if necessary; and to be able to connect to the Public Switched Telephone Network The gateway operator, as noted earlier, is a key (PSTN). In some cases, the gateway operator will participant in the implementation of the MSS be responsible for all these regulatory actions. In system.It is instructive to look at the IRIDIUM other cases, the gateway operator will be working system for a view of the number of responsibilities with retail cellular or wireless service providers to required of the gateway operator. implement the service and obtain appropriate authorizations. The IRIDIUM gateway operator is responsible for: Buying equipment from Motorola;
330 358 Providing gateway services; Orders for 35 more gateways have been placed by Getting licenses and permits to construct and Globalstar's partners, but in order to speed up operate the gateway; implementation, Globalstar has agreed to finance Designating service providers; approximately $80 million of the cost of up to 32 of Requiring compliance by the service provider the 35 gateways ordered by the service providers. with IRIDIUM-mandated guidelines; Globalstar expects to recover this cost through the Supporting IRIDIUM positions at World Radio sale of the gateways to the service providers. Conferences; Entering intosettlement agreements with Globalstar's strategic partner service providers service providers (to permit roaming); have been granted exclusive rights to provide Establishing interconnection agreements Globalstar service in 71 countries around the between gateway and local PSTN operators; world.Six additional service providers will offer Obtaining any necessary international carrier Globalstar service in 32 additional countries.To status to route traffic to and from the country maintain theirservice provider rights on an in which it is located; exclusive basis, the service providers are required Obtaining the right to route IRIDIUM traffic to make minimum payments to Globalstar equal to through the PSTN as an international carrier; 50% of target revenues. According to Globalstar, Obtaining the right to route traffic using leased based on current market estimates (which will be lines; and updated in 1998), such payments total about $5 Obtaining the necessary licenseto import billion through 2005. IRIDIUM Business Support Software. Globalstarwillreceivea payment of about In exchange for meeting these requirements, the $400,000 on each installed gateway sold to a gateway operator has the exclusive right to market Globalstar service provider. IRIDIUM services in its territory, and can acquire up to 9 million Class 1 interests at $ 0.00013 per Globalstar has commissioned the design of the share if they complete the gateway on schedule gatewaysfromQualcomm. Ownershipand and meet certain revenue criteria. operation however will be the responsibility of service providers in each country or region in Physicalconstructionofnineoftheeleven whichGlobalstaroperationsareauthorized. IRIDIUM gateway facilities was completed by year Manufacturingrightswillbelicensedby end 1997.Currently, IRIDIUM has commercial Qualcomm to at least one third-party operatinglicensesforgatewaysintheUS, telecommunications equipment manufacturer. Thailand, and Taiwan. It has experimental licenses in Korea, Brazil, Japan, Russia, and Italy. ICO has awarded contracts to several of its SAN The Saudi Arabian gateway contract has been operators, including COMSAT for the US SAN, signed, with construction due to commence. No Japan Satellite Phone for an Asian SAN and back action has occurred on the Chinese gateway. up earthstation,Deutsche Telekom forthe European SAN, INDOSAT for another Asian SAN, IRIDIUM has service licenses in 18 countries, and Telstra Australia.Distribution agreements including the US, Australia, Canada, Thailand, have been signed with service partners in 91 Colombia,Venezuela, New Zealand,Taiwan, countries, requiring them to market ICO through Argentina, Cook Islands, Guatemala, San Marco cellular operators and other service providers; and Micronesia. In addition, it has been awarded tailor products and applications to meet local or provisional licenses in five countries. Distribution regional market needs; manage, coordinate and agreements have been executed with support the administrative and technical interfaces approximately 40 roaming partners and service with the cellular operators, local service providers providers. and other retail outlets; facilitate market access; and provide customer service and support. The Globalstar system will begin operations with 39gateways:fourarealmostcompletein Australia,France, South Korea and the US.
331 359 ICO recently received its first operators license terminals, and is negotiating with Ericsson and from Korea, and expects other licenses to follow Panasonic. this year. However, despite the market projected for MSS, the number of phones to be manufactured will never reach the quantities of terrestrial wireless. GETTING THE PHONE TO MARKET: Consequently, the actual cost of the phones can ANOTHER HURDLE never be reduced to a very low number and the system operators and service providers may have Mobile satellite services will have no value if there to subsidize the phone price to the consumer to are insufficient quantities of consumer telephones generate service revenues. of attractive size, weight and price available. The MSS operators have contracted with equipment GMPCS MoU: ROLE OF THE ITU manufacturers to develop the phones to work with their respective systems.In addition, and in In light of the plethora of regulatory aspects recognition of the importance cellular will be to the involvedin providingglobalmobilepersonal MSS market, all of the MSS operators are planning communications services (GMPCS) via satellite to offer dual mode satellite/cellular phones. and in an effort to facilitate their introduction, the ITU hostedapolicyforumtoprovidean IRIDIUM,forexample,hascontractedwith opportunity for system providers and government Motorola to develop the specifications for the entities to fully explore the many issues. One of subscriber equipment. Motorola has also licensed the results was the establishment of a working Kyocera to build IRIDIUM phones, resulting in two group which has developed a Memorandum of potential suppliers of IRIDIUM phones. IRIDIUM Understanding to facilitate the free circulation of has indicated that it may be required to purchase a terminals.The MoU, which was signed in July number of phones,before commercial service 1997, agreed on the first set of arrangements for begins, to guarantee their availability. In addition, global cooperation on type approvals and licensing IRIDIUM has indicated that either it, its gateway terminalsandcustomsprocedurestoallow operatorsorserviceproviders may end up unrestricted transborder movement. The GMPCS subsidizing the cost of the hand held phones. MoUshouldprovehelpfultoreducethe complexitiesofmutualrecognitionoftype IntheGlobalstarsystem,Qualcomm/Sony, acceptance and facilitate easy roaming across Ericssonand TELITAL aredevelopinguser borders. terminals with production orders expected to be placed by the end of 1997.Globalstar intends to AMSC - LESSONS LEARNED ON SERVICE offer both dual mode and tri-mode phones to access IMPLEMENTATION both Globalstar and a variety of local land-based analog and digital cellular services. Having looked at the progress being made by the three leading Big LEO systems, it is instructive to QualcommhaslicensedbothEricssonand consider the experienceof an MSS provider TELITAL to manufacture Globalstar phones, and already in operation.American Mobile Satellite has agreed to grant similar licenses to at least one Corp., for example, has been providing commercial additional manufacturer. mobile satellite services since 1993, and has been operating its own satellite since 1995.Like the Globalstar will receive up to $10 on each phone, MSS providers described above,,AMSC planned to payable until Globalstar's funding of the design wholesale most of its satellite capacity.It, too, has been recovered. envisioned offering space segment to a multitude of cellularserviceproviders,enabling AMSC to ICO's approach toward handset licensing has been leverage off their expertise and access to the to establish an open standard and license several consumer market. To that end, in the years before manufacturers. ICOhascontractedwith its satellite's launch, AMSC devoted considerable Mitsubishi, NEC and Samsung for mobile satellite marketing efforttowardsobtainingresale
332 360 agreements with retail wireless providers. By the time it launched its satellite in 1995, AMSC had agreements with 156 authorized service providers (mainly cellular operators) covering 70% of the US population. While AMSC had been busy building its satellite and ground network, however, several events conspired to frustrate AMSC's original business plan.Among those challenges were difficultiesingettingsufficientnumbersof consumer telephone handsets to market, and the extensive terrestrial cellular build-out in the US, which has involved a large percentage of the country. Out of necessity,having seenits consumer market fail to materialize, AMSC has since radically redefined its business plan to no longer rely on cellular operators to market its service. Instead, it is concentrating on business to business marketing, focusing on fleet management applications for both voice and data applications. The consumer market is no longer the primary focus of its marketing efforts.
Like AMSC, the Big LEOs and GSO MSS systems must contend with extensive terrestrial cellular build-out as well as roaming among terrestrial systems. In particular, GSM systems permit roaming in literally dozens of countries. Like AMSC, the Big LEOs and GSO MSS systems will have to assume an active role in getting their handsets and service into the marketplace.
CONCLUSIONS The mobile satellite market is as complex as it promises to be lucrative. To realize the levels of subscribers and revenues that LTA as well as others have projected, the mobile satellite industry has to meet and overcome many challenges, including the technical, regulatory and business ventures addressed above.
361 333 International Agreements and the Roll-out of Hand-held Mobile Satellite Services
Joslyn Read VP International Affairs, World Space Management Corporation Washington, DC USA
1. ABSTRACT
There are a number of international agreements that were initiated during 1997 that will have a significant impact on the start-up of hand-held mobile satellite service. These include the World Trade Organization's Basic Telecommunications Agreement; the Global Mobile Personal Communications Systems by satellite memorandum of understanding and associated arrangements; and bilateral and regional satellite agreements. All of these agreements promise to advance the ability of satellite service providers to gain faster and better access to telecommunications markets worldwide. They also give governments the opportunity to discuss and develop consensus on the terms for such access on a multilateral level. These agreements, however, are not complete panaceas and need continued efforts to bring all their promised benefits. This paper discusses the achievements of these agreements and the challenges which mobile satellite companies still face despite the multilateral accords.
2. WORLD TRADE ORGANIZATION AGREEMENT discrimination between other Members of the ON BASIC TELECOMMUNICATIONS Agreement - the most-favored nation (MFN) principle.
2.1 BACKGROUND The WTO Group on Basic Telecommunications concluded on February 15, 1997 after several years of Established in 1995, the World Trade Organization negotiations. At the end of these negotiations, 69 (WTO) is an inter-governmental organization set up to countries representing more than 95% of the world's oversee the rules of international trade in goods and telecommunications revenues had committed, in whole services. Its purpose is to help trade flow smooth, in a or in part, to liberalize their communications regulations system based on rules, to settle trade disputes between and open their national markets to foreign service governments, and to organize trade negotiations. The suppliers. These commitments are to be ratified on WTO seeks to achieve freer trade through negotiation; November 30, 1997 at which time they will become more predictable trade policies around the world legally binding. Many of the commitments will take through the disciplines of the WTO agreements; greater effect starting January 1, 1998. trade overall; and a better allocation of resources. The international organization that preceded the WTO was Important elements of the commitments made under the General Agreement on Tariffs and Trade (GATT), the WTO Basic Telecommunications Agreement (BTA), although the GATT agreement is now part of the WTO like those of other trade commitments under the GATS, agreements. The GATT deals with trade in goods, the include the "service sectors" covered by a commitment; General Agreement on Trade in Services (GATS) deals the "modes of service supply" covered; and any with trade in services, and the Agreement on Trade- "limitations" on market access or national treatment for Related Aspects of Intellectual Property (TRIPS) deals service suppliers of WTO Member States. Members with such issues as copyright, trademarks, patents, may also make additional commitments which may not industrial designs, and trade secrets. The WTO fit easily in the above categories. Service sector applies continues to oversee the implementation of the to the special service for which a Member may wish to agreements reached in the 1986-94 Uruguay Round of identify special conditions of access (such as for local, world trade talks. The Uruguay Round led to the domestic or international long distance telephony). The creation of the WTO. modes of service supply include any conditions for the cross-border supply of service; the consumption of the The GATS has three basic principles: (1) all services service abroad; whether service suppliers of other are covered except those provided in the exercise of Members must establish a commercial presence in the governmental authority; (2) there should be no Member country, and whether there are any rules discrimination in favor of national providers the regarding the presence of natural persons. Limitations national treatment principle; and (3) there should be no on market access or national treatment refer to
334 362 limitations which a Member may place on a service Principles in the future, and a further six governments sector, a mode of supply or a service supplier within its committing to a portion of the Regulatory Principles. country. Once commitments are ratified and become legally binding, Members may not downgrade their The main elements of the Regulatory Principles commitments. Members may improve their committed countries to establish competitive commitments at any time. safeguards to prevent anti-competitive practices (such as anti - competitive cross-subsidization). Furthermore, 2.2 ACHIEVEMENTS OF THE WTO BASIC the Regulatory Principles ensure that suppliers of public TELECOMMUNICATIONS AGREEMENT telecommunications networks will allow all users to interconnect under non-discriminatory terms, 2.2.1 Significant Markets Have Participated conditions, rates and quality of service in a timely, transparent, and reasonable fashion. The procedures The WTO Basic Telecommunications Agreement has for this interconnection must be publicly available, as substantially advanced the liberalization of must be the resulting interconnection agreements or telecommunications in many major markets. The offer; and a mechanism for resolving disputes in a participation of 69 countries establishes a significant timely way with an independent domestic body must be foundation on which to build the global made available. The Regulatory Principles confirm the telecommunications market for the next century. Mobile right of nations to define the kind of universal service satellite services are uniquely and clearly positioned as obligations they wish to maintain, but these may not be a basic telecommunications service enabling MSS anti-competitive and must be administered in a service providers and satellite operators greatest transparent, non-discriminatory and cornpetitively- access to the markets liberalized through the WTO. neutral manner. Licensing criteria must be publicly available and the reasons for denial of a license must Specifically, for international services and facilities be made known to applicants. Countries adhering to (these include international wireline, international the Regulatory Principles also agreed to establish an wireless, and international satellite services unless independent regulator separate from and not conditioned in a Member's commitment), 52 countries accountable to any supplier of basic guaranteed full market access; and an additional five telecommunications services. Finally, with regard to countries will open their market for selected any procedures for the allocation and use of scarce international services. Commitments to fully open resources (Reference Paper, paragraph 6), including national markets to all satellite facilities and service frequencies, numbers and rights of way, countries providers totaled 49 out of the 69 country commitments: agreed they would be carried out in an objective, timely, 26 of these commitments start in 1998 and a further 14 transparent and non-discriminatory manner. The Members will open up for satellite services over the next current state of allocated frequency bands must be five years. Furthermore, many countries offered made publicly available. flexibility for foreign ownership or control of all telecommunications services and facilities in-country: 2.2.3 Dispute Resolution 24 Members will offer this flexibility starting in 1998, with another 20 to open over a phased-in period; and 12 The WTO has one unique feature that is not shared by further countries indicated that they would permit the other two agreements affecting mobile satellite foreign ownership for specific telecommunications service provision -- a legal mechanism to enforce services. national commitments. Under the WTO's dispute resolution procedures, WTO Member countries who 2.2.2 Reference Paper on Regulatory Principles believe that their service suppliers have been denied the benefit of the commitments made by another As mentioned above, during negotiations Members may Member, may take the case to a WTO dispute make "additional commitments". Many countries resolution panel. If the panel concludes that the adhered to one important consensus document of the complaint is justified, and if the Member continues to WTO Basic Telecommunications Agreement in their not comply, the aggrieved country is permitted to take additional commitments: the Reference Paper on legal trade retaliation to the value of the denied market Regulatory Principles. This appendix to national access, in any service or goods sector between the two commitments legally bound 55 countries to guarantee nations. the pro-competitive Regulatory Principles, with an additional four nations guaranteeing the Regulatory 2.3 WTO's REMAINING CHALLENGES
335 363 2.3.1 Important Markets Missing "Spectrum/frequency management is not, per se, a measure which needs to be listed under Article XVI. Clearly the WTO Basic Telecommunications Furthermore under the GATS each Member has Agreement is a very significant achievement for broad the right to exercise spectrum/frequency market liberalization. Equally as clearly, for a satellite management, which may affect the number of service provider to successfully provide its services on a service suppliers, provided that this is done in global scale, it must be permitted to serve as many accordance with Article VI and other relevant nations in its coverage area as possible. There are provisions of the GATS. This includes the ability to several significant and important markets which did not allocate frequency bands takinginto account make market opening commitments, or who are not yet existing and future needs. Also, Members which members of the WTO. Certain key satellite have made additional commitments in line with the marketplaces resisted or limited liberalization during the Reference Paper on regulatory principles are 1997 negotiations, including Argentina, Brazil, India, bound by its paragraph 6." Indonesia, Malaysia, Pakistan, the Philippines, South Africa and Thailand. Nations with large satellite The GATS Article VI requires that all domestic markets which are not yet members of the WTO and regulations be established and managed in an who must consider future market access commitments objective, timely, transparent, non-discriminatory and for basic telecommunications, include the People's least-burdensome manner. The GATS Article VI and Republic of China, Russia and Saudi Arabia. Satellite the Reference Paper paragraph 6 on allocation of companies wishing to access these markets will find scarce resources should ensure that global and that the WTO has not significantly changed their ability regional mobile satellite operators and service providers to provide satellite services to, from, or within these will be given fair consideration in the allocation and countries. assignment of frequencies on a national level. The Chairman's Note on Spectrum Availability should give 2.3.2 Spectrum Allocation and Assignment regulators the comfort and guidance they need to proceed with spectrum management activities in Throughout the last year of the basic accordance with the GATS principles. The telecommunications negotiations, nations asked when implementation and testing of these premises over the domestic spectrum management particularly as it next few years will demonstrate whether in fact relates to global or regional satellite systems - is spectrum management can be fairly conducted under considered a legitimate and sovereign policy activity GATS Article VI, or whether countries will use spectrum under the GATS, and when spectrum decisions could management as a means of introducing or maintaining pass over the line to become a barrier to trade? The competitive imbalances. group closed in around the view that the GATS controls the application of policy objectives, such as spectrum 2.3.3 National Security Concerns management, through the requirements for most- favored-nation treatment (GATS Article II), the This is another area where mobile satellite systems disciplines on domestic regulation (GATS Article VI), could face difficulty. The GATS contains specific and the provisions of GATS Article XVI defining market exemptions for governments to deny market access or access limitations that must be listed to pe maintained. national treatment for purposes of national security and A few weeks before the negotiations closed in February law enforcement. While the WTO BTA has achieved 1997, the Chairman of the negotiating group submitted significant and useful ma'r'ket opening commitments a Note to the plenary meeting regarding market access from large telecommunications marketplaces, it will be limitations on spectrum availability for consideration. up to MSS operators to provide the assurances to Although not formally adopted, the Note was heavily governmental authorities that the provision of used by nations to guide the drafting of commitments transnational mobile satellite services will not cause on spectrum availability, and has been incorporated into unmanageable national security or law enforcement the negotiating history for the talks. The Chairman's problems. Without these assurances, governments Note concluded that: may seek refuge behind the GATS exemptions.
2.3.4 Scope of the Agreement
The WTO Basic Telecommunications Agreement suffers from a certain lack of self-definition and from
336 364 the rapid development of innovation in the Specifically, these countries may be uncertain as to communications field. The GATS Article XXVIII defines how to authorize global mobile satellite systems to the "supply of a service" as the production, distribution, operate within their territory. They may be unclear as to marketing, sale, or delivery of a service. However, which regulatory models to follow (USA vs. Europe vs. when the Group on Basic Telecommunications was other approaches) or whether they should simply rely established, the term "basic telecommunications on the technical guidelines and clearances provided service" was not defined. Many nations raised the through the ITU. The ITU and nations with developed question (and continue to question) where the regulatory systems can provide assistance and negotiating group as a whole, and countries individually, information to governments just now developing their drew the line between,"basic telecommunications" and regulatory systems. Mobile satellite systems operators other communications. Did the negotiating mandate and service providers will need to further support these include all communications such as telephone, telex, countries in developing creative regulatory approaches telegraph, data, paging, video (point-to-point, and point- which satisfy both government and business to-multipoint) and multimedia (interactive or one-way) requirements. communications? The group further asked, if the mandate only included some of these services, how 3. THE ITU AND GLOBAL MOBILE PERSONAL could the impermissible be enforced in a digital world? COMMUNICATIONS BY SATELLITE These questions and the lack of precise definitions led many countries to take market access limitations or 3.1 BACKGROUND MFN exemptions for certain services. The first World Telecommunications Policy Forum The convergence of communications technologies and (WTPF) was proposed by the 1994 Kyoto servicestelecommunications vs. one-way media vs. Plenipotentiary Conference and took place in Geneva in interactive media -- has created an extremely difficult October 1996. The purpose of the WTPF was for all environment for governments to draw rigid trade ITU Member countries and participating private sector distinctions. The next generation of mobile satellite entities to address the policy and regulatory issues systems will require the flexibility to provide the full raised by the introduction of global mobile personal gamut of traditional, content-based, and personal communications systems and services by satellite interactive communications services. There has been (GMPCS). GMPCS systems can be geostationary or some discussion that multimedia communications and non-geostationary, fixed or mobile, broadband or other convergence issues will be taken up for review at narrowband, global or regional, but must be capable of a new round of negotiations scheduled to start in 2000. providing services directly to end - users. pqcuments submitted prior to the forum demonstrated Mat there Another question of scope was also considered during were three main perspectives on MRCS systems: (1) the last few months of the negotiations. Were the inter- satellite operators and, service providers stressed the governmental treaty-based satellite systems (e.g., need for open, equitalile, and non - discriminatory INTELSAT, Inmarsat, EUTELSAT and others) access to national markets on a &PM basis; (2) beneficiaries of the WTO structure and final regulators from developed countries supported open commitments? An informal consensus developed market access but indicated that the results of the around the understanding that the organizations were forum should be non-binding on Member governments; not "service suppliers of a Member" country'pursuant to and (3) regulators from developing countries the GATS, and therefore that they could not be emphasized the issues of national sovereignty and beneficiaries of the final BTA (or other WTO offerings). revenue bypass concerns. While this was not memorialized in a formal document of the negotiations, it may ultimately become academic At the October 1996 meeting, 128 ITU Member if the inter-governmental organizations become private, countries and 70 private sector members committed to national law companies. work together on common understandings for use by service providers and governments in the licensing of 2.3.5 Regulatory Preparedness GMPCS systems and services worldwide. The draft Memorandum of Understanding (MOU) which resulted Although countries have made liberalizing from this meeting was to be used as a framework for commitments to introduce competition in their arrangements to facilitate the global circulation and telecommunications markets, many are struggling with transborder roaming of GMPCS terminals. Specifically, exactly how to implement their commitments. the draft MOU called for agreement on such critical
337 365 commercial requirements as multinational type 3.2 GMPCS ACHIEVEMENTS approval of hand-sets, licensing of terminals, marking of terminals, free circulation of terminals across borders, 3.2.1 Worldwide Discussion on Matter of Concern to and access to traffic data (customs issues were added Many Countries Achieved later). Another important set of guidelines established by this meeting were the set of ten voluntary principles Given the high level of concern about GMPCS systems outlined in Opinion 2 of the October 1996 WTPF expressed by nations worldwide at the 1994 Kyoto Report. These principles addressed concepts of early Plenipotentiary, the conclusion of the informal introduction, international cooperation, global service multilateral process in October 1997 marked a very availability, GMPCS regulation, investment participation, significant achievement for the participating unauthorized use, user terminal and free circulation, governments, GMPCS system and service operators, universal access, interconnectivity, and further as well as for the ITU itself. Oftentimes, the opportunity cooperation. The October 1996 session called for to frankly discuss concerns leads to increased another meeting to take place in February 1997. understanding and consensus on possible solutions and next steps. The February 1997 MOU working group finalized the MOU. More than 120 delegates adopted the document, 3.2.2 Significant GMPCS Principles Agreed including 88 ITU Member states and 40 private sector members. The MOU was sent out to all ITU The sometimes low-profile GMPCS process has delegations for formal signature. In July 1997, the achieved in one year what mobile satellite proponents working group met again and agreed on the first set of have been seeking for more than a decade. Critical arrangements under the GMPCS MOU, including (1) principle agreements of the GMPCS MOU and the mutual recognition of GMPCS terminal type arrangements include: approvals; (2) a simplified process for the licensing of GMPCS terminals; (3) a method of identifying (marking) o GMPCS systems will be coordinated in GMPCS terminals; and (4) access to traffic data by accordance with ITU Radio Regulations; authorized national authorities. Recommendations on o GMPCS systems will be subject to the national principles for customs procedures in support of the laws and regulations of each country where unrestricted circulation of GMPCS terminals across GMPCS will be providing service; borders were also agreed. o Each GMPCS operator will take steps to inhibit the use of its system in any country that has not The October 1997 meeting approved the final text of all authorized its GMPCS service. arrangements. The ITU Secretary General invited all o To enhance cross- border circulation of terminals, Member countries and private sector participants to national authorities are invited: to mutually begin to implement the arrangements. The ITU, as recognize type approval and marking procedures; depository for these arrangements, will maintain a list of to recognize type approved terminals when standards and type approval specifications, and will essential criteria in the arrangements are met monitor the implementation of the MOU arrangements. (marked with "GMPCS MOU" on the equipment); All recommendations contained in the arrangements and to work towards a single type approval are voluntary and are consistent with the ten voluntary procedure in the medium- to long-term. principles adopted by the October 1996 WTPF. o Administrations are not recommended to require individual licenses for GMPCS terminals as long As of early November 1997, 18 ITU Member states plus as they conform to certain criteria in the the European Union had formally signed the MOU as arrangements. well as by 46 private sector member entities. The o Agreement that GMPCS system operators or governmental signatures as of early November were: service providers will provide, upon request, to the Argentina, Brazil, Cameroon, Chad, European Union, competent national authorities implementing Finland, Indonesia, Italy, Japan, Kenya, Korea, Laos, these arrangements, GMPCS traffic data Lebanon, Monaco, Mongolia, Norway, Tanzania, originating in or routed to its national territory. Tunisia, and USA. Implementation procedures are These reports will not provide confidential beginning to ramp up in some of these and additional customer information, but must be sufficient to countries already. assist with identification of unauthorized traffic flows.
338 366 o Requests that nations reduce customs duties on agreements can be made which satisfy localized GMPCS terminals placed on the market and to needs. The U.S. and Mexico have mutually developed exempt from fees and restrictions, those GMPCS satellite services accords which focus on certain terminals transiting a country on a temporary satellite services. To date, the U.S. and Mexico have basis. signed three satellite-related agreements:
3.2.3 GMPCS Fills in Gaps Left by WTO Basic o In April 1996: the Agreement Concerning the Telecommunications Agreement Transmission and Reception of Signals from Satellites for the Provision of Satellite Services to The GMPCS MOU and its arrangements address issues Users in the United Mexican States and the and service requirements which were not within the United States of America; scope of the WTO BTA and possibly not even within the o In November 1996: the Protocol Concerning the reach of bilateral agreements. For example, the WTO Transmission and Reception of Signals from BTA can not effectively address the terminal type Satellites for the Provision of Direct-to-Home approval, equipment standards, or customs issues on Satellite Services; and which the GMPCS group has developed consensus. o In October 1997: the Protocol Concerning the Transmission and Reception of Signals from 3.3 GMPCS REMAINING CHALLENGES Satellites for the Provision of Fixed-Satellite Services. 3.3.1 MOU and Arrangements not Legally Binding The U.S. and Mexico are currently preparing for Although the MOU and its arrangements have made discussions on a protocol for mobile satellite services in significant progress towards the worldwide early 1998, and the U.S. and Argentina have understanding of GMPCS systems and services, they progressed significantly towards an agreement on fixed- remain purely voluntary in their recommendations. satellite services. They provide important guidance to regulators developing regulatory systems in their own countries for As specialized and useful as these inter-governmental GMPCS but ultimately depend on the good will of all agreements might appear to be, it will not be feasible signatories (public and private alike) for effective for individual governments to negotiate these accords implementation. fast enough and broadly enough for the needs of global mobile satellite service providers. Furthermore, mobile 3.3.2 No Dispute Resolution satellite services may differ significantly in their need for multilateral breadth than other services such as fixed In addition to not being legally binding upon signatories, point-to-point and point-to-multipoint Satellite services. the GMPCS MOU and its arrangements doe not have a dispute resolution mechanism. Under certain 5. CONCLUSIONS circumstances, if a country withholds market access, a company (through its licensing Administration) could From the satellite service provider perspective, the seek redress through the WTO dispute resolution WTO basic telecommunications commitments mechanism or through international arbitration where combined with the GMPCS achievements offer to feasible. This would not, however, apply to all matters catalyze the availability of new-generation mobile related to the GMPCS MOU. It is important to note that satellite services in all countries. In particular, the non- the WTO dispute resolution mechanism is unusual in geostationary systems by their very design will facilitate the world of trade agreements. Enforcement practices non-discriminatory service to both developed and for more than a century have relied on international, developing countries. Liberalization and open market generally non-binding, arbitration to resolve disputes. access will be phased-in based on the time schedules identified in each country's WTO commitments. By 4. BILATERAL AND REGIONAL SATELLITE virtue of the WTO's MFN principle, companies from AGREEMENTS WTO members who did not make commitments will be able to benefit fully from the liberalization commitments Finally, in some cases, bilateral and regional that fellow WTO members did make. National agreements for satellite services offer the potential to commitments for market access will be enforceable build out access arrangements on .a more focused under GATS procedures. The GMPCS process basis than at the multinational level. Specific provides established templates for companies and
339 3 6 7 governments to start discussions - much of the hard policy work has been completed on a multinational level through the ITU in 1997.
From the national government perspective, both the WTO and the GMPCS processes offer countries who have not participated in the early stages of the negotiations to take part in the growing market for these services. All WTO and ITU member countries will be able to reap the benefits. Through the GMPCS process, regulators from all economies will have the opportunity to express their national needs and concerns, to benefit from the hard work of the GMPCS working groups, and to participate in finding appropriate national solutions side-by-side with the commercial providers. Matters of concern to national regulators will include compliance with national telephony rules, interconnection, universal service, national security, and revenue bypass. Bilateral agreements could provide some of the advantages accomplished by multilateral agreements. However, bilateral agreements are resource intensive and more limited than multilateral agreements can be for multiple parties.
In sum, for mobile satellite service providers, market access has never been more achievable than now with the WTO Basic Telecommunications Agreement and the GMPCS MOU and its arrangements. Without these two multilateral agreements and activities, mobile satellite service providers would not have the benefits of independent, transparent and non-discriminatory regulatory systems; and would need to negotiate for GMPCS service entry on an even more detailed level than they will in the post-1997 timeframe. Bilateral agreements may make incremental progress between some countries for some services but global progress for national governments and mobile satellite service providers will be best achieved through the multilateral telecommunications trade and policy fora of the combined WTO and the GMPCS process. Efforts must continue in these two arenas to improve the number and quality of WTO Member commitments for basic telecommunications, and to add momentum and strength to the GMPCS implementation activities. Multilateral agreements are clearly "greater than the sum of their parts" for all participants.
340 INMARSAT: A Shared Vision of the Future
George Novelli, VP Marketing & Business Development
Inmarsat 99 City Road London, ECY 4AX United Kingdom
1. ABSTRACT Inmarsat satellite system came into operation in 1982, New technology, new services, expanding markets, growing using the commercial capacity on three Marisat satellites competition and regulatory changes are all having profound it had inherited from Comsat, augmented by two Marecs effects on the way Inmarsat will operate in the decade to satellites from the European Space Agency, and then by come.In the face of these changes, this paper provides a Maritime Communications Subsystems on several perspective on Inmarsat's development and the key strategies Intelsat 5 satellites. it is adopting to meet the growth of competition. From a commercial perspective, Inmarsat quickly exceeded all expectations and within a couple of years 2. INTRODUCTION was trading with a surplus. As part of this success it Inmarsat was established 19 years ago in 1979 -- became apparent that the type of mobile satellite initially, to service the maritime community -- but since communications that Inmarsat could provide was of then its expanded to operate a global satellite interest for applications well beyond maritime. Indeed, communications system serving not only maritime virtually the entire evolution in mobile satellite telecommunication needs but also aeronautical, land communications has been pioneered by the Inmarsat mobile and other vertical markets including the corporate partnership. Planning began for the development of what traveller. was to become a multi-application globalmobile communications network. It grew out of an initiative of the then International Maritime Consultative Organisation, now the IMO. The This began to become reality with the launch of the drive was to harness the advantages of the then new world's first dedicated mobile communications satellites - satellite communications technology for the benefit of the the Inmarsat-2 series -- in 1990. These internationally maritime industries to improve distress and safety manufactured satellitesmajor contractors were British communications for life at sea. Aerospace, Matra and Hughes -- more than doubled the capacity of the Inmarsat system. And they allowed At the time of Inmarsat's establishment, mobile Inmarsat to begin to expand and update the range of communication via satellite was still an unexplored communications services -- and terminals -- that could technology, and there was a great deal of doubt in many operate with the system. circles as to whether it would be commercially viable. For this reason it was decided that Inmarsat should be a joint Throughout the 1980s there was only one mobile satellite co-operative venture of governments, with their service available Inmarsat-A. Signatories -- nominee organisations, in most cases PTTs Through an evolutionary process that involved shrinking and bearing the high risk -- contributing the capital the size and cost of equipment, making terminals more involved. portable, introducing new applications and systems,and lowering production costs Inmarsat has produced a range Right from the outset, as early as 1983, Inmarsat of other services. Thus, the original somewhat bulkyand surprised investors by beginning to provide them with a expensive Inmarsat-A analogue terminals were return. And, as history has shown, that was only the supplemented by a variety of digital terminals with beginning. Demand has continued to rise, new different specifications and capabilities, making them technologies and services have been introduced, and suitable for a broad range of applications at sea, in theair whole new markets opened up and developed. and on land which include:
3. INMARSAT AS A LEADER IN TECHNOLOGY Inmarsat-A was Inmarsat's original offering. This Inmarsat is still an internationally owned co-operative, analogue system supports phone, fax, telex and data at up now with 81 member countries. The first generation
341 369 to 64kbit/sec for maritime and land-mobile users. More associated with this massive programme are now largely than 25,000 Inmarsat-A terminals are in service. behind Inmarsat. Today it has a fully-operational system o Inmarsat-B, launched in 1994, is the digital to be used for the benefit of its customers and investors successor to Inmarsat-A. Because it makes more efficient alike. use of space segment resources it permits significant reductions in user charges. Inmarsat now faces the challenge of effectively marketing the potential offered by Inmarsat-3a particular O Inmarsat-C, introduced in the early 1990s, supports store-and-forward data messaging at 600 bits/sec to challenge for Inmarsat, and its service providers and terminals that are briefcase-sized and smaller. Inmarsat- Partners. C terminals are in service in maritime, land-mobile, aeronautical and remote-monitoring applications. The advanced spot beam technology of the Inmarsat-3 spacecraft, and their overall capacity, is leading to a new O Since 1992 Inmarsat-M and 1996 Inmarsat-phone range of service products that are bringing the has supported the world's smallest satellite phone advantages of mobile satellite communications to a much terminalsbriefcase-sized and smaller. Also provided are wider global audience. fax and 2.4kbit/sec data. ® The Inmarsat-Aero system supports phone, fax and In addition, the evolution towards an ever-widening data up to 10.5kbit/sec for the purposes of passenger family of new terminals and services led to the communications, air traffic control, and airline establishment of ICO. Inmarsat was the founder, and is operational and administrative communications. Almost a major shareholder of, ICO, which is developing an all the world's leading international airlines have intermediate circular orbit satellite system for hand-held committed to using the system. telephone communications. Inmarsat will develop and ® Introduced in 1997 Inmarsat-D, offers global wholesale some specialised services using ICO satellites messaging to pocket-sized and vehicle-mounted for maritime and aeronautical customers, to complement receivers. In 1997 A message-acknowledgement facility the total range of products Inmarsat supplies to these was introduced under the enhanced D+ service communities.
It is worth noting by January 1997 Inmarsat had Furthermore, Inmarsat has established over the years commissioned 65,000 terminals, today it has over levels of technical specifications. These are covered in 100,000 in operation around the world. Its revenues the Specification Development Manuals. In general, continue to grow strongly against a background of these are available to all manufacturers. Inmarsat continually lower user charges. requires those manufacturers wanting to design products for the services provided by Inmarsat to build to very Inmarsat is currently enjoying the dawn of the third thorough technical requirements. Once built there is a generation of Inmarsat satellites and services. In late process of type approval by Inmarsat to manufacturers January it will launch the fifth Inmarsat-3, built by which can consist of days or months of beta testing of the Lockheed Martin and Matra Marconi. The deployment of new equipment. the satellite - an in-orbit spare - completes Inmarsat's global coverage with I-3s giving Inmarsat a total Over the years this has resulted in a number of constellation of 9 geostationary satellites. specialised manufacturers whose business is to produce products for use with the Inmarsat network becoming The Inmarsat-2s more than doubled the previous capacity established as a flourishing global network which wit had been operating. The Inmarsat-3s have improved continues to grow as new products are launched. our capacity eight-fold over the Itunarsat-2s. This greatly increased capacity and the Inmarsat-3 spot beam capability are enabling Inmarsat to provide new systems 4. BREAKING DOWN REGULATORY BARRIERS that expand the services available to professional mobile Technically, it is possible to use satellite communications communicators, and other businessmen, professionals all over the world. But some countries do not permit the and hobbyists who need the support of mobile use of Inmarsat equipment -- or make it prohibitively communications. expensive to do so. These systems provided the basis for the Inmarsat -phone the world's first mobile satellite phone. Inmarsat D+, Inmarsat is encouraging those countries to remove or one and two way data and message exchange to pocket reduce the regulatory barriers which restrict or prevent sized terminals; and the shortly to be launched Aero-I the use of its satcom equipment within their borders. service, a compact economical multi-channel communications system designed to meet the needs of The organisation is particularly concerned to open up medium haul airlines. possibilities for users of Inmarsat -phone and users in the With around $1-billion in the Inmarsat-3 system -- land transport, rural and remote sectors, so that satellites, launch vehicles and ground segment the risks international travellers may use their mobile satellite communications systems wherever they are in the world.
342 3 7 0 Various barriers presently exist. Some countries prohibit context of the Information Technology Agreement, any use of mobile satcom equipment. Others permit it agreed by WTO ministers in December 1996. only in particular circumstances, such as for disaster relief or emergencies, or in limited geographical areas. Regional directors and other representatives of Inmarsat are visiting telecommunications ministers in different High licence fees, taxes and customs duties put mobile countries to discuss trans-border agreements. satcoms out of reach of many potential users; in some countries the annual licence fee is several thousand Inmarsat's short-term targets include the reduction of dollars, three times the cost of the equipment itself. import duties to around 10 per cent of the equipment's Additional type-approval is sometimes necessary, even purchase price (or, in one case, by 98 per cent) within six though the equipment has been type-approved elsewhere months to a year; reducing licence fees (by about 95 per or meets internationally recognised standards. cent in some cases) within six to nine months; and for regulations to be changed to permit the use of Inmarsat- Often these regulatory barriers exist because the country phone in a number of countries where it is presently not does not have a policy or regulatory framework covering allowed. the mobile satellite services or because they fear bypass of their terrestrial network (even in areas where there is no 5. INMARSAT TODAY Inmarsat today is a financially successful and thriving network to bypass). Some countries are concerned that mobile satellite service partnership.It has evolved from mobile earth stations may be used by drug smugglers or a single service system into a full-service global mobile- car thieves to avoid detection, but criminals intent on satellite system for all mobile user communities - breaking the law will do so anyway. On the other hand, maritime, aeronautical, and land - with multiple mobile earth stations can be helpful to law enforcement services.It operates globally but acts locally through agencies to combat crime. Another reason for regulatory Signatories and other service providers who act Inmarsat In the same time revenues barriers is concern about interference to other telecom services to end-customers. have grown many-fold. Inmarsat has been the chief equipment, but spectrum sharing studies available from architect behind growth of mobile satellite Inmarsat show that sharing is possible. communications and has greatly benefited the newcomers to the game. Indeed, many of the personnel working for Restrictive regulations usually impede only the country's the newcomers actually got their starts with some of the own socio-economic and political development, Inmarsat signatories or the organization itself. especially in remote and rural areas where Inmarsat terminals tend to be used the most because of inadequate or non-existent alternative facilities. In addition to socio- 6. TOWARD A SHARED VISION OF THE FUTURE economic benefits, a liberalised telecom environment will While there is always uncertainty in trying to predict the help generate new revenues for service providers and future, Inmarsat has developed a strong and coherent vision others in the country. of the future upon which its strategic approach is based. It is focusing its efforts around five strategic initiatives: In February 1997, the International Telecommunication building further Inmarsat's position as a leading Union (ITU) hosted a meeting of 88 administrations, provider of satellite telecommunications in our key satellite system operators, manufacturers and service maritime, aeronautical and land mobile markets; providers which agreed a Memorandum of improving the yield from its second and third Understanding (MoU), the aim of which is to facilitate generation of satellites by innovative pricing and the free circulation of global mobile personal services which will appeal to a new range of markets; communications by satellite (GMPCS) terminals. The expanding and continuingto expand Inmarsat's MoU group is expected to develop arrangements for type distribution channels, especially with regard to some approval, licensing, marking of terminals, customs duties of the new products and services Inmarsat has and access to traffic data. recently introduced and ensuring integration of mobile satellite service in mainstream communications; Inmarsat it is building a more effective presence in The World Trade Organisation and its member states some of the regional markets. have also taken steps to liberalise telecommunications Along with its partners it is aiming to get closer to its services, including satellite services, as a result of the customers whoever they are. It is listening to their successful negotiations concluded within the Group on needs and working with them to ensuring that it Basic Telecoms (GBT) in February 1997 and to lower provides good support to keep their loyalty. customs duties on information technology and telecom equipment, including mobile earth stations, in the
371 343 7. THE CHALLENGES b. The development of present and future markets 7.1 There are new challenges as Inmarsat moves forward. As the decade progresses, Inmarsat's traditional markets in These include: the maritime, aeronautical and land mobile communities will vast new markets - global mobile traveller be joined by vast new markets for personal and multi-media - global mobile office; mobile satellite communications. o the need for package solutions and pricing flexibility o the need for new ways of doing business; These markets will include business travellers,cellular o the need to restructure to provide more choices; extension and national roaming markets and Inmarsat services will attract those who are out of reach of cellular o Competition is exploding around the world which is service or who move through areas of incompatible cellular in turn leading to an increase in choice for customers, systems. Given that cellular is expected to reach less than 60 a fall in real prices and an increasingly rapid rate of per cent of the world's population by the year 2000, the innovation. potential is considerable andin developing these services Inmarsat is tracking developments in the terrestrial mobile Inmarsat faces challenges on two fronts -- from existing networks to ensure that its services present a complimentary regional mobile satellite communication operators and extension to meet the needs of these markets. from new companies such as Iridium, Globalstar and Odyssey. c. Inmarsat's marketing strategy A strong marketing strategy for developing its mobile But some of the newcomers to the field of mobile satellite satellite family of services is seen as one of the keys to communications have yet to face up to many of the success and to meeting competition. Central to this strategy challenges ahead of them which include: is that each member of the family is a part of a total, keeping a project of the magnitude of a satellite system integrated service strongly branded and marketed under the within long term financial projections; via Inmarsat umbrella. o terrestrialcellularsystemsencroachingintoless populated areas; With proven services already on the market Inmarsat begins o successfully optimising the distribution chain, through with significant strategic and commercial advantages ahead service providers to end retailers; of the forthcoming competition. the pace of technological and market change. Today, Inmarsat has very focused vertical markets. It Ultimately, the billion dollar question for all is how many does not see itself competing with the LEDs. Their paths global LEO and MEO operators and regional GEO will cross but the market strategy is to provide services to aspirants can the market sustain? All are entering an the global mobile office. This is not just a phone (voice industry -- mobile telecommunications -- which has service) but a complete communications package: voice, increasingly narrow margins and an increasing focus on data, e-mail, internet, fax and video-conferencing. This niche markets. Where there are few precedents it is is an evolutionary path for Inmarsat -- not something clearly a major challenge to accurately determine the new and untried viability of several operators catering for the needs of the market. d. The development of personal mobile satellite communications 7.2 INMARSAT'S STRATEGIC APPROACH Longer-term, the personal mobile satellite services has been a. The enhancement of existing services considered the next step in the organization's strategy. The focus is on: Although a key strategic focus is mobile multi-media satellite identifying business opportunities in the first decade communications,Inmarsatisfullycommittedtothe of the next century; provision and further development of services to traditional select the most promising; markets such as the aeronautical and maritime communities O identifying the most effective technical and and specialized land mobile markets. This is not only commercial means of delivering these services; important for the customer and for Inmarsat, but for planning for their introduction and for the space Signatories who have built their Inmarsat business, to date, segment needed to support them; onservingthesetraditionalcustomers. Continuous development for its existing markets offering greater value to o promoting timely implementation. our existing customers. Thesedevelopmentshavebeenintegratedundera Inmarsat has also taken on and will continue to provide programme umbrella known as Horizons. Inmarsat's important public service obligations, such as safety and research has concluded there is an unnerved need for distress services. These services are core to its business today satellites delivering service with greater functionality than and will be closely protected if it ultimately becomes a full handheld satellite communications and greater mobility than blown commercial company. VSAT-based services. The Horizons plan builds on Inmarsat's demonstrated expertise in delivering satellite
344 372 services to terminals,to provide high bandwidth data change further but has all of the institutional means channels with high frequency re-use at a low price per bit to needed to restructure and to provide the investment mobileusers. ItwillbeaPersonalMultimedia flexibility, and the right governance and management Communicationsservice, providing standard office capability to successfully compete in the future; applications to standard portable, PC based terminals. It is Inmarsatmembersandusersbenefitfromthe anticipated that the new system will operate alongside the organization'sstronginternationalcharacterand current satellites by 2001 or 2002, providing a wide ownership; range of multi-media services to mobile terminals. Although Inmarsat operates globally,it acts through its unique structure of signatories and service There seems little doubt that mobile satellite operators providers who are close to their markets; will be called on to support much higher data rates than Any manufactureranywhereintheworldcan are the norm at present. Project Horizons is being driven manufacture and sell Inmarsat terminals, as long as they by the market, not the mechanics of satellite meet the type approval requirements; communications. Inmarsat has in the past been accused The Inmarsat systemensures common equipment of being an engineering-led organisation, delivering standards around the world; technical excellence in its own time. Technology It is here today! obviously will have a bearing on what Inmarsat offers in the next century but it has moved to a marketing led operation. d. Strategies for institutional change Because of changing technology, services and markets, it will not be possible in the future to operate the mobile satellite business in the same way as has been done in the past. Although successful now, Inmarsat needs to change in order to be ready to succeed in the emerging environment. During 1997 a major effort was directed at finding the most appropriate structure for Inmarsat itself, an effort which involved Signatories, Council, Parties and the Directorate to determine the: the appropriate legal form for Inmarsat; governance /management flexibility; valuation / investment / shares; ground segment infrastructure; service provision / marketing / tariffs. 8 CONCLUSION THE INMARSAT ADVANTAGE Inmarsat has begun the push to anticipate and answer the many other needs of the 21st century mobile satcoms community. The future of communications lies in the Internet, and Inmarsat has the products to enable people to use the Internet. The organisation believes it has the ability to greatly influence the work and leisure lifestyles of millions of people around the world. The task is demanding but certainly feasible, given a shared vision of the future and a common will to succeed. In summary: Inmarsat is well positioned and has enormous strengths and advantages which are particularly important at this time; Inmarsat a highly successful organization, with growing markets, revenues and a financially robust balance sheet; Inmarsat is now recognized as a global centre of mobile satellite communications know-how and experience; Its business integrity is appreciated around the world; Ithas already shown itself to be highly adaptable, moving forward from a "treaty" organization to one which isincreasingly commercial. Inmarsat needs to 373 345 Competition and Convergence in Canadian Telecommunications
Laurence J.E. Dunbar Partner Johnston & Buchan Ottawa, Canada
1. ABSTRACT
Through a series of initiatives over the past five years, Canada has managed the difficult transition from a highly regulated environment to one in which almost all sectors of the telecommunications industry are now open to competition. Moreover, this has been accomplished without jeopardizing Canada's longstanding broadcasting and telecommunications policy objectives, including the provision of universal telephone service at affordable rates and the maintenance of a uniquely Canadian broadcasting policy. As a result, the Canadian regulatory framework provides an alternative model for nations confronted by the challenge of introducing competition and complying with the WTO Reference Paper, while maintaining domestic telecommunications and broadcasting policies.
2.0 INTRODUCTION permit former monopolists to enter each others markets. The past year has witnessed significant changes in the Canadian telecommunications sector, as Given that competition in the provision of public steps have been taken to open the last vestiges long-distance services was only introduced in of monopoly to competition. mid-1992, the evolution of the Canadian regulatory framework towards competition and Important new initiatives include the following: convergence has been relatively swift. However, in marked contrast with most countries, where (1) introduction of competition in switched the liberalization of telecommunications markets local telephony; has been mandated by either government legislation or anti-trust decree, the transition to a (2) introduction of competition in competitive framework in Canada has been broadcasting distribution using precipitated in large measure by the CRTC, an terrestrial, DTH and local multi-point independent regulatory agency entrusted with communications systems; wide-ranging powers to regulate both the telecommunications and broadcasting industries. (3) introduction of competitive PCS services; This paper explores the CRTC's approach to introducing competition in various market (4) introduction of price cap regulation for segments, including its approach to such issues dominant LECs; and as interconnection, anti-competitive conduct and universal service. These are issues which many (5) introduction of legislation for licensing other countries will now have to address, as they international carriers and resellers. seek to implement the World Trade Organization (WTO) Reference Paper. Canada's experience When coupled with prior initiatives to open the in seeking to find workable solutions to these public long distance market, the data market and problems over the past five years may therefore the wireless market to competition, virtually provide a useful model for others to consider. every aspect of telecommunications will be subject to competitive market forces. In addition, Finally, the paper explores recent steps taken by the way has been opened for convergence the Government of Canada to fulfill its WTO between the broadcast distribution and commitments to open the international telecom telephony sectors as new convergence policies sector to competition.
346 374 3.0 PRO-COMPETITIVE POLICY IN THE voting shares of a carrier in order for it to be TELECOMMUNICATIONS ACT eligible to operate. At least 80% of the Board of Directors must be Canadians and the Canada's new Telecommunications Act came corporation must not be otherwise controlled by into force on October 25, 1993. It updates in non-Canadians. This 80% requirement has several important respects the antiquated been relaxed somewhat in the case of holding Railway Act, that used to govern companies that control Canadian carriers. The telecommunications regulation. Perhaps most regulations require that 66 2/3% of the voting importantly, section 7 of the Act contains a set of shares be held by Canadians in order for the principles which describe the objectives of holding company to qualify as "Canadian." In Canadian telecommunications policy. The practice, this has led some carriers to have up to CRTC is required to exercise its powers with a 20% foreign ownership at the operating view to implementing these policy objectives. company level and a further 33 1/3% at the The new legislation has a pro-competitive slant holding company level, for a total foreign which is exhibited in paragraphs (c) and (f) of component of approximately 46.6%. section 7. These provisions now give the CRTC a clearer mandate to pursue its competitive and 4.0 PRO-COMPETITIVE deregulatory policies: INTERCONNECTION POLICIES
(c) to enhance the efficiency and Canada has historically had nine regional competitiveness, at the national telephone companies providing services in and international levels, of distinct geographical markets which are usually Canadian telecommunications; coincident with provincial borders. Each of these companies is vertically integrated providing both (f) to foster increased reliance on local and long distance services within their market forces for the provision respective operating territories. They cooperate of telecommunications services with each other in a consortium known as and to ensure that regulation, Stentor to provide common national and where required, is efficient and international services (in conjunction with effective; Teleglobe Canada on overseas calls).
Section 34 of the new Act is also important in Unlike the situation in the United States, where this regard. This section allows the CRTC to the antitrust laws and judicial system were used forbear from rate regulation (deregulate) in to structurally separate AT&T's local and long circumstances that are consistent with Canadian distance businesses, the Canadian approach telecommunications policy objectives, where a has generally favoured the use of non-structural service is subject to competition which is safeguards to protect against abuses of this sufficient to protect the interests of users. The vertical structure and, in particular, to prevent the CRTC is not permitted to refrain from regulation telephone companies from exploiting their of a service when to do so would be likely to control of the local network to advance their "impair unduly the establishment or continuance position in other more competitive market of a competitive market for that service." segments. A number of these approaches to non-structural safeguards are discussed below. This new power, and the tests for regulatory forbearance which it establishes, now provide 4.1 No "Head-Start" Rules the CRTC with the means and an analytical framework to deregulate services or classes of No "head-start" rules have been used effectively services when competitive market forces are in some instances to encourage the telephone considered sufficient to discipline the telephone companies, and more recently the cellular and companies' pricing strategies. cable television companies, to negotiate competitive access arrangements to their The restriction on foreign ownership constitutes networks in instances where new markets are another important element of the legislation. being opened up to competition. Such rules Canadians must now own at least 80% of the incent the local access provider to conclude
347 375 interconnection negotiations in a timely manner to "confer an undue advantage" on their own since their own ability to enter the new market is operations, or to "discriminate unjustly" against tied to their provision of local access to their their competitors. competitors. A good example of this approach is found in the An early example of this approach is provided in CRTC's 1992 decision to permit competitors to the case of cellular telephone service. In 1984, offer public long distance (MTS/VVATS) services: the Government of Canada licensed the regional telephone companies and a competing supplier, The Commission considers that Cantel Inc., to provide cellular telephone safeguards should focus on equivalent services across Canada. In order to ensure that access to the type of services and the telephone companies could not hold up facilities that the telephone companies Cantel's market entry by denying it local network require in order to provide their own long interconnection, the telephone companies' distance services. cellular licences were made inoperative until the earlier of two events. This approach led the CRTC to implement an equal access regime for long distance services, (1) six months following approval of whereby subscribers can obtain 1+ dialling to the interconnection tariffs or long distance carrier of their choice on a pre- agreements by the appropriate subscription basis.It also led to the regulator; or interconnection of CCS7 signalling networks between competing carriers, casual calling (2) market entry by Cantel. arrangements and other features such as busy line verification, barge-in services, directory A similar rule was applied by the CRTC in the assistance, billing and collection services, and case of enhanced telecommunications services data base queries/access. and market trials for new services, which rely on underlying local facilities provided by the In a later follow-up proceeding in 1994, the telephone companies. Generally, the CRTC has CRTC elaborated further on the principles of not allowed the telephone companies to proceed comparably efficient interconnection in two with either market trials or the launch of new respects. First, the CRTC endorsed the concept enhanced services unless they have offered, at of colocation, which permits competitors to tariffed rates, the underlying local facilities terminate their own transmission facilities on the required by third parties to offer similar trials or premises of the central offices (local or tandem services. switches) operated by the telephone companies. Secondly, the CRTC endorsed the concept of More recently, this approach has formed part of local network unbundling as a means of the CRTC's convergence policy governing the facilitating efficient interconnection arrangements entry of telephone companies into the between competing carriers. broadcasting distribution market. The CRTC has indicated that it will not licence the telephone Consistent with this approach to interconnection companies to provide cable TV services until issues, the CRTC has addressed the issue of such time as barriers to entry into the local access to telephone numbers (including 800 and telephony market have been removed. 900 type numbers) by promoting the establishment of an industry advisory committee 4.2 Comparably Efficient Interconnection composed by industry representatives with recourse to the CRTC in cases of dispute. Generally speaking, the CRTC has required the telephone companies to offer comparably The CRTC has also endorsed the concept of efficient interconnection arrangements to local number portability (LNP).It has done so in competing service providers. In so doing, the recognition of the fact that local telephone CRTC has invoked its jurisdiction to ensure that subscribers (especially business users) would the telephone companies do not use their be discouraged from changing suppliers in a monopoly position in the local exchange market competitive market unless they can retain their
348 376 existing telephone number when they switch telecommunications markets to develop. This is local service providers. An industry committee particularly true in the telecom services and has now been established to pursue technical equipment markets where interconnection to the solutions to the problems associated with LNP. public switched telephone network is required. This process is well underway with trials Use of propriety standards by the telephone scheduled for early in 1998. companies could otherwise be used to thwart or delay new entry. 4.3 Restrictions on Unfair Marketing Practices In Canada, this issue has been addressed by the CRTC, which has enforced the requirement for The CRTC has also recognized that the de facto open interconnection standards, and Industry monopoly enjoyed by the telephone companies Canada, which has worked with industry groups in the provision of local switched telephony to develop and publish such standards. places them in an advantageous position to Standards and protocols exist for terminal know who their competitor's customers are, and equipment, cellular interconnection, when they have switched, or are about to switch, interconnection by interexchange carriers and suppliers. This advantage arises from the many other forms of services and equipment. In vertically integrated structure of the telephone its local competition decisions the CRTC has companies and the fact that almost all of the initiated a process involving industry customer base still deals with the telephone representatives and CRTC staff to develop all of companies for the provision of switched local the necessary technical arrangements required telephone services. for interconnection of competing suppliers of local switched telephone services. This advantage first came under scrutiny in the early 1980's following the introduction of In addition to policing this requirement for open competition in the terminal attachment market. interconnection standards, the CRTC has Competing suppliers of PBX and key telephone required the telephone companies to give formal systems began complaining that when a notice of pending network changes that might customer requested a service record, or ordered affect existing interconnection arrangements with a cut-over of lines to a competitor's terminal competing service or equipment suppliers. Such equipment, a telephone company representative notice must be provided at the earlier of the would intervene in an attempt to win back the following two dates: customer. (i) at the time the local telephone The CRTC responded to this problem by company finalizes its decision to requiring the telephone companies to set up an proceed with the network independent department to handle these types of change; and orders by competing equipment suppliers. This group of telephone company employees was not (ii) 6 months before the proposed allowed to share information received from change. competitors, with the telephone companies' own marketing divisions. 5.0 RESTRAINTS ON CROSS SUBSIDIZATION OF COMPETITIVE With the advent of other forms of competitive SERVICES AND OTHER ANTI- entry, such as cellular telephone service, resale, COMPETITIVE PRICING STRATEGIES the provision of enhanced services and interexchange competition, these groups are The vertical structure of the regional telephone now responsible for liaising with a variety of companies, and the fact that they have competing service providers. historically provided a mix of competitive and monopoly services, posed a significant problem 4.4 Oven Network Standards for the CRTC in attempting to prevent cross- subsidization of competitive services and other It is generally recognized that open network anti-competitive pricing practices. The CRTC's standards are required in order for competitive problems were made worse by the fact that each
349 377 of the telephone companies had historically been detailed price regulation with two different types regulated on a rate of return basis with a single of safeguards designed to prevent targeted rate base for all service elements. pricing strategies and to protect consumers in relatively inert market segments. This has been The introduction of competition in certain market done by establishing cost-based floor prices for segments in the late 1970's and early 1980's interexchange services and by capping rates for began to put considerable strain on this basic (DDD) calls at existing rate levels. approach to rate regulation. Competitors feared that the telephone companies could lower prices Another important feature of the new split rate for competitive services and make up for lost base regime was the CRTC's decision to revenues on monopoly services which were allocate new broadband investment (fibre/coax priced at a level to achieve an allowed rate of facilities) to the Competitive segment. The return (ROR) on the overall rate base. Later on, CRTC took this step in part to protect local with the introduction of long distance telephone subscribers from the risks associated competition, the telephone companies' initial with the large scale investment, and in part, to dominance in that market gave rise to concerns ease concerns as to the potential for cross- that they were undercharging in market subsidization of new multi-media and other segments where they faced competition, and competitive broadband services that will overcharging in more inert markets. primarily utilize the new facilities.
In an effort to better replicate a competitive In addition to the pricing safeguards, the CRTC environment for long distance services, and to has imposed restrictions on the telephone better police cross-subsidies between local and companies' ability to bundle local (Utility) competitive services, the Commission decided in services with Competitive segment services. 1994 to "split" the telephone companies' rate These restrictions are intended to prevent the bases into "Utility" and Competitive" segments. telephone companies from extending their The actual split was performed using the market power in local telephone services to CRTC's approved cost separation procedures as competitive market segments. the basis for investment allocations between the two segments. 6.0 LOCAL COMPETITION
The splitting of the rate base opened the door to Another major regulatory reform announced in separate regulatory treatment of the two the CRTC's Review of Regulatory Framework segments. Generally speaking, the Utility decision was its determination to open the local segment is now comprised of local telephone switched telephone market to competition. services, including switched access for competitors. This segment will become subject In May and June of 1997, the Commission to price cap regulation in January, 1998. released a group of inter-related decisions and orders delineating the principles for local In order to further address the concerns of exchange competition, including interconnection competitors regarding the lack of explicit charges arrangements, network unbundling, co-location, for local access utilized by the telephone and number portability. companies' own long distance services, in 1994 the CRTC required the telephone companies to The Commission's Local Competition decision is establish cost-based carrier access tariffs intended to establish a framework for facilities- (CATs) to be applied to both the telephone based entry by new service providers into the companies' own Competitive segments and their market for local telecommunications services. competitors.
As of January 1, 1995, services falling within the There are three important principles which Competitive segment, including the telephone underlie the CRTC's decision: companies' long distance services, are no longer subject to either rate of return or price cap (1) "Competitive Local Exchange Carriers" regulation. Instead, the CRTC has replaced (or CLECs) are to be treated as co-
350 378 carriers with the incumbent local 6.2 Portable Subsidies telephone companies (or ILECs); One of the most significant aspects of the new (2) The new regime is "technology neutral"; regime relates to contribution payments, or and subsidies towards the cost of local telephone service in high cost areas. lnterexchange traffic (3) Under the new regime, customers will be has remained the sole source of this contribution assured access to IXCs or wireless or subsidy. All LECs will collect contribution from carriers of their choice. IXCs that originate or terminate traffic on their networks. These contribution funds will then be The CRTC has chosen an open entry model for disbursed to all LECs serving residential CLECs. Anyone can enter provided that they customers in high cost areas based on the agree to abide by the obligations identified in the number of residential NAS they serve. In other decision. Including: words, contribution will be portable when a customer switches service providers. ' interconnection with all other LECs, IXCs and wireless service 6.3 Unbundling providers; In its decision the CRTC has mandated the "equal access for IXCs; unbundling of a limited number of "essential facilities". These essential elements include: ' provision of local number portability; "central office codes;
'access to 911 and Message 'subscriber listings; and Relay Service; and local loops in less densely 'protection of privacy of populated areas - principally subscriber information; and Bands C + D.
"a variety of information In addition to these "essential facilities", ILECs requirements related to must also unbundle certain other "necessary consumer protection. facilities" which will be required during the early stages of competition. These include: New entrants need only attest to satisfaction of these requirements and notify other carriers and 'non-essential loops; the CRTC of their entry into the market. Once they enter the market, the CLECs' retail rates will 'transiting; and not be regulated. EAS transport services. 6.1 Local Interconnection Arrangements The local competition regime, including the Where LECs exchange traffic within an existing portable subsidy scheme, will be implemented exchange boundary, the CRTC has mandated on January 1, 1998. that they connect at a single point of interconnection (unless they agree otherwise). 7.0 MAINTAINING UNIVERSAL SERVICE Moreover, the CRTC has mandated that the two POLICIES IN COMPETITIVE LECs share the cost of interconnecting facilities. MARKETS
Where traffic originates and terminates within an One of the central issues raised by the exchange, the CRTC has mandated a "bill and introduction of competition in Canadian keep" arrangement between LECs provided that telecommunications markets has been the there is not a significant traffic imbalance. potentially adverse impact that competition might have on local telephone rates and policies 379 351 promoting universal availability of telephone Based on the record of its proceeding, the CRTC service at reasonable rates. made some interesting findings: between 1985 and 1995, the overall price of telephone service Historically, local telephone rates have been set (the price of local and long distance services at a relatively low rate in Canada to encourage combined) decreased by 44% in real terms; and subscription to the telephone system and extend during the same period, the telephone the universality of telephone service in more penetration increased from 98.2% to 98.5%. remote parts of the country. In order to finance this public policy goal, long distance services 8.0 COMPETITION IN BROADCASTING were historically priced well above cost. DISTRIBUTION
Many of those who opposed the introduction of On October 11, 1994, the Government of competition in the long distance and other Canada initiated a broad-based inquiry by the market segments feared that competition would CRTC on the policy and regulatory implications upset this rate structure and threaten the of the convergence of the broadcasting and universal availability of local telephone service at telecommunications industries. affordable rates. In its discussion of "background principles" the When the CRTC ultimately permitted competitive Government emphasized the need to ensure facilities-based competition in the long distance competition through the establishment of a level market in 1992, it imposed a "contribution" playing field across sectors and groups of charge on all long distance voice traffic to help competitors. offset the cost of providing local telephone services in high cost areas. Later on, this The Government went on to request the CRTC regime evolved to include wireless and data long to address the specific question of whether it distance traffic in the category of contribution- would be appropriate for all telecommunications paying services. carriers to become eligible to hold broadcasting licences and if so, within what timeframe and While this regime has proven to be cumbersome under what conditions. to administer, it has nonetheless served its purpose of minimizing the impact of long In its report entitled "Competition and Culture on distance competition on local rates, in what the Canada's Information Highway: Managing the CRTC has termed "consumer-friendly Realities of Transition" (19 May 1995) (the competition." "Convergence Report") the CRTC determined that in order to achieve the goal of competition, This is not to say that the CRTC has ignored the telephone companies should not be granted problems posed by continued subsidization of broadcasting licences until the many barriers to local service rates.In its 1994 decision entry into the local telephone market had been respecting the new Regulatory Framework, the removed. CRTC approved the first step in a gradual process of bringing local prices more in line with In August, 1996, the Government formally costs. Since the introduction of long distance endorsed this "no head start" rule in its competition in 1992, the contribution rate has "Convergence Policy Statement." fallen by approximately 60% and long distance rates have fallen by 30% to 50% in various To ensure fair competition and no head market segments. starts, the Commission should ensure that telephone companies cannot offer Following its review of the regulatory framework, their broadcasting distribution services the CRTC initiated a separate proceeding in until regulatory barriers to competition in 1995 to consider the appropriateness of other local telephone service have been mechanisms, such as low cost "lifeline" rate removed and the Commission has plans, to ensure that local residential telephone approved tariffs to enable cable service continues to be accessible at affordable companies and others to launch rates. 352 360 competitive local services. This may be instances, the CRTC is requiring that non- done on a market by market basis. discriminatory network access be provided to third party Internet service providers.
The CRTC's recent decision on local 9.0 INTERNATIONAL DEVELOPMENTS competition, and its related proceedings on local number portability, colocation and unbundling At the present time, Teleglobe Canada still are designed to remove the existing barriers to enjoys a monopoly in the provision of overseas entry into the local telephony market. Once all of telecommunications services originating or these barriers are removed, which is expected terminating in Canada. sometime in 1998, the Stentor companies will be permitted to enter the broadcasting distribution This monopoly is enforced in a number of ways market in competition with the cable television including a refusal by the Government of companies, DTH service providers and other Canada to licence other overseas carriers, or service providers in that market. grant landing right to such carriers, as well as the imposition of routing restrictions on Canadian In addition to permitting the telephone carriers and resellers designed to prevent by- companies to enter the broadcasting distribution pass of Teleglobe's facilities by routing overseas market the CRTC has taken a number of steps traffic through the United States or by switching in the past two years to open the broadcasting Canadian traffic through "hubs" in other distribution market to competition. countries.
For example, in 1996, the CRTC licensed Pacific The switching of Teleglobe's private line services Place Communications to provide the first in Canada by resellers is permitted where competing cable television service within the reciprocal rights exist in the correspondent existing operating territory of a long-established country. cable television company - Rogers Cable T.V. However, this restriction and the restriction on In that same year, Industry Canada issued hubbing severely limit this form of competition. frequency blocks in the 28 GHz band to provide competitive telecommunications and The CRTC's restrictions on by-pass of broadcasting distribution services using Local Teleglobe's facilities and on hubbing have been Multipoint Communications Systems (LMCS). the subject of considerable dispute over the past two years. On May 5, 1997, the CRTC issued a Since 1995, the CRTC has also licensed a decision which permitted facilities-based number of carriers to provide direct-to-home carriers, including the Stentor companies, to (DTH) satellite-based broadcasting distribution engage in international simple resale to countries services in the Canadian market. offering reciprocal rights. However, the CRTC reconfirmed its restrictions on bypass and third Steps have also been taken to open up access country hubbing. to existing cable television distribution networks to competing suppliers of telecommunications The CRTC's decision to retain its restrictions on services. hubbing has since been the subject of litigation and a proceeding has been convened by the One of the first markets to become subject to the CRTC for reconsideration of its decision. forces of competition between cable television companies and telephone companies is the The CRTC has also announced its intention to Internet access market. In 1996, the cable consider a new framework for competition in the television industry launched a new high-speed provision of overseas telecommunications Internet access service called the WAVE services early in 1998 and, on October 31, 1997, employing its local broadband distribution legislation was introduced in Parliament to create network. Earlier in 1996, the telephone a new licensing regime for international carriers companies had initiated their own Internet and resellers. access service called Sympatico. In both
353 381 Consistent with Canada's commitments to the monopoly on fixed satellite services will end WTO agreement on Basic Telecommunications, March 1, 2000. the new legislation does not contain any restrictions on ownership of international carriers. 10.0 CONCLUSIONS
Services regulated under the Broadcasting Act Based on a review of the Canadian experience, and measures affecting such services, as well as it is clear that involvement of the regulator is telecommunications services supplied for the required in managing the transition from transmission of services regulated under the monopoly to competition in integrated Broadcasting Act "where such services are telecommunications markets. intended for direct reception by the public", are expressly excluded from the services covered by Absent the type of structural separation and Canada's schedule of specific commitments. divestiture witnessed in the United States, considerable regulatory effort is required to In very general terms, under its schedule of negate the ability of the incumbent to provide specific commitments on basic discriminatory access to its competitors; to telecommunications, Canada has committed to prevent the cross-subsidization of the the liberalization of its routing restrictions: incumbent's own competitive operations and to prevent anti-competitive pricing practices from (1) as of January 1, 1998, there will be no being pursued in horizontal competitive markets restrictions on routing of mobile satellite services where the incumbent may still retain market between points in Canada and between points in power. Canada and the United States; In Canada a number of mechanisms have been (2) as of October 1, 1998, all restrictions on used to promote competition in both the routing of mobile satellite services will be lifted; telephony and broadcasting distribution markets, while at the same time ensuring that long- (3) as of December 31, 1999, restrictions on standing domestic policy goals continue to be routing of international services (other than fixed pursued. satellite services between Canada and points in the United States) will be lifted; and These mechanisms should be of interest to other countries seeking to implement the terms of the (4) all restrictions on routing of satellite services WTO "Reference Paper." will be lifted on March 1, 2000. In addition, steps have been taken to ensure that With respect to ownership, the general in areas of convergence like the broadcasting restrictions on foreign ownership of facilities- distribution section, new entry by telephone based service providers remain in place. companies is coincident with the removal of Canada did, however, commit to the following barriers to entry into their own local telephony changes in the current ownership regime: foreign markets. The removal of these barriers is ownership restrictions for mobile and fixed underway and will be achieved in 1998. satellites used to provide services in Canada are lifted in parallel with the removal of traffic routing On the international front, steps are being taken restrictions for these services; and as of October to open the overseas market to competition. By 1, 1998, foreigners will be permitted to own up to October 1, 1998 the overseas market will be 100% of international submarine cables landing open to competition with a new licensing regime in Canada. in place.
Canada has also committed to end the monopolies held by Teleglobe and Telesat. Teleglobe's monopoly on Canada-overseas services will end on October 1, 1998. Telesat's
354 3 8 2 Regulating for ConvergenceAsian Issues and Conflicts
Michael Gertler, Denton Hall, Hong Kong, David Ben Kay and Beth Bunnell, Denton Hall, Beijing and Askandar Samad, Denton Hall, Singapore Denton Hall
1. ABSTRACT
This paper provides an overview of initiatives taken in Singapore, Malaysia, People's Republic of China, Hong Kong and Indonesia in relation to convergence and the regulation of convergence. All countries under examination have formulated policies to deal with the information infrastructure, but the strategies for implementation differ from country to country.
2. INTRODUCTION by the imminent advent of the information age, Asian The most important communications issue facing the countries are keenly aware of the possibility of majority of countries in Asia-Pacific isstill how to leap-frogging technologies and ensuring that their increase telephone penetration levels, so as to provide citizens are not left behind. Inthis context, in affordable plain old telephone services (POTS) to all September1996 theAsia-Pacific Telecommunity sections of the community. organiseditsSecondPolicyMeeting onthe Asia-Pacific InformationInfrastructure("All")in Recentlyhowever,manycountriesinAsia,as Thailand. This was followed by a high level elsewhere, havedevelopedinitiativesforthe Development Meeting on AII in June 1997 also in establishmentof aninformationinfrastructureat Thailand. national or regional levels to provide 'pretty amazing new services' (PANS).In addition, supra national Notwithstandingtheopendeclarationofthe organisationsare considering the development of the Asia-Pacificgovernments,setoutintheSeoul global advanced information infrastructure. Declaration forthe Asia-Pacific Information Infrastructure in May 1995, that one of the core The existence of a well established, ubiquitous and principles for the development of the Asia-Pacific pervasive telecommunications network is understood to information infrastructure would be the promotion of beanessentialpre-requisiteforestablishingan acompetitive environment,theinterpretationof advanced information infrastructure.In contrast to the competitionacrossAsia-Pacificseemstovary situation in Asia-Pacific, the advantage which a number markedly.This seems to arise not from a difference of the western developed economies have is that such of opinion as to whether a competitive model is the telecommunications networks were alreadyinthe best model, but rather which path will best lead to a process of being established by the 1980s. Furthermore competitive model appropriate to a given nation. the early introduction of competition in such countries has provided them with the experience of regulating the This paper attempts to provide a brief overview of the telecommunications industry in an emerging steps which are being taken in several countries in competitive environment.The perceived success of Asia in order to implement an advanced information deregulation in the telecommunications industry and the infrastructureand how issuesof regulation and benefits that the introduction of competition has brought competition are being addressed, if at all, at this stage. about in terms of greater choice, improved quality of services and lower costs, means that market forces and competition are viewed as the essential mechanisms for 3. THE WESTERN EXPERIENCE theimplementationofanadvancedinformation infrastructure. 3.1 Initiatives In contrast, Asian governments have only just started tackling the issues associated with the deregulation of Western economies with high telephone density levels telecommunications and the introduction of competition are in the process of developingstrategies for the (in varying degrees) in order to promote the growth of implementation of advanced information infrastructures, telecommunications services. Nevertheless, confronted such as thelaunch of the US National Information with the technological and societal revolution presented Infrastructure Initiative.In the UK the government has
355 333 already begun addressing the economic,social and putting in place the necessary controls and checks to technological issues raised by converging technologies for curb the emergence of a dominant player that may have the delivery ofinformation. In 1994 the Trade and the market power to stifle or distort competition. Industry Committee report Optical Fibre Networks(1) and the Government Command Paper Creating the For example, in the UK, Oftel has publicly stated that in Superhighways of the Future:Developing Broadband respect of broadband switched mass market services, it would not seek to regulate for the sake of regulation and Communications in the UK(2) advocated the timely only a minimal level of regulation would be imposed, implementationof networkscapableof conveying leaving the market to decide on most issues. Regulation broadbandservices. The UK telecommunications would be implemented only to the extent necessary to regulator, Oftel, issued a consultative document in August promote the development of the market, to protect the 1995 entitled Beyond the Telephone, the Television and consumers and tosafeguard theinterests of new the PC(3)setting out the initial parameters for the entrants.(5) regulation of broadband switched mass market (BSM) services with a view to stimulating debate in the industry Oftel hasidentifiedthe ownership of distribution as to the appropriate regulatory action.Oftel isstill networks as the most likely area where dominance may considering the responses. arise. Clearly dominance could emerge in other areas of the advanced information infrastructure, particularly in In the European Union, the European Commission will the area of content provision, but Oftel is of the view soon launch a consultation on the policy implications of that sustainable dominance is only likely to exist in this convergence through the publication of a Green paper area where control of content provision is integrated The Convergence Green Paper of 1997 (which was due for publication in November 1997 but appears to have with control or ownership of distribution networks.(6) been delayed) is intended as a platform for defining the Oftel has therefore proposed that where distribution policy response in the EU in respect of convergence over network owners achieve market dominance (based on the next five years. The European Commission has also criteria which have been developed under the European suggested that the next step to simplify the current Union's competition law policies) regulation would seek frameworkwould be to create a "European to achieve the following aims. Communications Act" which would bringtogether legislation on the provision of infrastructure, services, Open access for service providers (including network owners)onanon-discriminatory content and the conditions of access to content.(4) This basis; proposal echoes the strategy proposed to be adopted by Malaysia throughthe Multimedia Convergence Act Allowingdirectcommercialrelationships which is discussed below. betweenserviceprovidersandindividual customers, allowing the former to set their own 3.2 The Competition Paradigm retail prices; The experience of developed economies such as the US, Appropriateseparationbetweennetwork UK and Australia in revolutionizing the telecommunications industry with the introduction of distribution and service provision; competition has created a precedent for the regulatory Open technical standards and interfaces at the action to be implemented for broadband services.The remarkable success achieved over the last decade in network termination points to allow implementation of open access and bringingcostsdown,creatinggreaterchoiceand competitioninthesupplyof consumer improving servicesinthe telecommunications sector through the introduction of competition have created a premises equipment.(7) mindset for the development of an advanced information infrastructure.Competition is viewed as the ultimate In Australia,therecentamendmentstothe driver for the implementation of broadband networks. Telecommunication Actaresimilarlyfocused on competitionlawasa means of curbing market The corollary of the introduction of competition has been dominance, but allowingmarket forces to ensure the a reliance on competition law principles to regulate and deployment of broadband networks. The former controlthe dominance of theincumbentoperator. telecommunications regulatory authority AUSTEL has Accordingly the focus of the thinking for the regulation of been abolished and replaced by the general competition broadbandserviceshasbeenhowtoencourage law regulatory body, the Australian Competition and investment in such services whilst at the same time Consumer Commission.
356 384 y TAS, the telecommunicationsregulator,is This brief outline does not mean that the western responsible for licensing and driving developed economies are not considering other areas that infrastructure development. need to be addressed.For example, interconnection is clearly an operational matter that impacts on the viability The NTSB isresponsiblefor encouraging of competition in the provision of distribution networks. research and development in new technologies Other areas are also being addressed such as copyright and new services on Singapore ONE. protection, protection from inappropriate content on the internet, protection from tampering of communications y The NCB spearheadstheexecutionand and protecting the safety and security of communications. deliveryof applicationsandserviceson However the basic question in relation to competition Singapore ONE. remainstowhatextenttheregulatorypolicies implemented for the introduction of competition in the y The EDB, which has overall responsibility for telecommunications sector can be applied to broadband industrial planning, is involved in promoting services. As Oftelconcludesinitsconsultative the development of on-line businesses and document:- encouraging electronic commerce.
"we want toadaptthesuccessfulpoliciesof the The SBA which regulates the broadcasting narrowbandswitchedworld- suchaspromoting industry,isinvolvedinencouragingthe competition and regulating dominant and non-dominant creation of content for Singapore ONE.(9) systems on a different basisfor the broadband switched Under Singapore ONE, a number of broadband testbeds world." (8) are currently under trial. Singapore Telecom has embarked on a video on demand (VOD) system trial 4. SINGAPORE based on both ADSL and fibre-coaxial access network technologies.There is island wide coverage for the 4.1 Initiatives provision of ADSL supported services (e.g. fast Internet access). On the basis that the next century will depend on information and knowledge as the main driver for growth, A fibre optic high speed testbed based on ATM in March 1992 the Singapore National Computer Board switching is currently in place at the Science Park, announced the IT 2000 vision under which Singapore is linking research and development institutions such as to be transformed into an intelligent island with an the Information Technology Institutes (ITI), the Institute advanced information infrastructure connecting of System Science (ISS) the Singaporean Universities computers in every home, office, school and factory.In andSingaporeTelecoms optical network for 1996, as a major step in the realisation of IT2000, the experimentationand developmentofadvanced Singaporean Government launched the initial stages of information technologies and broadband applications. the deployment of a multi media broadband network (MBN) which is known as "Singapore ONE" (One TheSingaporeGovernmenthaspromotedthe Network for Everyone). The infrastructure of Singapore construction of a cable TV network by Singapore Cable ONE has a core broadband network based on ATM Vision (SCV) and SCV is currently deploying a nation switching and opticalfibretechnologies connecting wide cable TV network with a targetof 800,000 several local access networks which will link businesses, households to be passed by 1998.SCV has the schools and homes. Singapore ONE is currently being advantage of mandated access to the optic fibre network implementedasajointprojectdrivenbythe which itleases from Singapore Telecom.SCV is Telecommunication Authority of Singapore (TAS), the responsible for the construction of the vertical network National Computer Board (NCB), the National Science by linking coaxial cable to the optic fibre network to andTechnology Board(NSTB),theEconomic connect all homes in high rise residential buildings and DevelopmentBoard (EDB) andthe Singapore landed dwelling units. As such, SCV's network would Broadcasting Authority (SBA). Given the regulated provide a coaxial connection from homes tothe nature of Singapore's executive structure, the institutional information super highway until fibre is deployed to the co-ordination of Singapore ONE has been carefully home.(10) crafted with a relative absence of overlapping spheres of competence often seen in Asian countries.
385 357 4.2 Regulatory Approach graduallyintroducedaspart of the Governments strategy to achieve rapid advancement. At present there The interesting aspect of Singapore's model is that while are four principalfixed line competitors to TMB as the Government has a policy of liberalisationin the well as a number of wireless operators. telecommunications industry (driven in part by its WTO obligations), the philosophy in Singaporeisone of TMB has been encouraged to roll out its network so that introducing competition progressively.In practice this all areas of Malaysia are reached. It is reported to have reflects the Government's view that the development of a approximately 13,000 kms of fibre optic cable, and is nation wide broadband infrastructure would not be rapid expanding its investment in fibre in the local loop. In and efficient if left purely to market forces. The argument 1996, a joint venture was established between Telekom is that as there is as yet no proven commercially viable Malaysia and Permodolan Nasional to establish a broadband application and since Singapore Telecom and network for government agencies. SCV are private entities (although the Government is a significant stakeholder), their investment decisions would Other carriers are also commencing optic fibre network largely be influenced by profitability.In such a scenario roll out, in particular Time Telekom, with its extensive itisarguable that commercial operations would be optic fibre trunk network along the North - South unlikely to make the necessary investment.In practice Expressway. therefore the Government is underwriting part of the investment cost of the physical network by guaranteeing 5.2 Multimedia Super Corridor some minimal level of usage to the network provider. The capacity leased by the government will be used to The Multimedia Super Corridor (MSC) is an area of make government services available to the public via the development 15 kms by 50 kms long which will span an MBN. area from the Kuala Lumpur city centre, south to the new Kuala Lumpur international airport.The MSC is The net result of this regulatory approach appears to be the focal point of the Government's development of one of top-down government driven impetus. The multimedia services in Malaysia. Launched in 1996, government is providing fiscal and financial incentive the MSC is intended to act as a test-bed for the schemes, such as the Singapore ONE Pioneer Club, where development and application of leading-edge businesses launching a commercial application or service technologies. Two cities are being developed in the by 30 June 1998 enjoy special funding schemes, tax MSC being Putrajaya (to be thesite of the new incentivesprogrammes,preferentialtariff ratesand Government and administrative capital) and Cyberjaya publicityprogrammes. Unlike many otherAsian (the intelligent city). countries there is a clear division of labour between the Companies awarded MSC status will enjoy certain Government agencies and their activities are co-ordinated financialandnon-financialbenefitssuchastax by the National IT Committee. Furthermore, competition incentives, research and development grants and special in the provision of infrastructure has been sanctioned by telecommunications tariffs. The Government has the proposal to issue up to two licences for basic services targeted seven multimedia applications for development starting in the year 2000. However as yet there has been by the year 2000. These include electronic government, no formalpolicystatementasto how Singapore telemedicine,amultipurposecardandborderless Telecom's dominant position is going to be regulated in a marketing centres. competitive broadband environment.This is a knotty issue which the Singapore government has chosen not to 5.3 Regulatory Approach address yet. Many have argued thattheMalaysianregulatory 5. MALAYSIA framework has not kept pace with the pace of competition so as to provide an environment of certainty 5.1 Initiatives of investment for the new infrastructure based carriers. This is probably in part due to the inherent conflict As part of the Vision 2020 initiative(11), the Malaysian between the functions of the regulatory body (Jabatan Government aims to create a knowledge based society Telekom Malaysia or JTM, which is a government where all Malaysians will have access to information and department) and the government's stake in Telekom learning through telecommunications and multimedia Malaysia. It is also in part due to the high level of infrastructure for personal, organisational and national discretion exercised by JTM. advancement. The former monopoly telecomniunications provider, Telekom Malaysia Berhad (TMB), was partially There are various examples of the slow pace of privatised in 1990, since which competition has been regulatoryliberalisation.Whileaframeworkon
358 366 interconnection and access has been promulgated by the Computer Crime Act, Amendments to the Copyright Government(12), the framework has given rise to several Act, and the Telemedicine Act. A review of this areas of concern. For example, interconnect charging has legislation is beyond the scope of this paper. However, been based on revenue sharing rather than cost.The the passage of this legislation and the proposals for Government has delayed the introduction of equal access further legislation emphasise the seriousness with which for long distance and international communications. Both the Malaysian Government is treating issues associated of these issues have concerned the new fixed network with the information age. carriers and reduced revenue available for investment.
It is not yet clear how the Government will regulate the 6. CHINA information infrastructure and related services. 6.1 Initiatives There has been some indication that the Government may limit the application ofprinciples of open access and 6.1.1 General interconnectioninthebroadband environment.For example, in the MSC, the Government proposes to grant The Chinese government has set the year 2010 as the to Telekom Malaysia the exclusive right to supply targetdatetohaveinplaceastate-of-the-art telephony and leased line services to all customers in the communications system that would include, among MSC area at levels up to the ATM switch level. This has other things, a broadband, integrated communications been justified on the basis of the large amounts of network linking major cities throughout the country and investment required in order to complete the MSC supporting a rangeofmultimediaand data This is clearly an ambitious infrastructure.It highlights a difficultyinherent in the communications services. regulation of the broadband environment. That is, while it goalgiventhatChina isstilldevelopingthe may be considered necessary to grant exclusive rights to infrastructure required to provide even relatively basic encourage infrastructure investment, to do so may give telecom and broadcasting services on a nationwide rise to the same inefficiencies and lack of incentive for basis. innovation and investment which characterised previous monopolies in narrow band environments. While domestic competition with the dominant state player, the Ministry of Post and Telecommunications Nevertheless, Malaysia is one of the first countries in the (MPT), is on the up-swing, no clear-cut policies have world to develop a scheme of legislation intended to meet yet to emerge as to how China plans to meet the the particular needs of convergence. New combined challenges presented by technological convergence. legislation to be known as the Multimedia Convergence Complicating China's efforts to develop policies in this Act will governtelecommunications, broadcasting and regard are the on-going ministerial power struggles, the on-line services and will replace existing PRC government's censorship concerns and mounting telecommunications and broadcastinglegislation. The international pressure to open the telecoms markets in passage of this legislation has been deferred and is now accordance with WTO requirements. expected to take place early in 1998 With such a multitude of factors at play, it is therefore Although details of the new legislation have yet to be difficult to predict the regulatory approach that will be released, the Government isexpected to encourage taken in China, but we set out some of the initiatives facilities based competition and to implement competitive that are being taken to indicate the problems which safeguards for the converged sector. It is believed that the China will need to address at a later stage. Government will only impose individual licensing for facilitiesbasedservicesprovidedforthepublic. Non-facilities based services and services not intended for the public, such as closed user groups, will either not 6.1.2 Dominant Player-Ministry of Post and require a licence or will be subject to a class licensing Telecommunications scheme. It is also believed that content for interactive and on-line services will not be regulated under the new Act, As the regulator of the telecommunications industry, the with localand but will be governed by other legislation, such as the rules MPT controlsinterconnection all international service networks and thus, can (and does) in relation to censorship, defamation, copyright, etc wield significantinfluence over any thirdparty's Certain legislation of interest has already been passed. implementation of network projects. Having completed The first four Cyber laws have been passed by the in 1996 a long-distance backbone consisting mainly of Malaysian parliament - the Digital Signature Act, the fibre optic cable and supplemented with microwave and
359 387 satellite links that connects 30 provincial capitals and "consulting" and utilizing what some would consider major cities, the MPT has by far the biggest existing relatively "creative" investment structures.Prodigy's network in China. formation of a joint venture with China North Industries Operating under the MPT, the Data Communications or Norinco to become the first government-approved Bureau(DCB)administersChina'spublicdata foreign Internet provider, also indicates a further area in communications networks. The DCB hasrecently which ambiguity under PRC law may provide an completed a frame relay backbone and supervisesboth opportunity for foreign investors. China Net,China'smainInternetbackbone,and ChinaPac's national packet-switched network which went 6.2 Regulation into operation in 1993. Outdated infrastructure in parts of the MPT network and sporadic service has, however, 6.2.1 Converging Technologies: Competing made local access to these services extremely unreliable. Bureaucracies Although a separate MPT department is making moves to offer ISDN services, high installation rates and the use of Whether multimedia will be subject to incompatible ISDN switches throughout China will likely telecommunicationsorbroadcastingregulationsis retard progress in that regard. inextricably linked with the relative powers of the two Ministries in these sectors, namely the MPT and the 6.1.3 Other Players Ministry of Radio, Film and Television (MRFT). Between the MPT and the MRFT, MRFT is arguably in Unicom, acooperativestructurecomprising of the a weaker position given that it does not have authority Ministry of Railways, Ministry of Electronics Industry to provide data or voice services or the funds required to and the Ministry of Power, along with 13 other major independently upgrade its network. MRFT's alliances shareholders,has,sinceitsestablishmentin1994, with Unicom and Jitong, will, however, no doubt mounted an impressive challenge to the MPT's monopoly enhance its position in this regard. The MPT also has in mobile services. Unicorn has recently announced that somewhat of a head start in the multimedia arena given it will offer fixed line services in Tianjin and Chongqing, its leading role as an Internet service provider and in the as well as develop a long distance network consisting of area of data services. 5,000-km of fibre optic cables. Unicorn has also teamed up with the technology firm Sparkle to operate an Internet TheMinistryof ElectronicsIndustry,theState database offering State Council-supplied information on Education Commission, as well as the Public Security one million Chinese companies. Bureau are also involved with China's information technology industry. Moreover, on a macro-economic A third telecom operator, Jitong Communications Co. level, the Leading Group on Information Advancement, Ltd.,isexpandingChina'sinformationtechnology whichis comprised of representatives of nearly 20 infrastructure through a series of deals known as the governmental bodies and reports directly to the State Golden Projects.Both Jitong, which islicensed to Council, is responsible for developing policies in the provide data services including Internet access, and the information technology industry.While the Leading Ministry of Radio, Film and Television (MRFT), which Group has offered some unified guidance amidst the operates an extensive cable network, will no doubt figure ministerial jousting,it has yet to break the MPT's prominently in the emergence ofmulti-media virtual monopoly or provide comprehensive guidelines communications services in China. In fact, recent reports as to how China plans to meet the challenges of indicate that Unicorn has joined forces with Jitong and establishing nationwide state-of-the-art communications MRFT to use hybrid-fiber-coax (HFC) technology that services.It is possible that more streamlined policies would provide voice, data and video over existing cable may emerge when the long awaited new infrastructure. telecommunications law is promulgated (althoughit remains to be seen when the law will be fmalized and Foreigncompaniesarespecificallybannedfrom issued).It is also worth noting that shake-ups at the managing and operating telecoms networks or investing ministerial level arerumoured with one proposal in cable networks, however, this is not to say that foreign apparently under consideration being the creation of a companies are not playing an active role in the developing State Commission forInformationthat would be PRC telecoms market.To that end, more and more responsible for formulating policies with regard to foreign companies are teaming up with PRC entities to licensing,resourceallocationaswellasnational installnetworkswithequipment. Someforeign standards. This new commission would coordinate companies are also seekingto skirt the ban on foreign between the MEI and the MPT and would likely participation in theoperationofnetworks by introduce a new licensing system for multi-media, characterizing their services to network operators as convergence type technologies.
360 333 Chinese government is also developing a nationwide Notwithstanding the ambiguity that exists with respect to intranet, complete with filters to control access to (and the supervisory authority over multimedia, it is reasonable from) the network. toexpect, given how the Chinese government has introduced reforms and innovations in other industries, that multimedia services will in the future be licensed and 7. HONG KONG introduced on an experimental basis in a limited number of cities. Following an assessment of thesetrial 7.1 Initiatives programs, national regulations would likely be developed. While Hong Kong is now a part of the People's 6.2.2 Regulation of the Internet- Piecemeal Approach Republicof China (PRC),theregulation of the telecommunications industry does not reflect that which China's approach toward regulating Internet services exists on the mainland. The basic law which has reflects the Chinese government's ongoing struggle to governed Hong Kong since 1 July 1997 promises that permit services that are required for an integrated, the "laws previously in force in Hong Kong...shall be internationally viable economy while at the same time maintained after 1 July 1997 and that the "previous maintaining strict censorship control. To that end, capitalist system and way of life shall remain unchanged regulations regarding Internet use and services have been for 50 years". Thus far, there has been no indication that introduced in a piecemeal approach often in response to, this will not be adhered to in the regulation of the rather than in anticipation of, the introduction of high end telecommunications industry. technologies. Until July1995, the Hong Kong Telecom Group, The primary legislation in this regard is the Provisional through Hong Kong Telephone Co. Ltd. (HKTC), held Administrative Regulations of the PRC on International an exclusive franchise over the provision of domestic Connections to Computer Information Networks fixed network telecommunications services in Hong
(promulgated 1 February 1996, by the State Council) Kong. In July 1995, three new fixed ("Provisional Regulations") and the Decision of the State telecommunications network service (FTNS) operators Council on Amendment of the Provisional Administrative were licensed to compete with HKTC in relation to Regulations of the PRC on International Connections to FTNS services. Computer Information Networks (Promulgated May 20, 1997, by the State Council). The Provisional Regulations Hong Kong's telecommunications networkisvery require that Internet users register with the police and ban advanced. HKTC is reporting to be planning to spend the transmission of state secrets, information harmful to over $10 billion over the next 10 years to establish a state security and pornography. Under revisions to the broadbandservicesnetworkinHong Kong(13). ProvisionalRegulationseffectiveMay,1997,units Further, the subsidiary of the Hong Kong Telecom engaging in business activities related to global computer Group which has been established for the purpose of networks must now apply for licenses and provide data on deliveringmulti-media servicesisreportedtobe the nature and scope of their networks, as well as the proposing to spend a like amount to provide intelligent addresses of their computer hosts. Only four entities or service platforms and customer equipment. Internet service providers (or IPSs) are authorized to provide international Internet access in China: ChinaNet The new FTNS operators are also in the process of (which is operated by under the MPT arm DCB and is the investing in optic fibre backbone facilities. In the local country's principle commercial service provider), the loop, the new operators are either establishing their own Golden Bridge Network (operated by the Ministry of fibre facilities, principally in business areas, or leasing ElectronicsIndustrythroughitssubsidiaryJitong), capacity from HKTC. Chinese Academy of Sciences Networked and the China Education and Research Network. There are more than Wharf Cable Limited has the exclusive right to provide 100 secondary commercial Internet providers. terrestrial subscription television services until 1998. Wharf Cable Limited is an affiliate of one of the new While the Chinese government appears committed to FTNS operators, New T&T Hong Limited. New T&T developing an integrated high speed information network, hasaccesstoadditionalbroadbandinfrastructure it remains to be seen how interaction with foreign links through access to the Wharf Cable network. will be managed.In the past, China has, for example, temporarily blocked access to more than 100 Wed sites, The Government announced earlier in the year that it including the Web page of the Wall Street Journal and would licence two video on demand (VOD) service several other well-known Western news providers.The providers.The first of these new VOD licences has 389 361 been issued to an affiliate of HKTC, Hong Kong Telecom IMS Limited.The process for the issue of the second 7.2.3 Regulatory Approach Existing Regulation licencehas been held up pending resolution of a legal dispute affecting two of the licence applicants. These Strong dominant carrier controls are in place in relation licences are non facilities based programme service to the conduct of the incumbent carrier HKTC in the licences, with the transmission facilities to be provided by narrow band environment. The measures which have the new FTNS operators. HKTC will provide VOD been taken include: transmission facilities through a combination of fibre, co-axial cable and where necessary copper wires utilising cost based interconnect charges(15); ADSL technology. y the availability of type II interconnection(16) Regulatory Approach 7.2 (similar to expanded access interconnection as itisknownintheUS)enabling new 7.2.1 Policy competitors of HKTC togainaccessto HKTC's local loop on an unbundled basis; In his policy address of 8 October 1997(14) the Chief Executive of the Hong Kong Special Administrative restrictions on anti-competitive conduct Region, Mr. Tung Chee-hwa,foreshadowed policies containedinthelicenceconditions,with intended to make Hong Kong a leader in the information specificrestrictionsapplicableto anti- world, including the bringing together of: competitive conduct by carriers possessing dominance; hardwareof highcapacitycommunications systems; the tariffs of HKTC are subject to the approval of the TA and HKTC may not give discounts a common software interface through which to its prices without the approval of the TA. individuals,businessandgovernmentcan interacteasilyand securely usetheir own In July 1997, OFTA confirmed thatitintends to systems; continue to rely on dominant carrier regulation in respect of video on demand services.As HKTC is people who know how tousethenew regardedasthedominantoperator,transmission technology; and services providedto its affiliated company providing VOD services will have to be tariffed and applied to all a cultural environment that stimulates creativity VOD programmeserviceprovidersonanon- and welcomes advances in the use of technology. discriminatory basis.
A Bureau Secretary is to be established to co-ordinate Broadband Regulation overall information technology development in Hong Kong. This is an important step for Hong Kong as to date, One of the key issues currently being addressed in Hong the authorities responsible for broadcasting and those Kong iswhether the regulatory framework which responsible for telecommunications have operated with applies in the narrowband environment will be extended only a minimal amount of co-ordination. to the broadband environment.
The policy address also foreshadowed that steps will be Vigorous debate has already commenced as to whether taken to introduce information technology measures in HKTC's broadband network should be subject to education, including connection of all schools to the existing regulations.Predictably, HKTC has argued internet and making preparations for an education specific that itis not necessarily dominant in relation to the intranet. broadband market, and that broadband and narrow band services should be regulated separately. 7.2.2 Information Infrastructure Advisory Committee As noted above, in the context of video on demand, In March 1997, an Information Infrastructure Advisory OFTA hascontinuedtoadopt dominantcarrier Committee (IIAC) comprised of various interested parties regulation to the transmission services provided by wasestablishedtoadvisetheOfficeofthe HKTC. However, the Telecommunications Authority Telecommunications Authority (OFTA) on aspects of the (TA) has taken the view that regulation ought to reflect development of the informationinfrastructure in Hong the risk involved in investment in broadband networks. Kong, including technical and regulatory issues.
362390 The TA hasdecidedagainstmandating TypeII provide any detail as to the means by which this is to be interconnection (see above) to the broadband environment achieved, nor doesitprovide theoutline of the for a period of three years from commencement of regulatory framework that might be imposed. relevant services.(17) Six months ago PT Telkom, the Government backed OFTA has identified the types of infrastructure where a telecommunications operator announced that it would Type II determination will not be made in relation to invest US$100 million in PT Multimedia Nusantara, a broadband services.Essentially they are elements of the company which is also backed by the state broadcaster access network which constitute bottlenecks. They are: TVRI, the satellite services operator PT Indosat and PT Indocitra Grahabawana.The latter company has an optical fibre cables from local exchanges to `in-principle' licence to provide multimedia services. equipment rooms and buildings (basically fibre PT Indovision, a cable and satellite operator is also to the curb); moving into the field of the provision of multimedia services. coppercables withinbuildings between equipment rooms tothe customer premises In addition, PT Pasifik Satelit Nusantara is planning the where suchcablesare newlyinstalledfor launch in late 1998 of the M2A 'multimedia' satellite. broadband conveyance services provided that The M2A satellite has been designed to distribute there are copper cables available for telephone internet, interactive video services and rural telephony. services (which would therefore be available for It faces competition from PT Satelindo's Palapa D Type II interconnection for telephone services); project, which is the latest of the Palapa series satellites. and This is planned for launch in 1999 and is for internet and DTH service applications.
5' electronic equipment for the conveyance of broadband services, since electronic equipment 8.2 Regulatory Framework can readily be provided by competing operators. The conflict between the Ministries responsible for Hong Kong therefore appears to be taking the UK telecommunications and media respectively which is approach which identifies those areas of the narrowband evident in China, is equally present in Indonesia. regulatory regime which seem applicable to a broadband environment, but at the same time do not (for example The Ministry of Tourism, Posts and because of the dominance of a particular operator) inhibit Telecommunicationspresidesoveraregimefor investment by operators by allowing the competitor to telecommunications which is considerably more liberal "piggy back" on infrastructure investments made by a than the Information Ministry responsible for television particular operator. and other forms of media. This is particularly evident in the area of foreign investment, where investment has 8. INDONESIA beenpermittedsubjecttoequitylimitsinthe telecommunications field, but not in the media area. 8.1 Broadband Initiatives Similarly, even where foreign investment in telecommunications is more restricted such as in the In November1996,theGovernment of Indonesia fixednetworkarea,foreigninterestshave been permitted to participate through the successful KSO announced the promotion of the'Nusantara 21 (18) (joint operating scheme) projects. initiative under which Indonesia aims to develop an advanced information infrastructure for the 21st century. Although the Indonesian government recently passed a In January 1997 the Minister of Tourism, Post and Telecommunications issued a document entitled 'Network new broadcasting law(19), this has not effectively dealt and Information Systems: Nusantara 21 ' which sets out a withtheregulationofconvergenttechnologies. masterplan for the development of broadband applications `Multimedia'isreferred toin passing in the new and services in Indonesia. The masterplan does provide broadcastinglawasbeing provided byso-called some detail as to the areas which are to initially be served `Special Broadcasting Services Organizations'. by broadband networks and in this sense mirrors the However this reference relates solely to the provision of Malaysian concept of the Multimedia Super Corridor. content services.Notwithstanding the KSO projects, However the document is drafted in general terms setting basic telephony isstill part of the exclusive rights out the eventual goal of connecting the citizens of granted to PT Telkom.The carriage of the content Indonesia to the information superhighway, but does not would therefore have to be supplied by PT Telkom, if part of the services included basic telephony.To the
363 391 extent that basic telephony is not provided, arguably other networks, such as the cable and satellite network of Indovision could be used. However the regulatory position is far from clear. As elsewhere the government and the investors are still grappling with what is actually meant by multimedia and what product they are intending to provide.
364 392 Incumbent's Complaint againstConstraints on Competition Whajoon Cho and Myungja Yang Korea Telecom Seoul, Korea
1. Abstract sincelate1980's. CompetitionhasbeenintroducedinKoreantelecommunicationsmarket Interconnection arrangements among carriers andregulatory framework for them have beenchanged by the market situation.Asymmetrical regulation played important role for newentrants to settle down and to activate competition in themarket. The incumbent, however, has suffered toomuch to compete fairly with the protected new entrants.Controversial issues are raised for the draft of new incumbent and some suggestions are made toavoid interconnect order from the perspectives of the Regulation has better be conflicts. Barriers of any kind do not help faircompetition atall. liberalized for new entrants as well as for theincumbent.
2. Introduction Most of institutional entry barriers have been removed or soon will be if not yet.In order Telecommunication services had been provided to promote fair competition, many of undernaturalmonopolyinmanycountries. restrictions put on dominant carriers also need The state had to expand services forvarious to be removed and many regulatory measures purposes and the numberof entities that were should be liberalized.The suggestions will be abletoraisetherequiredresources were made how theregulatoryliberalizationand limited.In order to compensate for the mass removal of constraints promote fair competition investment, the market needed to be protected both for newcomers and the incumbents, and for a longtime. Due tothe technological howtheyhelptokeepconsistencyin development, the idea of natural monopoly was rule-making and to motivate proper destroyed. New entry does not costthat investments in infrastructure. much, and users request new forms of services that have never been asked. New carriers The remaining part of this paper is composed started to enter into the most profitable sector in the following manner.The purpose and of telecommunication services market. effect of competition will be discussed.Later, major theoretical arguments oninterconnection As the number of carriers is increasing inthe chargewillbepresented. We will,then, telecommunications market, almost every new explain how interconnection arrangements have entrant talks about potential or realabuse of been changed in Korea. The problems and market power by the incumbent.To activate controversieson the initial, currentand competition,itis believed that the regulators revising Interconnection Orders will be havekeptprotectingnewcomers. Itis, identifiedandevaluated,andfinallysome however, difficult to objectivelyevaluate suggestions for improvement will be made. whether the degree of protection is appropriate. Various asymmetric regulation measures and 3. Introduction of Competition and its Impact strict audit review of cost information become quiteaburdentotheextentthatthe In many developedcountries,competitionin incumbent feels unable to compete fairly with telecommunication services market has started the protected new entrants. naturally. The demand in telecommunication serviceshadbeenexpandedtothelevel So far,the arguments for competition were exceedingthe economiesofscale,and the mostly made from the perspectivesof new monopolized carrier could not satisfy entrantsand most ofthe incumbents have customers'needthatdevelopedalongwith been defensive because they naturally lose advancement in technology.Whereas in many market and relevant revenue.However, itis developingcountries,competitionhasbeen revealedthatsomemeasurestakenfor introduced to attract foreign investments. competition could hurt it and the benefits from competition are not fully harvested. In Korea, the process has been rather unique.
365 393 Competition wasintroducedtoeffectively majorityoftheotherentitieswasrelated responsetotheforeignpressureforopen companies of Korea Telecom since complete market.The government decided to introduce separation was not possible technologically and competition within the country before opening financially. Dacom wassetupfordata the market worldwide.So far 37 licenses for communication,and SK Telecomforradio basic telecommunication services and 318 for pagingandmobiletelephoneservicesas value added network services have been issued subsidiary companies of Korea Telecom,Both out. Thetable 1 summarizesthemajor were later separated from Korea Telecom. development of competition in the telecommunication services industry for last 17 The international trend of free trade started to years. influenceintelecommunicationsindustryof Korea. The government planned to introduce Table 1. New Licenses Issued by the Ministry meaningfulcompetitionbyissuingbusiness of Information and Communications licensestoanumber ofcompanies. As phone results,we becometohaveunprecedented year new licenses and orders number of telecommunication operators. density Korea Telecom(alltypesof The serious evaluation has not conducted for 1981 8.4 services) effect of the change.The attitude of Korea Telecomhas surely been changed into 1982Dacom (data communications) 10.4 customer-oriented.Prices have been lowered SK Telecom (radio paging and and the quality of services improved.Whether by 1984mobile telephone, Korea Mobile13.8 suchimprovementhasbeencaused competition is a bit questionable.The history Telecom at that time) oftelecommunicationsindustryhasshown Korea Port Telecom (port area similartrendevenbeforethecompetition. 1985 15.8 services) More distinctive improvement may be needed to prove the positive effect of competition. 1991Dacom (international) 33.7 First Interconnection Order 4. Interconnection 199210 radio paging carriers35.7 4.1 Theoretical approach (regional) Interconnection between different networks is 1994Shinsegi (mobile telephone) 37.8 crucialfor new entrants because accessto Dacom (domestic long-distance) usersisprerequisiteforservicesrevenue. 1995 39.6 How two or more networks are interconnected Second Interconnection Order and how the compensationiscalculated are two key features of interconnection. 1 international, 3PCS s, 11 1996 42.2 CT-2s, 7 TRSs, 2 leased lines Regulators and economists were eager to find 1 domesticlong-distance, 1 out the best solution that satisfied incumbents as well as newcomers. They believed that 1997local, 4 TRSs, 1 radio paging, 343.6 cost-basedinterconnectchargeshouldbe leased lines implementedtoinduce economicallyefficient behavior. Equal access has been acrucial Prior to theDacom's entry into the issue for competing operators, but the social international telephone market in 1991, most of costs of and benefits from it were never be new entries were establishedforspecialized fully analyzed. services. Untilthenalltypesoftelecom serviceswere providedbyKoreaTelecom Regardingthedeterminationofinterconnect which usedto be a government enterprise. charge, economists suggest numerous sharing According to the government's policy of "from mechanisms of usage charge among carriers thenationalcompetitiontotheworldwide that contribute to provide end-to-end service. competition", business licenses for Cost is now known as the best alternative for telecommunication services have been issued to efficient resource allocation, even though very otherentities. Inthebeginning,however, different concepts of cost have been discussed.
366 394 The level of an acceptable interconnect charge mobile operators is different.Mobile services could be defined in a range.It should be low are regarded as premiumservices with high enough for the new entrants never to intend prices. When the PSTN operator is involved construction of their own networks. At the inservice provision,itisallowedtoenjoy same time,it should be high enough for the some surplus of high mobiletariffs. It does incumbentnevertohesitateinvestingin not hurt fairness because the mobilecarrier expansionandmaintenanceofitsexisting usually takes bigger chunk of surplus thanthe network. Technicallyspeaking,itmustlie PSTN operator. When the dominant mobile between the stand-alone cost and the marginal operator and the PSTN operator aretotally cost of interconnection services. separatedentities,theconflictofinterests between the two carriersisnotnegligible. Fully distributed historical costing method has Therecentcontroversyoninterconnection been used in many countries even though it arrangement in Korea will be described next. has been criticized for lack of motivation for efficientoperation. Replacement costingor 4.2 Korean Practices current costing is regarded conceptually superior tohistoricalcosting,but inferiorin Asdescribedpreviously,competitionwas implementability. Incrementalcostingis introduced in 1991 for international telephone supported by new entrantsbecauseitcan services. Priortoit,new carriers operated lower the level of interconnectcharge business in leased lines, TRS, data determined by fully distributed costing. Since communications,radiopaging andmobile commoncostsareneverrecoveredunder phones under monopoly or duopoly at most. incremental costing system, strict incremental Theinterconnectionarrangementsdid not costing threatens viability of the incumbent. matter. Since market entry was allowed by the government, new entrants believeadequate In addition, experts such as Baumol and Willig interconnect arrangement was also guaranteed emphasized the opportunity cost borne by the with business licences. Moreover, some of incumbents. According to them, the new carrierswere subsidiarycompaniesof incumbentsvoluntarilyprovideinterconnect Korea Telecom.Both the government and the services to competitors when they recover the carrierswerefocusedmoreonproviding lost revenue (opportunity cost) by providing quality services than on possible problems with interconnection services as well as the actual interconnection. costof network componentsoffered. This mechanism allows market entry onlyto the When anyinterconnectiontookplace,the carriersthataremoreefficientthanthe pricesweredeterminedinasimpleway. incumbents. There was notransactionbetweenmobile carriers and PSTN operators. Both parties Though nothing is universally supported, each charge to their users for end-to-endservices country desires best for itself by choosing the withoutanysettlementforinterconnection. most appropriate method under their For international telephone service, Dacomjust circumstances. While UnitedStatesforces paidforappropriate domestic ratetoKorea equalaccessandfreecompetition,United Telecom for interconnection. Kingdom reserves equal access considering net negative effect of it.New Zealand decided to At the end of 1992, the government announced rely on commercial law rather than on special a setofbasicrulesforinterconnection law for telecom industry. Australian arrangements:First Interconnection Order. government allowed Telstra charge Customer The charge was determined based on fully Access Network chargetocompetitors even distributed costing (including fair rate of return though it decided to choose directly attributable on investment) and interconnect wasclassified incremental costing. into two different types;local only and local andlong-distancecombined. Therate All these cost-based arguments are applicable international carriers have to pay for totherelationshipbetweenlocalexchange interconnection became lower than before. carriersand long-distancecarriers,inother words, among fixed networks. The While no-settlement was sustained between relationshipbetweenPSTNoperators and radio paging operator and Korea Telecom, the significant problem was raisedbetweenthe
367 395 PSTN operator and a mobilecarrier. The the weakness of the existing rule to handle interconnectchargeto a mobilenetwork complex interconnect relationship among calculated by fully distributed costing was too carriers. high for Korea Telecom to pay.Since mobile phone business were not fully grown at that Many newideaswere discussed,butthe time, the unit cost was over 170% of PSTN perspectives represented during discussion were operator's revenue from the call. biased because the task force members were expertgroup ofa fewmajorcarriers. Other than the high interconnect charge to a Assuming that it could help lowering the level mobile network,introduction of competition in ofinterconnectcharge,incrementalcosting domestic long-distance marketalsorequired issue was discussed even though most of the some adjustmentsinthe existingrule. In participants recognized that it was hard to be 1995, a newinterconnectionorderwas implemented. There were intense arguments announced. Newentrants, Dacom, was on subscriber line cost.Majority of the team successfultopersuadethe government that argued the costs would better be compensated strong protection was desperate fordesirable byfixedratechargedtothesubscribers. market entry and stability.Discounts on local Economicefficiencyandfairnesswould be loop interconnect charge, exemption ofNTS improved when subscribers pay for the costs contributionand upperlimitof interconnect what they incurred. charge up to their revenue for non-profitable sectors were introduced in the new order. Ideas representedintheinitialdraftare,in general, characterized as unrealistic and Inaddition,theusersandproviders of academic.For example, there was no serious interconnecting services were uniquely defined. consideration on universal service.It had been Whenever a local exchange carrier(LEC)and provided by the incumbent without any specific other carriers interconnect, LEC wasdefined as funding mechanism other than a minor portion the provider and the other partythe user. of NTS contribution.Universal service must With this arrangement, the settlement problem notbeabolishedunder anycircumstances, between mobilecarrierand PSTN operator therefore, affordability is another critical factor disappeared. Instead, for calls originated from for tariff setting.No subsidy for access deficit the PSTN and terminated to a mobilenetwork, was provided on the initial draft of a proposal. user charge belongs to amobile carrier and No new funding mechanism was mentioned, the LEC only collects cost-based interconnect either. If the rule becomes effective as was charge. Underlined idea was that the PSTN presented initially, it is expected that the fixed operator should be fully compensatedforits rate for basic telephone services would rise, costs because the sound local loopmanagement and then, some poor group of people may have was foundation for thedevelopment of telecom togive uptelephoneservices. Universal industryasa whole. As results,allthe service is never possible. surplus from calls between PSTN andmobile networks goes to the mobile carriers. The new rule, revised from the initial draft, is nowunderfinalreviewbytheKorean The new rule is now evaluated as a temporary Telecommunications Committee. Itdoes not remedy. No measures were provided for the seemtobereasonableandcomprehensive arrival of various new services andaccordingly enough to reflect interests of all related parties. various types of interconnect, and thelocal Rather,it shows tint of politicalnegotiation. loop-centered idea is doubtful for its viability. The interconnecting carriers pay for a portion Infact,themobilenetworkshavebeen ofsubscriberlinecost,butthelong-term expanded surprisingly fastinlast couple of investment type cost (depreciation of subscriber years. Itis now difficultto regard mobile line) shouldbebornebythelocalloop network as subsidiary one to PSTN. operator. Incremental costing was withdrawn due to the difficulty involved in In late 1996, a task force team wasformed to implementation, but common costs are reviewthecurrentinterconnectruleand excluded. Many of the excessive protection preparea new proposal. The government measuresfor new entrantsexistinginthe already issued licences to numerousbusiness current order were eliminated. entities for various types of telecom servicesin June as shown in Table 1.It also recognized Inthe next section of thispaper, we are
3683 9 6 goingtoexaminealltheissuesraised by conditions for interconnection. interested parties and analyze consequences if possible. When competition was introduced and so was interconnection charges, a portion of the charge 5.. Controversial Issues was assumed tobeasubstituteforcross subsidy to keep providing universal services. 5.1ExclusivenessoftheProcessofRule Iftheportioniseliminatedforeconomic Change efficiency without any other specificfunding for universal services, users have to pay high Initiatives for institutional change were usually pricesand universalservicesaresacrificed. taken by dissatisfied operators, and the process That is exactly what could happen if the new seemed to be exclusive.Most of task force interconnection order becomes effective without members were delegates from major operators modification. Inanutshell,the change of andtheymade upadraftforthenew interconnection charge influences on the other interconnect ruleforabout 3 months. No two, universal services and tariff rebalancing. interimstatementsor opinionsurveys were made.After the basic idea was discussed and The Korean approachtoreviseinterconnect decided within the task force,it was written arrangements seems a littlehasty and forthedraft without seriousdiscussion by inconsistent.The government naively believes variousinterestgroups. Itisnaturalthat that straightening out the problematic users' benefit is not fully reflected under such interconnect regime that promotes situation. Instead, interest of existing cross-subsidy naturally leads to improving the operatorscould playimportantrolesinthe other two.But it forgets that Korea does not process because they were the key membersof have aninstitutional mechanism for funding the task force team and no one except for the universal services except for a small government is focused on the interest of users. component in NTS contribution. The Impacts of the new rule on operators' revenues discussion restricted in a certain aspect could andcostswerefullyanalyzedwhilenot be in vain and the new rule can not last long, enough attention was given to the interest of which increases social costs for frequent rule users.The survival of new entrants selected changes. by the government was imperative. Task force team discussed fair competition endlessly but In order to promote competition and nodiscussionwasheldonsocialcosts deregulationintelecommunicationsindustry, involvedinenforcing the new rule. Public substantialguidelinesforlocalcompetition, hearing needs to be activated for representing universal services, and local access have to be broad perspectives.Every issue raised at the prepared. Allthelegal,economic,and public hearing must be fully discussed among administrative barriers ought to be removed for interestgroups andthedecisionshould be local competition. New entrants canfreely validlyjustified. Moreexpertshaveto enter into the market whether they construct participate in the process and more time should facilities by their own or rent them from other beinvested. As wrappingupthework, carriers. On the other hand, strong support everybody's name should be opened so that mechanism for universalservices has to be they become accountable for the new rule and establishedtokeepthelocalrateatan theprocess becomes transparent. affordable level.For any revision or creation, interest of user groups should be represented 5.2 Lack of Consistency through a formal process. Interconnection arrangement, universal services, The cost for universal services needs to be and tariff rebalancing are interrelatedissues. clearlydeterminedandthesufficientfund Thus, we need to consider all three aspects for should be raised.Every carrier has to pay for problem solving. In Korea, however, itwithoutdiscrimination. The carrierthat uniqueness of each were too emphasized to receives support has to clearly announce how raise interrelatedness.Since individual trial for much goestowhichservicessothatthe problem solving results in high uncertainty on paying party can set up tariffstrategy and other aspects for future business environments, businessplaninadvance. Current implicit carriers become too sensitive to be reasonable support mechanism ought to be analyzedin for reaching an agreement on any terms and detail to determine the size of support, and the
369 397 subsidy hasto be externalized. When the disclosedintheprocess. Thatcouldbe carrier which provides universal services can detrimentaltothe incumbent and hurtfair besureaboutfullcompensation,itnever competition. Instead,active competition and hesitate to reveal the size of implicit support. adequateincentivesystemwouldbe much beneficial both for the auditee and the auditor For desirable results from the new setsof (regulator included). rules,itshould be understood and analyzed what is happening in reality.Affordability has 5.4 Over-regulation to be considered to set tariffs and the change should be gradual.Interim measures with a Serial changes of our regulation system for gradualplanwould makesense. Korean interconnection could be negatively evaluated in government intends to liberalize regulation and somesense. The governmentandother promote competition through revised law and carriersdistrustthecost minimizingefforts interconnection order.Profitability of local loop and the cost and traffic information reported andaffordabilitybyuserswerenotfully by the incumbent.Introduction of competition recognized, however. Lowering the levelof didnotsubstituteregulationwithmarket interconnect charge is suggested for mechanism, and the regulation does not seem competitors but possible rise in fixed rate for to be liberalized sufficiently. localloopisnotcontemplatedindetail. Everyone recognizestheneedforuniversal Implementation of optionalcallingplans has services, but no one makes serioussuggestion been delayed to sustain favorable environments for funding mechanism. When the issue of fornew entrants. Interconnectioncharges inconsistency on related areas was raised, it have never been negotiated by therelated was toolateto be changed, and interested parties. When revenue sharingisdiscussed parties were eagertonegotiate rather than for the calls originated from the PSTN to a straighten out the bend. mobile network, the government is assumed to set up thesharingratio. Such measures 5.3 Lack of Incentives restrictthepossibilityofpricedecrease by align interests of both carriers for status-quo. Interconnection charges are set up by the rate of return regulation in Korea.Many pointed Itis about time to move over to price cap out the lack of motivation to minimize cost or regulationfromrateofreturnregulation. improve efficiency as a major weakness of the Global price capping is strongly supported by rateof returnregulation. Externalparties Laffont and Tiro le.It is believed to moderate including the regulator do not trust reported sideeffectsofotherregulatoryframework. costinformationandmanagerialeffortfor Introductionofoptional calling plans is efficiency by the incumbent.In order to avoid recommended for users.And there must be a suchaproblem,itwasdesignednotto room fornegotiation by two interconnecting compensate for a portion of costs.Such a parties as competition istaking place in the mechanism, however, can only play as penalty interconnectservicesmarket. Itwill make as long asthe ex post facto adjustment is tariff setting process flexible, and carriers are made. No compensation without advance notice free to develop or design new services with simply ends up with some loss for the paid various price packages. party. However hard the incumbent pursues efficiency, it can never recover a 5.5 Excessive Protection for New Entrants pre-determined portion of costs incurred. Driven by the governmental policy of In addition,auditprocessis strictand "asymmetric regulation", the new entrants have accordingly it costs a lot.The costs for strict been very well protected.The most distinct audit are never compared to the benefits from asymmetryisshownintariffsettingand it.In other words, high cost is not justified. regulation on interconnection.While Dacom is Howeverstricttheauditprocessis,itis abletofreelyintroducevariousdiscount almost impossible to detect internal problems programs, theprice decrease by Korea such as management fraud.Rather, we can Telecomrequiresthegovernmentapproval. point out side effect of it.It is very likely for The government thinksthat pricedifference theconfidentialbusinessinformationofthe betweenthe Korea Telecom and Dacomis incumbent in competitivemarket to be more important forsurvivalof Dacom than
370 any other competing factor. As results, the should be made in advance and its operation price decrease after introducing competition in be properly compensated.For fair competition, domesticlong-distance market never exceed theKorean government weighssurvivalof that happened before.To be more specific, the new entrants heavier than reliablelocalloop price is decreased by 15-20% every year since operation.Neglecting profitability of local loop 1990.Though it is a bit early to evaluate the operatorcan end up withfailureof many effect of competition (becauseit passed only interconnecting carriers. Thecumulated two years since competition has started), the earning power of the incumbent is exhausted price was decreased only once by 10%.The byexcessiveprotectionfornewentrants. similar trend is shown in international New reserve for the expansion and telecommunications market. The 35% price modernizationoflocalloopisdesperately decreasetook placefor5 years beforethe needed for upcoming information society. second carrier started business while only 22% decrease has taken placefor 5 yearsafter In order to draw out an appropriate level of competition. Various discount programs were interconnect charge, the costs incurred, introduced before than afterthe competition. including opportunity costs, have to be properly Due to the government's intention of keeping compensated. Thebiggest problem in price differential, the dominant carrier can not interconnect charge determination declaredin initiatepricedecrease, which ends up with the new interconnection order is, we believe, slowerpricechangethandesired. Well no coverage of common costs.It brings down protected new entrants might want tostay the interconnect charge rate but offerslittle under the "price umbrella"of the incumbent. incentives for investment in local loop by new entrantsandmodernizationofitbythe 5.6 Indifference to Social Costs incumbent.It may promote competition for the time being. Itslong-term effect couldbe, Preregisteration of a long-distance carrier could however, detrimental for developing be a critical factor for fair competition and infrastructurefortelecommunicationservices. hasbeencompletedinseveralcompetition Economic efficiencyis crucial for determining -oriented countries.The Korean Government theinterconnectcharge. Butincentiveis announceditwoulddoitinlate1997. another factor which should never be forgotten. Nevertheless,indepthevaluationonsocial Australian example of CustomerAccess welfare and costs seems to be ignored in the Network charge is very insightful.The two decision making process. Equal accessisa importantfactors shouldbeharmoniously great idea by itself for new carriers and their combined based on full understanding of the users.Costs for implementing it is quite high, environment. though.Net effect of equal access on social welfare isnot necessarily positive. Infact, 6. Conclusion OFTEL announceditdidnotforceequal access since the net social welfare effect was Competition is only a tool to obtain a goal of estimatednegativewhateveroptionswere maximizing social welfare.This paper tries to taken.The decision for equal access seemed examine how the Korean policy for to be made in a hurry due to the conflict of telecommunications industry affects the interests among competing operators. developmental process of interconnection arrangements among different networks. 5.7Lack ofAttentionon Modernizationof Obligation of interconnection and a reasonable PSTN and logical way of determininginterconnect chargearenecessarytoavoidduplicated Almostallthe decisionsare made favoring investment and to efficiently use the existing new entrantsunderthename offair network. competition and severe distrust in the dominant carrier is underlined.Under the situation, the Interconnect charge is a major cost component interest of the incumbent who operates local for new entrants.If the level of interconnect loop is not properly considered.The local loop charge is too low to cover the cost, even the is basic common utility any telecom carrier has inefficient carriers could stayinthe market, to use for their business.It would be too late and cause rise intotal costs.On the other forexpansion or modernization when actual hand, new entrants would prefer constructing demand are recognized.Adequate investment their own networks to interconnectionifthe 399 371 level of interconnect charge is too high. References
Inordertoharvestfruitfulresultsfrom Lewin,David,and MalcolmKitchen, 1994, competition, the opinions from various Interconnect: the key to effective competition, interestedpartiesshould be reflectedinthe Ovum, London, England interconnectionorder. The processof rule change and/or rule making must be open and Lewin, David, and Richard Kee, 1997, transparent so that it is not interfered by any Interconnect: a globalguidetoeffective irrelevantpoliticalmotive. The interrelated telecommunications, Ovum, London, England issues to interconnection ought to be discussed jointly. Localcompetitionanduniversal Ministry of Communications, 1992, Interconnect services are closely related to interconnection. Order, Seoul, Korea In addition, interconnection arrangements must Ministry of Information and Communications, be able to provide incentives to operators for 1995, Interconnect Order Revised, Seoul, Korea efficientmanagement. Restrictionsbythe government have better be removed so that Ministry of Information and Communications, carriers do not rely on their lobbying power. 1997, Draft of Interconnect Order 2nd Revision, Excessive protection for new entrants has to Seoul, Korea be moderated for the interest of users.The interest of users can never be sacrificed while OFTEL,1997,Network Charges from1997, dominant market power of the incumbent could London, England be cut down ifnecessary. Along with the emphasis on interest of users, we should not Tiro le,Jean,1997,"Remarks on Regulatory forget that the existing local loop is social and Issues", Competition and Regulation, Dongkuk industrialinfrastructurewhichhastobe University, Seoul, Korea expandedandmodernizedforalltypesof services.Last but not least, the social costs and benefits of any rule change have to be carefullyevaluated and validlyjustified both from short-term and long-term perspectives.
372 4 Telecom Market Liberalization in Taiwan
Lawrence S. Liu*
Lee and Li, Attorneys-at-Law Taipei, Taiwan
1. ABSTRACT
The Cabinet in Taiwan launched the Asia-Pacific Regional Operations Center Plan' in 1995 as a formal attempt to shift Taiwan's economy towards more private ordering. The APROC Plan bears the mark as a "cross century initiative"' with respect to seven areas of project implementation.' Among them, the three-phased Regional Telecom Center Program' was first on the ROC government's agenda for execution.'
The purpose of this paper is to pinpoint and analyze the Program's recent development and implementation. The first part seeks to provide a synopsis of the pertinent historical background, inherent problems and potential economic impact. Second, this paper will examine the new regulatory regime and the Telecom deregulation contemplated by the Program. In particular, the legal reforms necessary to implement the Program and the relevant issues stemming therefrom will be explored. Moreover, the deregulation of the satellite television industry, which is currently under implementation, will also be outlined.
2. HISTORY OF TELECOM REFORM EFFORTS In a way, the telecom program within the APROC Plan added more impetus for telecom market reform in Taiwan as 2.1 TELECOM MARKET AND REGULATION it represents the renewed commitment of the EY. However, BEFORE THE 1990s it also highlighted the urgency for the passage of the three telecom reform bills'', because the second stage of the Until its amendment in February 1996, Taiwan's Telecom market opening could not be implemented successfully Law' of 1958 maintained a bureaucratized and monopolized without having these bills passed first." As such, in July model for its Telecom market.' However, the monopoly 1995, the APROC Window/CEPD formally intervened to arrangement in Taiwan became undesirable in light of global re-examine the three telecom reform bills pending in the trends,' and the Directorate General of Telecom' together Legislative Yuan."' The aftermath sees the much revised and with other government agencies" began studies of improved bills with each adopted on January 16, 1996, but liberalization in the early 1980's. As a result, domestic only after intensive debates and enduring consultation were companies were allowed in the late 1980's to provide limited made." value-added services. However, liberalization did not begin quickly enough." It was not until 1995 that the anti- 3. NEW REGIME CONTEMPLATED BY THE THREE competitive policy was re-examined by the Council of REFORM LAWS Economic Planning and Developmene and eventually discontinued in 1996. 3.1 BIFURCATION OF REGULATORY AND BUSINESS UNITS 2.2 TELECOM REFORM BILLS, APROC PLAN AND RENEWED IMPETUS As amended, the TL now requires the DGT to be a mere independent regulator. The DGTs business unit was to be After various legislative attempts to amend the TL since the privatized as Chunghwa Telecom Corporation,' which took 90's," the Executive Yuan" adopted an ambitious APROC place on July 1, 1996. Yet, due to a major compromise Plan in early 1995 to engineer more economic liberalization among political parties to placate the activist DGT union and internationalization to enhance Taiwan's members, the amended TL provides that CHT will be a competitiveness." The Plan, inter alia, contains a three-stage state-owned company. In other words, unless the LY gathers blueprint to facilitate the telecom market opening in Taiwan. political support to amend the TL in the future, CHT will First, the second generation cordless telephone business" remain majority-owned by the government. was to be opened to the private sector. Second, four additional segments of the wireless telecom market would be 3.2 CLASSIFICATION OF TELECOM SERVICES opened for competition: cellular phone, paging, trunlcing radio, and mobile data. Third, competition in the wired/fixed The TL also classifies Telecom industry into type I and type line basic service market, including the previously =22.Importantly, it follows a "negative listing" approach for deregulated satellite television industry, would be introduced this classification and provides that a type II business is within five years. whatever activity not canvassed by type I. The type H market is generally open to competition, and licensing would be
373 4o1 based on a pro forma review. Foreign ownership in the type companies such as Asian Business News chose Singapore II industry is not limited. On the other hand, the type I instead of Hong Kong because of a more relaxed ownership industry is subject to an oligopolisic model; competition will requirement.' Additionally, the EY ministers thought that be gradually introduced and segmentation within the basic foreign ownership restrictions would not make sense in the service market will continue for some time. area of satellite broadcast and television, since airwaves do not recognize borders. Therefore, the final EY bill removed In connection with this new TL regime, the government in all restrictions on foreign ownership. Taiwan also determined to allow some competition in the mobile telecom sector. However, a formal policy decision 3.4 OTHER SALIENT FEATURES OF THE AMENDED was made by the EY in October 1995 to give CHT a TL five-year grace period to engage in the fixed-line telecom business beginning from its incorporation on July 1, 1996. In By like token, the ramification of the TL is widespread and other words, licensing and review should occur before the raises other contentious issues especially in the following end of this century to ensure that by July 1, 2001, new areas: providers for fixed-line basic services will enter the market.' 1. The equal access rule and the specific obligations In fact, the EY has recently decreed the market opening of type I telecom companies to provide schedule for fixed line Telecom business.' interconnection to other telecom companies;32 2. The universal service fund obligation;33 3.3 FOREIGN OWNERSHIP LIMITATION 3. Rules against discrimination;' 4. Tariff liberalization;35and To maintain the competition model for the type II industry, 5. Fees for frequencies;" there is no foreign ownership restriction for equity investment. However, foreign ownership in a type I business 4. CORPORATIZATION OF CHT is limited to 20% under Article 12 of the TL as newly amended. This is substantially lower than the one-third limit One important feature of the Program is to corporatize the contemplated by the CEPD under the revised TL bill of 1995 CHT. It would have made some economic and political but far better than the 1992 bill, which would have ruled out sense to break up the business arm of the DGT into several foreign ownership entirely. Essentially, the 1992 bill operating companies, much like the involuntary divestiture represented the old DGTs tactic of using foreclosure of of AT&T in 1984, so as to generate more competition in the foreign participation as leverage for Taiwan's bid to join the Taiwanese telecom market. However, this alternative was World Trade Organization'. quickly ruled out because of the high political cost and low political will of such an action. Although privatization has Importantly, under the revised 1995 TL bill as enacted, CHT not been completely ruled out, it is not a short-term solution would also enjoy this 20% foreign ownership quota. either. Corporatization of the DGTs business unit, therefore, Moreover, the TL, provides that a majority of the directors was the only remaining politically feasible solution. In and supervisors of a type I telecom company have to be addition, the old DGT and its activist union members Taiwan nationals. This means that foreigners could fill up to thought it was not sufficient to just rely on general corporate slightly less than a majority of the board or supervisors, if laws for such corporatization. The political commitment of agreed to by the local partners. This disproportionately larger granting job security to DGT employees necessitated that a quota for directors or supervisors was a deliberate attempt to political promise be permanently enshrined in some permit international strategic alliances to be made in the legislation. Hence, the CHT Law. futures However, the process of corporation was not smooth, and For comparative purposes, the Satellite Broadcast and the CHT Law was only put into effect after the following Television Law bill' in Taiwan does not restrict foreign competing interests were reconciled and issues resolved:37 ownership.' The direct satellite television business is a new 1. Job security of CHT employees and their labor industry in Taiwan, however, certain laws already embody participation in management" the regulatory policies in this area.' Initially, the 2. Board and management qualifications, civil Government Information Office", the administrative agency servant status;39 vested with the power to oversee broadcasting and television 3. Ownership diversification in lieu of privatization, activities, proposed a foreign ownership restriction of not strategic sale;" exceeding 50%, a requirement which would essentially deter 4. More autonomy and restructuring at CHT;41 any serious foreign investors. The GIO then altered this 5. Fair competition in the new market" and position at the urging of the Council of Economic and 6. Relicensing.43 Planning Development so that foreign ownership now may not exceed 51%. By doing so, the GIO adopted a different 5. RECONSTITUTING THE DGT logic: that is, foreign investors could gain control as long as they take on minority local partners. The Council of The DGT Law seeks to reconstitute the new DGT as a mere Economic and Planning Development had argued that professional regulator within the Ministry of Transportation
374 402 and Communications. However, during the legislative connection, MOTC/DGT have proceeded to entertain debates for adopting the three telecom reform laws, there applications for mobile telecom operations in the four had been some proposals for having a more independent and segments. Thus far, 17 international consortiums have filed powerful regulator such as the United States' FCC. As a 42 applications for 8 mobile phone operator licenses. In result, some compromise had to be made. In other words, addition, 32 applications have been made for 8 paging some independent and even adversarial mechanisms had to operator licenses, 31 applications for 17 mobile data operator be built into the architectural design for the new DGT. licenses, and 98 applications for 20 thinking radio operator licenses. In total, 102 groups have filed 203 applications for 5.1 DISPUTE RESOLUTION COMMITTEE 53 licenses in connection with the mobile telecom market opening program. Recent statistics" and the recent award of Specifically, the DGT Law mandates that a Dispute trunking radio licenses' show that further deregulation is Resolution Committee be set up within the DGT. The likely to continue. committee is to be composed of representatives from political parties, agencies, academics, experts and consumer 6.2 INTERNATIONAL INTEREST groups. Proportionate representation is required; representatives from the same category may not exceed There has been much international interest in the telecom one-third of the total, and representatives belonging to the market contest. The heavyweight participants reportedly same political party may not exceed half of the total. More include AT&T Wireless, AirTouch, Southwestern Bell importantly, even though the DGT is only a subordinate Corporation, Mitsubishi, Nynex, France Telecom, Telia, agency of the MOTC, which is supervised by the EY, First Pacific, Sprint, GTE, Telstra, Sumitomo and Ameritech. members of this committee should be directly appointed by Rigorous competition is also foreseen in the satellite the EY. television market. According to the local press50, international companies such as MCI, AT&T and Sprint The Dispute Resolution Committee, therefore, is a have revealed deep interests to set foot in the local satellite potentially powerful check on the DGT. However, industry, and numerous negotiations for joint venture preparations for impaneling it and staff work supporting it projects are underway. A notable example is the cooperative must come from the DGT itself. In Taiwan, it is also possible arrangement consolidated between AT&T and two local to seek administrative relief by appealing to the supervisory companies, TTN and the Far East Group. Even though the authority" of the agency", rendering an adverse adjudication local market is still inchoate and unpredictable, rapid before judicial review is sought. So should decisions by the progress is expected on these fronts. However, the unique DGT be first referred to this committee or directly appealed political, social and economic background of the telecom to the MOTC and EY? How should decisions of this market opening in Taiwan promises to be challenging for committee" be handled by the EY if it receives an these international firms and their Taiwan partners, as well administrative re-appeal? In real politics, how should such as regulators. dispute proceedings interact with possible parallel dispute proceedings before the Fair Trade Commission alleging Fair 6.3 FOREIGN OWNERSHIP LIMITATION REVISITED Trade Law violations? These are all new issues brought about by the DGT Law amendment. Several challenges have surfaced, while others have loomed ever larger on the near horizon. First, a method to compute 5.2 POLITICAL IMPACT AND CHALLENGE the 20% foreign ownership limitation in mobile telecom operators already requires some clarification. Frankly, the The requirement of political party representatives in this TL is unclear on this issue. The controversy came about committee introduces the possibility of politicking for their because even local companies taking the lead to form such nomination and the work of the committee. While this may international consortiums may already have foreign be a necessary evil to ensure that the DGT will not favor shareholders as a result of Taiwan's trade and investment CHT, the cost of maintaining such political elements in liberalization program of the past decades. For example, dispute resolutions will not be insignificant. How to enhance some of such foreign investors in leading Taiwan companies the size, professionalism and morale of the DGT staff is also are strategic investors, while others are portfolio investors an imperative issue. Unless the DGT develops a highly who invest in listed Taiwanese companies under the motivated and adequate staff imbued with professional government Qualified Foreign Institutional Investment esteem and expertise, efforts to liberalize the telecom market program. Currently, aggregate QFII ownership in any in Taiwan will be insignificant. publicly listed or quoted company may reach 20%, the same level as under the TL. This portfolio foreign investment 6. MARKET OPENING quota, however, will increase over time as Taiwan further internationalizes its capital market. 6.1 MOBILE TELECOM Therefore, would such indirect foreign ownership reduce the As referred to above, there are three main phases of the quota for direct foreign ownership in the new telecom Telecom market opening' for the coming decade. In this companies to operate any of the four new mobile businesses?
3754 0 3 A literal interpretation suggests that it would, which means this aspect, even though competition will gradually be that all indirect foreign ownership should be summed up introduced in the telecom market. This rate-of-return regime under a "vertical dilution computation" principle so as to claimed that mobile telecom applicants would create an scrutinize whether the 20% quota has been filled. This could anomaly, at least in so far as the mobile telecom market is be an administrative nightmare for both the consortiums and concerned. Instead, it was argued that a price capping regulators because of the high cost of constantly monitoring approach should be adopted for a market gravitating towards share transfers. Where the Taiwanese companies involved in a competition model. the chain of corporate ownership are publicly listed companies whose shares change hands every trading day, In the bilateral trade consultations with the United States' monitoring is particularly difficult. negotiators in mid-1996, the DGT reportedly was open to making some changes in this regime, subject to further A more thoughtful interpretation would suggest that the studies to confirm the merits of price capping arrangements computation of foreign ownership should follow the and the legislative approval to amend the pricing formula for "control" test. In other words, if any constituent companies the tariff. Assuming such willingness, how a price capping are controlled by foreign owners or corporations, their share- formula would work in a dual regulatory regime is worth holding should be attributed towards the 20% quota. Control some serious consideration. Presumably, only one price cap could follow the more rigorous majority ownership test or tariff can be adopted for both sectors since it must be a "one the more flexible "effective control" test, which is not size fits all" regulation. In a dual regime, although the unheard of. When the Taiwan Securities and Exchange private-sector mobile telecom operators will have a strong Commission' liberalized the securities brokerage market, profit motivation, CHT as a state-owned enterprise may not subject to some foreign ownership limitation, it was exactly be so motivated to improve upon its efficiency. The CHT what the SEC had done in 1989. The SEC liberally Law has guaranteed the remuneration of most of its interpreted the 10% per foreign shareholder requirement employees as civil servants. Therefore, even within CHT under the 40% aggregate ownership limit; four foreign itself, this dualism adds complications to any price capping holding companies held by the same group could invest in a proposal. local securities firm without violating the 10% quota for single foreign shareholders. 6.5 RATE RE-BALANCING
Either the majority control test or the effective control test Another issue relating to the tariff pricing regulation is the for this alternative interpretation would ensure more robust rate re-balancing program. In the past, the DGT has resorted competition, because the incentive for foreign telecom to higher profits from long distance and international calls to companies to participate in the mobile telecom market would subsidize local calls. In connection with introducing be significant. Following either test, however, this competition in the telecom market, rate re-balancing would interpretation could lead to indirect, beneficial ownership be necessary to prevent market distortion which otherwise exceeding the nominal 20% quota. It would also suggest that would follow, as new entrants in a cross-subsidized market foreign shareholders as a group, rather than local would choose to "skim the cream" if such an opportunistic shareholders as a group, could become the dominant voice in option was available. While the 1995 rate re-balancing such international telecom joint venture companies. program by the DGT in anticipation of the passage of the telecom reform legislation proceeded uneventfully, the 1996 In the midst of highly contentious democratization and rate re-balancing program by CHT, in the midst of mobile following a cabinet change in mid-1996, the MOTC/DGT telecom market opening, drew much criticism and concern position took a predictable turn for conservatism. The strict, that this could be a predatory ploy. literal interpretation requiring vertical computation of all indirect foreign ownership was taken up. Under this 6.6 SATELLITE TELEVISION conservative approach, there would not be any challenges by legislators or local companies who would be able to maintain The opening of the four segments of the wireless market dominant ownership. All applicants were asked to submit has triggered the third phase of Telecom Deregulation. The their application documents and business plans on the basis viability of the government's undertaking to liberalize may of this interpretation. On the other hand, the problem with once again be tested in this unfamiliar environment. In this monitoring change in foreign ownership in the future has regard, MOTC has devised a plan to launch direct satellite been temporarily swept under the rug. television business in Taiwan and 25 licenses will be released for the operation of satellite television operations by 6.4 PRICE CAPPING OR RATE OF REGULATION the end of 1999. This plan is classified as urgent and is high on the MOTC's agenda. According to its current schedule, Another issue which has cropped up is the rate-of-return MOTC promises to have the relevant proposals for rules for tariff regulation. The TL, of 1958 had contemplated liberalization ready by the end of 1996 and the precise ambit a rate-of-return pricing model for a public utilities monopoly of permissible satellite televisions operations would be and required a pricing formula for such tariff to be approved delineated by May of 1998. Interested parties may tender by the LY. The 1996 amendment to the TL has not changed open bids for a license(s) in August of 1998. Permits will be
3764 0 4 awarded by the end of 1998 and the operational license will be issued by the end of 1999, to render a one full year Fourth, what the SBTL bill does not require is also worth service preparation period for the awarded operators." noting. For example, as referred to before, it does not restrict foreign ownership. Direct Satellite Television Business in Taiwan is virtually non-existent. Therefore, issues of its regulation arise from Fifth, the SBTL bill does not contain any local the cable television business in Taiwan, one of the most program/contents requirements either. This has been a dynamic markets in the APEC region. Because of the density traditionally sensitive area; academics in Taiwan are of communities in Taiwan" consumer behavior, the often divided on this issue. On the other hand, Taiwan- perceived inadequacy of the oligopolistic government and made programs such as the highly successful Judge Bao KMT- linked terrestrial television stations, cable television soap opera television series demonstrate - for lack of a has become the alternative television industry. Currently, better characterization - the competitiveness of the Satellite signals are down-linked only to be transmitted Chinese culture. Indeed, there have been reports and through the CATV systems." assertions that, if cultural aggression is a real threat, elsewhere in Asia the Chinese culture" is deemed to be Even though direct satellite television is a way of the future, threatening to other cultures.' several of the legislation - not entirely consistent among themselves - already embody Taiwan's regulatory policies in Sixth, the SBTL bill is fairly open about entry by those this area.' The Satellite Broadcast and Television Law bill media firms which are already well entrenched. was drafted by the GIO facing these circumstances. It was Therefore, it does not prevent the three terrestrial approved by the Executive Yuan in September of 1995 and television stations in Taiwan from entering this market sent to the LY for deliberation." segment. Again, this is a very controversial issue, particularly to the opposition parties. On the other hand, 6.6.1 SALIENT FEATURES OF THE SBTL BILL these three stations do have some competitive strengths if one views the market as larger than Taiwan itself.' SBTL was introduced by the EY to redress the inadequacy of various legislation" in dealing with television and 6.6.2 CURRENT STATUS OF THE SBTL BILL broadcasting issues. The bill is policy oriented and seeks to maintain the public interest with the following stipulation. The SBTL bill seems to be at a stalemate at this point. Meanwhile, some DPP Legislators have tabled a First, offshore program providers may not supply competing bill. For example, this competing bill would programs or advertisements in Taiwan unless they set up limit foreign ownership in a direct satellite broadcast a branch or appoint an agent in Taiwan and have reported television system operator to 20%. Foreign ownership in such arrangements to the GIO for its recordation. As a a satellite broadcast television channel operator would be result, system providers, cable television system limited to 50%. Also, under this bill the three KMT or operators, and radio and television stations may not air government-affiliated terrestrial television stations will such programs or advertisements of non complying be locked out of this market as it would prohibit offshore program providers." Offshore program investment by such stations that have more than 30% of providers airing programs or advertisements violating the their shares held by the government or a political party. SBTL provisions' could lead to vicarious administrative In addition, this bill would prohibit direct broadcast penalties' levied on their Taiwan branch or agent.' satellite. Offshore channel operators would be required to apply for a down link permit and would have to Second, substantive regulation under the SBTL does not contribute to a fund.' appear to be cumbersome. It sets forth application procedures, qualifications, requirements for business The requirement that offshore program providers must plans, license duration' and review standards for such set up a branch or appoint an agent is also controversial. applications." A name change or change in the Free traders argue that this is an anti-trade measure; responsible persons' would require the GIO's approval, certainly where international trade in goods is concerned, whereas share transfers, suspension of business and there has been no such requirement. Proponents, termination of operations have to be reported to the GIO essentially the GIO itself, believe that without this within 15 days.' provision they would not be able to control the legality of programs and advertisements. Indeed, in October 1995 Third, regulation of programs and advertisements under the GIO had sanctioned 92 CATV system operators for this bill is essentially a repetition of similar provisions in airing non complying programs supplied by offshore the Cable Television Law. An exorbitant provision program providers. However, this decision was quashed encourages the export of locally made programs to by its own Administrative Appeals Committee, which facilitate cultural exchange and requires compliance with held that the local operators had no way of controlling international treaties and practices concerning satellite the programs or advertisements and thus could not be broadcast and television.' fined."
377 45 now that it has to pay value-added tax, a form of local taxes? Arguably, the GIO could resort to another statute without Will it succumb to employee pressure to have labor having this provision in the SBTL bill. In other words, representation in the board of directors? If this should the Broadcast and Television Law already provides some happen, what would be the spoiled over effect on the private authority for sanctions. Article 2 of that law arguably sector? Will CHT pre-empt or stonewall competition by defines television broadly enough to include satellite private operators, either consciously as a monopoly facing television." decreasing market share, or vicariously through government policies artificially resisting market mechanisms to allow a Another interesting twist on this requirement is found, longer grace period for the state-owned telecom company to surprisingly, in the interpretation of Taiwan's income tax catch up? law and regulations. Without a branch or agent, offshore program providers would incur a flat 20% withholding Policy issues aside, at the practitioners' level, the telecom tax on the income generated from licensing the programs. reform will lead to a new area of practice for telecom Because of disproportionate bargaining positions, they industry managers, consultants, lawyers, bankers and would ask local operators to absorb such tax, thereby investors. The three telecom reform laws now have forced increasing the royalty. Even so, the proposed the government to rethink policy issues relating to the Cable requirement of setting up a branch or appointing an agent Television Law, Broadcasting and Television Law, Satellite will test the strength of Taiwan's long arm laws.' Broadcast and Television Law bill and even the outdated Publication Law. Also, how will these reform laws interact Some Legislators are involved in the CATV business with the FTL and Consumer Protection Law, which stress themselves or closely associated with CATV operators. competition policy, and the Statute Governing Privately To some of them, the branch/agent requirement for Owned Public Utilities, which stresses economic regulation? offshore operators could solve this industry problem. How would the operational provisions of these reform laws Satellite channel operators in Taiwan and abroad are interface with other laws relating to land use such as the generally lukewarm about the SBTL bill; they view it as Land Law and Building and Apartments Law? Even among regulatory. Those who are interested in the direct government officials, how would these reform laws interact broadcast television systems, however, view this bill as with the more traditional laws and rules governing civil enabling; without it, they are afraid the GIO cannot find servants, government procurement, administrative relief and other legal authority to allow such business to exist." judicial review of agency actions?
The LY's current session promises to be as politically I surmise that much trial and error will occur in the five-year charged as the one before. Unlike other economic period leading up to July 1, 2001 when competition for fixed regulatory legislation, the SBTL bill involves significant line basic Telecom service will ultimately be introduced. cultural and political issues. As a result, its passage (and Undesirable as such a hazardous approach is, unfortunately if so, the compromises made) is subject to various there may not be a way around it. As a byproduct of the competing forces. precocious democracy in Taiwan and its unique international status, political factors will spice up further telecom market 7. PROSPECT AND IMPACT reform initiatives in this dynamic economy.
Through the lens of the 1995-96 telecom reform program in Taiwan under its APROC Plan, one is offered a glimpse of End notes the complicated political, economic, legal and social issues affecting Taiwan's efforts to embrace the information age. In * The author is also concurrently an Advisor to the Coordination and retrospect, it was even amazing that a package of reform Service Office for the Asia-Pacific Regional Operations Center (that is, legislation as politically sensitive as the TL, DGT Law, CHT the "APROC Window"), Council of Economic Planning and Law and SBTL could receive passage by the contentious LY. Development (that is, the CEPD), a council of ministers for the Executive But, the pressure for more ambitious reform is mounting as Yuan (that is, the cabinet). During 1995 he was Executive Director of the several international developments take shape. First, the APROC Window/CEPD and was in charge of inter-ministry coordination efforts for telecom reform legislation. This paper, however, represents European Union is poised to begin the onslaught of free and his own opinion which should not be attributed to institutions with which full competition in basic service among its members in 1998. he is affiliated. The author gratefully acknowledges the assistance of Second, the WTO is slated to complete the negotiations on Jack Wu and Paul Wu, Lee and Li, for the completion of this paper. basic telecom services in 1997. I Hereinafter referred to as "APROC Plan". 2 The Plan manifests an intention to assist Taiwan to, inter alia, (1) better meet the global political and economic challenges of tomorrow; (2) Telecom reform is a topic both subject to significant rapidly integrate with regional nations, in particular, to enable Taiwan to domestic pressure and gives rise to serious inquiries of the cooperate with regional states, such as Hong Kong and Singapore, rather quality of Taiwan's political system. Will Taiwan's than to compete with them; (3) entrench Taiwan's international status; complicated constitutional system stifle the competitiveness and (4) arguably, to strengthen the ties across the Taiwan straits. 3 Remark made by Premier Lien Chan, the seven areas include the (1) of its state-owned enterprises such as CHT? Will CHT fall macroeconomics adjustment program, under the Council of Economic prey to pressures and undue influence of local governments Planning and Development; (2) regional manufacturing center program,
378 406 under the Ministry of Economic Affairs; (3) regional sea transportation 22 Type I refers to the basic Telecom services, and type II refers to center program, under the Ministry of Transportation and value added or enhanced services. Communications ("MOTC"); (4) regional air transportation center 23 For more details, please refer to Table I. program, under the MOTC; (5) regional financial center program, 24 Please refer to Table 1. primarily under the Central Bank of China ("CBC") and secondarily 25 Hereinafter referred to as "WTO". under the Ministry, of Finance; (6) regional Telecom center program, 26 Recently, CEPD/MOTC were involved in a discussion' in May of under the MOTC; and (7) regional media center program, under the 1997 seeking to present a bill to the EY for raising the investment Government Information Office. restriction from 20% to not exceeding 50%. This would be a substantial For more discussion in this respect, please refer to Lawrence S. Liu, increase from the original benchmark, and would allow more leverage Aspiring to Excel - The Uneasy Case of Implementing Taiwan's Asia- for foreign involvement in the local market. However, this not Pacific Regional Operations Center Plan, 10 Columbia Journal. of Asian exceeding 50% ratio was not easily agreed upon by both CEPD and Law 199 (1996). MOTC as the contentious issue regarding whether protection should be Hereinafter referred to as "Program". afforded for Type I business resurfaced. CEPD seemed to be a strong
5 The Telecom implementation program is 3-tiered. Please refer to part 2 proponent for the Telecom market liberalization as it preferred the below for more detail. relaxation of the current foreign investment restriction. According to 6 Hereinafter referred to as "the TL". CEPD's method of calculating foreign equity for investment, the 7 Under this regime, the MOTC was responsible, through its Directorate highest foreign holding permitted could amount to 60%, including both General of Telecom, to implement Telecom policy and operate the only direct and indirect investments. Telecom business in Taiwan. The MOTC, however, held a different stance. Despite its 8 1980's saw the gradual privatization of state-owned Telecom companies willingness to cooperate for deregulating the local telecom market, the and liberalization of the Telecom market in North America and Europe in MOTC preferred that the foreign share-holdings in aggregate of a light of technological advances. telecom entity must remain as minority. The MOTC insisted on local 9 Hereinafter referred to as "DGT". shareholders to remain in control of the management of a Taiwanese I° At the same time, the Council of Economic Planning and Development, telecom company. Based on this rationale, MOTC's view prevailed, a council for ministers within the Executive Yuan, also began to research and the proposed equity restriction ratio was tentatively set at 50%. telecom market reform measures abroad. Under the proposed legislative framework stemming from the In the area of the procurement of switching equipment, a decision in the Discussion, a foreigner is permitted to have a less than 50% share- mid-1980's under foreign trade pressure actually led to a three-way oligopoly. holding in a type I Telecom business. However, the less than 50% Each equipment supplier (one each for northern, central and southern equity investment limit does not solely represent direct investments. Taiwan) was set up as an international joint venture affiliated with the DGT. Foreigners are only allowed to make 30% in direct investments and
12 Hereinafter referred to as "CEPD". 20% in indirect investments through a third company or a subsidiary.
13 In April 1992, a bill to amend the TL as drafted by the DGT was The rationale for this imposition is unclear, and, in practice, submitted by the EY to the Legislative Yuan (hereinafter referred to as the distinguishing between direct and indirect investments in this manner "LY"). However, this bill, even though a good cornerstone for future may hinder a foreign entity's willingness to invest because the development, was perceived by many LY members to be lacking both in transactional costs involved will be increased. scope and substance for sufficient competition. Consequently, the LY Viewing the above, the no-restriction approach may not be appropriate demanded the submission of two additional bills to amend the Organic in the case of Telecom industry. Rather, a foreign ownership limit of just Statute of the DGT (hereinafter referred to as the "DGT Law") and to enact less than a majority is preferred to ensure adequate competition in the an Organic Statute for Chunghwa Telecom Corporation (hereinafter referred liberalized segment of Taiwan's telecom market through new foreign to as the "CHT Law") so as to privatize the business unit of the DGT. Even ownership in market entrants. A higher foreign ownership limit would not though these two bills were submitted by the EY in December 1994 for the have been politically correct. Many LY members and policy makers LY's deliberation, the controversies surrounding market opening and supported this contention and their logic was that, due to the diffusion of boycotting by the DGT employees had led to a stalemate. Moreover, about government monopoly, the local firms should have the first, or at least a nine competing bills were initiated by various LY members on their own. larger, bite at each liberalized segment. Foreign ownership in Telecom is The efforts to open the Telecom market were stranded. welcomed under their proposition, but only to the extent necessary to induce
14 Hereinafter referred to as the "EY". foreign shareholders to supply the needed technology and capital. Further, 15 The APROC Plan was drafted by the CEPD, and a Coordination and many members of both the ruling party and the opposition party contemplate Service Office for the Asia-Pacific Regional Operations Center (hereinafter that Telecom is too much of a strategic industry. Hence, a higher foreign referred to as the "APROC Window") was set up to implement this initiative ownership limit should not be permitted. This writer endorses this view, as and coordinate the inter-ministry efforts towards its fruition. limited protection must be in place to achieve two ends, i.e., any new bill 16 Hereinafter referred to as "CT2". Please also refer to Table I. must concurrently promote the local Telecom industry and to maintain 17 Refers to the TL, DGT Law, and the CHT Law bills. sufficient local interests until the local contingency has sufficient strength 18 One important element of this second-stage market opening was foreign and know how for complete liberalization. participation, which would have been blocked by the TL of 1958. 27 Hereinafter referred to as "SBTL". The SBTL was drafted and 19 Supra n. 3, "LY". tendered to the EY for deliberation in September 1995. 28 20 After intervention, intensive consultation ensued with the relevant See Lawrence S. Liu, Issues in Debate on Regulating Satellite ministries to substantially improve the three bills. Fundamental principles Television in Taiwan, 18 East Asian Executive Reports 8 (1996). governing the revised telecom reform bills were adopted by the EY in early 29 Please refer to part 6.6 for a more detailed discussion on SBTL, October 1995, along with the APROC Window/CEPD's recommendation relevant laws and related issues. that the revised bills be initiated by ruling party LY members. However, the 38 Hereinafter referred to as the "010". ruling LY party lost the early December 1995 election in the sense that its 31 Remarks by Paul France of ABA at a seminar on Telecom majority status in the new LY, to begin in February 1996, would consist of a liberalization in the Asia-Pacific region, held in Taipei on November 23, razor-thin margin of only a one-vote advantage. The possibility for enacting 1995. According to him, the ABN would have chosen Hong Kong, but for the revised telecom reform bills was slim, and the consequences of this its prohibition of majority foreign ownership in satellite broadcast and prospect were dire. However, after more than one hundred briefings by the television. core CEPD/MOTC team to the LY, various political parties, the industry, 32 At this point, it seems that CHT takes the position of one-way academic and consumer groups, and the media, and despite contentious interconnection with CHT for pricing/billing purposes. In addition, how opposition by DGT union activists, the three telecom reform bills as revised would CHT reconcile its interconnection obligations with its pronounced were adopted on January 16, 1996, just before the 1995 LY session ended. profit-making objectives is another important competitive parity issue. Two 21 Hereinafter referred to as the "CHT". observations are relevant. First, even though the new DGT should play the
379 4 0 7 role of an independent arbiter, this would be easier said than done. Some new DGT and CHT now have been divided, policy makers still serve on the adversarial proceedings involving the MOTC or the Fair Trade Commission CHTs board of directors. This situation makes avoiding conflict of interest (hereinafter referred to as the "FTC") may be necessary. Second, in addition more difficult. On the other hand, the presence of policy makers on CHTs to the general obligations governing interconnections under the amended TL, board of directors would ensure more direct influence over its various the CHT Law also provides that CHT shall maintain reasonable tariffs. This constituents within the CHT, such as senior management and union CHT-specific requirement is compatible with the argument of a cost-based, leadership. non-biased interconnection principle. Similarly, a type I operator under the 39 The chairman of CHT's board of directors and other directors nominated TL is prohibited from subsidizing its type II business. Less clear is whether a by the government as owner, must be civil servants. This requirement could type I operator may cross-subsidize different (Such as fixed line versus preclude CHT from recruiting experienced business leaders to serve on its mobile communication devices) services which are all type I businesses. board, a reality for state-owned enterprises. The original CHT bill of 1994 However, such cross subsidization should not be allowed for three reasons. had provided that the chairman would have to be experienced in the telecom First, the spirit of the 1995 revised bill that led to the TL amendment business. This requirement was eliminated in the final negotiations as some suggests that such cross-subsidization should be prohibited. Second, support LY members thought the experience requirement was unnecessary and even can also be drawn from the policy underpinning the TL amendment, which potentially abusive as it would have favored incumbents. The CHT law is the APROC Plan. The Plan certainly would support a pro-competitive provides for significant protection of employee welfare, as employees' civil approach and therefore, would not accept predatory practices. Third, the Fair servant status has been maintained. Meanwhile, this law also allows CHT to Trade Law (hereinafter referred to as the "FTL"), which has yet to apply to recruit new employees who would not be civil servants, so that hopefully the the telecom market, suggests that such cross-subsidization could constitute corporate culture at CHT will gradually reflect its status as a semi-privatized predatory action by the dominant firm. entity. This dual personnel system is a breakthrough for state-owned 33 Details on how contributions to this fund should be made will be enterprises in Taiwan. Indeed, when the provision was proposed originally in developed after the mobile telecom market opening program, as discussed 1994, it was vehemently opposed by the Examination Yuan. below. 40 In addition to job security, under the CHT Law employees at CHT are 3' The amended TL also specifically prohibits telecom companies from given preference in the offering of any ownership diversification program discriminating against their customers. This anti-discrimination requirement that the government conducts for its holdings in CHT or for the issuance of could be interpreted literally. However, a more enlightened interpretation new shares. This treatment is similar to that under the Statute for Privatizing would be to follow the same prohibition in the FTL, which requires such State-Owned Enterprises (hereinafter referred to as the "Privatization differentiated treatment to be justifiable, thereby allowing a "rule of reason" Statute"), which was amended in 1990 as a result of lobbying by employees line of defenses for telecom companies. of state-owned enterprises. The Privatization Statute, however, may not 35 The it also contemplates some liberalization in the tariff First, for type adequately address issues arising from massive share diversification II telecom businesses, the tariff is completely deregulated as this segment programs such as those involving CHT, Taipower, and Chinese Petroleum follows the competition policy. For the type I industry, a major tariff will be Corporation. There is now a new thinking among policy makers and advisors adopted by the DGT subject to the MOTC's concurrence. A secondary tariff to the Taiwan government that a much wider distribution of shares of for type I businesses will be determined by the DGT itself. Importantly, the telecom companies to citizens would be advisable for efficiency as well as TL, even as amended, still provides that the tariff formula should be social justice reasons. Union activists at CHT do not believe the state is a approved by the LY. In other words, even though some competition will be legitimate shareholder. To the contrary, their demand for board introduced into the type I industry, there will still be some legislative representation belies their conviction that the employees of CHT are the oversight as if the natural monopoly utilities model still applied. The LY driving force behind CHT's success and as such, are the true "stockholders" review of the tariff formula promises to be a politicized process and as will at CHT. Therefore, it would behoove policy makers in Taiwan to create be discussed below, the imminent entry of new mobile telecom operators legitimate ownership, by allowing its millions of telephone users, who have already presents some policy issues in this area. paid hefty installation fees over decades, to be shareholders of record. 36 The TL also provides DGT with the authority to collect fees for However, mere diversification of ownership through underwritten offerings assigning radio frequencies. In other words, the auctioning-off of frequencies may not be enough to galvanize CHT. As indicated above, outright is a possibility in the future. However, because there has not be an privatization as a shock treatment has been ruled out as a politically assessment of the aggregate use of frequencies (particularly where the unpalatable proposition. In the alternative, perhaps some thought should be frequencies are deployed for military uses) and the intricacy of such an given to transforming the bureaucratic culture at CHT. This may be achieved exercise, the MOTC/DGT has opted for the traditional merit-review by arranging for a strategic sale to one or several international telecom licensing approach for the mobile telecom market opening program of 1996. companies. 37 The CHT Law bill was the most contentious of the three telecom reform 41 Another important breakthrough in the CHT Law was the provision laws adopted in 1996, because its implementation would have a major adopted to unshackle CHT from the "prior audit" requirement imposed upon impact on the autonomy of CHT and the job security of its employees. the old DGT. This requirement of the Control Yuan (hereinafter referred to Indeed, not only were the unions of CHT becoming vocal; so were the as the "CY") is rather unique in that audits by definition should occur after unions of other state-owned enterprises such as Chinese Petroleum the closure of the fiscal year. However, the CY, as one of the five branches Corporation and some state-owned banks. of government in Taiwan that exercises oversight and impeachment power 3' One of the demands of the DGT employees was that their over activities of agencies and state-owned enterprises, administers the representatives should become members of the board of directors or Audit Statute which contemplates such prior audits. Despite this legislative supervisors. To support their contentions, the DGT employees cited the reform, old habits promise to persist. However, CHT still seems inclined to German co-determination, labor participation legislation for large enterprises submit to prior audits in order to prevent their procurement procedures and and a similar arrangement at France Telecom, which was also undergoing other similar decisions from being second guessed by the Audit Ministry of privatization at the time. During the final LY negotiations in mid-January the CY. Although some policy makers and indeed, employees of the old 1996, a compromise-albeit what it meant was less than clear-was reached so DGT had argued that CHT should be freed from all government oversight, that under the CHT Law, one-fifth of CHTs board of directors would be and from budget review in particular, this argument was not accepted and "experts." Presumably, labor representatives were considered "experts." did not even make its way into the original CHT bill. Under the Taiwan's However, the ruling party and MOTC/DGT have resisted such an Constitution, the Budget Law, and related legislative practice, the LY's interpretation of this provision. Since the corporatization of CHT, all its budget review power has always extended to state-owned enterprises. The board directors have been appointed by the government, and there has been LY's power to review, though, occasionally runs counter to the public no labor representation. However, in the re-election for CHTs union corporation's best interests. For example, the new LY session for the first leadership in October 1996, those that strongly opposed management half of 1996 did not approve the budget of state-owned enterprises in time. received more support. The increasingly vocal CHT union leadership will As a result, all state-owned enterprises ran on the basis of the previous make transformation of the CHT more difficult and could affect its behavior year's budget. In an effort to maintain stability, CHT has only made in the marketplace. Even though the business and regulatory functions of the cosmetic internal changes thus far. Its corporate management structure still
380 408 has too many layers, and streamlining would create internal personnel " Members of the committee are appointed by the EY. problems. Its budget for fiscal year 1997 does not distinguish between type I Supra p.3. and type II business costs and revenues, nullifying the TL prohibition against 48 As of 13 January 1997, eight licenses were granted for the operation cross-subsidization. Although CHT claims that it only had a few months to of two types of mobile phone service, i.e. DCS and GSM. Six winners prepare this budget between the enactment of the three telecom reform bills were selected by MOTC from 29 contending companies. Most of the 29 and its incorporation, whether a better job at preparing the fiscal year 1998 companies are joint-ventures between local groups and foreign companies budget will be made remains to be seen. The prospect for tightening up from Europe, Asia and North America. For more details, please refer to CHT's capital budgeting and financial management is not promising. Such Table II. Regarding the licenses of the paging service, 32 applications inadequacies will have a significant impact on its competitive behavior and were filed by 19 companies and MOTC granted 8 licenses to the 8 private the government policy for further opening the telecom market. For example, winners on 30 January 1997. For details, please refer to Table III. as a state-owned enterprise, CHT is not subject to generally accepted 43 The award of trunking radio licenses was announced through open accounting principles or auditing standards applicable to private companies bidding on 20 May 1997 and 20 licenses were awarded to 14 business in Taiwan. Therefore, the integrity of its accounting system and transparency operators. Please also refer to Table IV for details. The trunking radio of its cost structure is questionable. CHT has virtually no debt, but is license award concludes the prelude of Telecom liberalization in Taiwan unlikely to be able to maintain its debt-free status for long. In the future, and arguably the experience derived may be beneficial for further CHT will come under constant pressure to better use its borrowing capacity. deregulation. In addition, as the burden on the Taiwan government to fund welfare so See "Kon Shan Hourly News", May, 20th, 1997, page 21. programs increases, there is even more pressure to siphon off after-tax 5 Hereinafter referred to as "QFII". earnings' from CHT. Finally, CHT's capital account has relatively low 52 Hereinafter referred to as "SEC". paid-in capital and but a bloated capital surplus, all on a historical basis even "Supra note 23, page 8. though an asset revaluation would increase its net worth several times. The 54 Taiwan is an island of which 75% is covered by mountains and relatively smaller paid-in capital was designed in a way to circumvent a hillsides. statute adopted in the 1930's governing contributions to employee welfare "Supra note 23 page 9. funds, which would require a significant initial contribution on the basis of 56 Applicable legislation include: the paid-in capital. This artificially low paid-in capitalization will not be 1. Broadcast and Television Law, which regulates broadcasting conducive to any massive public offering in the future as the offering price and television in general and is enforced by the Government per share would be too expensive. Information Office; The CHT Law allows CHT to enter into other businesses as approved 2. Cable Television Law, whose enactment was sponsored by by the MOTC. This provision represents an acknowledgment by the old the GIO to legalize the de facto CATV industry that DGT that its successor corporation would have to diversify. However, this mushroomed after 1988; provision signals potential threats to companies in other markets. Where 3. Telecom Law; the boundaries between traditional markets such as cable television and 4. Publication Law, which is an older statute that applies to Telecom are becoming less and less easy to distinguish, the concern for print media; and competition, and indeed fair competition, has increased. 5. Fair Trade Law, adopted in the early 1990's, embodies One concern of CATV operators in Taiwan is that CHT is permitted Taiwan's recent policy shift towards competition policy and to enter the cable television market, but the CATV operators are not competition rules, although its application in this field is still allowed to enter the Telecom market. Their fears may be justified because largely untested. a unique provision was inserted by the DGT into the Cable Television 37 Supra note 23 page 21. Law. (The Cable Television Law was adopted in 1993 to legalize the 'ISuch as the Broadcast and Television Law, Cable Television Law or CATV industry, also know as the "Fourth Station" because they Telecom Law. operated illegally in competition with the three legal terrestrial "Article 4 of the SBTL. television stations owned by or affiliated with the government). 60 Such as programs which violate laws or regulations detrimental to the Amazingly, this provision would disqualify any applicants seeking a welfare of minors or contravene public order and good morals as CATV operator's license if it engages in "the business of the DGT." stipulated in Article 15 of the SBTL. Clearly such a provision was not necessary even under the TL of 1958, 61 Penalties in the form of pecuniary fines are most often imposed. because it had contemplated a government monopoly such as the DGT. 62 Article 28 of the SBTL. The intention of this provision, therefore, was plainly anti-competitive; it 63 The license duration is sex years and renewable. appears to block future entry into the Telecom market by CATV operators. "Article 6-14 of the SBTL. Interestingly, now that the business unit of the DGT has been privatized as 65 Responsible persons in Taiwan usually refer to as the managing CHT, and the DGT is only a regulatory agency after the TL amendment in director. 1996, the disqualification in the Cable Television Law based on engaging 66 Article 13 of the SBTL. in "the business of the DGT" does not make any sense. Whether it is 67 Article 18 of the SBTL. prudent to reinterpret this provision in light of the gradual market opening 60 Which also includes the Taiwan strand. or repeal it outright requires some thoughtful policy formulation. 69 See "Judging the Judge", Asian Wall Street Journal (October 12, In any event, the MOTC should be circumspect in allowing CHT, a 1995). formidable player in any new market despite its constraints as a state-owned 70 Supra note 23 page 22. enterprise, to enter any new market. From a national policy perspective, the Ibid. CEPD should not be stagnant while the MOTC makes up its mind on this 72 Ibid. issue. To be sure, the LY will also use its budget-review power to monitor 73 Ibid. CHT's competitive strategies in new markets. "4 Ibid. 43 Another regulatory and competitive parity issue relating to CHT is 75 Ibid. whether it had to be re-licensed to engage in the telecom business. As a state-owned enterprise, it would be in the public interest to re-license CHT to continue the business of the pre-corporatized DGT. Thus, CHT was re- licensed. However, what should have been addressed was the broader issue of whether any constraints should be imposed on CHT in connection with such re-licensing to provide a fair chance for the private-sector entrants to compete. "Such as the MOTC and then the EY. 45 Such as the DGT.
381 409 TABLE I TELECOM MARKET OPENING TIMETABLE Fixed Network. Service Business Timetable Note Local Telephone July 2001 Including the opening of digital communication business; Domestic Toll Telephone July 2001 Including the opening of digital communication business.' International Telephone July 2001 Including the opening of digital communication business.' Leased Circuit Service July 2001 Lessee can not merely act as the agent for recording services.? Wide-band Service July 2001 For digital operation, Openitors without unified transmission network equipment and establishment are classified as Type II operators.' Data. ransmission Service July 2001 Operators without unified transmission network equipment and establishment are classified as Type II operators. the actual number of operators permitted is TBD depending on market demand.
Satellite Communication Service Business Timetable Note Satellite TV Broadcasting Links Service Dec. 1996 25 Operators Mobile Satellite Service Dec. 1999 The number of Operators is TBD Fixed Satellite Service
Wireless Communication Service Business Timetable Public CT-2 Nov. 1994 900 MHz: Northern: 3 Central: 3 Southern: 3 Cellular Mobile Phone Jan. 1997 900 MHz: Northern: 1 Central: 1 Southern: 1 1800 MHz: Northern: 1 Central:" 1 Southern:.'1 Island-wide: 2 Radio Paging Jan. 1997 285 MHz: Northern: 2 Central: 2 Southern: 2 Island-wide: 2 Trunking Radio Mar. 1997 500 MHz: Northern: 4 Central: 4 Southern: 4 Island-wide: t 1800 MHz: Northern: 2 Central: 2 Southern: 2 Island-wide:I Mobile Data Mar. 1997 500 MHz: Northern: 4 Central: 4 Southern: 4 Island-wide: 1 800 MHz:- Northern: I Central: 1 Southern: 1 Island-wide: 1 Source: Execution Yuan Gazette, Volume 2 ,Issue 51
382410 TABLE IIMOBILE PHONE LICENSEES 1997. Type Area Winner of the license Foreign partners Nation Pacific Communications System GTE wide (Pacific Electric Wire & Cable Group) Nation Far Eastern Telecom Co., Ltd. AT&T wide (Far Eastern Group) DCS Northern KG Telecom Preparatory office Sprint Taiwan (Koo's Group) Central Smark Link (Tuntex Group) First Pacific Taiwan Southern Smark Link (Tuntex Group) First Pacific Taiwan
Northern Far Eastern Telecom Co., Ltd. AT&T Taiwan (Far Eastern Group) GSM Central Mobitai Co. De-Te-mobile Taiwan ( TECO Electric & Machinery Group) Sumitomo Southern TransAsia Telecom (TAT) Southwestern Bell Co. Taiwan (Asia Pacific Investment Co.) Source: compiled by the author from various sources.
TABLE IIIPAGING LICENSEES I
Area Winner of the license Foreign partners All distance First International Pager Service Corp. Chung Hwa International Paging Co., Ltd. Northern Taiwan Express Link Ltd. HK ABC Taiwan Mobile Communication IWC Central Taiwan Hsun Ta Telecom Taiwan Mobile Communication IWC Southern Taiwan Southern Telecommunications Telia Ucom Chang lung Telecom Source: compiled by the author from various sources.
383 411 TABLE IV TRUNKING RADIO LICENSEES Frequency Licensee Major Shareholders Facility AU AreasLianbang Co., Ltd. Chung lien Transportation Co., Telecom Co., Ltd. Ltd. Advanced Advanced Scientific Corp. Tait Telecommunication, Inc. 800 NorthernADI Communications Meng Chaonien ADI Corporation MHz Advanced Advanced Scientific Corp. Tait Telecommunication, Inc. Central ADI Communications Lia Chicheng ADI Corporation Huawei Huang Peiyuan Tait Telecommunication Co., Ltd. Southern Data TelecommunicationKaohsiung Bus Co., Ltd. CKT Co., Ltd. Sugui Telecom. Freedom Tajung Transport Co. Tait All AreasTelecommunication Ltd. Taichong Telecom. MSI International Corp. Nokia Fleetpro Hsinchu Trucking Co., Ltd. Tait Telecommunications, Inc. NorthernSimple Prince Motor Ltd. JRC Telecommunications Corporation Preparatory Office Beiyun Telecom. Micro Electronics Motorola Fleetpro Telecommunications, Inc.Hsinchu Trucking Co., Ltd. Tait 500 Simple Prince Motor Ltd. JRC Telecommunications Corporation Preparatory Office MHz Central Bestway Technology Co, Hsinke Telecommunications Nokia Ltd. Leephone Leephone Transportation Co. Motorola Telecommunications Inc. Fleetpro Telecommunications, Inc.Hsinchu Trucking Co., Ltd. Tait Simple Prince Motor Ltd. JRC Telecommunications Corporation Preparatory Office SouthernADI Communications Lia Chicheng ADI Corporation Phantai Chiehfu Co. Nokia Telecommunication Inc. Source: MOTC
384 412 TELKOM's Approach to Integrate Service Management Into Integrated Management System (IMS) to Face a Converging World
Endang Susilowati, Abdul Hadi, Ida Bagus Putu Ariartha PT. Telekomunikasi Indonesia Bandung, Indonesia
1. ABSTRACT
The requirements for the operational organizations of telecommunication business are more complexthanmostbusiness.To facecompetitioneraoftelecommunicationbusiness, telecommunication providers must provide the best services to customers. To improve the customer service quality, PT. TELKOM has an approach to integrate the Customer support system into TELKOM's Integrated Management System as one of functions in TMN service management layer.
2. BACKGROUND describes TELKOM approach solutions for reengineering service management need to integrate In today's environment, nothing is more important the CSS into IMS. than customer service. With competition comes choice, and fortunes await the provider who excels at 3. TELKOM's INTEGRATED MANAGEMENT treating customers as partners. Therefore, the heart SYSTEM (IMS) of telecommunications business are customer care processes, its operational support systems, and its In1993 TELKOM adopt the Telecommunication linkages between customer service offerings and Management Network which is expected to achieve underlying networking assets. optimum availability and control of the entire network and have capability to monitor the performance of The Indonesian telecommunications network of the the entire network. The prime infrastructure of the 90s and beyond will be one of multiple networks network management functionisthe Integrated connected to PT. TELKOM and regulatory agencies. Management System (IMS) that is expected to be These organizations will provide the glue that allows capable for achieving certain functions of the ITU-T their customers to do business in the manner that as per draft recommendation M.3010 include fault they want. There are different levels of Customer management, configuration management and Support Systems (CSS) exist in Indonesia with some performance management. being manual and others computerized. TheIntegratedManagement System(IMS) is To accomplish TELKOM goalasworldclass centered on the National Network Control Center operator in 2001, TELKOM must achieve new levels (NNCC) that carries out surveillance of the overall of integration among all systems across vendor network and transmission backbone. 5 Regional boundaries, even across national with cost-effective Network Control Center (RNCC) are connected to ways. Automation and standardization of CSS is a the NNCC and carry out surveillance of switching in key success factor that should be implemented. each region. The operating system that used to integrate various type of switching is MFOS (Multi For this reason, the Integrated Management System Function Operating System). provides the power to accommodate today's need with the future in mind, and thereby enable future TELKOM has a planning to develop IMS which technologies to cooperate and inter-operate without providing network management functions to enhance artificial restrictions. network performance and help achieve TELKOM'S World-Class service quality objectives.Integrated This paper gives a brief description about strategy of Management System (IMS) designed to improve the TELKOM to integrate CSS into IMS.The first part operationalmanagement, servicemanagement, describes about TELKOM's IMS, the second part reduce cost, thus improving profitability. describes about existing CSS, and the thirdpart
385 413 IMS Development Strategic Planisfocused on Althoughtherearevarious SISKA/SISKAMAYA providing the integration strategies required insuring version, but basic function that already applied are optimum utilization of this system. The cable administration, fault administration, and service considerations which used to improve the IMS / TMN administration. are activities of five business Processes, those are Network Operations, Customer Support System, Cable network computerization System is a system Engineering & Planning, Accounting, and Corporate that function to execute establishment, renovation Support Systems. and maintenance of cable network database and that database utilization for telecommunication services Those business processes reflect the TELKOM's necessity. vision, strategy, organization, and company culture asa World-ClassOperator in 2001. The Cable network administration system has some implementation of those business processes based objectives,whichare:straightenup andtake on the five-management layer concept that included inventorylocal cable network data,create data on ITU-T M.3010. uniformity at any working unit through centralized cable network database establishment, accelerate Inintegratingthefivebusiness processes,the interposition work information and document flow implementation is divided into three stages. The first andminimizepaper document usage,shorten stage starting from 1993 to 1997 is optimization of service time, facilitate status and process monitoring the existing system and network operation. The at any working unit, and facilitate to make report and second stage starting from 1997 to 2000isa statisticanalyzetomanagement andplanning continuation of the first stage and customer contact necessity. service,engineering and network planning, and accounting system. And thethirdstageisa Fault administration (117) deals with the handling of continuation of the second stage and corporate trouble reporting by customers to the 117 operator. support system. Existing repair process is shown in figure 1.
Hand In the < As a target shown in second stage (1997 - 2000), plant customer contact services become an important Poor Initial Fix TOKUCC aspect that is considered to be integrated into IMS. Repeal .43 trouble feasted and Diapal h Limited incentives to R peat Trouble - Tesled Queue ethiave higher 4.EXISTING CONDITION OF CUSTOMER productivtty and quality SUPPORT SYSTEM Different levels of CSS exist at the Kandatel level,
Customer has Trouble reported to I Force and bad not F roe atways ragmentab n with some being manual and others computerized. trouble vnth test a dispatch center a Meiently matched working on yesterdays or force lead Each Kandatel stands alone operating autonomously services segmented by function High and no clear load to hand.oft installation peak demand strategy and idle tim from others, and as aresultstandards,data, fallout
Long eye* methods, and procedures are not always Subsequent No access IMes Trouble calls implemented consistently. The manual CSS I Geared Repeal 44 operationisstillimplementing insome small trouble < Found ON Kandatel or Kancatel and rural service area.The process of manual CSS has a same process flows Figure 1: Existing trouble handling with the computerized. Number of Kandatel or Kancatel that implementing manual process is not Service administration provides functions i.e. perform toomany. Most ofKandatel havebeen newconnectionofferand mutationservices, implementing the computerized CSS. monitoring applications in process, acceptance of customer applicant, services application cancellation, Customer Support System application that has been waiting list menu, see telephone number ready to implemented so far in TELKOM is SISKA (Sistem sale, etc. Informasi Kastemeror customer information system) /SISKAMAYA(Sistem Administrasi Kabel dan The newest version of SISKA is SISKA phase-2, Manajemen Pelayananor cable administration and which has functionalitybetter than the previous service management system). SISKA/SISKAMAYA version. Its system specifications are: consists of a is containing the information necessary for service number of integrated and independent modules, provisioning and customer billing. provide multi-user access, on-line updating system, and utilize remote login function.
386 414 SISKA phase-2 application generally dividedinto regarding new installation, changes, moves, shifts or three parts of module, theyare technical disconnectionofexistingservices. Itprovides Management Module, financial Management support to all work groups involved in the back office Module, and Commercial Management Module process, as well as repair and sales and marketing. Technical Management Module provides network The IMS will integrate the Front Office one stop management function, and work force management services with access to the following sub-systems, function. Financial management module consists of which are order handling, billing, local Plant Records, billing function, customer accounting and payment fault handling and testing resolution, field work force process. Commercial management module provides management, report generation and management customer management function, request information,customercomplainthandling, and managementfunction, directory service, fault interfaces to other systems. management, and call data collection. The figure below describes about IMS front office Regardingtoalloffeatures whichhasbeen one-stop services: implemented, there are some other features that have not been completely provided. The desired status features and need to be developed are Mater Direct Debit functions for fiber access network, integration with Accounting other services (IN, ISDN, etc.), billing applications for FRONT OFFICE variousservices (IN, PSTN,etc.), integrated REPRESENTATIVE Facilities modules (technical, financial, and commercial). Waiting List
Work Teams Directory 5.INTEGRATION CSS INTO IMS Assistance o Translation The requirements for daily operational organizations CUSTOMER Line Equipment of telecommunications business are more complex Line Number thanmostbusiness. The operationsinvolve Force continualmonitoringof thestatus lotof Allocation of a Scheduling components.Inaddition,theorganizationmust
manage installation and troubleshooting schedule, Line Test collect usage data then process it, plan for current Work Teams and future demands, and maintain efficiency. For this reason, the IMS provides the power to accommodate today's need with the future in mind, Figure 2 : IMS Front Office One-Stop Services and thereby enable future technologies to cooperate and inter-operate without artificial restrictions. Billinginquiries,collectionof overdue accounts, sales of various products and services, complaint 5.1. CSS Functionality resolution, referral of faults, answering of general questions, and electronic mail and public provision of The explanation below identifies CSS that need to be company policy can be made accessible through the integrated with the IMS to provide the functionality IMS. required by an efficient telephone. Service orders input into the IMS will be generated 5.1.1. Front Office and processed automaticallyinthe system and The Front officeis a crucial part of the overall distributed electronically to the network provisioning customer process methodology supported by the mediation device of the exchange switch. The IMS. Most face to face customer contact occurs at service order creates the customer database which this location.Therefore, itis critical that individual in turn will become the basis for the customer history customer data be made available to Front Office file, directorydataand listings,billingdata, personnel. A fully functional IMS is the perfect tool to administrative reports, customer facilities provide current interactive data. (cable/pair/number) and fault reports. Front Office willbe responsible for meeting the To speed up the service order process, the Front demands of business and / or residence customers, Office will be directly linked by computer to the via on-line transactions directly linked into the IMS, mediation device. The service order process should
LE BEST COPY AVAIL& 387 415 be completely automatic including service Then it can optimize the path between exchange and provisioning. When the provisioning fails due to distribution point using the local line plant records unavailable facilities, improper address, or billing and, allocate the appropriate line plant. problem the customer will be immediately notified and the order routed to the Back Room. The order handling modules maintains the information, i.e. customer details data, service and Services provided by the Front Office supported by equipment features, plant and maintenance, main IMS are sales of services, provisioning of services, station, special details (about discount rates, taxes complaint resolution, and order handling. status), support of route-specific rating and directory assistance, and billing and payment history. Sales of services cover services, which are : types of serviceoptions and customer equipment,help 5.1.2. Back office customers choose the most economical and efficient service to meet their needs, discuss service rates, The Back Office provides all the support systems to provide a help desk for customers requiring more assist in the day to day operations of the company. complex services, discuss billing options and cycle The IMS will allow sharing of vital data across with customers,takecustomers ordersand multiple organizations allowing for rapid changes to determine installation schedules, as well as identify daily workloads, identification of facility and plant sales promotion. problems and on-line updates of all databases. Provisioning of service has functions to manage a. Billing installation or change and deactivation of services, Its functionality can be divided into primary areas, input of service orders into IMS, distribution and which are : entering and updating information for trackingofservicesorderstoplantforces, customeraccounts,collectionofbillingdata, scheduling of installation dates as set by installation processing of billing data, interrogation of customer work force, education of customer regardingbill billinformationtoanswer any customerbilling payment at time of the installation,post service inquiries, correcting and editing customer information activity, provides a response via a referral process to service faults and failures, escalate faults to the and billing data. responsible groups,provides answers tobilling An important aspect of billing system is to ensure inquiriesandcomplaints,providesanswersto that the data within the system is accurate.The general inquiries and complaints, perform collection billing system must provide sophisticated verification activity,maintainhelp desk functionformore procedures in order to ensure that its customers are complex services andfaults,andupsellsto protected from the problem of inaccurate billing data. customers with existing service. This is achieved through special software routines in the network interface and operator input modules, Complaint resolution provides functions to manage which intelligently verify data as it is received. status of customer complaints, matters relating to pre and post service provisioning, management The IMS networkinterfacecontrols all the functions, customer database management, support communication between the billing system and the to other groups, report administration, development network switches. The physical interface, based on and training. CCITT-definedstandards, is handled by the Mediation Devices.The Mediation Devices handle The IMS will allow Front Office staff to make inquiries the different data formats from major switching of information held in all the sub-system.Security system manufactures. and levels of access will be determined through network operator agreements.One of the various Connection between the switches and Mediation sub-system is order handling which is concerned Device are based on protocol X.25.All customer- with the establishment, changing or termination of relatedinformationismaintainedinthe master service to a customer. The system will allow service contained within theBilling System. From this orders to be entered on-line by Front Office staff database the Billing System will generate a series of located at centralized Customer Service Centers. work orders, or tasks, for connection, disconnection, and other supplementaryservices. These are It will automatically allocate a number from the list of processed by the Mediation Devices, which update available numbers held in the system, and will be the network switches. capable of determining the correct local distribution point for the new subscriber from their address.
388 416 b. Local plant record able to generate management reports and marketing information based on the types of customer served. This sub-system is concerned with holding a full record of the external plant available and is used in The system is capable of interfacing either directly, the access network and remote stations, including or by magnetic tape, to other system i.e. directory buildings' distribution systems. inquiry systems to provide updates to customer records, accounting ledger for the productionif The system allows details of the remote stations to accounts, call data collector for access to exchange be stored including available numbering ranges and call data, operator-connected call information, and MDF termination points.It also stores details of the banks and other clearing houses. external line plant so that work lists can automatically be generated for external plant provision and repair The accumulation of this data allows for the end user activities. The system allowsbulk moves of to draw day to day operational reports, identifying exchange and line to be made. monthly and yearly trends, and weekly spots within the organization. c. Trouble handling 5.2. Customer Support System Functional This sub-system deals with the handling of troubles Architecture reported by customers. The system allows details of the reported trouble to be input on-line through a Figure 4 depicts the basic customer support system VDU into the Administration System, at the same interrelationships,which are requiredtoprovide time as the customer reports the trouble.It supports service and billing to the customer. the initial analysis of the trouble by the operator and automatically triggers a suite of line testing to further Billing Services that process usage data from NE diagnose the cause of the trouble. providesfunctionsforprocessingof payments, generation of bills, and maintenance of customers
Emma. rehab bills. jobs entax damn. mratem Dispatch ord.. Pons launivaxasT Network Resources Assignment has functions for cern. tech. provides service requests, and assigns inventory Dispatch system matches lead to Tech.Incepted to *Mew records. Ciesicaner has molted.. earn mid qualityMI.M.11. ear*. T.h. Mm m.. T eubu roped is A Customer contact representative can identify and deeded hosts le Erne...Fed received .el PleVIlt service delays Mh vs* consolldeted 1 mod. nd melt. loxa to load resolve most of the problem and service request end dispatch center femme. alndesie Minimal Mata.tion given by the customer while the customer is on the 1.W entax dispatch system line.If the problem can not be resolved immediately f1)...monitoring system Meddles T Tack Oxpanicad Technical report the representative can usually identify where the montol troubles turlIsams Mb. llr melemor 6.1. memo. in affected comely end pro.didly problem is and gives an accurate estimate of when the problem will be resolved.
Figure 3 : Trouble Handling With IMS extaments 4 ion/6i BaMs mamas. d. Work force management tietead 4--1.1,Efstnante cal cernmmonenterupt This sub-systemassiststheinstallation and met.. p. 4- Ira ptaW maintenance management staff in the management Customer 4- t 'Cmthei 1.10111. IC=r Mt. ital d of the field work force. The system maintains work- 01MM conua remonee commtment detto/complelso lists for each of the field units and is able to book matt cadet 4_ t- Mom SequentI FeeMe dews evabbOly appointments in their daily schedules.It is able to condeto. run jobs, in sequence, allocating new jobs when the old ones have been completed. e. Reporting Figure 4: Customer Support System Function This sub-system is concerned with the production of management statistics and progress information. The system is capable of generating the statistics required for overall performance indicators.It is also LEST COPY AVAILABLE
389 41? 5.3. Functional Architecture of integration CSS 6.CONCLUSIONS into IMS There are differentlevels of Customer Support The figure below describes the functional System (CSS) exist at Kandatel level, with some architecture of integration CSS into IMS. being manual and others computerized. SISKA, SISKAMAYA are the current computerized Customer ,CSS Support System (CSS) that TELKOM has in place to meet world class service standards. Q3 The existing CSS in each Kandatel is stand alone operating autonomously from others, and it has not optimally used to support operational and managerial Q3 activities.
Mediation Mediation The Integrated Management System (IMS) provides Device Devi the power to accommodate today's need with the future in mind and thereby enablefuture technologies to cooperate and inter-operate without artificial restrictions. ",... JE NE NE NE The integration of CSS into IMS, as TELKOM focus on 1997 2000, will result a smooth flows among Figure 5: Architecture Of Integration CSS Into IMS systems, and become a source of information for the corporation, and a reference for the engineering the For the sake of integration, TELKOM has a commit expansion of the network. to standardize about its common interface and its database that contains all information about service For the sake of integration, TELKOM has a commit provisioning and billing.Database system and its to standardize onits common interface and its support functionwillbe integratedinto one of database that contains all information about service integrated system. provisioning.Database system anditssupport function will be integrated into one of integrated Based on the above figure about architecture of system. integration CSS into IMS, the interface that need to be standardized are X interface for CSS and IMS Such integrationwillprovide the accurate,on- interconnection, Q3 interface that used for demand data needed to run day-to-day operations connection between Operating Support System to and to project future requirements, and furthermore it DCN and between DCN toMediationDevice. will support TELKOM's target to meet world class Otherwise Qx interfaceis a proprietary vendor's operator in 2001 and to face a converging world. interface.
References (1) Fundamental Technical Plan, TELKOM, 1996. (2) TELKOM Master Plan of Integrated Management System, 1995.
(3) Uyless Black, Network Management Standards, Second Edition, Mc. Graw Hill, 1995. (4) TMN Laboratory Guide for PT TELKOM, DIVRISTI, Version 1, October 25, 1996
390418 Cable TV and Telephony Convergence in Taiwan
William Zarit and Frances Li American Institute in Taiwan, Commercial Section Taipei, Taiwan
1. ABSTRACT
With a high cable TV penetration rate and modern telecommunications network, a comprehensive Cable TV Law, new legislation which will liberalize telecom, and an aggressive plan for its National Information Infrastructure, Taiwan appears ripe for implementing cable TV/telephony convergence. Though many cable TV networks still lack modern transmission infrastructure, the small cable operators are now joining forces to amass sufficient combined resources to support the modern technology for convergence. But cable TV is regulated by one agency, telecommunications by another independent organ; the difficulties for establishing and coordinating convergence policy are obvious. Even as it tries to address the regulatory obstacles, Taiwan is going forward with broadband network pilot projects to overcome technological barriers. There is an excellent opportunity to add convergence- related products to Taiwan's long list of successes in the production of information technology hardware.
2. CABLE TV/TELEPHONY CONVERGENCE world with the building of National Information Infrastructures (NII). And these NIIs will eventually What is convergence? Cable TV is one-way, non- merge to form a Global Information Infrastructure switched, broadband broadcast; whereas telephony is (Gil) based on the guiding principles for building the two-way symmetric, switched, narrow and wideband GII adopted in 1994 by the International voice or data service. Convergence is the integration Telecommunication Union, affi rmed in the 1995 G7 of the co-existing symmetric and asymmetric, Telecommunications Ministerial and at a major 1996 switched and non-switched, and narrow/wide/ Asia Pacific Economic Cooperation meeting. broadband technologies to provide communication Although this paper focusses on cable TV/telephony services of voice, data, video conferencing, and convergence as part of Taiwan's NII efforts, it is just videophone, in addition to the array of broadband one piece of the puzzle which will connect, and multimedia broadcast services. These multimedia perhaps unite, the world through communications. services will include entertainment -- analog and digital broadcast, pay-per-view, near-video-on- demand, video-on-demand, interactive games; 3. TAIWAN'S CABLE TV AND information -- news, travel information, weather; TELECOMMUNICATIONS ENVIRONMENTS transaction -- home shopping, home banking; distance education; and telemedicine. Cable TV and telephony 3.1. CABLE TV ENVIRONMENT convergence is also one of the proving grounds for the integration of computer, communication, and 3.1.1. Cable TV Law -- Taiwan's cable TV industry consumer electronics technology. is one of the most developed in the region, with one of the highest penetration rates in the world, 75%, Taiwan's cable TV environment, though it provides and programming comprised of about 50 locally- broadband service to 75% of Taiwan's households, produced programmers and 15 foreign-based satellite has no backbone network, and no switching, transfer, transmitted channels, with monthly subscription fees or other functions between headends. The telephone of USD 15-20. At the time it was fmally legalized in network, in contrast, has a backbone network November, 1993, cable TV in Taiwan had grown supporting switch, transmission, and other functions from one small cable station in 1969 to an industry between switches, although this service is mostly with annual revenues of USD 600 million earned from narrow band. Integrating cable TV and telephony will 2.5 million subscriber households being served by 300 take significant technical innovation, massive capital cable operators. investment, and visionary regulatory policies. Under the Cable TV Law (Cable Law), all of the This scenario is familiar in countries throughout the "illegal" cable TV operators were given amnesty if, by
391 419 the end of 1993, they registered with the Government 1999) of being awarded a preliminary license, after Information Office (GIO), the organ which regulates which MOTC will award a license valid for nine cable TV. Even though only about half of the 618 years. Many of the operators 1) have been delayed by companies registered were actually cable TV bureaucratic obstacles to underground cable operators, all of those which registered were eligible installation, 2) are watching to see which multimedia to apply for a cable operator's license. To apply, and cable/telephony technologies will become companies had to provide sophisticated operating and standards, 3) are waiting for the optimum merger business plans, pledge significant paid-in capital, and offer, or a combination of the three. meet technical specifications which would require retrofitting or completely rebuilding the cable TV However, GIO reports that some 45 cable operators networks. are already moving from straight coaxial cable to hybrid fiber/coaxial (HFC) and about 35 cable The Cable Law divides Taiwan into 51 Cable Districts operators have adopted encoded addressing systems, and allows 5 cable operators in each District. The which pave the way for interactive cable services. Of reason for five districts was a compromise to course installing fiber to the last amplifier (FTTLA), accommodate competition among the political party- fiber to the node (FTTN), and fiber to the curb backed operators and some of the conglomerates (FTTC) are still ideas which will have to wait for looking to enter the market. Also, the Cable Law economic feasibility. limits any one Taiwan investor to a 20 percent share of a cable operator, investment in only one operator 3.1.3. Major Operators --- Despite the 100+ per District, and puts limits on trans-district operators throughout the island, it is the 1) sizable ownership. The Cable Law also restricts foreigners necessary investment, 2) market forces, and 3) to less than 20 percent investment in a Taiwan companies and GIO alike conveniently turning a blind company which has holdings in cable operators, in eye to the regulations, which will lead Taiwan's effect limiting foreigners to a maximum of just under market eventually to be dominated by a handful of 4 percent investment in any single cable operation. major companies. The local cable operators, mostly small enterprises, realize they are not big enough to Though the Cable Law allows for a maximum of 255 compete with telecom service providers. That would operators, the market can only support one to two require significant resources to reach competitive operators in most Districts. Even before licenses economies of scale for both network were awarded, a number of the 204 companies which building/upgrading and operating. submitted license proposals by the March, 1995 deadline merged or were bought out. Awarding the Among the many players, however, two Taiwan 120 preliminary licenses has not stopped the mergers conglomerates are positioning themselves to play and buyouts. In Taipei for example, the five licensed major roles in cable TV: Rebar and United operators in each of Taipei's five districts have Communications. Rebar is a widely diversified already merged into two operators in each district. company, whose holdings include construction Market forces are expected to result in having only materials, real estate, and media. In 1996, Rebar one operator in most of Taiwan's cable TV districts established three new channels with an investment of by the end of 1998. This will increase the need for a USD 110 million, and proposes to invest another USD strong GIO to regulate the local monopoly cable 300 million through 1999 to develop other channels. operators. Rebar also holds minority interest in 20 cable The Cable TV Law, though it was successful in operators, with 1.2 million subscribers throughout legalizing and giving some order to the cable TV Taiwan and over 70% market share in Taipei. In July industry in Taiwan, 1) does not give GIO sufficient 1997, Rebar invested USD 70 million to build an power to effectively regulate the evolving market, and island-wide HFC network to be completed within 2) is the main legal obstacle to convergence (see three years. In September Rebar invested USD 12 REGULATORY ISSUES below). million with four Taipei affiliate cable operators to set up a local MSO, which the partners plan to expand in 3.1.2. Status of the Networks The Cable Law the long term into an island-wide MSO requiring an requires newly-licensed operators to complete a new, estimated investment of USD 1.3 billion. Rebar also or retrofit existing, systems within three years (by intends to launch direct broadcast satellite (DBS)
392 420 service by May 1998. In addition, in cooperation Telecommunications (DGT), was stripped of its with United Fiber Optic Co. and Hitron Technology, operations responsibility, left to perform the Rebar is working on a broadband interactive service regulatory function. Operations were shifted to a trial program which is scheduled to run through 1999. newly-formed state-run company, Chunghwa Telecom Co. Chunghwa is responsible for constructing and Another major Taiwan cable TV company, United installing telecommunications equipment and Communications (Ho Hsin, or UC), is a subsidiary of providing basic network and value-added services, the Koo Group, a broadly diversified company which accounted for revenues exceeding USD 5.9 involved in banking, insurance, hotels, billion in fiscal year 1997. petrochemicals, advertising, and communications. With significant ownership shares of 25 cable The Telecom Law also divides services into. Type One operators accounting for 2 million subscribers, UC and Type Two. Type One is basic telephone service invested USD 260 million in cable TV programming including wireless services, and Type Two (also and upgrading its cable systems. UC is a major called value-added network services, or VANS) are program provider, developing its own programming those services using the Type One network and adding as well as representing 10 major foreign and Taiwan value such as voice mail, fax store and forward, and programmers, including MTV, Discovery, TNT, and various other data services. CNN. The Telecom Law also allows for 20% foreign A UC affiliate recently became a major player in investment in private providers of the Type One Taiwan's telecommunications service industry, services which are determined by the Ministry of winning a mobile telephone license for Taiwan's Transportation and Communications (MOTC). Value- lucrative northern region. UC looks to leverage this added network service providers are allowed up to by integrating cable TV, satellite, and 100% foreign investment.It is worth noting that telecommunications services into an island-wide nowhere in the Telecom Law is any mention of network. UC's progress on HFC network convergence (see 4.2. REGULATORY ISSUES construction is the fastest among all cable operators in below). Taiwan, with already 3,000 kilometers of HFC cable networking which will be augmented by another USD 3.2.2. Telecom Network --- Chunghwa's basic 160 million in island-wide network construction. UC network consists of over 10.4 million local is also moving forward with convergence projects. In subscribersover 48 lines per 100 population -- September 1997, UC paid USD 14 million for ranking Taiwan among the top 25 in the world. The controlling shares in Bao-Fu Cable TV, which is the 13.2 million locally switched telephone lines are over operator involved in Taiwan's foremost cable and 98% digitally switched, while the 960,000 long telephony integrating pilot project (see 4.1.4. distance lines are 100% digitally switched. Broadband Experimental Networks below). UC also Chunghwa plans to have 100% optical fiber for all 1) plans an advanced cable/telephony broadband long-distance wired trunks by the end of this year, 2) interactive services trial program in Taipei. In international submarine circuits by 1999, and 3) addition one UC affiliate provides satellite up-link interoffice trunks by 2000. ISDN service, first services while another has signed a memorandum of offered commercially in 1995, now has 4,712 understanding with Hughes Network Systems, subscribers. Chunghwa Telecom Co., and Microelectronics Technology to work together on Internet satellite Taiwan has committed to start privatizing Chunghwa transmission services. by 1999, and liberalize both mobile and fixed network satellite communication services by 1999 and to liberalize basic wireline service by 2001. Meanwhile, 3.2. TELECOMMUNICATIONS ENVIRONMENT Chunghwa's cellular telephone network -- 700,000 American Mobile Telephone Service (AMPS) analog 3.2.1. New Telecom Law --- Taiwan's new subscribers and 500,000 Global System for Mobile telecommunications legislation (Telecom Law), Communications (GSM) digital subscribers -- has promulgated in February, 1996, opened the way to been facing competition since the late-1997. In mid- telecom liberalization. The monopoly January 1997, three GSM licenses, one for each operator/regulator, the Directorate General of region (northern, central, and southern), three
393 421 regional Personal Communication Service (PCS 4. INTEGRATING THE NETWORKS 1.7/1.8 Gigahertz) licenses, and two island-wide PCS licenses were awarded to six foreign-invested Efforts to integrate cable TV and telephony are under consortia. The market is expected to reach 6 million way. Taiwan's National Information Infrastructure subscribers, over 25% penetration rate, by 2000. program, including a number of pilot projects to develop domestic broadband two-way communications In addition Chunghwa's paging network of 2.4 million and media capabilities, is an important part of these subscribers will is also facing competition. In late- efforts. Convergence in Taiwan faces not only January 1997, two island-wide and six regional paging technical challenges, but also regulatory obstacles. licenses for service on 284.5 to 285.5 megahertz were awarded and service started toward the end of the year. 4.1. NATIONAL INFORMATION The paging market is expected to reach 5 million INFRASTRUCTURE subscribers by 2002. The two other Type One wireless services which were liberalized in 1997 were To help ensure that Taiwan will play a major role in trunking radio (eight licenses were awarded in March global communications in the next century, the 1997) and mobile data communications (20 licenses Taiwan authorities are developing a National were awarded in April 1997). Information Infrastructure (NH). The Taiwan authorities estimate that from 1995 through the year 3.2.3. Type Two Services --- In contrast to the 2005, USD 10 billion in public and private funding previous regulations which contained a "positive list" will have been invested in NH development. From of allowed VANS services, the new regulations use a 1997 through 1999, planned public funding "negative list", allowing companies to provide VANS appropriations will exceed USD 600 million for not specifically prohibited. There has also recently network development, technology R&D, applications, been a major step toward liberalizing digital high- and other related infrastructure improvement. speed broadband technologies: the authorities have categorized as Type Two those data services which Taiwan will use NH as an engine to keep its use ATM or frame relay switching equipment not information technology hardware industry moving integrated with the existing public network. forward despite significant migration of its However, voice transmission over private networks, manufacturing to lower cost offshore venues in the including Internet phone, is prohibited. region. The NII will also spark domestic software development, helping to build an information 3.2.4. Satellite Services --- As of October 1993, infrastructure which will not only support Taiwan's private firms were permitted to lease transponders economic growth but also help Taiwan realize its goal from Taiwan's monopoly telecommunications services of being an Asia-Pacific Regional Operations Center provider, to establish networks for satellite (APROC) for telecommunications, fmancial services, communication or broadcast television services. As transportation, manufacturing, and media services. of December 1994, foreign and local satellite organizations could lease or sell transponders to The broad guidelines for the NH laid out in 1994 by broadcasters to establish satellite base stations and Taiwan's premier include increasing the use of data relay program signals for their own use. Starting in communication services, developing a domestic April 1996, VANS providers were permitted to multimedia industry, propagating the NH and establish very small aperture terminal (VSAT) educating end-users, integrating networks, and networks for domestic data communication service. ensuring conformance with international standards. Starting in August 1997, commercial satellite Another essential aspect is implementing and up/down-link services were allowed. Direct broadcast expanding broadband experimental networks. satellite (DBS) service is currently unavailable in Taiwan. Coinciding with Taiwan's 4.1.1. NH Task Force A high level Task Force telecommunications and broadcasting privatization headed by a cabinet-level minister was established to plan which will allow private competition in satellite oversee the NII project. Other Task Force members communication services, DBS service is expected to are officials and other key decision makers from the be launched between 1998 and 1999. relevant ministries, think-tanks and research institutes. Aside from working groups for resource planning, network construction, application technology &
394 4 22 promotion, human resources education, and public services, there is also a Private Sector Advisory develop Taiwan's multimedia networking Council made up of Taiwan information industry, industry as a logical progression from academic, and related association leaders. Legislators Taiwan's role as a the world's third largest have also formed a separate oversight group to manufacturer of information technology monitor and maintain close communication with the hardware. NII Task Force. 4.1.3. Network Integration Merging broadband In addition, the Taiwan Electric and Electronic cable TV and telecommunications networks is a key to Manufacturers Association (Taiwan's largest scientific NII planning and one of the three essential elements to technology industry association) and Industrial network integration, along with popularizing the Technology Research Institute's (ITRI) Computer and Internet and building an island-wide broadband optical Communications Research Laboratory (CCRL) co- high speed fiber backbone. organized an NII Committee to focus on Internet, set- top box, broadband services, and network 4.1.3.1. Cable TV is an important building block in development, as well as on overall policy & Taiwan's NII. And because of Taiwan's extensive regulations. cable TV development Taiwan has a perceived advantage in the region for linking consumers to the 4.1.2. NII's Five Goals --- Significant progress in NII NII through the cable TV networks. Most operators development has been made in the past two-half years, will eventually build networks with 550 to 750 MHZ including the completion of an island-wide high-speed (able to carry some 60 channels). However the broadband experimental network and international networks need to be upgraded. And due to cost high-speed broadband connections with Hong Kong considerations in this competitive market, many and Singapore. Experimental projects on distance operators are still reluctant to bear the extra expense learning, telemedicine, VOD, and electronic library for digital-ready networks capable of supporting were launched. Progress on the Internet has been interactive communication. But networks must be remarkable: commercial subscribers have increased built/upgraded if the cable TV system is to play the from 4,300 in 1995 to 350,000 at the end of 1996, as major role envisioned by NII planners. the bandwidth of network connection with the U.S. has also expanded from 512 Kbps in mid-1995. to 4.1.3.2. A second essential element of network 12,816 Mbps at the end of 1996. integration, and an integral part of the NII plan, is popularizing the use of the Internet. Future Internet The authorities have set five goals for NII growth is indicated by the Taiwan Executive Yuan's development: goal to expand the present 1.2 million users to 3 million by the year 2000, and the authorities' plan to promote the use of the Internet, hoping to spend US$ 600 million over the next three years on have 3 million Internet users by 2000; Internet-related infrastructure improvements.
promote Internet in the schools: to have all The academic network, called TANet, has 500,000 senior high and senior vocational schools on- users; the Chunghwa-run HiNet has 300,000; with line within 3 years, all junior middle schools 100,000 on SeedNet, a service the Institute for and primary schools on-line within 5 years, Information Industries (III) provides. Chunghwa's and to have a minimum of one networking- HiNet and III's SeedNet provide international network multimedia computer per 20 students; connection service to over 70 Internet Service Providers through ten dedicated Ti (1.544 Mbps), one establish Taiwan as an Asia-Pacific Internet T2 (6 Mbps), and two T3 (45 Mbps) lines.. Nearly hub by liberalizing communication services 2,000 Taiwan based companies already having within Taiwan and expediting network homepages on the World Wide Web. connection to all countries in the region; Despite healthy growth of Internet use, obstacles to establish a "Global Chinese Network even more significant growth have been Taiwan Information Center" to the one fifth of the residents' limited use of computers for on-line world's population which speaks Chinese; services, and the lack of availability of Chinese-
395 423 language information and Internet application to convergence. software. 4.1.4.3. Chunghwa's Northern Region Business 4.1.3.3. The third essential element of network Group led the installation and testing, and integration is an island-wide broadband optical high Telecommunications Laboratory's Applied Research speed fiber backbone. Taiwan's toll circuits (long- Laboratory provided technical support and system distance wireline transmission networks) are now integration service for the development, construction, 100% optical fiber, and 100% of interoffice trunks and operation of a "Telecommunications, Video, will be by 2000. With ATM-switching devices and Interactive Multimedia Service" pilot system. In the the island-wide fiber layout, the backbone allows data project's first stage, started in March and completed transmission speeds to increase from 64K-1.544 Mbps in December, 1997, Asymmetrical Digital Subscriber to 45-155 Mbps. Taiwan plans to have 100% of Line (ADSL) transmission technology was used in a subscriber local loops to be optical fiber by the year system which provides plain old telephone service 2020. (POTS), live video, and Internet service to twenty- eight subscribers in Taipei's Chung-chen District. 4.1.4. Broadband Experimental Networks -- The NH spawned two original broadband multimedia pilot The workstation construction includes a Video Service projects, one in Hsinchu Science-based Industrial Park Engine, Live TV Server, Internet Access Server, (HSIP) and one in Taipei. In July and November, Network Manager, User Gateway, Video Switch, and 1995, the networks in Hsinchu and Taipei, ATU-C (Asynchronous Digital Subscriber Line respectively, were completed. Terminal Unit-Central Office End). Subscriber equipment developed for the program are set-top box, 4.1.4.1. The Hsinchu project resulted in Taiwan ATU-R (Asynchronous Digital Subscriber Line engineers developing the ATM switches which Terminal Unit-Remote End), and multimedia remote interconnect Chunghwa's three regional operation control devices. Multimedia information is headquarters, Chunghwa's Telecommunication transmitted from the services center work station, Laboratories (TL), the National High-Speed through regional switches and the ADSL, to Computing Center, the HSIP Administrative Bureau, subscriber's TV sets, each equipped with a Set Top National Chiao Tung University, National Tsing Hua Box. University, and the Industrial Technology Research Institute's (ITRI) Computer and Communications The project's first phase verified that ADSL would Research Laboratory (CCRL). Over one hundred support interactive multimedia service. The second firms located in HSIP are also linked with the stage, starting in June 1998, will test system broadband experimental network. integration compatibility to 200-400 subscribers, paving the way for larger scale construction by early 4.1.4.2. The Taipei pilot project includes distance 1999. The key technologies and equipment were health care, library, and learning services; weather developed by Chunghwa's TL. broadcasts; and near video-on-demand, multimedia data bases and cable TV service, coordinated by the 4.1.4.4. In October, 1995 Taiwan's premier tasked Institute for Information Industry (III) and private the Ministry of Transportation and Communications companies in the Nankang Software Park. The (MOTC), the Government Information Office (GIO), Taiwan University, Tsinghua University, Chiaotung and the NII Task Force to study cable TV/telephony University, and National High-speed Computing developments abroad and draft a plan for convergence Center distance learning systems are also in Taiwan. MOTC organized an international interconnected on this broadband network. In a symposium in February, 1996, a symposium for related development distance medical diagnosis domestic enterprises in April, and a symposium for systems (DMDS) were established between relevant Taiwan authority organs in June. Shortly Chengkung University Hospital and the Penghu thereafter GIO was tasked with eliminating regulatory Hospital (on an offshore island), and between restrictions for convergence (see 4.2. Veteran's Hospital and Kinmen Hwa-gang Hospital REGULATORY ISSUES below). (also on an offshore island). DGT's Radio & TV Broadcast Technology The three following programs are more closely related Department is overseeing a "Pilot Project for
396 424 Integrating Cable TV and Telecommunications". service in Taiwan. Note that each of the above- DGT is subsidizing equipment and network mentioned broadband experimental trial programs connection fees, and Chunghwa's TL is providing the require special permission because Internet and voice cable TV and telephone network connection are still not permitted in cable TV service. GIO, technology. ITRI's CCRL focuses efforts on though, does advocate amending the Cable TV Law to developing the cable modem (see 5. TAIWAN AS coordinate with liberalization of wireline basic CONVERGENCE HARDWARE telecommunications services by the year 2001. MANUFACTURER below) while academic experts Industry experts expect the legislation to pass by the provide necessary inspection and consulting services. end of 1998.
The trial areas are in the Hsinchu Science-based However, an indication of opposition to convergence Industrial Park and Taipei, using the cable TV on the part of cable operators is reflected in their networks of two local cable TV operators, Chu-Shih in responses at informational meetings held in Taiwan's Hsinchu and Taipei Bao-Fu. One hundred subscribers four major urban areas to discuss convergence with in each of the two cable networks participate in the cable TV operators. A public official involved in the trial. The planning was fmished at the end of 1996, meetings said that the cable operators, which are and the test will run from April, 1997 through March, mostly small companies, lack extensive cable TV 1998. The pilot networks provide subscribers fast industry knowledge and long term vision. Not access to the Internet through an Internet router, and surprisingly, he said, the cable operators were mainly cable TV networks connect (through 3Com and interested in protecting their cable markets by keeping Westend cable modems) with telecom networks for out the deep-pocketed telecommunications providers, two-way operation. and few cable operators had viable plans for longer than three years into the future. 4.1.4.5. In still another pilot project, the NII's Private Sector Advisory Council has pioneered a According to press reports, a GIO official supported video-on demand project. The system planning has the cable operators' view. This official said that cross- been completed and specifications finalized for set-top media operation is not necessarily in the interests of box design, with the prototype constructed in June, the cable TV operators, who should first be allowed to 1996. Chunghwa has completed this program's phase operate across districts, giving them time to achieve one HFC network, which has six fiber nodes and 1,548 critical mass sufficient to effectively compete with home-passes. This trial program provides near-video- telecommunications service providers. on-demand, high-speed data transfer, Internet access, Representatives not only from the small cable TV and telephony over HFC. Trial runs for two hundred operators, but also from the major players, concur. subscribers began in March 1997. GIO and DGT officials, as well as private sector Major hardware and software providers involved in this representatives, agree that just amending the Cable pilot program are Celerity for video server, INC for TV Law would not be sufficient to solve the wide VDT gateway headend equipment, Tatung for set-top ranging issues needing resolution between the two box, and IBM for system integration. regulators, GIO and DGT. Taiwan will need a new communications and broadcast law to integrate the 4.2. REGULATORY ISSUES services. Considering how long it took for the legislature to pass both the Cable TV Law and As mentioned above, in October, 1995 Taiwan's Telecom Law, it may be a long time before Taiwan premier announced an initiative to merge cable TV has an effective integrated set of convergence and telephony. This included eliminating legal and regulations, not to mention an integrated regulatory regulatory obstacles. Taiwan's new Telecom Law body.As a local expert on cable TV and telephony does not prohibit telecommunications service said, input from international media and providers from operating cable TV. telecommunications groups will have some impact on legislation and regulations, but more influential will The Cable TV Law, however, is the major legal be the high number of legislators whose families are obstacle preventing convergence. Article 22 of the intimately involved with media or media-related law denies any applicant for cable TV operation if that enterprises. applicant is involved in providing telecommunications
397 425 5. TAIWAN AS CONVERGENCE HARDWARE 6 CONCLUSION MANUFACTURERS Taiwan is in a unique position as it approaches cable A modem is a data signal shifter, or translator. The TV/telephony convergence. The percentage of word modem is a combination of the words households subscribing to cable TV is among the "modulation" and "demodulation," the technical terms highest in the world, and recent telecommunications for signal transformation which has been mainly used liberalization will position Taiwan to catch up with the for computers connecting over telephone lines. Much telecom networks and services in most advanced of the technical success of convergence will rely on countries. And though Taiwan's cable TV more complex cable modems to facilitate voice environment's lack of integrated, modern networks service over the cable TV network, and ADSL and its dispersed ownership has offset advantages of modems to facilitate visual service over the telephony high user penetration, operator cooperation and network. The fact that Taiwan is number three in the consolidation is already starting to address these world in information industry hardware products (over shortfalls. However, the present and potential USD 30 billion produced in 1997) and leads the world problems from two separate regulatory agencies in computer modem production (over 16 million units overseeing telecom and cable TV, respectively, still in 1997, focused on 33.6 Kbps and 56 Kbps speeds), pose major challenges. puts Taiwan in a strong strategic position to play a major role in cable and ADSL modems development It will take strong and visionary leadership from and production. Taiwan policy makers, as well as continued liberalization of the economy, especially the ITRI's CCL has led cable and ADSL modems communications industry, to help Taiwan realize its research in Taiwan. In late 1997, U.S. firm AMATI NII goals, which include convergence. At the same authorized CCL to establish technology transfer time, Taiwan stands to gain significantly if it can agreements with 13 Taiwan firms (including GVC, become a world leader in convergence-related Hitron Technology, TaiNet, and United Fiber Optic) hardware manufacturing the way it has for other for a project to develop ADSL modems and related information technology products. devices. This two year project, for which the Taiwan authorities have appropriated USD 40 million, is based on American National Standard Institute's (ANSI) discrete multi-tone (DMT) signal modulation technology. The ADSL modem prototype and related system should be ready by March 1998, system function tests such as temperature and electromagnetic interference will be completed in September 1998, with integration of the ADSL system into the ATM network in September 1999.
Other local firms are also getting involved in research and production. CIS Technology has formed, an alliance with Turbo Net of the U.S. and Toshiba of Japan to develop cable modems, with first delivery expected by the first quarter of 1998. E-Tech has invested USD 3.15 million since late 1996 to develop cable modems which it predicts will hit the market in 1998. GVC Corporation, Taiwan's largest, and the world's second largest (behind U.S. Robotics), modem manufacture, is developing a digital simultaneous voice over data (DSVD) modem, expecting significant demand for cable modems to come as late as 1999. Other companies such as Zyxel and 3J Tech probably will also be important players in future cable modem production.
3926 Regional and Industry Development Through the Convergence of Electricity and Telecommunications Industries
Terry Charman, Optus Communications and Joe Ceccato, ACTEW Corporation, Canberra, Australia
1. ABSTRACT
Deregulation of the electricity and telecommunications markets in Australia is creating new opportunities and challenges for both industries. Optus Communications and ACTEW Corporation are developing a strategic relationship based on ACTEW's plans to build an advanced broadband communications network in Canberra, the nation's capital. Such a network will have a positive impact on regional and industry development
2. INTRODUCTION Secondly, and seemingly of more interest, is the opportunity presented by the synergistic nature Much of the convergence debate over the past of the business. The global telecommunications decade or so has focused on the convergence of market is estimated to be worth many billions of technologies; i.e. between computing and dollars, including internet and video services. telecommunications. A far more significant convergence is occurring, however, as a result of This is an attractive business opportunity for an the globalisation of business, increased industry looking to expand its interests. competition and the new applications enabled through technological advances. This is the 3. ELECTRICITY UTILITY PERSPECTIVE convergence of once separate industries; e.g. insurance and banking, media and With increasing competition, electricity is being telecommunications and more recently, the viewed more and more as a commodity. The telecommunications and electricity industries. incumbents are faced with a loss of market share and falling prices. They therefore need to make It should come as no surprise to anyone that some difficult choices. One would be to electricity utilities are expressing a great deal of increase growth in the existing market. This interest in telecommunications. This interest is would be limited by the usage patterns of the relevant from two main perspectives. customer base and would require substantial increases in advertising and promotional Firstly, the telecommunications industry in activities. Another is to expand the market by Australia and elsewhere has already undergone a moving into new areas (competitor's markets) or change from a monopoly environment, through a acquiring competitor's businesses. A third is to period of limited competition to full and open diversify into new business streams. Which competition. This in itself provides some useful could also incorporate the first two options. lessons for what is happening and is likely to happen in the electricity supply industry. In Many utilities are seeking to become multi- Australia, following the 1994 Hilmer Report into utilities offering a one-stop shop for a variety of competition policy, the electricity market is being products and services, including progressively opened to competition. Telstra, telecommunications. previously the monopoly telecommunications carrier in Australia, has itself applied for an The synergies between electricity and electricity supply license. telecommunications include: 4 0
399 same customer base; 5. THE TRANSACT PROJECT similar customer service systems; e.g. call ACTEW Corporation is 100% owned by the centres, billing systems; ACT Government and as such needs to meet some major objectives in the development of a infrastructure; broadband network. The first, of course, is that the business must stand alone and be similar operational processes; commercially viable. Second, the network must be an open access network to stimulate service benefits to both industries. provider competition and third, it should contribute to the competitiveness and AtlEW Corporation is a relatively small utility development of the Canberra region. with an annual turnover of A$340 million and an operating profit of A$46 million. It is fairly While, traditionally, monopoly providers have unique in that it is already a multi-utility. ACT not taken much cognisance or market needs, Electricity and ACT Water were merged in 1988 ACTEW has been very proactive in finding out resulting in the delivery of water, sewerage and what its market wants. electricity services within the one organisation. The infrastructure to deliver these services are ACTEW initially conducted a market survey of viewed by ACTEW as networks which they 300 households and businesses to determine own, maintain and operate. For some time, whether there was sufficient interest to proceed ACTEW has been considering the addition of a and to understand what information was fourth network and is now well downstream on required for further investigation. This was the planning for an advanced broadband followed up by an expanded and more detailed communictions network for the city of Canberra. market survey, jointly funded by Optus, of 1000 households and 300 businesses. At a later stage, gas may be added as a fifth "network". The results were better than expected. Not only was there a much higher than average response 4. TELECOMMUNICATIONS COMPANY rate, but the interview sessions were twice as PERSPECTIVE long as the allocated time, due to the strong interest in the topic by the recipients. As of 1 July 1997, the telecommunications market in Australia was liberalised to allow full The surveys were supplemented by ongoing and open competition, not just in services, but in focus groups, public meetings and speaking network infrastructure too. As Australia's engagements to industry bodies within the second carrier, one of the greatest challenges industry and community. faced by Optus is the cost of providing a competing access network. To date, Optus has The major outcomes were that the community of spent over A$5 billion on a trunk network and Canberra: corporate CAN. A further A$3 billion, approximately, has been spent through Optus definitely want broadband services; Vision on providing a local telephony and pay- TV network in major capitals, which is yet to do not want to pay the additional cost of provide an adequate return on investment. underground cabling, except where all other services are underground; Optus already has multi-faceted relationships with electricity utilities, including rights of way definitely do not want multiple infrastructure agreements, and is keen to work with them to providers delivering services which can be develop a new model for the extension of provided over one network; and network-based competition in Australia
400 428 strongly support a locally owned network; and When Optus and ACTEW first began discussions on a strategic partnership the model do not necessarily want one supplier under scrutiny was that of a joint venture with providing all services. injected capital from both organisations. At the time, AC1EW was not comfortable with an The project has now moved past the feasibility independent strategy where it took all of the risk study to prototype testing and ACTEW has of ownership and control. For its part, Optus signed MOU's with broadband Technologies was uncomfortable with investing in a new (BBT) and SAT. The project team has selected technology access network at a time when it was Switched Digital Broadband, or fibre to the curb, attempting to integrate its Pay-TV and local technology. Integration of the new technology telephony business into its existing business. will be conducted in association with BBT and The hybrid fibre coax network which Optus SAT in three locations: Canberra, Paris and deployed for Pay-TV and local telephony was North Carolina. still being bedded down and the diversion of capital to a new, untried technology platform The network will be a unique, switched digital could prove a high risk approach during the broadband model, contributing to Canberra's implementation of a strategy to maximise the use reputation as a high technology city. The of existing assets. network will be capable of delivering: In spite of these potentially conflicting strategies, Basic and advanced telephony; ACTEW and Optus developed an excellent working relationship throughout the process and Television (re-transmission of free-to-air); developed a joint vision, shared objectives and a win/win attitude based on mutual respect and Pay-TV; trust. These are essential ingredients in the development of a successful relationship. The Near video-on-demand and video-on- nature of this relationship could evolve into more demand; and of a partnership model at a later stage. Interactive services, such as Internet, home Also during the process, the increased shopping, home banking and distance understanding of the nature of the business, the education. outcomes of market surveys and growing confidence in the business case have led to a The next stage will be a pilot system, new look at the independent approach, where commencing around March 1998, where two AC1EW will fund, build, own and operate the suburbs will be wired up and a range of services local network. This approach is highly will be tested. Once the pilot has been fully consistent with the objective of encouraging tested, the project will proceed to full network multiple service providers to deliver services over roll-out with a view to completion by the end of the network. Optus will provide expertise and 1999. other support to ensure a profitable outcome. 6. THE BENEFITS AND ESSENTIAL Service providers maintain a direct relationship INGREDIENTS OF A SUCCESSFUL with their customers and ACTEW provides the STRATEGIC RELATIONSHIP access to those customers. This approach overcomes one of the major reasons for conflict Deregulation and globalisation have created an in a number of ways to deliver the outcomes. environment that is characterised by a rapid pace This is explored in more detail in the next of change and uncertain futures. The creation of section. Optus is likely to participate in the pilot profitable and mutually beneficial alliances project and may invest in the project over time. minimises risk and maximises the commercial returns for the combined business. The benefits to AC1EW include:
401429 A 100% customer base with an associated Experience of a new line of business which long term relationship; and establishes ACTEW as a credible infrastructure build partner in other markets A strong brand image and track record. in Australia and the Asia Pacific; Optus brings: Additional revenue streams to protect against competition; Experience of building, managing and operating a sophisticated, advanced Differentiation as a true multi-utility in a telecommunications network; highly competitive market; Fibre and network infrastructure in Canberra; Optus benefits through: Knowledge and experience of wholesale Access to an advanced broadband platform operation; for delivery of advanced services; Experience in negotiating interconnection Opportunity to increase market share; arrangements; Local access to an additional 120,000 Advanced network integration experience customers; across fixed, mobile and satellite networks;
Opportunity to bundle services in new ways: An established customer base across and government, corporate, business and residential markets; and Scope to participate in advanced service development with other complementary A strong brand image and track record industry players. Aggregation of the combined competitive 7. AGGREGATION OF COMPETITIVE advantages of ACTEW and Optus lays the ADVANTAGE MAKES BUSINESS foundation for a more profitable business and SENSE reduces both the implementation and societal costs of building a broadband network. One of the mainstays of a successful business relationship is the blending of different but 8. REGIONAL AND INDUSTRY complementary skills and assets, where practical. DEVELOPMENT ACTEW and Optus each bring considerable market strengths and experiences to the As well as being the capital city of Australia and relationships. the seat of Federal Government, Canberra is a business hub for the Australia Capital Territory ACTEW brings; (ACT) and the region. Canberra itself has a population of approximately 300,000 but the Access to rights of way; wider region provides access to a population of some 5 million. The workforce of the ACT is Existing infrastructure such as power poles generally well educated, highly skilled and lends and cable ducts; intself to a high technical environment. There is a higher than average penetration of Pcs and A skilled workforce; Internet access, making it an ideal location for test-bedding advanced telecommunications and Sound knowledge and experience in asset multi-media applications. There are already management; plans for a high speed rail link to Sydney and Canberra airport has recently been upgraded to
402 430 international status. The addition of an advanced video and multimedia applications and advanced, broadband communications network advanced telephony services. will further stimulate job opportunities and additional business within the region.
Already, several local companies, including Internet service providers, have indicated an interest in participating in the development of a centre of excellence. One of the most interesting is a local video store chain interested in developing video on demand and near video on demand services. The marketing plan includes further stimulating the development of new applications and creating Canberra as a technologically advanced city, where businesses and investors will wish to play a part. For example, the development of applications for on line real estate and tourism transactions is a possibility. Other utilities in Australia are taking an active interest in the project, some with a view to utilise ACTEW's capabilities and others to investigate the applicability of the business model for their business. Optus is examining the options for appropriate business models for arrangements with other electricity suppliers.
ACTEW already has business interests in the Asia Pacific region, primarily in water purification projects. The development of a broadband communications network will give ACTEW and its strategic partners the opportunity to offer a total infrastructure build capability, i.e. water, sewerage, electricity, telecommunications and potentially gas, for developing areas and new developments. 9. SUMMARY
As in all environments of change, there are challenges and opportunities. While the challenges of building a new advanced broadband communications network are significant, the opportunities it creates will be exciting, rewarding and beneficial to all. ACTEW, the network provider and Optus, along with other service providers have an opportunity to develop more profitable businesses.
The community of Canberra will be served by an advanced communications infrastructure providing access to high speed Internet,
403 431 Enhanced Information and Operator Services for Developing Countries and Newly Industrialized States
George J. Lissandrello Vice President, T/I Laboratories, Inc. Garland, Texas, U,S.A.
1. ABSTRACT
In order for the telecommunication service providers of developing countries and newly industrialized states to economically enhance and expand their new and existing wireline and wireless telecommunications networks and services, non-traditional and innovative approaches are required. This is true for information and operator services which are provided to the public and business through the telecommunications service providers. Technologies and systems architectures are available today to allow for the implementa- tion of such services on networks based upon past, present and future network topologies developed for wireless, wireline and satellite technologies.
2. INTRODUCTION Enhanced 911 Emergency, TRS (Telecom- munications Relay System) for the hearing 2.1 OVERVIEW and speech impaired, Directory Assistance, Operator Assistance, Prison Call Manage- This paper covers the technology and archi- ment and others designed to meet the specif- tecture which is available to allow telecom- ic needs of telephone and telecom service munications service providers to implement companies. Examples of existing systems standard and enhanced information and are described including those used in satellite operator services through existing Commer- based international gateway systems, island cial-Off-The-Shelf (COTS) hardware and nations, independent U.S. telcos and in par- software on past, present and future central ticular a system being implemented in South- office switching systems for wireline and east Asia by a major carrier. wireless network topologies. Detailed descriptions are given of the sys- The concept of Enhanced Services-Switching tems digital switch and network interface; Systems (ES3) platforms for Enhanced Infor- the applications processor and the operator mation and Operator Services; and call cen- workstations. ters is introduced. The architecture and technology available to allow the telecommu- The unique requirements for the implementa- nications service providers including wireline, tion of operator/ information services of the wireless and satellite based to offer leading developing countries are addressed including edge value added information and operator a number of suggested alternatives to meet services. The ES3 architecture uses existing those requirements, In addition, methods of standard hardware and software and can implementation are reviewed including strate- accommodate all types of central office gic relationships and technology transfer. systems and manufacturers. Suggestions as to how developing countries All major applications are covered including: can economically implement operating and Electronic Yellow Pages, Debit/Credit Card, information services are made and conclu-
404 Li 32 sions drawn. where operator services are no longer a cost center but are a profit center. 2.2 THE TELECOMMUNICATIONS ENVI- RONMENT the need to interconnect a variety of new and existing telecommunication The telecommunications environment of the networks, terminals and communica- late 1990's and the first 5 years of the mil- tion based information systems of lennium finds the traditional different vintages, standards and telecommunications carriers of developing manufacturers. countries and newly industrialized states repositioning themselves to adapt to new the need to adapt existing systems to network, hardware and software platforms, new platforms, from analog to digital, and to new competition. These entities and from wires to wireless, from central- their new competitors must address the ized systems to distributed, from old following elements which make up the new computer languages to new, from environment: terrestrial to satellites, and from main frame computers to servers, work- the deregulation and denationalization stations and micros. of the telecommunications networks, service providers and manufacturers the carriers have pressure to improve which allows for the creation of com- productivity and find new revenue petition and new business opportuni- sources such as competing for the ties. The recent 1997 World Trade fast growing international traffic, the Organization agreement by seventy creation of teleports for satellite based nations on telecommunication servic- services, and the offering of value es is a prime example of this. added services above plain old tele- phone (POTS) services. the availability of new technologies, networks and information services 3. TELECOMMUNICATION SERVICE PRO- which shorten the life cycle of sys- VIDERS OVERALL REQUIREMENTS tems and create new opportunities for those carriers that can optimize on Figure 1 shows the typical public switched these new offerings. This includes telephone network topography with the the new wireless and satellite technol- various classes of central offices. It also ogies. shows the demarcation between long dis- tance services or interexchange carriers the exponential growth in the outsour- (IXCs) and the local exchange carriers (LECs) cing and systems integration business services. This type of demarcation is new or gives new opportunities to the tele- does not exist in a number of countries. communications carriers allowing However, it is an indication of the new com- them to expand into new international petitive environment which has existed for and industry markets. This includes some time in the U.S. and is now being the provision of Call Center services implemented in some form in many coun- . such as those supplied by Cincinnati tries. With the new U.S. 1996 telecom bill Bell's Matrix subsidiary in the U.S. the long distance carriers can become LECs and the LECs can become IXCs. the requirement to learn to manage the new technologies, systems and The enhanced operator and information ser- services as applied to meet the carri- vices systems are normally added to the ers customer's applications needs Class 4 Toll Tandem exchange of the local
405 433 How T/I Labs ES Systems Interface Telephone Networks
Public. Switched Telephone Network (PSTN).
International and/or Domestic
IXC
T ; TANDEM CLASS E-DOTS 0 ; -- p ;TOLL TANDEM 4 X/M S C/0
CLASS CLASS 5 5 C/O C/0
E-DOTS- IIF WORKSTATION
E-DOTS MAP
END OFFICE
SUBSCRIBER OFFICE TA LABORATORIES, INC.
PUBUC SWIRMED TELEPHONE NEIWORK
PSTN2DRW 5-2307 Figure 1
406 434 telephone company as indicated in Figure 1 types of central offices and networks includ- as the E-DOTS-X/M (Enhanced Digital Opera- ing analog, digital, wireless, satellite systems tor Traffic System) and its components. The and international gateways. long distance carriers and international carri- ers can add them to their gateways and to Queuing, prioritization and auto call distribu- their central offices designated as informa- tions to operator workstations, public safety tion and operator service centers. The wire- access points and automated systems are a less and satellite carriers can add the ES3 major requirement. platform to the network control centers, toll exchanges and/or teleports (earth stations). The switch must be designed based upon a flexible architecture which would allow for The general customer requirements, taken in growth and for the accommodation of new the context of the customer being the tele- features and functions. communications carrier and the supplier being the manufacturer of the enhanced The switch software is to be transportable to information and operator services system, is switch platforms provided by other manufac- shown in Figure 2. The system includes a turers. transparent switch network interface, opera- tor positions (workstations) and an applica- 3.2 OPERATOR POSITION/WORKSTATION tions processor which allows for the offering REQUIREMENTS of data base and information services. The operator position is key since it is the 3.1 ES3 SWITCHING SYSTEM AND NET- person machine/system interface and is the WORK INTERFACE REQUIREMENTS support unit for the operator interface to the telecommunications service provider or call The switch network interface component of center customer. The requirement is for an the ES3 should be equal in availability to that integrated intelligent workstation for the of the standard digital public switched net- operator which is based upon standard PC or work toll exchange, It is required to be a fully workstation products and standard operating redundant system for uninterrupted service. systems such as DOS or Windows. The switch is to be a fully digital tandem type of exchange with the ability to accom- The position should be capable of integrating modate local exchange switching functions, voice and data, have direct access to the be transparent to network protocols, inter- switch and direct access to the application face multiple switches and distribute calls to processors. This is to allow for quick respon- operators and automated voice response ses to the service providers customers and to systems. optimize on the operators work time.
In order to insure uninterrupted service the Ergonomic design of the keyboard and dis- switching system is to be self diagnosing for play is of prime importance and is to include in-service problem definition and allow for function keys, color-coded function groups in-service maintenance to minimize down and keyboards designed for specific applica- time. tions. Special operator support features are also required which include digital voice The ability to concurrently support multiple announcements, digital voice recording and toll exchanges is a key requirement in partic- the capability to have one position handle ular for those carriers that may be offering multiple types of operator information and services to other interexchange and local call center services. The system should have exchange carriers or are centralizing. The the capability to provide automated operator switch must be capable of interfacing all services using Interactive Voice Response
407 4 3 5 Wireless General Customer Requirements Public National and International Telephone Network Satellite Networks Transparent Switching LocalSystem Switching Interface and Systems User Terminals cP Operator Data Base and User Terminals WorkstationIntegratedPositions InformationApplicationServicesProcessor I,M11'/ILI/ a!711111111111NV, III 0111I ION IF IF 9. T/I _LABORATORIES INC Figure 2 437 Systems. alized states.
3.3 APPLICATION PROCESSOR REQUIRE- The most important issue for the telecommu- MENTS nications service providers of developing countries and newly industrialized states is to The application processor is to be a high define the technologies they require to pro- speed real-time computer. It is to be based vide the necessary and enhanced services to upon a standard commonly available server the populace, businesses and institutions machine using a standard operating system based on what is proven and available. In and data base management system. It should addition, the carriers must capitalize on exist- be capable of local data base support and ing installed equipment and optimize on the have the ability to access remote data bases new technologies available such as wireless and computers. Its local and remote data and satellite based networks. base access system has to have the capabili- ty to support billing and accounting func- 4.1 BASIC NEEDS tions. The need is for a basic reliable universal The ability to provide the operator access to service plus universal access to value added multiple applications is mandatory. These services, that provides a foundation for fu- applications include standard applications like ture growth and new services. This service directory assistance, 911, and toll assist and needs to be available at a minimum to the special information services such as electron- public areas of every hamlet, town, village ic yellow pages, well care, call center appli- and city. Implementation is to be quick and cations, hotel billing, systems for the hearing easy. and speech impaired, and prison systems. Certain operator services, such as 911, direc- Reliability and redundancy is another require- tory assistance and toll call assistance, are ment of the application processor. It should essential. In addition, there is a need for have the ability to operate in a hot stand-by emergency and disaster control systems. mode in a duplexed configuration and should These systems are required to optimize on have the capability to have a duplicate and the country's languages and dialects. Also back-up database and file system. needed is the development of a method to simplify billing. 4. DEVELOPING COUNTRIES AND NEWLY INDUSTRIALIZED STATES REQUIRE- 4.2 SPECIFIC REQUIREMENTS MENTS The requirements for information and opera- The implementation of traditional public tor services of the developing countries and telecommunications technologies will not newly industrialized states telecom service allow the developing countries to reach the providers are driven by country specific re- required telephone, data terminal, fax, video quirements which include the following: and integrated, fixed and mobil terminal population per capita necessary for develop- the enhanced information and opera- ment. New and innovative methods are re- tor service switching and interface quired including new approaches to the regu- system needs to interface with old latory and telecommunications industry infra- analog exchanges and signaling sys- structure. In most cases, using the developed tems in order to offer the operator countries as a model is not appropriate for services enhancements to such sys- the development of telecommunications in tems. The switch requires the capabil- the developing countries and newly industri- ity to access a satellite earth station
4o4 3 8 and to interface wireless based net- Prison Call Management works. Mobile/Marine Radio the operator positions must have a national language keyboard and func- tion keys designed for country specif- Automatic Rating ic applications. The displays on the screen are to be in the national lan- Credit Card Calls guage and in some cases multiple languages are required. Local Debit Cards the application processor and data base machine need to have its data Billing base in the national language and format. In particular the names in the directories. Applications unique to the Booked Calls country can be added by the telecom- munications service provider. Intercept the system should have local content. This could be in the form of technolo- Well Care gy transfer in regard to the building of the switch/interface and the develop- Message Center ment of the software. It can also include locally manufactured and/or assembled PCs as operator positions Hotel Billing Information Center and locally available UNIX file servers as application processors. Telecommunication Relay Service for the hearing and speech impaired 5. APPLICATIONS 5.1 ENHANCED DIRECTORY ASSISTANCE The enhanced information and operator ser- vices applications include: The Directory Assistance application provides a multiple search criteria to prompt the oper- Directory Assistance ator for the proper response to the inquiry. The search criteria is based upon name, Electronic Yellow pages address, city and other criteria. It also pro- vides digital voice response. A new feature, call completion, allows for automatic dialing Property Database once the correct number is found.
Enhanced E911 Another type of directory assistance is the Electronic Yellow Pages which provides the International Gateway carrier a database that can be accessed by product or service. As with directory assis- tance, the selected number can be automati- Automatic Message Accounting cally dialed forward.
5.2 PROPERTY DATA BASE Toll Assistance
410 439 The Property Data Base application enables tence which enable the carriers to add their the telecommunications service provider to own unique applications. enter and maintain certain information about a property associated with a specific tele- The Telecommunications Relay Service appli- phone number. This information is displayed cation, for example, is for the speaking or on the operator's screen when a call comes hearing impaired to communicate with others in. For example, the application can enable via an operator by using a keyboard device. the operator to provide customized greetings The operator (Communication Assistant) and determine what services are available for provides the appropriate text and speech a particular property. In a similar fashion the conversions. Emergency Number Data Base application enables the carrier to enter and maintain the 6. TECHNOLOGY TO MEET REQUIREMENTS necessary emergency numbers associated with a particular property or phone. Figure 3 shows an Enhanced Services Switc- hing System (ES3) Platform Technology, 5.3 CREDIT CARD VALIDATION known as the Enhanced Digital Operator Traffic System (E-DOTS) which meets the This application provides access to credit requirements as stated in the previous sec- card data bases for card validation and au- tions. thentication. It is capable of accessing most available external data bases via X.25, TCP- The digital programmable tandem switch and /IP or other protocols as required. The Credit network interface (DOTS-X/M) appears as a Card Validation application provides for op- tandem to the network and allows for the tional automatic call completion without addition of the new services to the existing operator assistance on validated credit cards. network and switches. It has the capability to interface a local Class 4 or 4/5, an interna- 5.4 ENHANCED 911 SERVICE tional gateway, a satellite system through an earth station, wireless networks and private This application allows for two types of calls; networks. It supports all carrier operator emergency calls dialed with 911 and emer- functions and can interface multiple switches gency calls dialed with 0. simultaneously.
When a 911 call is received by the system it The switch is the first leg of a three legged is directed to a dedicated terminal in the architecture consisting of the switch, the appropriate Public Safety Answering Point operator positions and the application proces- (PSAP), which is selected based on the ANI sor. All three legs are interconnected to allow (Automatic Number Identification) of the for efficiency, reliability and speed. calling party. A PSAP workstation has a unique display and the operator performs no The second leg is the operator position which other call handling functions except E911. All is an integrated function workstation based calls are recorded and archived. upon a standard IBM compatible PC and MSDOS or windows called the DOTS-I/F 5.5 OTHER APPLICATIONS (Integrated Function). It includes a special- ized operator services keyboard and the Each operator and information service appli- ability to perform multiple functions from a cation is a paper in itself and cannot be ade- single position including all applications de- quately described here. The purpose of this scribed in this paper as well as multiple lan- section is to make the reader aware of a guages. The operator position communicates myriad of such applications which are avail- with the switch at 9600bps and with the able and also, that there are systems in exis- applications processor over the enternet at
411 440 56kbps. services with a foundation for future servic- es. Railroads and utilities can assist in provid- The applications processor, known as the ing complementary infrastructures to the DOTS-MAP (Multiple Application Processor), existing telephone networks. The national is the third leg and provides for all the data and international satellite systems can be bases for all the applications both locally and used to develop-alternate and complementary remotely.It also interfaces a host computer approaches. Cellular, PCN and LMDS technol- for automatic billing and an Automatic Mes- ogy can be used in lieu of stringing wire and sage accounting tape. It interfaces the burying copper. A new regulatory environ- switch at 9600bps and is the file server for ment is required to allow for the optimization the operator positions. The applications pro- of resources. cessor is a standard UNIX machine and is programmable by the telecommunications The existing public national and international service provider. telecommunication networks can be enhan- ced with new information technology prod- The systems architecture as shown in Figure ucts. This will allow for new information and 3 allows for the networking of such systems, operator services as described in this paper adding remote concentrators and expanding including applications which are customer the size of the system to handle large num- and country specific. Existing analog switch- bers of operator positions and additional es and new digital switches can be enhanced trunks. The architecture also allows for the by attaching state of the art operator work- addition of new and enhanced applications. stations based upon PCs, application proces- Most important, due to the transparency of sors based on UNIX LAN servers and small the switch, it can enhance old and new net- digital toll switches based on micro comput- works and central offices. ers. These three components tied together into a systems architecture allow the carrier Figure 4 shows an expanded system which to provide a variety of new services without includes a remote switch/network interface, the need to replace existing switching sys- remote operator positions and an interactive tems, In addition, such architecture can voice response system. There is a total of enable the enhancement of local exchanges 120 operator positions in this configuration. to provide custom calling features and usage This system is installed in a major telecom- sensitive pricing. munications service provider in Southeast Asia. The system provides directory assis- The carrier can then have the opportunity to tance with call completion and call assis- provide the outsourcing of Call Center infor- tance to the country for domestic use only. mation and operator services to hotels, insti- It interfaces a Fujitsu switch (toll exchange) tutions and businesses through the imple- and an IBM RS6000 database for directory mentation of enhanced information and oper- assistance.It has been customized to meet ator systems. Such systems can apply to all the unique requirements of the country's types of services such as teleports, interna- telephone company. tional gateways, wireless services and future internet and multimedia services. 7. CONCLUSIONS AND RECOMMENDA- TIONS As most are aware, it is not necessary for developing countries and newly industrialized The developing countries and newly industri- states to evolve in telecommunications in the alized states should consider all available same manner as the developed countries. In resources and methods at their disposal in fact, such an evolution can be a retarding order to implement a telecommunications force on the development of a country, By system which can provide basic reliable taking new approaches and implementing
412 441 Host Computer Optional Local Databases E-DOTS Enhanced Services Platform Configurable Network CTI DOTS-X/M taIMMieleimmemot W rkstation I Panelterface VoiceData 000 SOB! DOTS-I/F DOTS -MAP M11111111111111111. 9 Workstations External Databases ...... WorkstationSupervisor 61 AMA Tape ,4 120 channels Management PositionService Class 4/4-5/5 CO71_7 120 channelsTl/E1/C Datalloice Hub LAN * AutomatedDirectory Inquiry Yellow (ACC) Pages (ACC) Optional Local Databases: Booked Call Service PropertyFaultAnsweringEnhanced Reporting / HOBIC Service E911 / E999 OperatorWake-upWellNotificationDebit Care CardMulti-Leaf.Service Service Services CreditMobileCollect Card /Call Marine Management Radio CallTRSRate Screening (Relay / Route Service) Tables T/I LABORATORIES INC. E-DOTS Customized Intercept Precedence/Preemption . 442 AT&T2.0RWConfigurabel Workstations 44302728/97 E-ROC E-DOTS Enhanced Services Platform Network CTI DOTS-X/M DOTS-I/F Workstationif Supervisor IR Workstations ENt.ROCni j I DOTS-X/M Imo IVR - I I DOTS-I/F Bridge I Supervisor Workstations ConsoleMatra MAP MAP(Dual) Workstation Management Potation&mice 112=1111=11 1111111111 MI I-1 -11 TIT LABORATORIES INC. &DOTS Enhanced &Won Platform 444 LAN Figure 4 EDESP1A.DRW Network CTI I 01-13-97 445 state of the art information technologies technologies offered by the entrepreneurial (which include telecommunications and com- high technology companies. puters) a developing country can create its own indigenous telecommunications indus- try. This can occur and is occurring by the formation of strategic alliances, joint ven- tures, and business relationships with entre- preneurial fast moving high technology com- panies of the developed countries. These companies are able and willing to provide technology transfer and knowhow. The tradi- tionaltelecommunication companies are not geared in that direction.In addition, the new innovative international carriers are usually entrepreneurial and can readily form alliances to provide new and competitive services.
The developing countries and newly industri- alized states will find that the high technolo- gy companies and the new telecommunica- tion service providers of the U.S. are willing to consider the trade of technology and know how for investments and expanded markets. Such companies are researching, developing, manufacturing and/or offering digital switches, satellite communication systems, radio frequency components/wire- less technologies and information and opera- tor services systems. The PTC would be instrumental in facilitating such relationships on a more formal basis between U.S. based entrepreneurial companies and the telecom- munication service providers of the develop- ing countries and newly industrialized states.
This paper has covered one area of the many technologies available that can assist in the implementation of new telecommunication services and enhancements of existing ser- vices and networks. It can be used as input to those in decision making positions in the developing countries and newly industrialized states for the implementation of their infor- mation and operator services.
The key recommendation is to insure that the traditional and new telecommunications service providers of the countries are aware of all the major options available and are flexible enough to take advantage of the new 446 415 The Year 2000 Dilemma: Fact or Fiction ??? "How to Manage One of the Greatest Issues since the Ending of the Cold War."
Angelo M. Sanchez Managing Director The AMSG Group
ABSTRACT Estimated to cost upwards of $600 Billion worldwide, resolving the Year 2000 problem poses one of the great economic and technological issues facing the world's governments and businesses since the Cold War which threatened to destroy our economic fiber.If the Year 2000 problem or better known as "Y2K" in information technology jargon is not resolved or ignored, it would have the effect of bringing to a standstill information technology dependent businesses, industries, and governments. This paper will provide the reader with an overview of the Year 2000 Dilemma and potential approaches to assuring that his/her organization's information technology functions on January 1, 2000.
Possessing an effective methodology to analyze 1. THE PROBLEM and implement a solution to the problem Many have oversimplified the problem as the changing Identifying the most effective tools to analyze and of the two digit date field (e.g. '98, '99 etc.) to a four assist in the conversion of a particular application digit date field to accommodate the new millennium. If the date field is not expanded, all non-compliant Y2K Estimating the extent of Y2K conversion for given applications will interpret '00 to mean 1900 and systems and application portfolios invalidate all information associated with such a date. Estimating the resources and budget for a Y2K Identifying and changing actual date fields would be resolution the simplest part of any Y2K compliance process. Of importance that is more critical are the secondary date Obtaining Y2K trained resources for a Y2K fields, routines, and sub-routines that populate date resolution fields from a myriad of other fields and input depending on the size and complexity of the application. In all, The last factor is a probably the greatest issue of all. converting systems to Y2K compliance is could be Given the explosive growth of new information similar to rewriting a system in a much shorter amount technology products and services especially those of time. related to the growth of INTERNET services and the replacement of the "Legacy" systems, there exists an extensive gap between available information 1.2 ASSOCIATED COMPLICATIONS technology resources and what is needed to fulfill these requirements. With the Y2K problem, the gap Complicating the resolution process are the following has grown at an exponential rate. Difficult decisions factors: are now being made between development and resolving the Y2K problem in most industries in terms The lack of appropriate application and systems of financial and human resources availability. This is a document especially in the older "Legacy" systems worldwide issue and as reports have stated traditional and even new systems resources for IT personnel such as India and the Philippines may have been exhausted at the time of Correctly identifying all the date fields this writing. The question for most companies and Correctly identifying all the routines which are governments has been and will continue to be what to linked to the date fields do and who to turn to for a viable solution.
416 1.3 Y2K REALIZATION AND ACTUALIZATION the Big Six, the large systems integrators and hardware providers to software companies, the When first confronted with the situation a many a COO, solutions appear to be there. Sorting these out and CFO, or CIO have many responses to the Y2K evaluating various proposals will be the unwelcome, problem. Among the more popular responses are the thankless, and dutiful tasks of management, especially following: when one remembers that the process will lead to "just" a Y2K compliant system. There will be neither "We don't have a problem since all our enhancements nor any measurable advances in the systems are new." proficiency of the system. The only benefit realized will be that the systems will work on January 1, 2000. Assessments on 2- 3 year old open architecture systems have shown that although not as pervasive as older legacy systems, these systems 2.1 APPROACHES AND METHODOLOGY: have had 10-20% of the code not Y2K compliant AVOIDING "MYTHODOLOGY" AND "EMERALD and these systems would also be prone to failure. CITY SYNDROME"
Maintenance agreements supplied by vendors in We will review some of the main approaches, tool sets, most instances do not include clauses for Y2K and methods to implement a Y2K compliance project. compliance. Companies need to have Y2K We will also examine what to avoid and what to compliance in all their warrantees, guarantees, and aggressively pursue. We will examine the role of maintenance agreements with software vendors. "Fuzzy Logic" tools in quickly assessing an This should also include penalties related to application's Y2K compliance and the characteristics of business losses if undiscovered non-Y2K tools useful in converting systems. Tools will be the compliance cause problems after Y2K. In any one of success factors in any Y2K solution given the case, an independent assessment on the Y2K need to overcome some of the lack of trained human compliance of your "new" systems is the best resources and the limited amount of time left to the insurance to really understanding Y2K risk and year 2000. However, tools are not the solution but just vulnerability. part of it. "We have a lot of time before 2000 gets here". Systems are highly complex and many systems As we quickly near the year 2000 and the runway for are not documented well enough to fully implementing plausible approaches or solutions comprehend the Y2K implications.If a company's becomes shorter, the greatest problem will be apathy systems portfolio contains various languages, are and an unconscious hope that the problem will resolve over 10 million lines of codes, and are highly date itself or that some kind of "magic box" will be available sensitive and dependent, that company will have a in a just in time fashion. Although somewhat dramatic very difficult time reaching a Y2K compliance sounding, it is just like the cancer patient waiting for the solution. miracle cure.It is the belief by all of us trying to resolve this problem that the patient must acknowledge "I will be retired by then". Immediately check the he/she has cancer and to what extent before a "cure" retirement date eligibility of all managers in charge can be prescribed and successfully given. The of your ISO function, especially if Y2K action plans essential objective of this presentation is to make the have not been developed. Then take appropriate listeners aware of this potentially fatal problem to their action. respective organizations. If this alarms the reader, we "Someone will provide a silver bullet" (The have just entered the first stage of a potentially extensive but very necessary process. Miracle Solution) Those who understand the problem, its complexity, and the difficulty of becoming Y2K compliant, know that there are no Like the biblical texts, many "messiahs" (vendors) will magic cures or miracles in the offering appear with various solutions that may or may not work. The only true path towards implementing a Y2K solution will be those solutions using a proven 2.A MYRIAD OF Y2K SOLUTIONS PROVIDERS methodology that is flexible enough to accommodate both tools and manual resources. Tools in many A kaleidoscope of solutions, vendors, methodologies, instances are not the critical success factor in Y2K tools, and consulting services are available on the projects.In some instances, it is more efficient in market. Choosing the right combination mix or solution terms of time, resources, and cost to do Y2K projects provider is a taxing and most difficult challenge. From using only human resources than using tools. The key
417 448 Y2K Compliant Applications in Production Y2K Impact nalysis
Parallel Enterprise Testing Systems Portfolio Assessment Pre-Integration
Testing 1
Strategic Program Plan Conversion, Windowing, Bridging Project(s) Plan
FIGURE 1
factor is a strong methodology which can provide Here the life cycle of various systems is determined assurances that the project correctly identifies all to determine the feasibility of immediate date associated fields, plans the project to optimize replacement of such systems and the associated time, and tests (and re-test) the software migration of essential data. Each system in the applications under simulated and real time portfolio is assessed to the viability of entering a conditions. One must always be cognizant that the Y2K conversion or whether to use other techniques existence of any two digit date field in a Y2K to continue its use through utilizing other systems to "converted" system can be highly dysfunctional if not convert its two digit field to four at the user interface fatal to the entire system. Figure 1 is an example of without disrupting the entire systems(s). Tools, an integrated methodology. techniques, and types of human resources as well as cost assumptions are defined in this phase. Some believe that as Y2K Compliance work is 2.1.1 ASSESSMENT progressing that other systems or application improvements can be integrated. This adds more Assessment is the most critical portion of the any complexity and it is not recommended. good methodology. It is here where all the date and associated date fields are identified and lays the foundation for the strategic planning of the entire 2.1.3 CONVERSION project. Basically the size of the problem throughout the entire portfolio is defined. Conversion is the implementation of the strategies and tactics defined in the Planning phase. The 2.1.2 Planning utilization of tools and human resources is implemented with constant quality control and Planning defines the approaches given the size of project management procedures. Critical in this the portfolio, its complexity, the time remaining to phase is the tracking the "live production system" as 000, the amount of resources available, and the to changes in order to insure a smooth integration at maximization of cost reductions within safe limits. the end of the this phase. A pre-integration test is mandatory in order to assure total Y2K compliance.
418 449 SOLUTION TIME FACTOR
(GENERAL)
Portfolio
2 Million
500K To 2 11nierirn Pull Conitersion of Million Alternatives terim Mematives Lines
Less than 2 Million Lines
1998 1999 2000
FIGURE 2
2.1.4 INTEGRATION AND TEST 3. OVERVIEW OF Y2K STRATEGIES
Integration and test migrates and integrates the Y2K Three types of strategies or their combination can be compliant system to production mode. New changes utilized in Y2K projects: that had occurred during the time of Conversion to the live production system are integrated as well as the A.Full conversionAll date related fields are fully data bases. Parallel production is implemented to converted to four digits assure all the Y2K compliant systems function exactly like the non-compliant systems. Constant testing and B.Windowingwere an overlay of windowing re-testing including stress tests is applied until the Y2K technology converts date related fields to four compliant system is clearly functioning within the digits. However, this must be carefully specification of the original system. Post Year 2000 implemented in order to assure that all date fields strategies and maintenance are then planned as are included. This technique is CPU intensive and required. in large systems would increase complexity and maintenance. If you are familiar with systems development methodology and this sounds strikingly familiar, you C.Bridginga technique in which already Y2K are probably right. Y2K compliance methodology is compliant interface applications are bridged to most analogous to systems development methodology. other non-compliant applications. The compliant This should enlighten you further as to the magnitude applications are able to perform the four digit of the solving the problem. One is potentially trying to conversion of two digit date fields without non- re-write a new system in the time left to the Year 2000. compliant system degrading or even crashing the entire application. Again highly complex and must be well planned and executed.
BEST COPY AVAILABLE 419 450 The latter strategies, Windowing and Bridging, are has to be validated with professional human resources. "stop gap" or "Band-Aid" approaches which will enable The greatest benefit of these tools is that they re- system to survive the millennium. The objective is to create missing documentation and/or validate older survive until a full conversion or replacement could be portfolio documentation. successfully completed of all non-compliant systems. Life Cycle of all systems is a critical factor in determining the use of these techniques. 4.MANAGING THE PRICE OF Y2K CONVERSION
A word about tools: Tools are job aides and nothing Y2k conversions will continue to climb. The United more. In some instances they can assist in the States and Europe are probably the highest in cost. At assessment but not be helpful in the conversion but the time of this writing (1997), the estimated cost of can latter be used in the testing phase. Some are converted line of code is approximately $(US) 1.65. geared only to conversion. In some instances a series This will probably climb by years end 1997 to $(US) of tools have to be used in a cohesive manner to reach 2.00. Calculating the price of an entire portfolio is results.In all, tools must be used selectively and are related to the age, size, and time one begins the not replacements for strong methodology. No tool or process as well as to the extent applications are not combination of tools is the "Silver Bullet" to resolve all Y2K compliant. problems. One clear fact in the Y2K experience so far, the output must always be validated by experienced Global prices on the average will steadily climb. human resources. The critical nature of Y2K cannot However, some regions will surpass the global average permit the use of any tool by itself, since at any time such as the United States and Europe since their like all software, tools can be corrupted inadvertently or awareness and use of available resources has misused. Only a methodology that checks and happened much sooner. Figure 3 is an illustration of rechecks results can be used with Y2K work. price trends and their future. Figure 2 illustrates potential planning strategies for various size systems. The point of unavailability simply means that there will be no solution at any price unless there really Triage is simply the term now used for Assessment appears the "silver bullet" which would probably mean and Planning. The significance of this word, which has even much higher prices. Should an unlikely "silver its origins in military MASH units, illustrates the bullet" appear, it is doubted that the prices would be emergency conditions due to time that Y2K projects lower than the projected cost per line and still at that have reached. Interim alternatives provide a minimum late date guarantee that it is doubtful that it could be set of solutions which may permit portfolio to survive trusted to work. the millennium. As we continue in 1998, many of these alternatives will not be available due to time. 4.1 PRICE SEGMENTATION
More words about tools. As stated previously tools Not all the lines of code in a given portfolio will have to are job aides. However, some tools can be utilized in be converted. Some will have to be assessed only, all phases of the methodology by themselves or in while others will have to be converted. All will have to conjunction with other tools. One of the more be integrated and tested. The following percentages significant types of tools now being used are those are a heuristic approach to price segmentation: tools based on fuzzy logic or sometimes called "what if tools". These tools are highly valuable with legacy Assessment and Planning 20% systems or other systems that are not fully Conversion 30% documented. These tools with the use of fuzzy logic Integration 30% establish a baseline for "truth" about the identity, Test 10% redundancy, and pervasiveness of date fields, sub- Again, these are heuristic approaches and the final date fields, and related routines and sub-routines price will depend on your vendors, the time, and the throughout the system. They not only identify the approaches planned. For example, windowing or datefields but in some instances are able to convert bridging may or may not usually be as costly as full (with or without other tools) the date fields to Y2K conversion but given the time frames the expenses are compliance and then are used to validate the fields predicted to be the same. The use of more automated during testing.It should be noted that they have had a tools usually does not affect the price since, as stated 80 to 90% accuracy level, which means that 20 to 10% previously, the results have to be validated with human of datefields have to be done with manual efforts. resources. In any case, Y2K compliance will be a very Also as stated before, the results of any tool in Y2K expensive proposition for all.
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Choose a vendor with the strictest criteria on 5.APPROACHES FOR ASSURING COMPLIANCE references, complete methodology, integrated tools approach, and proven resources to deliver a compliant The following are some of the areas which should be system. Shared Program management is highly followed in order to assure that your company or recommended, but project management should be in government agency assures itself of appropriate Y2K the hands of the vendor with coordination with key MIS compliance: and user group individuals in order to provide critical system knowledge and experience. Start immediately if you have not done so. Establish an executive committee with representation of MIS and In all, the Y2K problem is with us and has to be other executive heads. Empower the individual(s) confronted and solved. Some complete solutions will leading the effort with power to seek the best and least not happen until after the millennium but as mentioned costly approach. some approaches will at least provide temporary salvation. One other note, your organization may need Seek partnership with other companies or vendors of to postpone other capital improvements or MIS Y2K for joint ventures in a potential factory setting developments to offset the costs of Y2K compliance where work disciplines and methodology can be projects. quickly assembled and work begin in an orderly manner.
If you are a government agency, suggest government policies or involvement to assure that the Y2K is handled on a national level.In the United States, both Federal and State governments are coordinating their efforts to assure that the problem does not affect the economic vitality of the nation nor its national security. In addition, governmental restrictions on cross border data flows may have to be suspended in the case where systems have to be outsourced for Y2K compliance projects in other countries where the resources are available to provide such services.
BEST COPYAVAILABLE 421452 The Millennium Effect: Challenges and Opportunitiesfor Telecommunications Carriers
Negba Weiss-Dolev, Group Director, Year 2000 Programme,TELSTRA, 18/242 Exhibition St., Melbourne 3000, Australia. Ph +61 3 96346752, e-mail: [email protected] Koruthu T. John, IBM Global Services, C/-Year 2000Programme, TELSTRA, 18/242 Exhibition St., Melbourne 3000, Australia. Ph +61 39632 1029, e-mail: [email protected]
1. ABSTRACT
Issues arising out of the Year 2000 transition, often referredto as the Millennium Effect, are common to all Telecommunication Carriers. The profile of the industry,being a service industry with a heavy dependence on technology makes Year 2000 a critical andexpensive hurdle for all carriers. Operat- ing in a multi-vendor supplied and supported infrastructure,makes comprehensive compliance and inter-operability testing a technical challenge seldom faced byany industry. Year 2000 issues, while very daunting, offers excellent opportunities for global co-operation. Thepaper also discusses long term benefits that could be derived from a well-run Year 2000Programme.
no longer relevant as CPU performance as well as 2. INTRODUCTION affordability of hardware have dramatically im- proved in the last 30 years; in spite of this,pro- A majority of computer based systems as wellas gramming and management practices focussed microprocessor based embedded control systems on software module re-use seem to have com- use a two digit representation for year in a date pounded the problem. data structure. For example, 1998 is represented and often stored as '98'. This would result the 3. NETWORK IMPACTS year 2000 being represented as '00', leading to an ambiguity in the interpretation of the century as Figure 1 is a simple generic overview of thecom- either '19' or '20' as well as not recognising that ponents of a telecommunication carrier. 2000 is a leap year. While this may seem to bea trivial problem, the implications for enterprisesare enormous, as this ambiguity affects all date sensi- OUSI*SS SUPPORT SYSTEMS tive transactions. Telecommunication carriersare particularly vulnerable due to the heavy depend- ence on complex computer technology and large number of technology vendors, for all aspects of the day to day operation of the enterprise. A reli- able telecommunications service is critical tomany businesses. OPERATtOIVALSUPPORT SYSTEMS ;
The origins of the problem can be traced to the early 1960s. Programs were written with strict Figure 1: A simplified Carrier Architecture guidelines to conserve very expensive internal memory, disk space as well as CPU cycles. Using The switching and transmission elements form the core of the carriers network. Element Managers, two digits to represent year, instead of four,re- sulted in large savings in storage devices, both often supplied by the switch vendors, form the dynamic and static, as well as an increase of CPU next layer. The carrier's Business Support Sys- tems and Operational Support Systems performance. However such considerationsare are de- signed around these, and together support the
422 453 carrier's products and services. Each of these are 3.3 OPERATION SUPPORT SYSTEMS (OSS) discussed in the following sections. Typical operational functions carried out using 3.1 CORE SWITCHING AND TRANSMISSION OSS include: ELEMENTS Configuration Management Alarm/Fault Management The core switching and transmission elements Performance Management operate in real time, and often there is a sense of Accounting Management comfort that these are not impacted by calendar Security Management dates. In fact, real time systems represent dates Each of these functions rely on or generate date with a base date specified by the manufacturer related information. For example Call Charge and an off-set that represents clock ticks from the Records(CCR) typically carry call start (date and base date. Counters that register the offset will at time) and call duration (time interval between call some time overflow, causing the system to either start and end) information. This is used by down- default to the base date or produce unpredictable stream systems for generation of bills. While the results. While this may not happen at the turn of call duration information is used to determine the the century, it will happen at some time based on charge, the call start information is used to sort the the system design. For example most Unix ®1 charges chronologically. Typical CCRs have a based systems employ January 1, 1970 as the two digit representation for years and as a conse- base date and use a 32 bit offset to derive current quence may result in incorrect bill production. time. This scheme is expected to work till January 1, 2038, when the register overflows and may A more real-time, operational problem may affect cause unpredictable system state. Global Posi- the operator's ability to manage the network. tioning Systems that rely on satellites, have al- Typical alarm notifications carry time-stamps with ready been shown to be vulnerable, even before a two digit representation of year. Any ambiguity the century transition occurs. Systems that accu- in dates seen by management function that corre- mulate network traffic patterns for analysis and lates alarm information, will cause severe delays use it to predict and dynamically control bandwidth in restorative actions, degrading network perform- allocation should be examined carefully for date ance as well as availability. sensitive vulnerabilities. Instances have also been reported of configura- The challenge for the carriers is to identify such tion management as well as security management issues among the various elements and have in functions being impacted by century transition. A place an appropriate program for remedial actions. typical scenario, often quoted, is one where the A well run year 2000 programme can once for all security mechanism that checks expiry dates on tackle all such date related issues, even beyond software licences does not recognise '00' and the century date change. thereby locks out users at the turn of the century.
3.2 ELEMENT MANAGERS 3.4 BUSINESS SUPPORT SYSTEMS (BSS)
Element Managers use standard management Business functions supported by BSS include: protocols (eg. CMIP, SNMP, Q3) to manage the Service Activation elements in real time.It is likely that these proto- Service Assurance cols are not impacted by the century date change. Charging & Billing However, the Management Information Base These business functions are date sensitive. For (MIB) may contain date related data.Depending example Activation functions manipulate Customer on data definitions in the MIB , ambiguities in in- Required Date, Disconnection Date etc. Any am- terpretation of current year may result at century biguity in interpretation of dates will result in incor- transition. rect orders being generated and acted on.
UNIX is a registered trademark of X/Open Com- pany Limited
423 434 3.5 PRODUCTS AND SERVICES compliance testing, certification and the deploy- ment of certified systems in the network. The robustness of the products and services of- fered by the carrier is underpinned by the reliability It is to be expected that, in spite of best efforts, of the Network, OSS and BSS functions. Any some residual remediation work will need to be detrimental date impacts on any of these, will carried out post century date change. The pro- eventually have a flow on effect on the Customer gram winds down with a post implementation re- as well as the Customer's business. Carriers are view (PIR), typically scheduled within six months. being asked by Customers to guarantee Year 2000 compliancy in respect of the network serv- 5. POTENTIAL AREAS FOR CARRIER CO- ices and products provided to them. This is not a OPERATION simple undertaking, given the complexity of inter- system relationships and the multi-vendor de- Telecommunication carriers share infrastructure, pendency. depend on each others systems for inter-connect and call completion (for domestic as well as inter- 4. GENERIC REMEDIATION PROCESS national), exchange maintenance, upgrade and billing information, work to international protocol Figure 2 is a schematic of the generic Year 2000 standards and more importantly rely on a common programme process flow. The approach is consis- pool of equipment and system suppliers. Given tent with most Year 2000 methodologies seen to these, year 2000 issues can raise inter-carrier date. teamwork to a new level to meet the common challenge. Co-operative efforts to minimise overall Year 2000 Programme spend, as well as risks, can include, but are not limited to: a common approach to the management of vendor compliancy 0.10010 MANAGEMENT IMOCESSES exchange of year 2000 specific test plans and strategies, and where needed a common Figure 2: The remediation process flow remediation programme schedule sharing of test results on common infrastruc- Initial phase starts with a data collection activity to ture in order to reduce duplication create an inventory of all network equipment and forums to share experiences and approaches systems. All network vendors are surveyed at this Such arrangements can exist at regional, national time to establish the compliance level of their and international levels. products. The analysis phase looks at this inven- tory critically to identify date impacted elements 6. LONG TERM BENEFITS and is used to plan the remaining programme. This phase also involves analysing the business A well-run Year 2000 Programme can offer signifi- risks of failure for each item in the inventory and is cant benefits to the carrier's business, apart from used to develop a risk minimisation plan as well as ensuring that there is business continuity at the drive priorities of the overall program. This phase century transition. By creating an enterprise wide should also deliver a high-level design of the year inventory of all elements and systems, the pro- 2000 compliance solution, generic test plans and gramme is well positioned to rationalise and sim- test cases for the network equipment and sys- plify the carriers technology environment. In most tems. cases, this can also result in better management of valuable network assets. In addition, the pro- A consistent view emerging in the IT industry is gramme can also bring focus to those less well that 60% of the Year 2000 effort will be spent on known, but essential support elements of a car- compliance testing. This is not surprising, given rier's business: security access mechanisms in the complexity of current systems and interfaces. buildings, lifts, air-conditioning, emergency power The third phase of activity covers Year 2000 generators and in general any management func-
424 455 tion based on systems that manipulate or rely on date and time. 7. CONCLUSION
The year 2000 transition will have profound im- pacts on all business that rely on technology and telecommunications carriers are particularly vul- nerable. While the challenge is daunting and the time to act is getting shorter, there are unprece- dented opportunities for inter-carrier co-operation. A dedicated Year 2000 effort can bring tangible benefits to the enterprise well into the next cen- tury. 8. REFERENCES
[1] Bellcore (1996). Year 2000 Generic Re- quirements: Systems and Interfaces. GR- 2945-CORE [2] Chaabouni, Moez (1997). A Framework for Testing Year 2000 Application Conversions. In paper archives at http://www.year2000.com. [3] De Jaeger, Peter (1997). You've Got to be Kidding! In paper archives at http://www.year2000.com. [4]Bellcore (1996).Is Your Network Ready? Bellcore whitepaper.In paper archives at http://www.bellcore.com [5] Blau, John and Johnston, Chris.(1997). Phone System Braces for Bomb. Communi- cationsweek International, 2nd June.
425456 Creating Competitive Advantage for Telecommunication Operators Using the Internet for Self Help
Graeme Crayford, Director, Solutions and Technology, Communications Industry - Asia Pacific, Oracle Corporation Singapore 1. Abstract
This paper reviews the application of Self Help concepts within the communications industry. In particular the paper will focus on the opportunity for incumbent and new operators to tap into the explosive growth of the Internet and Intranets to provide Web-based customer support.
2. Background 2.2 Key issues Systems are supposed to provide cost reductions, The advent of de-regulation and competition in the Asia efficiency, speed of competitive action or response on Pacific communications industry has brought significant product and price offerings, process improvement and challenges to both incumbent and new carriers alike. integration, improved internal and external Both have sought to improve internal productivity, communication, improved billing, fraud and credit reduce operating costs, improve customer service levels control and a host of other benefits, which all contribute and dramatically speed up time to market. to competitive advantage.
As the operating technologies are reduced to commodity However, experience shows that there are four areas that levels, competition is based on providing excellent any new systems approach needs to focus on to achieve customer service. Thus both incumbent and new carriers real - and timely - success by enabling the delivery of need customer-centric systems to support their key excellent customer service: investment and operational business objectives, The ability to not only respond to competitor activity especially the delivery of the exceptional customer but also to pro-actively set the market pace. service which is the key market differentiator. The ability to incorporate new systems requirements flexibly and rapidly. Many services like mobile phones are offered to A cohesive systems architecture that will support the consumers indirectly by external organisations such as business objectives as they change over time. dealers. Connecting these organisations to, service Integration of all systems to enable the business to be activation systems using self service technology is also a truly customer responsive. high priority. These requirements become even more crucial when 2.1 Purpose and Scope operators move to provide automated Self Help to their The paper sets the context by examining some key trends customers and distributors. in the telecoms market, trends that not only exacerbate current competitive pressures and needs for change, but go much further, in breaking down traditional approaches 2.3 The Networked Society to the delivery of customer service. The way we do business, learn and conduct our lives is changing as a result of the convergence of computing, The paper then outlines how Oracle is working with its communications and content. Universal access to vast key telecoms customers in the Asia Pacific Region to quantities of information and sources of goods and help them link their internal business processes with services is creating a global electronic village and those of their key customers, suppliers and distributors to bringing with it a new economic order, indeed, a create greater customer intimacy. radically new economy, based on a networked society. 457 426 Computer Telephony Interface (CTI) rapidly converging to thrUst Web-based customer service Telcos have been experimenting with, and implementing, and support to a position of elevated priority within the CTI based applications. An example of the use of CTI service strategies of telecom operators. These include: technology is with customer service management The widespread, rapid growth of the Internet, World systems, used by telecommunication companies Wide Web, and corresponding user base have throughout Europe and England, that care for everything mandated that companies create a Web-based from order taking to billing for such services as call presence via home page sites for informational, waiting, call barring, and 3-way calling. In some marketing, advertising, service, support, and other companies, the CTI portion of the system is accessible purposes. only by a service representative; several other companies Customers have an increased reliance upon have added front end IVRs to the system to allow the communication facilities and their uninterrupted customers to activate and de-activate their own services availability. using a touch-tone telephone. Customer frustration with ineffective and/or overloaded customer service phone support systems Internet Services and Electronic Commerce that are unable to deal with the flood of incoming Web sites are being used much more frequently to inform calls efficiently; compounded by high support costs, and educate customers about product and service staffing, and logistical issues. offerings and provide fax on demand. The Internet is Rapidly shrinking product life cycles that produce also an ideal platform to provide customer support. increasingly frequent waves of new services and Traditionally, customer service personnel are typically features to be absorbed by users, create reached via an 800 toll free number after a customer is corresponding increases in demand for support, put on hold. The Internet offers a more efficient way to education, training and consulting services. provide this first level of customer service. The customer Technological enhancements in the areas of could access a company via the Internet and if the telecommunications equipment, multimedia problem cannot be solved by the customer finding the capabilities, intelligent software, database information at the company's Web site, a live customer applications, and Web site features and functionality service representative comes online with a solution. have made Web-based service and support more attractive. Another key advantage of Internet-based access is the Global competition and related pressures have made ease of linking internal users as well as external users to online support a necessity. existing information systems. Some telcos are marrying a Web browser and a search capability to their own The external Web site can be the one central repository systems and allowing agents to quickly access where all corporate knowledge is collected and displayed information about the availability of network facilities. for all to see as common problems are identified and They also indicate that the time to develop this type of resolved. For possibly the first time, a company can application is significantly less than with traditional develop a visible and pro-active corporate memory for development methods. each customer.
This mechanism is perfect for distributing rapidly The successful companies will ultimately be those that changing information such as mobile phone coverage are able to understand the needs of their customers and maps, White and Yellow pages information.In fact, utilise emerging technologies and service methodologies because of keyword searching and the ability to link the to meet those needs, gain correspondingly stronger information to maps and other Web sites on the Internet customer relationships, and ease or eliminate the burdens these systems can easily be made to be more functional and frustrations normally associated with providing and preferable to the books and brochures they replace or customer support. These service providers will augment. personalise their service, make it easy and convenient to access and use, and price it competitively in relation to 6. Issues in Web-based Customer Service more traditional forms of support and Support 6.1 Web-based Self Service Strategy The marketing, offering, and distribution of customer Telecom operators strategies and positioning for Web- service and support over the World Wide Web is a based customer support services for the next one to three relatively new phenomena. A number of factors are years generally reflect the following themes:
427 458 3. Challenges In fact, in the network economy the customer can be put to work by accessing these large databases of information. Customer service is all about giving In this environment of change, telecom operators, old and customers access to the necessary resources to get the job new, need above all to be flexible in order to adjust to done. There are many examples on the Web across what is still an emerging new order. The work that industries, such as Federal Express, that are now being Oracle it is doing with operators in the Asia Pacific applied to Communications. However, the systems are region is focused particularly on four areas: often much more complex and the applications such as customer provisioning are considerably more challenging Time to market for new products and services then most of the current Web applications. Competitive markets demand new innovative product packages. Product cycle times are reducing and mass- Financial Management and Reducing Operating customisation of products is becoming the norm, while Expenses end-user business units and their customers are Price competition is eroding product and service increasingly frustrated with constraints imposed by contribution margins and current high levels of fixed and existing systems and business processes. At the same allocated costs make it difficult for existing operators to time, management is increasingly concerned at the cost achieve a cost base that is competitive with the new start- and delays associated with in-house systems development up operators. This is exacerbated by the resource and the resultant proliferation of stand alone product wastage associated with high levels of rework and specific systems. inadequate internal controls that also make it difficult to comply with audit and reporting requirements. Self Increasingly, in a networked economy the consumer will Service is all about cost reduction without lack of expect even large organisations such as telecom customer service. These two rarely go hand in hand. operators to treat them as an individual and to adopt one- to-one marketing strategies to proactively meet their needs. 4. Solutions and Approach
Maintaining market share in the face of increasing In order to remain competitive, telecommunications competition organisations are increasingly being required to support Telecom operators have a wealth of information about flexible and changing business processes and to reduce their customers securely locked away in multiple the costs and limitations imposed by diverse application transaction processing systems. However, while the key and technical architectures. Information needs to be to accurate market segmentation and customer profiling shared both within an organisation - between marketing, is gaining access to accurate customer data, the current customer service and networks for example - and customer data is often inconsistent due to the multiplicity increasingly outside of it, with customers and partners of customer management systems. Telcos need a 'whole both world-wide and nationally. of customer' view including all their product and service usage across all networks. Ultimately they also need to In addressing these challenges, telecom operators understand which customers are more profitable. increasingly are approaching their business systems holistically, rather than in isolation. They are taking a Providing excellent customer service for competitive number of steps, including: advantage Sharing the business problem with selected vendors to gain from their experience instead of relying As communications infrastructure and facilities become a exclusively on in-house thinking. commodity, the key market differentiator is customer Reviewing data requirements of the total enterprise service. Current systems generally provide an using tools such as the Oracle Enterprise Data Model inconsistent view of customers and the products and (a component of the Oracle Telecom Enterprise services they utilise. This coupled with customer dissatisfaction with multiple hand-offs and high levels of Information Architecture). rework, highlights the need to provide a 'one stop shop' Reviewing critical business processes to ensure they approach and to 'get it right the first time'. The focus are adequately supported by appropriate information must be towards providing integrated product packages systems. with consolidated billing and away from discrete Identifying quick win niche solutions whilst working products with 'simple billing. on longer term integrated solutions.
428 459 Surrounding existing legacy environments to provide Candidate applications for Self Service include the increased flexibility without the need for wholesale following: replacement strategy (incremental change). Extending internal business processes to include IVR for Consumer Customers customers, suppliers and distributors through the use account balance, status inquiry, payment options Web-based technology. requests for bill reprints inquiry to customer loyalty programme To address the challenge of market share maintenance, self provisioning of simple service many telecom operators are implementing common front- end systems for all customer facing staff, to give them faults inquiry access to all relevant information in real time to support Internet for Dealers and Corporate Customers dialogue with the customer. Some are also extending access to these front-end systems to provide key initiate work request and track progress customers and distributors with direct electronic access. service enquiries, customer feedback product and service information 5. Self Service in the Communications electronic directory service (white and yellow pages) central office feature orders (Centrex, call-waiting, Industry call-forwarding, 3-way calling) adds/moves/changes 5.1 Background view, analyse and process billing data The purpose of this section is to review communications electronic data transfer of billing information company experiences with Self Service and to provide billing enquiries, bill status, analysis and payment insights into key trends that will impact future Self fault reporting and testing Service initiatives. trouble report tracking service centre call routing Self Service refers to the ability of an individual to electronic commerce conduct a transaction with a provider of service without dealer management reporting the intervention, in whole or in part, of a service representative. Communications companies in the Internet for Consumer Customers United States and Europe have been experimenting with "flagship" service Self Service technologies and applications for over ten full automation and reporting years. catalogue shopping, product information and guides, enquiries and purchase Early enabling technologies of Self Service include billing enquiries, status, analysis, payment approval Interactive Voice Response (IVR), voice recognition, and touch screens. More recently, technologies such as PC's, Computer Telephony Integration (CTI), and Internet- 5.2 Experiences with Self Service based access are enabling further advances in the field of Applications Self Service. It is generally true that these and other technologies are being used more aggressively by other Interactive Voice Response (IVR) industries, such as banking, retail, airline, travel, and Telcos are increasing the efficiency of their residential insurance. customer service centres by up to 20% by re-routing misdirected calls, through the use of an IVR-based menu As enabling technologies evolve, Self Service at the beginning of the call. Further productivity applications are becoming more widely available, usable increases are being realised with the use of CTI that and acceptable to most segments of the population. retrieve and present customer information to the service Telcos report benefits such as service centre cost representative at the same time the call is answered. reduction, productivity improvements, increased market penetration, increased levels of customer satisfaction. Many telcos are using IVR based applications to allow Individual Telco customers report benefits such as customers to report troubles. During the course of the greater schedule flexibility, shorter transaction time, and transaction, the application conducts various line tests access to more information. on-line, so that by the time the call reaches a repair technician, simple options are already addressed and eliminated.
429 460 Business Model Enhance Customer Relationship Improving the business model generally involves Companies are rediscovering the critical importance of concerted efforts in the areas of marketing, operations, simply talking to their customers and understanding and finance. customers' needs and requirements on a very deep level. Service provider tactics for achieving a stronger bond From a marketing perspective, service providers are with their customers involve operational and service intent upon becoming more efficient and effective at delivery improvements, the proactive setting and marketing Web-based customer service and support management of customer expectations, and strategic services to both existing and potential users. In some partnering with customers to become an extension of cases, the objective is to make the customer more aware their operation. of what the company offers via the Web. In other cases, the strategy involves either a planned shift of a certain 6.2 Innovation and Speed of Response percentage of support from the phone to the Web, within To achieve these general strategies two factors are a particular time frame. critical to success: Fostering innovation is considered a primary factor From a profitability position, service providers have critical to success for improving and enhancing Web- mixed views regarding the current performance of their based customer service and support. It is also critical support operations. The short-term view favours utilising to identify specific enhancements that incorporate Web-based support to maintain overall customer service user feedback throughout the innovation process. and support levels, whilst breaking even (or potentially Speed is a critical factor in attracting customers to, losing money) on the Web operation. The rationale for and delivering, Web-based support. Because this approach is that Web-based support is a long-term resolving problems is not a value-added activity for investment that will eventually yield long-term payoffs. most companies, users will use Web-based support Service Model only to the extent that it is faster and more efficient than phone support or other methods. Fast system Improving the service model generally involves the performance from a technological sense, combined following initiatives: with fast response time to user queries, is the key. Foster greater personalisation and inter-activity. The Integration of all forms of service is vital, the current Web-based model is built on a response customer activity log must transcend IVR, Telephone model concept in which a customer contacts the and Web Self Service systems. service provider when they have a new service need or a problem to fix. The newer model involves greater proactive communication and prevention that 7. Self Service Business Drivers are exercised on a continual basis in accordance with the customer's profile and preferences. 7.1 Corporate & Large Business Customers Increase customer self-reliance. Customer self- Providing Internet/Intranet access for provisioning by the diagnosis will be considered the first line of support Corporate and Large Business market will pave the way in the future. It will therefore be necessary to provide for earlier adoption of electronic commerce, and will customers with access to more information, features, also: functionality, diagnostic utilities, and access choices Ensure `around the clock' access to Telecom services to foster customer participation and problem thus allowing Corporate customers to quickly expand resolution success. key service elements Integrate services provided. As currently structured, Eliminate the need to `hold' for a Customer Service services are often provided to the customer in a Representative for simple and repetitive tasks disjointed manner. Greater consistency and leverage Provide self provisioning of configurable services, eg. would accrue from a more integrated approach. Centrex Evolve with the technology. Web-based support will Improve the reality or customer perception of service continue to improve as its enabling technologies quality improve. Examples include the move from Enhance brand image of the telecom operator as client/server to network computing and the use of PCs being in the 'leading edge' of service providers within as a conduit for voice and video communication. their market Encourage billing and payment by electronic media thus accelerating revenue collection
430 461 7.2 Business Customers & Dealers Small businesses and, most specifically, Dealers will benefit from the expanded access to the telecom operator's core processes through the Internet/Intranet. With the shift world-wide to electronic forms (thus eliminating paper-based communication) and automatic flow through service activation, simple configurations can be best provided by the Internet/Intranet access model.
This increases customer satisfaction and loyalty by: Increasing the pace of transactions from the Dealer Phase 1 Phase 2 Phase 3 network Internet Generations Increase the end-user's satisfaction with the purchased service as the end-user can obtain Fig.1 Evolution of the Internet `immediate' activation before leaving the Dealer's premises The impetus for Network Computing Architecture came Allowing the tracking of work in progress from from two different sources, what we will call the Dealers Developer's Dilemma and the Business Dilemma. Ensuring 'around the clock' access to telecom services by both Dealers and Small Businesses Developer Dilemma Eliminating the need to 'hold' for a Customer Service Representative for simple and repetitive tasks The Developer's Dilemma involves an increasing choice Improving the reality or customer perception of of incompatible standards, tools and technologies. service quality Technologies such as HTTP/HTML, CORBA, HOP, Enhancing brand image of the service provider as ActiveX, DCOM, Java, etc. offer unique possibilities for being in the 'leading edge' of telecommunication enhancing developer productivity or providing new service providers within their domestic market, and capabilities to users, but which technology should I internationally. support ? Ideally what I want to be able to do is to leverage the best of each environment with relatively 7.3 Consumer Customers little compromise. In the short term cost containment objectives in the Business Dilemma consumer market are more likely to be met by the introduction and expansion of use IVR technology and The Business Dilemma comes from the problem of how by integrating IVR functionality with the core customer to adapt new technology to real business applications. support business processes. How do I take advantage of the benefits of new technologies whilst still maintaining my significant 8. Network Computing Architecture investments in client/server and legacy environments?
8.1 The Networked Society and Network Network Computing ArchitectureTM is a common set of Computing Architecture technologies that will allow all PC's, Network Computers and other client devices to work with all Web The explosive growth of the Internet and Intranets has servers, database servers and application servers over any provided a common global infrastructure to fuel a network. Network Computing Architecture is the "networked society" that spans individuals, small productisation of Oracle's vision for network computing, businesses, governments and multinational corporations. and will help companies protect their technology The maturing of this infrastructure (see Fig. 1) signals a investments by allowing mainframes, client/server, new phase of network computing that involves real Internet and Intranets, and distributed object software to business transactions, data-driven multimedia content and work together. interactive information access via self-service Web applications.In response to this phenomenon, Oracle announced Network Computing Architecture (NCA), a comprehensive, open, standards-based software platform.
43 4 6 2 8.2 Three Tier Architecture applications obviating the need for wholesale replacement of legacy systems. Oracle's open Network Computing Architecture (see Fig. 2) is based on a three tier architecture: Key components of Network Computing Architecture Universal Client which can be any device ranging are: from an Network Computer to a PC "Pluggable" objects called cartridges that are Network based Application Server manageable and provide extensible functionality Network based Universal Data Server Open protocols and standardised interfaces that enable communication among cartridges through a software bus called Inter-Cartridge Exchange Extensible clients, applications servers, and database servers.
8.3 Enhanced TV In the consumer environment, blending the traditional television experienced with the capacity of the Web to provide online chat sessions, electronic program guides, email and even electronic commerce will be the bridge that enables the bulk of consumers to cross into the online experience from their couch. Hence, they will also have easy access to Telecom Self Service applications. Enhanced TV is the set-top box of the past but with the ability to seamlessly run the content standard of the future - the Internet. These low-end Network Computers or NC's will link each household to Telecom provided Fig. 2 Network Computing Architecture services and beyond. This approach which involves hosting the application and 9. Case Study data on network servers rather than on the PC client, enables thinner clients to be deployed compared with traditional client-server two tier architecture. As well as 9.1 Introduction requiring less expensive client devices this configuration The commercial pressure for Self Service is growing and is expected to be much easier to manage. Preliminary is different for the Corporate, Business and Consumer estimates by Oracle indicate overall savings of the order market sectors. Corporate customers demand improved of 50% to develop and deploy an application using NCA service quality and reduction in transaction costs. compared to an equivalent client-server application. Business customers and telecom dealers need improved sales effectiveness through screen-based Self Service and By supporting Internet Web standards as well as paper-less, electronic commerce. Telecom operators' traditional client-server Graphical User Interface (GUI) Call Centre costs need to be contained while maintaining standards, NCA also enables existing applications to be customer satisfaction. Web enabled and delivered via the Internet to telecom operators customers, suppliers and distributors. This 9.2 Technical Architecture enables operators to extend their business processes to A systems architecture (see Fig. 3) is required that: incorporate their entire supply chain (electronic Supports multiple access methods commerce). Records Self Service transactions regardless of access method (eg. Customer made a Billing Inquiry using NCA is intended to complement the existing legacy the Internet/Intranet) computer environment by providing linkages to existing Reuses existing or planned business functionality and applications and data running in this environment. That data by multiple access methods is, NCA can be used to not only develop new Reuse of the same technology for Self Service as for applications but to complement and extend existing Customer Service Representative lead sessions
432 4 (33 Recognises the unique abilities and limitations of Oracle views the technical architecture requirements for each access method. Self Service as a component of the telecom operator's Provides for the integration for multiple access corporate architecture. The Self Service access methods requirements do require additional architectural Reuses models for analysis, design, and build that components. These are additive to the telecom enforces consistency while minimising the unique operator's Enterprise Information Architecture. access method impact on core systems. The following is an example of how Self Service capability can be added for an existing major Oracle client in Asia Pacific. Sales/Services Sales & Access Services Network Method Information The architecture (see Fig. 4) illustrates how the Functions implementation of self-service enables the telco to leverage it's investment in existing and planned front haat UM I Send. office and back office systems. Ilftort,_ Moor_ Advation 1111**M.1,MO*
Fig. 3 Oracle's Self Service Context Model
Inter,ifeer, (Pa611e)
Sales and Service Access,: : Web Server
Saies and -Front Office'S jrstem Service Functions
Network FielcFForce Data = Activition Maiiiigement;Warehouse
Fig. 4 Self Service Systems Architecture
433 BEST COPYAVAILABLE 4 6 4 Consumer and Business Fault Centres. All these 9.3 Internet Access solutions will be fully integrated into the Self Service environment. The IVR option will fully leverage the The first option extends the Self Service solution to the back-end services generated using the Oracle Designer Internet for consumer access. This option generates 2000 repository. HTML front-ends that are rendered by standard browsers and the necessary business services on the back-end through the use of the Oracle Designer 2000 repository. 10. Critical Success Factors The generation techniques used in this option_allows for immediate deployment of existing applications with little Based on IDC's review and analysis of the Web-based or no re-development efforts. The entire solution is customer service and support market, the following based on proven Oracle products and is compliant with observations are made regarding service providers that the Web browser technology available today. Such a are currently employing, restructuring, or contemplating solution is small and light-weight yet scaleable and Web-based support initiatives. secure. 10.1 Know Your Customer 9.4 Intranet Access The practice of knowing and understanding the needs and In this approach, the Oracle Web Forms interface will be requirements of your customers is critical. The primary used to front-end the Self Service solution. Custom reason being that the "answer" may differ from service designed forms based on Oracle*Forms technology can provider to service provider, product to product, and be generated with minimal development efforts through customer to customer. The needs of a home-based Designer 2000 and deployed over the Internet/Intranet. business having trouble with a particular communication The generation capabilities in Designer 2000 are service will be totally different from those of a Fortune currently being used in many client engagements to 500 company. generate Oracle*Forms front-ends in a client-server architecture. The generation techniques used in this Accordingly, the successful providers of Web-based option allows for immediate deployment of existing services will seek to understand thoroughly the breadth of applications with minimal re-development efforts. The their customers' unique needs. Furthermore, the entire solution is based on proven Oracle products and is outstanding provider will anticipate them. Methods for compliant with the Web browser technology available achieving this understanding include: today. Talk to your customers at the time of a phone support incident. Create a process to make them aware of 9.5 PC/LAN Access available Web support options, perhaps by talking them through a Web-based application. A system is currently under development by Oracle for use by Customer Service Representatives of the client. Conduct focus groups and surveys via Web-based Oracle's Designer 2000 technology is being used in this forums. Offer incentives, such as product discounts, project to generate Oracle*Forms front-ends and back- in exchange for participation and valuable comments. end business services in a client-server architecture. Place renewed emphasis on the "feedback" button on Also, as a part of the project the relevant business rules your support page. and models are being maintained in the Designer 2000 Embrace the emerging practice of customer profiling repository. The entire solution is based on proven Oracle to individualise, personalise, and customise the user's products and the same architecture can be extended to the experience with your Web-based support (ie. one-to- development of Self Service solutions. one marketing). Gather as much meaningful intelligence as possible 9.6 IVR Interface from your site and use it to add value. Currently, the client operates a simple IVR-based product By thoroughly understanding what you are trying to information service for cellular customers. On a larger achieve with your Web-based support (ie. who you are scale, the client has commenced work to pilot an IVR trying to satisfy and how), your efforts will be centred service to residential customers. The pilot will around the most important growth principle and should effectively add-on to the existing hardware and processes yield positive results. and will offer a limited set of services. The client is also developing an IVR/CTI solution concurrently for the
434 465 10.2 Emphasise Your Strengths Support wizards, which are smart software utilities As the business world continues to award survival, designed to walk customers through a problem, step growth, and prosperity to highly focused organisations, by step can be provided. renewed interest is being placed on the idea of All the successful companies on the Web, continue to concentrating on your "core competencies." This innovate their offerings by launching a set of strategy is based upon realising where you provide the functionality, quickly listening to the needs of the most value to your customers and concentrating your their initial users and then responding with more resources in that direction. target features. This is not the environment to plan a big bang functional system delivery in two years. Instead of dealing with problems after they occur, focus This is the environment of interactive development on preventing them to begin with: and deployment. Emphasise quality control. As product life cycles continue to collapse, substantial pressure is placed on Over time, consumers will be drawn to online service providers to add features and functionality communities where a variety of their needs are met. rapidly, despite the potential to launch an unreliable Capturing this sense of community in all your self product. By committing more resources to preventing service activities is paramount. problems, customer experiences with the product will be better, and "service provider induced" support The primary strategic benefit of such an approach is that calls may be reduced. it assists in removing the elements of frustration and fear Produce enhanced smart utilities. Diagnostic utilities, in support situations by simplifying and humanising smart software, and automated help features possess them, correspondingly strengthening the bond between the functionality to diagnose problems and assist in customer and service provider. their repair at reduced levels of human or technical support involvement. These utilities will reduce both Web and phone-based support volume, providing 11. Conclusions service providers more time and human resources for creating value-added product. All telecom carriers need to equip themselves to meet the challenges and customer needs in the radical new Explore opportunities to collaborate with other parties business environment in the emerging networked that can add value to your Web-based support and vice economy. versa. Potential arrangements could involve outsourced Web support site development and ongoing maintenance, Web-based support represents an enormous opportunity data warehousing collection and analysis, and cross for service providers to fulfil support services in the most advertising and promotion via hot links with partners and efficient, effective, and personalised manner possible, affiliates. The common thread is that, in an increasingly while materially reducing the high support cost structures specialised world, these activities may be better associated with personnel-intensive phone operations. performed by specialised companies. The Web represents a unique sales and marketing channel and because of its bi-directional nature it can 10.3 Keep It Simple foster and build customer loyalty through engagement Although the technologies and systems underlying Web- and response. The ability to remember customers' based customer support may not be simple, the customer preferences and characteristics and to respond experience must be. The reason is that despite service accordingly introduces an intimate quality into the nature provider hopes and dreams to "create" a more self-reliant of the relationship between the operator and the customer customer, busy customers are reluctant to put much or dealer. energy into finding solutions to their problems on their own if they find that solutions are not forthcoming and Web-based Self Help offers the prospect of a quality one- that substantial time and effort have been wasted. to-one relationship which puts the focus on maximising the share and value of each customer's business. A more realistic approach is to structure a balance between self help and human help from a customer The challenge is to create a Web-based experience that is service representative. This means building ease of use, powerful, compelling and responsive for the customer responsiveness, and human interaction into the support tools and processes:
435466 China Telecom Deregulation: Market Realities and Future Trends
Hui Pan Chief Economist and Director of Asian Markets Information Gatekeepers Inc., USA
Abstract
The telecom market in China has experienced tremendous growth in the last several years. However, the Chinese market still remains highly regulated and foreign companies are barred from provisioning telecom services. This paper provides an overview of the regulatory structure of the MPT, the new competitive environment and future prospects for telecom deregulation in China.
1. Introduction Another area of rapid growth is mobile and data communications. As of November 1997, China The telecom market in China has experienced has more than 13 million cellular subscribers. tremendous growth in the last several years with The GSM network provides automatic roaming annual growth rates of over 40 percent since 1990. with 22 mobile networks in 18 countries and According the 9th Five-Year Plan (1996-2000), the regions including France, Germany, Finland, Ministry of Posts and Telecommunications (MPT) Sweden, Switzerland, Italy, Spain, the will invest a total of US$60 billion during the five- Netherlands, Australia, Turkey, Indonesia and year period before the end of this century in its Singapore. The number of public data posts and telecom infrastructure development. communications service subscribers has That translates into an annual spending of US$12 increased from 3,000 in 1993 to 300,000 as of billion, and the majority of that investment is in July 1997. The Internet has also become the telecommunications. information highway linking China with the world. The large investment has brought about great increase in the telecom network capacity and One of the major reasons behind this rapid telephone penetration rates. By the end of 1997, growth is the introduction of some degree of the public switched telephone network (PSTN) in competition in China's telecom sector. The China is expected to reach 115 million lines, forming of the second telecom operator, China ranking second in the world after the United Unicorn, is a major step in telecom deregulation States. Telephone in China. Even though China Unicorn is much penetration rates had reached 7.3 percent by smaller in size and capability, its entry or the August 1997 and is expected to reach 8 percent by threat of entering into some markets, has year's end. The total length of fiber optic cables prompted the MPT to take actions, sometimes amounts to 820,000 km, of which 150,000 km are unfairly, to compete for customers. The inter-provincial backbone trunks. When the project deregulation of value-added services such as of the Lanzhou-Xining-Lhasa fiber optic trunk is paging and VSAT has led to fast growth of completed in 1998, the fiber optic backbone these markets as well. network will reach all the provincial capitals and over 1,300 cities at and above the county level. Even though foreign telecom equipment Five international fiber optic links between China vendors have reaped the benefits of the and Japan, the Republic of Korea and Russia have telecom growth by selling equipment, the been completed. China has also participated in the telecom service market is still closed to foreign construction of the China-US Cable, TAE, South competition. The MPT has been able to finance Asia, SE-ME-WE 3 and FLAG fiber optic cable the rapid growth by charging customers very projects. high telephone installation fees and relying on
436 467 domestically raised capital. With intensified telecommunications industry. It is responsible competition from China Unicorn and increased for the macro control of the nation's posts and pressure from foreign companies and governments telecommunications industry, making overall for greater liberalization, the MPT may have to plans, coordinating projects, and supervising allow greater participation of domestic and foreign operations. It exercises centralized control over companies in telecom services. the nation's public communications networks and markets. The following sections will focus on China's regulatory structure, the MPT, new competitive The MPT has 12 departments at its Beijing environment and prospects for further headquarters. The following are the main deregulation. departments: Department of Policies and Laws, Department of Telecommunications Administration, 2. The Telecom Regulatory Structure and Department of Planning and Construction, the MPT Department of Science and Technology, Department of External Affairs, and the China's telecommunications industry operates Department of Finance. under a hierarchical structure with the State Council at the top, the commissions, ministries and The day-to-day management and provision of provincial governments in the middle, and some services are the responsibility of the Directorate 2,500 post and telecom administrations and General of Telecommunications (DGT) or China enterprises at the provincial, municipal and county Telecom. DGT officially registered with the levels making up the base, with a division and State Industry and Commerce Administration overlapping of functions in policy, planning, Bureau as an enterprise in mid-1995. This was manufacturing and services. The Ministry of Posts a move in the process of separating the DGT as and Telecommunications (MPT) serves as the the operator of the nation's public telephone central pillar of this structure, with the authority network from the MPT, the telecom regulator. from the State Council to oversee and manage the Even though the DGT has moved out of the day-to-day workings of this sector. MPT compound at 13 West Changan Avenue to a new building in Beijing, its authority as the The State Council is the highest organ of state official national operator is still constrained at administration. The State Council, the State present. The national long distance network, Planning Commission (SPC) and the State including the three international gateways, are Science and Technology Commission (SSTC) are actually operated by provincial and municipality in charge of general policy making. The National PTAs which hand their revenue directly to the Five-Year Plans outline the goals to be achieved in MPT. The DGT does not own any telecommunications by the end of the plan. These telecommunications assets. The provincial plans are produced by the State Council in PTAs report directly to the MPT. They are consultation with the SPC and the SSTC. On the parallel administrative organizations with the other hand, the SPC asks the MPT for input in DGT, not its subordinate operators. The long- setting up the medium and long-term development term goal of the government to transform the objectives for the telecom industry. Once the MPT into an US FCC-type (Federal objectives are set, the MPT devises annual plans Communications Commission) regulator and to meet that goal. As part of that process, the MPT the DGT into an AT&T-type operator will take in turn sets goals for the provincial posts and time to realize. telecommunications administrations (PTAs). Recently, the MPT has drawn a lot of criticism The Ministry of Posts and Telecommunications over its double role as the nation's telecom (MPT) is a functional department under the State regulator and the de facto operator. Most Council governing China's posts and complaints have come from China Unicorn, the
437463 new second operator, especially before its gaining distance services. Relying on the extra capacity interconnection for its GSM networks with the of the dedicated networks for railways and MPTs networks. Unicorn argues that the MPT power, China Unicom is installing long-distance cannot be an impartial judge when its own team is backbone networks via fiber optic cables, playing against others in the field. Unicorn's microwaves and satellites. The local network argument was not without a reason. In fact, the projects are underway in Tianjin, Chongqing MPT has allegedly tried to use various excuses not and Sichuan Province. The local network in to interconnect Unicorn's mobile networks with the Tianjin was put into trial operation on July 19, MPT-controlled public telephone network until the 1997. State Council put pressures on the MPT for interconnection. As the only company in China with a mandate to compete with the MPT in offering telecom Even though the MPT is undoubtedly the most services, China Unicorn has attracted a lot of important player in China's telecommunications interest from foreign companies and investors. sector, the competitive scene is changing gradually Unicom has worked successfully together with in the last three years with the establishment of Bell Canada International, Siemens of China Unicorn and the entry of other competitive Germany, Mitsui of Japan, Sprint, France service providers such as Ji Tong Communications Telecom, Korea Telecom, Daewoo of Korea Company. and STET of Italy. In the last two years, China Unicorn has raised RMB9 billion (US$1.08 billion), 70 % of which is foreign capital. 3. New Competitive Environment and China Unicorn The establishment of China Unicorn has brought great changes to the domestic telecom In order to introduce competition in the telecom market. Even though Unicorn's network sector, the Chinese government approved the capacity and subscriber base are very small establishment of China Unicorn as the second relative to the MPTs, competition has sped up telecom operator. On July 19, 1994, with the telecom development, improved service quality approval of the State Council, China Unicom was and decreased prices. The consumers are the officially established with the Ministry of Electronics clear beneficiaries of market deregulation. Industry, the Ministry of Electric Power and the Ministry of Railways as the major shareholders. 4. Prospect of Further Deregulation This was an important decision that marked the end of the near half a century monopoly that the Even though the introduction of limited MPT held in China's telecom industry. competition in China's telecom market has generated undeniable benefits to the Since its establishment, China Unicorn has made consumers, the MPT and the Chinese some progress in providing telecom services, government have been so far reluctant to open especially in mobile and paging communications. the telecom service sector to foreign By October 1997, China Unicorn had already competition. One of the reasons given by the started the construction of GSM mobile networks in MPT for not allowing foreign investment in the over 100 cities with network capacity of more than telecom service sector is the current lack of a 2 million users. Interconnection with MPT telecom law to guarantee fair competition. The networks has been achieved and the Unicorn GSM ability of charging high installation and network has over 330,000 subscribers. China connection fees for both fixed and mobile Unicorn's paging network began wide area paging phones by the MPT to finance network services in 10 cities in China in September 1996 expansions has also led the MPT to believe that and had 400,000 subscribers by October 1997. In foreign participation in network operation is not addition, China Unicorn has constructed tandem necessary. However, both of these factors are offices in over 37 cities for the provision of long changing.
438 469 The telecom law has been drafted and is believed to be released soon. The intensified competition between the MPT and China Unicom has led to continued decreases in prices, which is cutting into the MPT's profits and ability for self financing. In addition, China is bidding to join the World Trade Organization. On his visit to the United States in October, 1997, Chinese President Jiang Zemin has indicated that China will sign the International Technology Agreement. This will force China to further liberalize the telecom services market.
5. Conclusion China has abolished the MPT monopoly in telecommunications by establishing the second carrier, China Unicorn. Even though competition has been introduced in the telecom market, foreign companies are still not allowed to operate telecom networks in China. However, further deregulation in China's telecom sector may be coming soon because of the draft of the telecom law and the pressure from other countries on China.
4394 Opening up Telecommunications in Sri Lanka- Will it Attract Investment and Reduce Waiting List ?
A.D.V.N. Kularatna Principal Research Engineer Arthur C Clarke Centre Moratuwa, Sri Lanka e-mail : [email protected]
Sakina Dhilawala Senior Analyst Datapro Information Services 20, Cecil Street #21-07, The Exchange Singapore 049705. e-mail: dhilaws®pacific.net.sg
1. ABSTRACT
Sri Lanka is one of the Asian countries with a low telecom penetration and a low growth' rate up to very recent times.Government of Sri Lanka and the telecom regulatory authorities decided to allow many deregulatory measures such as licensing WLL operators and privatising the government owned Sri Lanka Telecom.Paper analyses the present scenario with regard to clearing the waiting lists and promoting telecom investments.
2. INTRODUCTION The newly licensed WLL operators are At the end of 1996, Sri Lanka had a expected to jointly install a minimum total of 254,500 main lines in service of 200,000 lines in the country by the for a population of 18.5 million. This year 2000. Although main lines have gavethecountryamainline grown by a compound annual growth teledensity of 1.39 per 100 population. rate (CAGR) of 109% between 1992 In 1997, main lines are expected to and 1996 (see Exhibit 1), it is still not grow by over 25% to 316,000. enough to meet the country's huge waiting list. The growing waiting list is Sri Lanka'slatentdemand for largely due to increasing per capita telephone lines, estimated to be over income (this grew by 17.5% between 500,000, has forced the government to 1992-1996) arising from the growing introduce drastic measures to improve numberofSriLankansworking main linepenetration. Since the overseas. 1990s, the Sri Lankan government has implemented several changes to do just At the moment, all the districts and this. This included the licensing of two divisionalsecretariats,exceptfor new WirelessLocal Loop (WLL) certain areas in the north and eastern operators in February 1996 to compete regions (due to security reasons), are against the incumbent operator,Sri covered by SLTL's telephone network. Lanka Telecom Ltd. (SLTL), and the However, more than 65% of total lines partial privatization of SLTL in which are currently concentrated in the Japanese carrier NTT bought over a metropolitan Colombo(Exhibit 2). 35% stake in the organization.
440 47.1 SLTL plans to extend coverage to the Asia. As early as 1989, the private villages during 1998. sector wasalreadyofferingvalue added services such as cellular and Despite efforts to liberalize the data paging. communications sector, only X.25 and X.28 packet switching and lease line 3. REGULATORY ISSUES servicesare available. However, the government's push to encourage the Priorto1980,theprovisionand private sector to move away from regulation of postal and telecommunicationsservicesinSri traditional economies such as Lanka fell under the jurisdiction of the agriculture and into more economically Post and Telecommunications viable sectors such as communications, Department (PTD). However, in 1980, transport, trade,andfinanceis expected to boost demand for faster PTD was split into two separate bodies and betterdata communications one for the provision of postal services.Although the government's services and the other to operate the main aim at the moment is to meet the country's domestic and international demand for basic lines, it must look telecommunications services. The ahead to plan for future needs by Departmentof Telecommunications ensuring that it leap frogs technology. (DOT) was" formed asaseparate organization from the Post Office to The lack of main lines coupled with operate the latter function. Both these the growing needs of the business organizations continued to report to the community for Sri Lanka offers one Minister of Posts and of the most liberalized Telecommunications(MPT),which telecommunications markets in South also played the role of regulator.
Exhibit 1 Sri Lanka Population, Main Lines, and Teledensity, 1992-1997
r == 1992 1993 0.4 :74,: 1996 1997 Pop (mn) 17.40 17.62 17.86 18.11 18.31 18.49 Main Lines 136 158 180 204 255 316 ( in'000s ) Teledensity 0.78 0.90 1.0 1.12 1.39 1.70 Annual 7.68 16.43 12.51 13.32 24.54 25.72 Growth (%) Source: Northern Business Information
441 472 Exhibit 2 Share of DELs in the SSC Areas,as at December 1996
Others Colombo 22% 65%
Matara 4% Kandy 4% Gampaha Galle 3% 2%
Source: SLTL theSriLanka Telecommunications (amendment)' Act No. 27. Despitethe restructuring, only limited improvements were made to 3(a) Current Telecom Regulations the country's telecommunications There are presently two laws governing infrastructure. To speed up the pace of the telecommunications services telecommunications development, the market in Sri Lanka. They are the Sri Lankan government appointed a Telecommunications Act No. 25 of committeetolookintowaysto 1991andtheTelecommunications deregulatethetelecommunications (Amendment) Act No. 27 of 1996. market andinstill competition. Thus, Together,these two Acts provide in July 1991, following the the basisofalegalframework recommendations of a committee, the foradynamicandcompetitive government passedtheSriLanka telecommunications industry. Telecommunications Act No. 25. The Sri Lanka Telecommunications This Act marked the secondstage Act No. 25 of 1991 is divided into of reform in the country's seven parts and provides for (i) the telecommunicationssector,bringing appointment of a Director General of with it a number of important changes, Telecommunications; (ii) the transfer includingthe creation of Sri of all property rights and Lanka Telecommunications Authority liabilitiesoftheDepartmentof (SLTA) as the new regulatory body, Telecommunications to the and the corporatisation of the DOT to Corporation named "Sri Lanka create Sri Lanka Telecom (SLT). Telecom" established by order under Further changes were announced in Section2of theStateIndustrial 1996. A new regulatory body, the Corporations Act No.49 of 1957; (iii) the repeal of the Telecommunications Telecom Regulatory Commission of Ordinance (Chapter192); and(iv) Sri Lanka (TRCSL), was formed under matters connected therewith or incidental thereto.
7 3 442 Under this Act SLTA was formed as However, this segment of the market the regulatory body and Sri Lanka will be liberalized by August 2002. Telecom Corporation was created to TRCSL isexpected torestrictthe absorb the operations of SLTD which number of international operators to was a government department prior to two,includingSLTL.Thenew 1991. operator will be given a five year license. The Telecommunications (amendment) Act 27 of 1996 was an amendment Exhibit 3 lists all licensed totheoriginal ActNo. 25of telecommunications operators inSri 1991. ThisActestablishedthe Lanka as at August 1997. Telecommunications Regulatory Commission of Sri Lanka (TRCSL) in 3(c) Telecommunications place of the appointment of a Director- Development Plan General of Telecommunications where In an effort to quickly increase the the original one man commission was growing demand for basic services, the replaced by a five member government ofSri Lanka formulated commission.UnderthisAct,the a short-term telecommunications Secretary to the Ministry becomes the development plan in 1988. The plan Chairman of the Commission, while was formed 'with the support of the the former Director-General becomes Asian Development Bank. Although the Chief Executive Officer of the the target of the plan was to increase TRCSL. switching capacity to 500,000 lines by 1995, this was never met. Several of The amendmentalsoallowedthe former SLTA to be converted to an the projects under this plan are still on- going. independentcommissionwhereit could be governed and managed as an The development projects, which has independent corporate body with gained much financial support from operational flexibility. donor agencies and foreign 3(b) Competition governments, can be divided into two groups - the foreign funded projects TRCSL is actively promoting and those funded internally. Countries competition by adoptingtransparent thathave beeninstrumental in proceduresinlicensingoperators, supporting SLTL's development facilitatingfair and reasonable projects are the governments of Japan, interconnection, promoting economi- France, Finland, and Norway. cally sound cost-based pricing One of the most principlesandprovidingadequate publicised regulatory certainty to investors. The telecommunications development number of competitors and duration of projects launched by the government their licenses is determined by market during the 1990s is the 150K Project and economic factors, subject to the (initially100,000 lines were to be availability of resources such as radio installed but this was later expanded to 150,000,andfinally frequency. adjustedto 230,000 by 1998). A new organization, At the moment, the only area in which Sri Lanka Telecom Services Company a monopoly is retained by SLTL is in Ltd. (SLTS), was also formed by the international telephony service.
443 4 7 4 government in April 1993 to oversee million, enjoys a penetration of 18.4 this project. per 100 population. Initially,SLTS was toactas an Therearecurrently25 licensed independent operator after the telecommunications service providers commissioning of the project. in Sri Lanka. Out of these, 23 are in the However, in the long run, it is unlikely thatthe company willbecome a general telecom service business while the remaining two operators, namely licensed operator. Instead, SLTS may Air Lanka and SITA, operate their own become a subcontractor for SLTL for private networks. consulting services. A see-saw of events occurred between At the Moment including SLTL, there 1993-1996 which very nearly resulted are three' domestic basic, four cellular, in the project being canceled. This five paging, one trunk radio, six data included the nearing of the country's transmission, four public pay phone, general elections and heavy opposition six internet, one premium services, and fromthetradeunions who were twostore-and-forwardfaxservice threatened by the formation of SLTS. operatorslicensedinthecountry. These were just some of the reasons SLTLstillholdsa monopolyin which led to the suspension of the international telecommunications project in 1994. A committee was then services. TRCSL has indicated that it formed to look intothe problems planstoliberalizethismarket by created by the project. At this stage, August 2002withoneadditional one of the successful bidders for the operator. Colombo/Vavuniya areas, AT&T, pulled out of the contract. A new The government licensed two tender was then put out for the two additional wireless local loop (WLL) operators in February 1996 in an effort areas. After evaluating the bids for two to help push the development of basic years, Mitsui and the LG Group were servicesinthe awarded the contractfor Colombo country. The new while Ericsson won the Vavuniya operators, Suntel and Lanka Bell, are contract. The delays in the project required to install a total of 200,000 eventually saw the original 100,000 lines by the year 2000. Both are, line project grow into a 230,000 line however, confident of surpassing this project. Full details of the project is number. given in Exhibit 4.
4. CURRENT OPERATORS AND THEIR SERVICES Sri Lanka, like many of its South Asian neighbours, suffers from extremely low main line penetration levels. At the end of 1996, the country only had 254,500 main lines for a population of over 18 million. In contrast Malaysia, which housesapopulationof about19
475 444 Exhibit 3 Licensed Telecom Operators in Sri Lanka (August 1997)
-..- 64g-I.& Doratio li .& Sri Lanka Telecom Ltd Aug 1991 20 years Basic domestic & intl telephony, telegraph & telex, data transmission, maritime mobile, facsimile, intl TV transmission, voice cast transmission, IDS, INMARSAT. Lanka Communication July 1991 20 years Switched & non-switched data comms, store & forward fax, Services (Pvt) Ltd e-mail, video text, enhanced voice. Electroteks (Pvt) Ltd Nov 1991 20 years Switched & non-switched data comms, telex, directory info, store & forward fax, e-mail, video text, enhanced voice, EDI, database facilities. ,. . SITA Aug 1992 5 years Switched & non-switched data comms, telex, e-mail, data processing within airline industry, SITAFAX. Infocom Lanka Ltd Sept 1992 10 years radio paging -. Bell Communication Lanka Dec 1992 10 years radio paging (Pvt) Ltd Telstra Feb 1993 7 years cellular mobile Fentons Ltd Feb 1993 10 years radio paging Dynacom Engineering (Pvt) Feb 1993 5 years trunk mobile radio Ltd Intercity Paging Services April 1993 10 years radio paging (Pvt) Ltd Equipment Trades Ltd Sept 1993 10 years radio paging MTN Networks (Pvt) Ltd Sept 1993 20 years cellular mobile Air Lanka Ltd Dec 1994 5 years Voice and data communications for Air Lanka's internal use only Lanka Internet Service Ltd Dec 1994 20 years E-mail, intemet, store & forward fax, e-mail to fax & fax to e- mail, telex, X.25 data transmission, video conferencing, enhanced voice services The Payphone Co (Pvt) Ltd Dec 1994 10 years Public payphone MTT Network (Pvt) Ltd May 1995 20 years Lease circuits Celltel Lanka Ltd Sept 1995 13 years cellular mobile, voice mail, fax, lease excess WLL capacity to payphone operators CeyCom Global Sept 1995 20 years Switched & non-switched data communications Communications Ltd Telia Lanka (Pvt) Ltd Feb 1996 20 years Fixed basic telephony, data transmission, public payphone, voice mail, facsimile Lanka Bell (Pvt) Ltd Feb 1996 20 years Fixed basic telephony, data transmission, public payphone, voice mail, facsimile Itmin Ltd June 1996 20 years Switched & non-switched data communications Eureka Online (Pvt) Ltd Aug 1996 10 years Switched & non-switched data communications Pan Lanka Networking (Pvt) Apr 1997 10 years Internet Ltd Milleneum Technologies Aug 1997 N.A. Premium services
Source: TRCSL
BEST COPY AVAILA113LE
445 4 7 Exhibit 4 Details of 150K Project
ontiiiiii7 ,f6. Miiii 2r-14r, ) 004.., '.....,.., ,__:,- - . - .., ,,,,, ,t,,§-004..:-: ,007, Korea Telecom 4,650 Trincomalee 8 completed : Ericsson 64,298 Kalutara, Kurunegala, 70 Dec '97 Kandy, Gampaha, Matale, Batticaloa, Kalmunei, Ampara Mitsui 21,694 Negombo, Kegalle, 30 Nov '97 Pollonnaruwa Nokia & NKF 15,420 Chillaw, Hambantota 14 Nov '97 Motorola 6,992 Kandy, Kalutara, Galle, 7 Aug '97 Nuwara Eliya . Sumitomo 46,981 Anuradhapura, Badulla, 36 Dec '97 Bandarawela, Galle, Nuwara Eliya, Ratnapura Mitsui/LG 67,750 Colombo 30 Dec '98 Ericsson 2,500 Vavuniya 4 Dec '98 Total 230,285 199 Source: SLTL
Though SLTL boasts of a 95% digital equipment supplied by Ericsson (DRA- switchingnetwork,itsrangeof 1900 radio access system). Lanka Bell enhanced services are few and do not started offering its services in March support the growingly sophisticated 1997. At the end of August 1997, the needs of thebusiness community. company hadapproximately8,000 SLTL's ratio of subscribers in the subscribers. Lanka Bell's transmission Colombo area is 54% residential, 38% equipment is supplied by Nortel. business, and 8% government. In the outskirts, the ratio is 51:35:14. Despite 4(a) Mobile Communications claims ofproviding nationwide Sri Lanka's mobile communications coverage, SLTL's distribution of main marketcomprisesof thecellular, lines is uneven between the Colombo paging, and trunk radio services. There metropolitan and other regions. There are currently four cellular, five paging, areplanstointroducethe ISDN and one trunk radio operators. service, although this will not take place until 2000. Cellularmobile,which wasfirst introducedin1989,isthemost Both the WLL operators have launched competitive telecom service market in their services, although largely in the Sri Lanka at the moment. There are Colombo district. As line deployment currentlyfouroperatorsoffering a increases, their services will spread to combination of analog anddigital the other parts of the island. Suntel networks. All four companies launched its service' in February 1996 providing the service were and had about 14,000 subscribers at the incorporated under partnerships end of August 1997. The company's between local and foreign companies. transmissionnetworkisbased on However, as at August 1997, only one,.
4464 7 Mobitel,remainsajointventure private operators who had introduced between SLTL andTelstra.The other forms of datacom services, such remainingthreeoperators(Celltel as packet switching, tofulfilltheir Lanka, LankaCellular,and MTN needs. The major datacom players Networks) are run by foreign concerns. currently are SLTL, Lanka Communications Services, Electrotek At the end of 1996, there were a total Networks, and Lanka Internet. of 66,245 cellular subscribers for all four networks. The limited availability At theend of 1996,thepacket of radio spectrum (which requires strict switching service had a total of 144 defense clearance) coupled with the subscribers. The service has been slow already competitive market is unlikely totake:. off.SriLanka'sbusiness to see the government issuing more community is currently largely made licenses in the near future. The take-up up of lOw technology, high manpower of the cellular mobile service is still industries such as garment considered low given the long land line manufacturing and agriCulture. waiting list and the ratio of cellular Although there are business segments subscribers against total population. withhighrequirementsfordata Someimportantreasonsforthis communications services such as those include the low income level of the in the shipping, freight forwarding, and population which does not allow the tourism industries, these are few in average person to purchase a cellular number. Small to medium-sized phone, high callrates, and limited companies, who would ordinarily be geographical coverage. one of the target groups of the datacom providers, usually do not have the The paging service was first launched funds to subscribe to the service. Late in 1981 byaprivateoperator, entry of the service into the market, Equipment Trades. There are now five coupled with the lack of aggressive operators and at the end of 1996, there marketing on the part of the operators were only a total of 9,260 subscribers. are also other factors affecting growth. The paging service suffers from slower Most of the operators are currently growth than the cellular service. Lack targetingtheservicetocorporate of geographical coverage, innovative customers explaining the low services, and low public payphone subscriber base. penetration levels are some of the reasons for the dismal performance of Lease lines are currently provided by the service: four operators, including SLTL. The growth ininternetsubscribershas 4(b) Data Communications created a market for lease lines. At the Data communications services are still end of 1996, there were a total of 2,497 in theinfantstagesinSri Lanka domestic and international lease line althoughthe markethasbeen subscribers.The sudden jumpin liberalizedsince1991.Thereare domestic lease line subscribers in 1996 currently eight licensed data was due to the high demand for lease communicationsserviceproviders, lines from the banking sector which including SLTL. As late as1991, started to promote new services such as SLTL was only offering leased lines. phonebanking.Leaselineswere Due to the high cost of lease lines, needed to network the banks' branches many potential .subscribers turned to around the island.
447 478 The internetservicewas only leading telecom research firm which introduced in Sri Lanka in 1995. There conducts proprietaryresearch and are currently seven (including SLTL) produces a full range of licensedinternetserviceproviders telecommunications reports. (ISPs) and one government operator in the country. At the end of 1996, Lanka Internet had the largest subscriber base References: of over 2,500. NBI does not project a high growth rate for the service largely 1. A D V N Kularatna,Sakina because PC ownership is still out of Dhilawala; "Telecoms in Sri Lanka rangeforthemajorityofthe An Industry and Market Analysis", population. However, the emergence of NorthernBusinessInformation, internetcafesinthecountry will Sept 1997. certainly help spread the popularity of 2. A D V N Kularatna,Gamini the service. Gunawardena and Chandana Williams; "Value Added Services 5. CONCLUSION & Private Sector Investment in The government's decision to open the New TelecomProjectsinSri country'stelecommunicationssector Lanka", proceedings of the17th will certainly benefit it in the long run. Annual Pacific History has shown that restructuring Telecommunications Council the regulatory and operating agencies conference, PTC '95, pages 442- and maintaining a monopoly 444. environment has done little to help 3. ADVN Kularatna;"Contribution improve telecommunications bytheOperatorsofPrivate development. The country's two new Telecommunications Services domestic basic services operators will Towards Development of certainly help the struggling incumbent Telecommunications Infrastructure operatorinreducingthegrowing of Sri Lanka in the Recent Past", waitinglist.Inaddition,SLTL's proceedings of the16th Annual strategic move to embrace NTT as a Pacific Telecommunications minority partner will no doubt help the Council, PTC'94, pages 415-420. company in improving both its service qualityandquickenmainline deployment. With the above measures in place, the government hopes to clear the waiting list for telephone lines by 2015. This paper is a summary of a 150 page report on "Telecoms in Sri Lanka An Industry andMarket Analysis" researched and written by the authors in September 1997. The said report is basedonproprietaryinformation gathered by the authors for the study. NorthernBusinessInformation,a division of the Gartner Group,is a
448 4 '7 9 PT. TELKOM Indonesia: the Development and Deregulation of the National Telecommunications Sector
Edi Witjara, Supriyo TELKOM Indonesia R&D Division Bandung, Indonesia
1. ABSTRACT
This paper will describe a general view of telecommunications infrastructure development trend and telecommunications industry structure in Indonesia after the deregulation of telecommunications sector which has been enacted by the government in 1989. This paper also examines the strategy taken by PT. TELKOM, as the incumbent domestic operator inanticipation to the future challenges and opportunitiesinthe telecommunications business
2. DEREGULATION FRAMEWORK for domestic telecommunications services for so long as TELKOM exists. "Basic services" generally Enacted in 1989, Telecommunications Law involve the delivery of information between sender 3/1989 is the principal telecommunications statute and receiver without processing or modification, in Indonesia and, along with the rules, regulations including voice and data telephony, telex, and decrees promulgated thereunder, establishes telegraph, leased lines and packet switched data. the legal framework for regulation of the "Non-basic services" generally involve the delivery telecommunications sector. The primary purpose of data which has been processed or modified by of the Telecommunications Law is to open the computers or otherwise. Such services include sector to limited private sector participation under electronic mail, paging, store and forward facsimile the aegis of designated state-owned and abbreviated dialing. telecommunications companies "organizing bodies" which have been delegated the authority and As an organizing body, TELKOM is not required responsibility both to organize and provide to hold a license in order to provide telecommunications services and infrastructure. telecommunications services, other than licenses Telecommunications services provided by these allocating frequency bands. Joint operating organizing bodies are separated into two classes, schemes, such as PBHs and KSOs, also do not basic and non-basic. Under this classification, require licenses to provide telecommunications private companies may offer basic services as TELKOM remains the operator of the telecommunications services, but only in businesses. joint venture companies, however, do cooperation with an organizing body and pursuant require licenses, procedures for which are to a license from the MTPT. The contained in MTPT Decree 39/1993 for basic Telecommunications Law permits such cooperation services and MTPT Decree 116/1991 for non-basic in basic telecommunications services only in the services. MTPT Decree 39/1993 provides that the form of MTPT may issue licenses to TELKOM joint venture a) joint venture companies in which the companies in which TELKOM has a direct or organizing body has a direct or indirect indirect interest for the provision of basic services equity participation, based on certain criteria, including the estimated b) joint operating schemes (such as PBHs and need within a community for new telephone lines KSOs) and for the next ten years and the call completion ratio c) management contracts. within that region. Each year, the MTPT By contrast, the private sector may provide non- determines the locations for such services, taking basic services without the cooperation of an into account proposals of the TELKOM joint organizing body, although a license from the MTPT venture company seeking to provide such services. must still be obtained. Private entities seeking such licenses must make an application to the MTPT to demonstrate their By MTPT Decree 61/1995, the MTPT confirmed operational and financial capability. The MTPT that TELKOM is and will remain an organizing body initially issues a license in principle allowing the
449 430 joint venture company to prepare its operations, 3. CURRENT INDUSTRY STRUCTURE FOR culminating in the issuance of a license to operate DOMESTIC SERVICES once the MTPT deems the venture ready to offer its services to the public. TELKOM is the primary provider of telephone Private entities are not required to cooperate services in Indonesia. It owns and operates the with TELKOM to provide non-basic services, country's only public switched telecommunications however they must obtain a license from the MTPT. network. TELKOM is also the organizing body for The procedures for obtaining a license to provide domestic telecommunication services; no other non-basic services, as set forth in MTPT Decree entity may provide basic domestic 116/1991, are similar to those contained in MTPT telecommunication services in Indonesia unless it Decree 39/1993. does so in direct or indirect cooperation with TELKOM. 2.1Exclusivity With effect from January 1, 1996, the MTPT has granted TELKOM (I) the exclusive right to provide Pursuant to MTPT Decree 61/1995, the MTPT local fixed wireline and fixed wireless confirmed that TELKOM is and will remain an telecommunication services nationwide, including organizing body for domestic telecommunications services provided for and on behalf of TELKOM services under the Telecommunications Law. In pursuant to joint operating schemes, for a minimum addition, with effect from January 1, 1996, MTPT of 15 years, and (ii) the exclusive right to provide Decree 60/1995 grants to TELKOM (i) the domestic long distance telecommunication services exclusive right to provide local fixed wireline and nationwide for a minimum of 10 years. fixed wireless telecommunications services nation- Most telecoms operators interconnect with the wide, including services provided for and on behalf company's network in order to provide of TELKOM pursuant to joint operating schemes, comprehensive service. For example mobile for a minimum of 15 years and (ii) the exclusive cellular calls usually originate on, terminate on, or right to provide domestic long distance transit through the Company's network. Moreover, telecommunications services for a minimum of ten TELKOM participates in each business offering years. These decrees effectively preclude the basic services either as a shareholder in a joint MTPT, without abrogating the rights of TELKOM venture company or as a participant in a joint under these decrees, from granting another entity operating scheme. Such joint venture companies the status of organizing body for the provision of offering basic services include mobile cellular domestic telecommunications services. TELKOM operators and one fixed wireless operator. believes that its grant of exclusivity in the provision of local and domestic long distance fixed wireline 3.1Partnership Arrangements and joint and fixed wireless telecommunications services is Ventures subject to other licenses in existence as of January 1, 1996, although the decree is silent on this TELKOM has entered into a variety of subject. arrangements with private investors to finance the construction of network infrastructure, to provide These decrees, however, are subject to the specialised services and to diversify its operations. MTPT's authority to regulate competition in the Private participation in basic domestic industry. Under the Telecommunications Law, telecommunications services with TELKOM can other operators are permitted to offer basic take the form of (i) joint venture companies, (ii) joint telecommunications services provided that they do operating schemes and (iii) management contracts. so in conjunction with TELKOM, either pursuant to To date, TELKOM has not entered into any a joint venture, a joint operating scheme or a management contracts. joint operating schemes management contract. The MTPT has sole are in the form of revenue sharing arrangements authority to license or approve joint ventures in called "PBHs" and operating arrangements called which TELKOM has a direct or indirect equity "KSOs." interest or joint operating schemes with TELKOM, and TELKOM's consent is not required to be 3.2 PBHs obtained in connection with the grant of any such license or approval. PBHs, or revenue-sharing arrangements, with private investors for projects such as the
450 481 installation of fixed wirelines, the provision of and other resources. The Company also believes analog mobile services and the production and that having a different major international maintenance of card payphones. PBHs were communications operator involved in each KSO introduced to complement the expansion plans of Division is preferable to having one such operator the Company. These revenue sharing for all five KSO Divisions because the Company arrangements were used primarily to finance the should benefit from the potentially different expansion of the fixed wireline network and to managerial, operational and technical strengths of launch the country's mobile cellular service. In a all five such operators as opposed to just one. In PBH arrangement, the private investor generally addition, the Company believes that the KSO finances and builds a given project and upon structure offers a combination of flexibility and completion receives a percentage of the revenues effectiveness in achieving its objectives for generated from the project either for a fixed term or development and improvement of the Network and until such time as the private investor's agreed meeting the Government's goals in Repelita VI. The return on investment has been attained. The following table indicates installed lines to be private investor retains legal ownership of the constructed by the KSO investors: constructed assets until the expiration of the PBH arrangement whereupon ownership is transferred Region Lines to Partners to TELKOM. During the term of the PBH, TELKOM built is responsible for the operation of the project and Sumatra 500.000 France Telecom/ bears all operating expenses associated with PBH Astra lines. West Java 500.000 US West/ Aria West PBHs with respect to telecommunications Central Java 400.000 Telstra and NTT/ services do not require operational licenses. Indosat However, the PBH investor must (i) be in the Kalimantan 237.000 Cable & Wireless/ business of the provision of telecommunications TMM services and have sufficient financial resources East 403.000 Sing-Telecom/ and professional personnel, (ii) demonstrate the Indonesia Bukaka operational worthiness of its plan, (iii) obtain the MTPT's approval, (iv) in the case of PBHs lasting 3.4 Joint Venture Companies less than one year, obtain the approval of TELKOM's Board of Commissioners and (v) in the Currently, Joint Venture Companies in Indonesia case of PBHs lasting more than one year, obtain are mostly cellular mobile phones operators as the the approval of TELKOM's shareholders. cellular mobile phones have become increasingly popular, and people from all walks of life and 3.3 KSOs professions are using them as an alternative to the in adequate fixed line telephone. Since 1994, the The KSO Agreements provide for a form of Indonesian government has licensed the following contractual joint venture agreement under which companies to provide telecommunications-related the KSO Investor, through the KSO Unit, will be business: responsible for the operation of the local network of the KSO Division. A different KSO Unit, each TELCO'S (JVC) BUSINESS involving a separate international telecommunications operator, will operate each TELKOMSEL GSM Mobile cellular KSO Division. The Company believes that dividing SATELINDO International the country into geographic regions and contracting telecommunication carrier with separate KSO Investors to develop and GSM mobile cellular operate each KSO Division is the most Satelit transponder advantageous means of carrying out the leasing development and operation of those Divisions RATELINDO Fixed cellular given the magnitude of the planned line TELEKOMINDO AMPS analog cellular development, the difficulty of the line development PBH given the terrain and the geography of the country Fixed wireline PBH and the scope of the required financial, managerial GSM mobile cellular
451 482 KOMSELINDO o AMPS analog cellular participation of the private sector and the LI NTASARTA o Data communication introduction of the capital through the introduction o Fixed wireline PBH of joint venture companies and joint operating 0 Credit Card payphone schemes including PBHs and, more recently, the PBH KSOs PASIFIK o Satellite transponder SATELIT leasing EXELCOMINDO © GSM Mobile cellular 5. TELKOM's BUSINESS STRATEGY OTHERS 0 AMPS cellular VSAT TELKOM has adapted business strategy designed Voice mail to maintain the company's growth while achieving Directories the government's target for the telecommunications Others. sector. The following discussion highlight the principal components of TELKOM's business strategy. 4. DEVELOPMENT OF THE DOMESTIC TELE- COMMUNICATIONS NETWORK 5.1 Expand and modernize the Network
The Government's development policies, of which TELKOM plans to expand its revenue generating its long term domestic telecommunications plans lines in service by aggressively installing and are a part, are set forth in consecutive five-year connecting new lines, improving capacity utilization plans known as "Repelitas". Each repelita and enhancing overall network performance. The assesses the current level of economic progress, Company plans to construct minimum of 3.15 establishes priorities for the next five-year plan and million installed lines in Division II (Jakarta) and realigns those previously made for future Repelitas. Division V (East Java) during five-year period To date, Indonesia has completed 5 repelitas. The ended December 31, 1998. In the KSO divisions, current repelita VI ends on March 31,1999. In TELKOM expects approximately two million Repelita VI, the government's general goals for the additional installed lines to be constructed by the domestic telecommunications sector are to KSO Investor between January 1, 1996 and March increase the accessibility, affordability and quality 31, 1999. In addition, TELKOM expects to of telecommunications services in Indonesia. complete construction of 1.4 million installed lines in the KSO Divisions by December 31, 1998. The following table shows the targets for local TELKOM is in the process of increasing capacity exchange capacity, and local exchange capacity utilization through the accelerated construction of per 100 inhabitants for each of Repelitas VI through additional outside plant, implementation of certain X. fixed wireless, access technologies, targeting and developing areas of high demand, and the roll-out Development Repelita of certain marketing and promotional programs Targets VI VII VIII IX X expected to encourage subscriber connection. (Year Ended March 31) (`99) (`04)(`09)(`14) (19) 5.2 Promote increased revenue per subscriber line Local exchange 10.519.029.042.060.7 The Company plans to increase average revenues capacity (millions per line in service by providing certain value-added of lines) services, increasing the number of business lines in service and by promoting increased usage of Local exchange 5.1 8.7 12.417.123.6 existing service through marketing and pricing capacity per 100 programs as well as by improving service quality inhabitants (line and availability. The Company is supporting this penetration) strategy by investing in high performance, high quality digital overlay network in areas with To facilitate achievement of the goals of Repelita concentrated business subscribers with service VI, the MTPT and TELKOM have encouraged the requirements beyond that currently available.
452 453 private sector to participate in the 5.3 Improve organizational and managerial telecommunication business. efficiency Indonesia undertakes its deregulatory measures in a unique way by inviting the private sector to To achieves levels of operating efficiency in line participate in providing basic telecommunication with those operators of more developed countries, services in cooperation with TELKOM as the TELKOM has recently implemented a Restructuring organizing body in the domestic program to streamline central management, telecommunications services. consolidate operations, introduce new management control and planning systems and upgrade the quality of its staff. The Company also to expects the transfer of managerial, operational and technical expertise from the international telecommunications operators participating in the KSOs. In addition, the introduction of experienced operators in the KSO Division will permit TELKOM to focus management's time and resources on Division II (Jakarta) and V (East Java) and the Network Service Management.
5.4 Enhance customer service and marketing
The Company has introduced a number of marketing initiatives to stimulate demand and has established a customer surveys to obtain feedback on customer satisfaction and the demand for new and existing services..
5.5 Identify and exploit new business opportunities
TELKOM continually assesses new technologies and services and seeks to identify business opportunities related to their commercial application. As part of this policy, the Company is positioning itself as a future provider of multimedia services by digitalising the Network, replacing copper wire with optical fiber and introducing broadband technologies among selected high- volume business users. The Company believes that its deployment of optical fiber will serve the enhance its competitive position against other provider of alternate delivery systems for this services. TELKOM is also undertaking a pilot PCN project, which, if successful, will lead the Company to seek appropriate licenses.
6. CONCLUSION
The Indonesian market for telecommunications services is still huge due to the growing size of the middle class and relatively high economic growth. This would obviously be very attracting for the
453 4 8 4 Electronic Delivery Systems In Instruction
Bhupendra Singh Assistant Professor, Department of Computer Science and Engineering. Regional Engineering College,Hamirpur (HP) -177005, India.
1. ABSTRACT
This paper examines the different potential electronic delivery systems currently available andtheir implications to the different components of the instructional system. In this definition the components of the frame work may encompass all the entities of,a 2. INTRODUCTION classical school system such as teachers, class rooms, laboratories, workshops, administration; In the past, instruction was offered by the teachers the resources such as books, library, and other to the students, by a variety of means such as class instructional materials; and the recipients which room teaching, individual coaching, includes full time students, part-time students, apprenticeship training, laboratory training, etc. industrialworkersoncontinuingeducation In this process of teaching, the teacher was programmes organized either at industry or in the assisted by variety of media/teaching aids such as institutions, and the students of distance education chalkboard,magneticboard,films,slides, programmes. transparencies, books, video programmes, computers. As we observe the process of change, It may be useful to categorize the delivery systems we find a definite transition to electronic media encompassed by the above broad definition into andassociateddeliverymechanisms.These some classification scheme. The scheme based on electronic delivery mechanisms are not simple the time and place of the learner and the teacher changes in the format/media in the instructional (!) is a useful one as it provides grouping of the delivery but represent a qualitative change with instructional delivery systems tosuitspecific ramifications to the teacher preparation, situations. The classification scheme is given in preparation of instructional materials, the very table 1. process of education, the institution of organized school and to the carefully built learning theories. TABLE - 1 This paper examines the different potential electronic delivery systems currently available and Place their implications to the different components of the instructional system. Same Different
We may restrict the scope of the instructional Lecture/conference,Broadcast TV,TV, delivery system with a definition to enable us to Same laboraotory, Fax, Audio conferencing, discuss the various issues within the boundaries of telephone Video conferencing the definition. This definition is specially given 1 3 for this article. Time Library, laboratory,CAL,ITS,CD-1, Instructional delivery system is a conceptual DifferenCAL, ITS, Cable, Computer Networks, frameworkwherethecomponentsofthe TV, Computer Simulation Lab framework act togethertocommunicate the integrated lab Video films knowledge, skills and attitudes to the recipient in 2 4 a systematic manner in order to achieve a set of (predefined) objectives.
454 465 3. ELECTRONIC DELIVERY SYSTEMS- The long distance telephone charges may be TECHNOLOGIES prohibitively high in most cases. Two Telephone connections providesbi-directional audio link. No further infrastructure is needed to The,Electronic delivery systems offer a wide range utilize this technology. of options to the schools, teachers and learners. thequalityoflearning Often, experiences 3.1.2. FAX provided by the electronic delivery systems is much more enriching than the conventional Faxofferscommunicationusingtext systems. However the introduction or the use of and Graphics.Sincefaxmessagesreceivedon these delivery systems needs careful evaluation of computer can be projected through projection the following parameters for better and cost systems, and since fax can be 'instantaneous', it effective impact: provides a very good interactive link between the teacher and the taught. The taught could be an individual or a group in a class room. The fax mode wasutilizedinAustraliatodeliver Target group size, instruction at remote locations with the help of a Academic level (age), semi skilled teacher. The only requirement is a Geographical distribution, good telephone line and a fax machine (not Geographical accessibility, required if scanner is attached to computer) and Communications infrastructure, computer. It is comparatively less expensive than Target group availability, telephone. Discipline of study, Educational infrastructure (Trained 3.1.3. AUDIO CONFERENCING teachers, Availability/Production of Instructional materials, H/W and S/W usage In the Audio conferencing with voice only a small and Maintenance) group or the whole class can interact with the Motivation and receptivity to NTT, teacher in 'Voice' mode. Audio conferencing in Costs-capital, running, I.M. preparation and Graphic mode allows voice communication along distribution. with the information on the electronic board. At the teachers' location electronic board is required. We may look at some of the delivery systems with Audio conferencing with low quality/compressed brief explanation and comments. The listis video is possible on the telephone lines. The neither exhaustive nor standardized. It is also not student to teacher link remains voice mode in presented in any particular order. Some of the most of these variations. The costs are determined delivery systems with which we are well familiar by the telephone charges. with are simply named and no explanation is offered. Some of the technologies that are in 3.1.4. AUDIO TEXT existence over a long period but whose potential ineducationarenotexploitedarebriefly Audio text allows us to integrate a data base with commentedupon. Sincemostof the voiceinterface between the human and the media/delivery systemscan beused inthe database. It is common in most voice assisted conventional Instructional systems, the aspects enquiry response systems. It has yet to find its that are relevant to non-conventional delivery applications in education. It uses text to voice modes are emphasized in this discussion. conversion facility.
3.1 RADIO 3.2. VIDEO FILMS
3.1.1 TELEPHONE 3.2.1 BROADCAST TV
Telephone can be used for large group teaching Video disc, under computer control offers the with the help of amplifiers. Since most places are facilities of interactive video. It could be used by connected by telephone, it is possible to make use individuals for self studying and by teachers for of this facility for instructionaldelivery. group teaching as in the class room. With its
455 486 capacity for near perfect still frame to full speed 3.3. CAI : COMPUTER ASSISTED and full screen video and with an average retrieval INSTRUCTION speed of 15 s from more than 100,000 frames, it provides a good andinexpensive instructional Computer Assisted Instruction or Learning that delivery system.(1-4) originated from Programmed Instructionhas undergone a variety of changes. It offers a very 3.2.2. CABLE TV powerful instructional delivery system thatis relevant to individual student, small groups and Most of us have experienced this technology and forclassroomteaching.Withitscurrent the power of cable TV. Since the investment in Multimedia capabilities,itcan providenear cableTVisalreadyexisting. Canthis human like teaching with the added advantage of infrastructure be used for educational purposes? excellent graphics, animation's and simulations. The incremental cost for such a conversion is Itisrelativelyinexpensiveandoffersthe more from the point of organizing theeducational advantages of interactively, dynamic graphics and programmes for viewing. It is possible to combine simulations. It is good for both class room and such systems with live lectures for the individuals distance learning modes. It can be integrated into participating from their homes or participating formal,non-formalandinformaleducation from the remote class rooms. It is possible to systems. The introduction of laboratory interfaces address issues such as Continuing education (CE) and Virtual Reality H/W and S/W will add a new for adult literacy and CE for industrial workers dimension to the level of interaction and to the using this delivery system. (1-4) delivery systems.
3.2.3. INTERACTIVE TV 3.4. ITS INTELLIGENT TUTORING SYSTEMS: A number of experiments were conducted using satellite TV for Instruction. The students can view Intelligent Tutoring Systems are extensions of thelivelectures broadcast throughsatellite. CAI/CAL. While CAI depends considerably on However the students can communicate with the the stored information for the presentation of teacher using an audio or video uplink from the information and dialogue with the student, the school to satellite. The mobile units providing the ITS depends upon the generic knowledge of the uplink to satellite tend to be expensive. domain and generates the required information from the generic knowledge and presents it to the students. In this regard it emulates the human 3.2.4. VIDEO CONFERENCING behavior. The current state of knowledge permits it, like a teacher, to develop a perception of the The digitalcompression Videoconferencing student interacting with it (student model), and systems can in principle, provides a fairly good usesittodecide thecontent and styleof connectivity between sites situated at different instruction. Its natural language interface provides locationswithfullmotion andfullscreen anidealizedlearningenvironmentforthe capabilities with near TV quality visual effect. individual student where the student can enter The professional quality Codecs and Decodecs are into a genuine and meaningful dialogue with the expensive. For small groups, desk top video student. Though a large number of experimental conferencing systems offer inexpensive solutions. systems are in use all over the world currently the ITS is in its developmental phase. The hardware A word of caution regarding the conferencing or requirements of ITS are the same as for CAL but remote lecturing situations is needed.Since the the computer systems need to be more powerful. technology doesnotrestrictthe number of The gap between the requirements of the systems participating audience, we may be tempted to for CAL and ITS has narrowed down in the recent reach larger groups of audiences. It is not the years because of the availability of powerful technology, but the interaction capabilities of systems. (5) human teachers that will impose restrictions on the number of students. 3.5. COMPUTER NETWORKS
456 487 Computer networks offer very powerful CD-I is one of the inexpensive technologies. Here environments for instructional delivery as the a CD is often used with a CD player and a TV. computers are interconnected and are able to The operation of the CD player is simple and can communicate amongst themselves. Both the local be used by relatively young students with a few areanetworks andthewidearenetworks minutes of training. The interactive nature of the including Internet provide many powerful options technology combined withaudio and video inthedeliveryofinstruction.While each information on the disc, the portability and the individual could work independently on different low cost offer enormous opportunities for it in the topics/ themes at different times and places and instructional delivery. It is useful for small groups yet, communicate with each other through text, and individual learners. graphics, sound and video modes. This means that the networks introduce the idea of group learning 4. COSTS AND BENEFITS while supporting and working in individualized mode. The Internet, which is a network of all the As can be seen from the preceding section, that networks provide access to global data bases and most of these technologies are not new but were support the professional learning style not exploited in the education system. Some of characterized by directed learning, learning by these are useful for individual learner, some for browsing, integrating the scattered information. small groups and some for large groups. Some of the technologies allow a group sitting at one place 3.6. DIGITAL LIBRARIES towork independentlywhile the other technologies, bring the people sitting at different Libraries play an important role in the deliver of places in the world into asingle group. All the instruction. Current technologiespermit technologies complement the human effort in a digitization of books, journals, and articles, store given situation and are efficient in that particular them on computer and deliver them to the user. situation.Researchfindingsregardingtheir The user can receive the information in full or in efficiency and effectiveness are often controversial part, for one time reading or for down loading. when generalized but are supportive when applied The organization of the book changes from the to a specific situation.It is thus important to previous linear format to the hyper text format consider the parameters given in the beginning of where the user has the freedom to see the book as the preceding section to select the appropriate he/she perceives and the book could contain technology for a given situation. It is also difficult dynamic graphics i.e. we could read the 'live' to talk about cost benefit ratio in general terms. books. Digital libraries integrate the needs of For instance a technology chosen for sparsely formal, informal and professional segments of populated region for its economy may not be societies and present information.(6) economical for densely populated region. While considering the costs it is necessary to consider 3.7. COMPUTER BASED LABORATORIES the costs under the heads-capital costs to establish infrastructure at the central point and at the user Certain types of learning experiences cannot be locations, running expenditure, S/W development delivered by the class room teaching and these costs. Figure-1 shows some information that will experiencesareprovided by thelaboratory. be helpful in selecting the technologies based on Computers have enhanced the effectiveness of the the age of the learner and the cost of the laboratory with appropriate laboratory interfaces technology. (7) for the acquisition and analysis of information. Further, the simulations provide a much greater 5. TEACHER EDUCATION understanding of the processes, systems, and concepts. They form a very effective Since most of the technologies/delivery systems complementary instructional delivery mode to the are new to the teachers, it is important to have the laboratories. The simulations, along with virtual key personnel from each institute trained in the reality provide vital experiences that are in the useoftheconcernedtechnologyandits Itis psycho-motor domain. implications to the educational system. possible that the role of the teacher changes 3.8. CD-I considerably while using some of the technologies and this should be given careful consideration in
457 488 AGE - TECHNOLOGY EQUATION
Cost of Satellite TV Technology TV Broadcasts Simulators CD-I Distance Learning Radio Interactive Radio/TV PC's Video-games Books Kits Hypermedia Fax Fax E-Mail
10 12 14 16 18 20 22 Age of Trainees
Investment Costs Simulators / Trainee position
US $ COST - TECHNOLOGY EQUATION 2000 Simulators
1000 Hypermedia Distance Learning TV Broadcasts 500 E-mail Video games Kits 100 Satellite TV Books Radio Interactive 50 Fax Radio/TV
0.1 0.2 0.3 0.5 1 10 100
Approximate Price ranges Operations costs/trainee hour Note:- The position of some of technology can change drastically depending upon the technology ownership.
FIGURE - 1
458 489 the training programmes. Further the issues in the We may be able to purchase a 'book' in full development or adoption/adoption of software/ or in part or purchase it for one reading or courseware should be discussed with the teachers. purchase to own it. The teachers also need training in the production Delivery of the books will be on-line (like on of instructional materials. The key personnel who Internet) are already trained may be used totrain the other teachers in the Institutions. The CAL and ITS can assume importance because of their interactive nature and their suitability for 6. INSTRUCTIONAL MATERIAL delivery on Internet. Internet will become one of PRODUCTION the important delivery systems. Since Internet could be used to deliver structured instruction as The availability of relevant instructional materials well as unstructured materials, a balance between isthe key to the success of the technology the two modesisto be workedout.The adopted.There are two choices develop the unstructuredhypermedia modeoffersmany instructional materials or adopt/adapt the existing advantagestothecontinuingeducationof materials. Often the materials being situation and professionals. However when used with younger culture specific the latter choice becomes difficult. groups it raises certain issues that are to be Further, even from the cost point of view also the addressed by the education system and some of latter choice becomes impracticable except in the these issues are briefly mentioned below. caseof verysmallcountries.However the production of instructional materials is a time How does a student who is accustomed to consuming activity and thus requires some sort of systematic teaching respondate to hypermedia co-operation between the institutions and co- approach? ordination in the developmental efforts.It may How do we take care of cognitive mapping of alsobeworthconsideringaninternational information (needed for understanding and collaboration in the region for producing the application) in the case of younger learners materials.Before the productionstarts,itis gathering fragmented information on important to draw standards for the Internet? documentation of design, lay down standards for How do we take care of students 'wandering' development and plan for utilization. in cyber space? How does the student take 'notes' in the case 7. IMPLICATIONS of BBS, Hypermedia, and conferencing sort situations? Some of the technologies such as the CAI, ITS, Digital Libraries and Internet have far reaching Thus the future of exciting and challenging. The implications. In an extreme case we may have to technologies are looking for applications and it is face the situation of virtual laboratories, virtual for us to make use of them in an innovative library or even virtual universities (universities manner. under the staircase). The libraries all over the world are likely to be integrated in a seamless 8. REFERENCES manner.Thedigitallibrariesanddigital publishing may have the following implications. (1) Camer H., Grese S1982 Bridging the gap; Towards a policy and strategy for film and Books may have nonlinear structure and may Television in the developing world. adapt Hypermedia approach (2) LohiaR..R.,1982,Implicationsof the Who will author the books in the fast Introduction totelevision in Papua New changing technological scenario? Guinea, Proceedings of the Congress The fast changing technologiescreatea CILCET, Austrin film and Television School situation where the knowledge will exist in a study. fragmented manner with a large number of people and often not confined to the university (3)Durr A., 1986, Television and Children, A boundaries. In suchcases what would be the special Medium for a Special Audience ,Bevaly form of the 'books'
459 490 (4) Arnove R.F.,(ed),1975 Educational Pau, L., F., 'The selection and use of New Television; A policycriteria and guide for (7) technologyandvocationaltraininginthe developing countries,New York. developing countries' at the expert group meeting of H.O. Turin in Dec, 93. (5) GoodyearPeter,'ExpertSystems and IntelligentTutoring, Someissuesinthe Engineering of Pedagogic knowledge.
(6) Rixon Paul, 'Some Basic Principles of conferencing Techniques'
460 491 Multimedia Distance Education Experiments in Japan -Three Site Debate Trial by MPEG2 over ATM System-
Gen HAMADA*/*, Kuniaki EBINA**, Shigeru MATSUMOTO, Takahiro KOMINE*, Ryutaro SUZUKI, Fumito KUBOTA
*: CSK Corporation, Tokyo, Japan / **: Kobe University, Hyogo, Japan ***: Kanda University of International Studies, Chiba, Japan ****: Communications Research Laboratory, Tokyo, Japan 1. Abstract This paper reports the Remote Debate Experiment which wascarried out in last winter as one of the Multimedia Education Network ExperimentsProject (MENE Project). ATM network was connected among three sites: Kobe University,Chiba University, and National Institute of Multimedia Education(NIME) in Chiba.The ATM network and MPEG2 video CODEC (encoder and decoder) were shown tobe effective in providing a virtual debate space.
2. Introduction was sat at a studio at NIME. Eachsitewas connectedbytheremote B-ISDN is expected to be installed everywhere communicationsystem.Thissystemused in near future. Facing with coming multimedia MPEG2 video CODEC and ATM network. age, we should solve the importantquestions: The purpose of the experiment was to observe How canweenhancetheeducationby the actions of the students in the debate trials multimedia technologies? How should we apply andtocollecttheiropinionsonremote Multimedia tools in the school education? And communication systems, and then to use that what impact would these tools have on students? datatoanalyzethe performance and the Multimedia tools will affect several situations of technical issues of multimedia communication the society. We are now beginning to investigate tools for use in the twenty-first century. the effective ness and influence of multimedia technologies in running parallel to develop the 3. Experiment communication systems. The MENE Project,whichismultimedia 3.1 Summary of Experiment communication technology, examines how the present technology can be used in multimedia The RD Experiment was prepared by three education. phases: The first phase was intended to test the ThispaperreportstheRemoteDebate network connectivity and adjust the Experiment (RD Experiment). We have communication systems to be used. And at the demonstrated how future students might use same time, the students of each Kobeand Chiba multimediacommunicationtoolsintheir junior high school experienced the long distance classrooms. communication by the system, and the students The RD Experiment was conducted among three met each other for the first time. At this time the sites: Kobe University, Chiba University, and students did not perform debate trials. The NIME in Chiba. The distance between Kobe and second phase experiment was leaning the debate. Chiba is about 480 km in a straight line. NIME is The junior high school students who took part in about 5 km from Chiba University. Ten student's last year's national debate tournament had come from each junior high school attached to Kobe and showed the debate demonstration. The third University and Chiba University served as phase experiment was a take of the debate, debaters at their respective sites, and the referee between the students of Kobe and Chiba Junior
461 492 High School. The purpose of the Second and the selected ( from 5.184 Mbps to 31.104 Mbps ). The Third experiments was to compare the feeling of compressed data was transmitted and received theexpert and beginnerdebaters,andto using ATM cells. This CODEC supported AAL-5 determine the role the remote communication to interface to the ATM network. A camera and system played in the debates. microphone connected to the encoder. Audio and The first phase experiment was carried out on video encoded by MPEG2 were sent to the ATM 11 November 1996, second on 14 December 1996, inrealtime. A TV monitor and speakers and the third on 8 February 1997. connected to the decoder played the audio and video decoded from the data received from the 3.2 Experimental environment ATM network. The encoder and decoder were connected to the ATM switches by optical fiber. In Kobe University, Chiba University, and NIME the experimental network, an encoder at any site were connected by experimental ATM network could be connected to a decoder at any site by called the "Joint Utilization Test Network of setting the connection of the ATM switches. Multimedia Communications", provided by NTT (Nippon Telegraph and Telephone Corporation). VP = 12Mbps This network topology was star type centering on I vc= 6Mbps NIME. This experiment used the Virtual Path \_4 Kobe Univ. bandwidth of 12 Mbps. VP = 12Mbps The configuration of the network connection VC = 6Mbps I/ was different each time, because mistook made in VC = 6Mbps the setup of the ATM switches, and unknown VP = 12Mbps NIME network problems were arisen. The composition I of network is shown in Figure 1 and 2. VC = 6Mbps Chiba Uwe VP = 12Mbps
Kobe Univ, VC = 6Mbps VC = 6Mbps )
NatisagblatutsaMatiowlia Fig.2 Bandwidth of experiment ATM network ATM Switch obit Utilization Test Network of 12/168 The first experiment was carried out only Multimedia Communications between Kobe and Chiba. Because a problem was happened in this time at NIME. Only Chiba and
NTSCMPEO2 Kobe could exchange data each other. We did resolved this problem after that, the cause of this Chiba Univ, problem was mistook the setup of traffic shaping of ATM switches in NIME. The composition of the Fig.1 composition of experiment network first experiment is shown in Figure 3. The second experiment was carried out between The NTSC CODEC had an MPEG2 algorithm Kobe, Chiba, and NIME. The MPEG2 data format. This CODEC's MPEG2 performance class encoded at each sites was sent to the ATM switch was Simple Profile at Mail Level(SP@ML), and at NIME. In the ATM switch at NIME, the the coding and decoding delay time was about 0.3 received data was copied by multi-cast mode and millisecond. Analog video signal from the NTSC sent simultaneously to the decoders at other both video camera was used. Analog audio signal sites. The composition of the second experiment input was used, with two audio channels in the is shown in Figure 4. MPEG1 audio mode. The output data rate generated by the encoder was 5.814 Mbps as CBR. Several kinds of output data rates could be
462 4 9 3 Chiba Kobe Monitor Chiba Kobe Camera Monitor CODEC 111 :111 111111 A A NIME NIME ATM-SW V 7 Video multiplexer KVA CODEC simm V.Y.A 17_,ZA
DEOORDER ENCORDER 4111EMATM-SW 111111 M
/MIN ONECamera r Kobe AFT Ilk MAW, 1&13.14 Chiba Univ. Kobe Univ.
Fig.3 composition of first experiment 1111111 A 1111111 VZA
NINEKobe _ NIMEChiba mmo
Chiba Univ. Kobe Univ. Chiba Kobe Camera Monitor Fig.5 composition of third experiment CODEC rhmu11111 NIME This video multiplexer decoded and multiplexed ATM-SW the data from Kobe and Chiba with that of NIME. ENNA Themultiplexeddatawasencodedand distributed to Kobe and Chiba. Only the data ATM-SW from NIME was copied by multi-cast mode of ATM switches. Emma mum The pictures on TV monitor of the remote communication systems frozen occasionally. The innreh 11111COD EC1111111111 effect was similar to what happens with loss of ATM Cell at some ATM switch in the Public NIME Kobe 'Chiba Network. These were two factors underpinning this problem. One was that the MPEG2 CODEC Chiba Kobe Univ. sent data at the maximum rate of the network. Fig.4 composition of second The other factor was the buffer size in the ATM switch in the Public Network. The third experiment was also carried out Occasionally there was troubled with sound between Kobe, Chiba, and NIME using the same transmission. During the troubled times, we had procedure as the second experiment. But only one replaced to use portable telephones. connection was made for sure at each site because of the network trouble. This problem was 3.3 debate the Kobe and Chiba could received only data of 6 Mbps from NIME. We supposed the occurrence of In thefirst experiment,students with no disposed of the ATM Cell on somewhere in ATM previous debate experience were invited to chat network. We could not resolved cause of this using the system. The students would later in the problem yet. So the data from the two other sites third experiment. This experiment was carried had to be multiplexed. The composition of the out to get the students used to talking in this thirdexperiment and multiplexed is shown in environment and to test the connections. The Figure 5. junior high school students at the Chiba site were
463 494 not able to take part in this experiment, so the students at the Kobe site introduced their school to the college students at the Chiba site. In the second experiment, experienced debaters came from the two schools, who took first place and third place in last year's national debate tournament, had a debate trail on the proposition, Resolved: "That Japan should have a daylight saving time system". The inexperienced students who wereinvitedtothefirstexperiment introduced themselves before the debate and observed the debate. Before the third experiment, two experts gave an intensive seminar lasting a few hoursin debate to those students who participated in the thirdexperiment.In thethirdexperiment students debated the resolution, Resolved: "That Fig.6 composition of debate stage of JapanshouldintroduceEnglishasan independentsubjectinthe primary school second experiment education".
3.4 results of the experiment
We hope to answer several question in these experiments. The first was whether the student debaters would find it more difficult to exchange judge arguments through only the video camera and Debate TIME TV monitor sets in front of them. We thought it would be more difficult for them to communicate 00:01:24 opponent using this system. One of the debaters said that he found it difficulttoprojecthis inner feeling tohis opponents due to the lack of direct interaction. It Fig.7 multiplexed video monitor seems that this comment ironically justifiesthe use of this system for debate in that the debaters Following the debate rules adopted by the cannot resort to emotional appeals but must rely national tournament, debaters were not allowed on verbal messages. to show any visual aids. This rule preempted the Another debater who took part in the first problems caused by frozen pictures on the TV debate said that it was rather difficult to look at monitor in that the monitors did not send any the video camera and the two TV monitors at the information directly relevant to the debates. same time. This problem was mitigated inthe Some debaters said that it was easy to see how second debate by placing the TV monitors closer the judge reacted because there was a monitor to the video camera and putting the pictures of showing the judge throughout the debate. In thetwoothersitesononescreen.The regular debates, debaters seldom see the judge(s), composition of debate stage of second experiment but in this setting they were able to see the judge and format of multiplexed TV monitor in Figure 6 thanks to the monitor. Some debaters in the and 7. second debate also said they found it difficult to hear their opponents from time to time. We think we could have preventedthis problemby
464 495 adjusting the sound volume and teaching the they are grateful to Prof. Hiroaki IKEDA of students in advance how to use the microphones Chiba University,Prof.Keizo NAGAOKA of effectively. NIME and Prof. Toshio KOBAYASHI of NIME for Another question we hope to answer is whether their cooperation in this experiment. an experienced judge particulardifficulty judging the debate. The judge in our experiments said References thatheperceivednosignificantdifference [1]S.Matumoto, K.Okamura, T. Kobayashi, between the remote debates and regular debates. S.Yamashita:"A New EraforEducational He also said that he felt that we could even hold a Debate An Analysis of Educational Values of debate tournament using this system. Three-Site Long Distance Debates by Japanese We would like to point out that the students MiddleSchoolStudents",Teaching Medical actively engaged in informal talk with the Literacyand MediaCitizenshipSummer students at the other site after their debate. They Conference,The National Media Citizenship seemed to enjoy themselves a great deal, and Project, June 20-22, 1997. some of them even shared their addressesand [2]R.Suzuki, TKomine, E Kubota, phone numbers. Therefore, it might be better to K. Nagaoka:"MultipointDistanceEducation have them talk informally first before the start of Experiments", IEICE. D-712, 1996 debates. [3]M.Itou, H.Higaki, T.Komine, K. Nagaoka:"ComfortableEnvironmentfor 4. Conclusion Remote-Debaters Display Effect on Remote- Debaters-",JSiSE,71-ansactionof Japanese The remote communication system using ATM SocietyforInformationand Systemsin and MPEG2 technology proved very effective for Education Vol. 14 No.3, August 1997 the remote debate. The debaters, The judges, and the experiment staff could communicate well with this system. Of course, this system had many problems:frozen pictures,voiceecho, forward delay of picture and voice, loss of ATM Cell in the network, and equipment expense. These problems need to be addressed. This experiment confirmed the importanceof voice in remote communication. Even if we can see a speaker's face, if we cannot hear the speaker's voice, communication will become much more re- trying. The delay in voice transmission made most participants feel uncomfortable. We must give sufficient thought to voice when developing remote communication systems. The remote debate experiment confirmed the possibility of using multimedia communication tools in education. Multimedia tools will soon be used in many factor of education.
Acknowledgment The authors would like to acknowledge all staffs of RD experiments, at NIME, at Kobe University, at ChibaUniversity.Authors expresstheir thanks especially to Kobe and Chiba Junior High School students and theirs teacher. Furthermore,
465 496 Virtual Classroom. Virtual Learners
V.C. Marney-Petix, Curriculum Designer, Marpet University, Fremont, California, USA & Roy K. Ng, Partner & Senior Consultant, CGI, Toronto, Canada
In this paper, we look at the challenge of distance education in both its synchronous form (virtual classroom/virtual university)via videoconferencing, audioconferencing, Internet live chat and other realtime technology and in asynchronous forms (self-study, thelnternet email).We wish to explore the new learner paradigms that are merging from the application of this new technology. As we make the learning experience virtual, we can ask if the skills learners need to succeed have changed. In this paper, we focus on our research results in this area. Which learners succeed in the various distance learning modes? What specific attitudes and behaviors do these successful virtual learners possess? Can we teach these attitudes and behaviors to people who have adapted to traditional learning? We will examine 4 years of experience at Marpet University, Temasek Polytechnic (Singapore), University of California Santa Cruz Extension and the Universidad Autonoma de Nuevo Leon (Monterrey, Mexico) with all these virtual learning modalities.
Marpet University has been experimenting with lesson of the new paradigm is that learning is various modalities for distance learning since now an active, not passive, process. 1991. In addition, local Universities that the authors are affiliated with have allowed them to Our research indicates that some traditionally experiment with non-traditional learning in both successful learners are more successful in accredited and non-credit courses in data synchronous learning modes (presumably communications, networking and telecom. because it most closely resembles traditional Experiments have shown that combinations of lecture mode), but much less successful in synchronous and asynchronous modalities asynchronous and mixed sync/async deliver the greatest learner benefit. As learning environments. Our research also indicates that institutions increasingly embrace non-traditional virtual learning success skills can be learned. delivery mechanisms, it is important that we Since our earlier research indicates that mixed study the learner characteristics that make sync/async learning promotes the highest level learning more successful in this new world. of demonstrated knowledge transfer, we will zero in on this environment in detail, looking at A rich body of research exists concerning the why this should be, and how we can promote characteristics that make a person successful in learning skills for this and other modalities. traditional learning mode (lecture). Classes exist to teach those who do not naturally exhibit 1. Shared Learning "successful learner" characteristics to develop these characteristics. They are usually titled 1.1 Looking at Marpet University's Learning *How to be Successful in )00(* where XXX can Environment be 3rd grade, graduate school, on the job training or aceing the scholarship exams. If * Need Async as prime component to cut loose interactive distance learning and multi-modality from time/place/distance. distance learning require different skills, we * Need to prevent straggling with a stressed need to identify what these skills are so we can population, so some sync component required. teach them to our learners. 1.1.1 Solution: Shared Learning We expect this research to complement the ° The primary vehicle for learning is self-study. research ongoing that is studying what the * The second vehicle is the study group. conveyers of the learning have to do to convey * The "instructor" facilitates and coaches. the learning most effectively. The most powerful * Learners get materials and get into study
466 497 groups on the kickoff day. 1.2.1 Success of Study Groups * Due Dates assigned for all components. In the beginning classes, the learners who 1.1.2 Expectations & Assumptions About attended more study group (synchronous) Learners meetings tended to do better. There was no correlation with attendance with the more * We expected a motivated, self-selected group. advanced classes because: In contrast, most learners didn *t know it wasn*t a lecture experience (for the first 2 years)! * Some advanced learners 'didn't need help" * We hoped that they would learn as much as and stayed away the lecture group, with a small decline in grades. * Several learners came to "be sure they didn*t What we saw instead was a significant increase. miss anything" and "get a better grade". An * We defined *learning* quantitatively, as additional reason, we believe: human contact. numerical performance on standard tests 1.2.2 Success of Telephony Hours 1.1.4 Components of Shared Learning * Learners at first tried to avoid actual working Required: Self-Paced Workbook, Quizzes by calling (shifting responsibility back to the (Hand-in reviews), Project, Final exam (only this instructor to "spoon-feed me"). is live) Optional: Q&A sessions, Study groups, Internet email, AOL chat, Telephony office 1.2.3. Success of Internet Email & Chat hours * 84% used email at least once. 45% were 1.1.5 Study Groups heavy users of email. * Chat was a hassle for many who are not All learners were required to join a live group, if technically savvy. possible. No constraints on time/place of meeting, including evenings/weekends/lunch. 1.2.4 Conclusions Groups generally met once/week. During the initial (prior to the current study) 1.1.6 Live Meetings research period, we came to some obvious conclusions about the learning process. For There are live meetings: 4 Q & A sessions, 90 instance, looking at the individual grades, we minutes each, at lunchtime. To answer could see that the overall competency level questions from study group ONLY. Handins increased as the quarter progressed; the graded in class for immediate feedback. average grade per handin climbed. There was a dramatic shift at just after the mid-quarter mark. 1.1.7 Telephony Office Hours This was the point at which the learners really incorporated the realization that the old "come For a total of 2 hours/wk, to ask the instructor to class and listen" paradigm was dead. Those questions not resolved in study group who had not been self-regulating their learning hours (doing the required work) were prodded by 1.1.8 Internet Email: To the Instructor poor grades and by their study group to get with the program. * For specific questions, not resolved in study group The mental transition that the learners made was from seeing the instructor as the primary 1.1.9 Internet Email: To Each Other architect of the learning process; they realized that they were responsible for getting the Learners used email to prepare for live study learning done - or not. The instructor is a group meetings and live Q&A. They used email facilitator and coach. Learners forced to take to share answers, ask questions, build team responsibility for their learning complained spirit. Asynchronous learning. mightily but learned more thoroughly.
1.2 Are Specific Learning Styles Correlated with This is where we were a year agowith a Success in Shared Learning ? promising direction but nothing more than
467 499 anecdotal answers to this fascinating question. Let's drill down to some of the details in these concepts:
New Research (1) Responsibility of learning
In order to answer this new research question, In lecture-based, synchronous learning, using every instructor was asked to rate incoming videoconferencing, satellites or whatever to learners on a list of characteristics, from degree increase the range of the lecture, the specific of intrinsic interest in the subject, degree of timetable and location takes the first step on the employer-induced interest and/or anxiety, to the road to making the learner become passive learner's experience with non-traditional towards the learning environment and the learning, the learner's experience as an learning process. Of course, this is the learning entrepreneur and other "no-one else to blame paradigm that we all grew up with, from our but me" situations. We also tested earliest experience of learning, uninterrupted to optimist/pessimist/realist characteristics on a the present for most of us. qualitative scale. We then correlated these learner characteristics with actual final grades. On the contrary, the asynchronous mode allows learners a higher degree of flexibility to arrange Results from 3 quarters have been analyzed. their own schedule and training progress. This The quantitative results suggest that successful freedom encourages the learner to be New Learners have the following characteristics: responsible for their learning. Successful learners in our study took responsibility for their 1) a background as an entrepreneur, or learning of both content and process. We saw other experience of a "buck stops here" no- this occur not only in their verbal excuses nature, or prior experience with non- communication, but in actual action. The traditional (non-lecture based) learning highest grade-earners, and the happiest learners, took the stance: what do I have to do 2) a strong intrinsic motivation to make it happen? This occured after about 4 sessions, even in the groups that did NOT sign 3) no expectation that the learning- up for New Learning. facilitator (instructor) would be entertaining, provide extrinsic motivation, "make the learning (2) Time management fun," etc. With the flexibility of asynchronous training, All of which culminated in 4) a paradigm learners often have the choice to determine shift from passive learner mode to active their time schedule and the duration of specific learner mode. bouts in the learning process. Good skill in time management is essential to meet assignment We also looked at the results of comparison of 1 deadlines and lesson revision under this new quarter of classes in which videoconferenced mode of learning in which you don't have your students were compared to Shared Learning instructor nagging you like a 5-year old and and regular lecture students. In our study reminding you many times of all relevant group, learners in synchronous non-traditional deadlines. learning (Kinko's videoconfercing) behave very like traditional learners. Most of what Also - and not an inconsiderable advantage - synchronous learning does is vanquish distance, learners in asynchronous learning mode have but you are still in passive listening mode vis-A- more time to devote to actual learning than vis an instructor. We believe that we did not see those in synchronous mode as they do not need a significant difference between to spent time in traveling to the learning location videoconferenced learners and traditional (school, institute, whatever) on a rigid schedule learners because it is only an asynchronous usually during peak commute hour! Even component that forces the "instructor" to though more time is available for learning, become a learning facilitator and the learners to learners must have the proper time take responsibility for learning. This is our management in setting priorities and exercising opinion, based on an inadequate sample. self-discipline.
468 499 (3) Goals and planning (2) Email discussion groups in asynchronous mode Learners use email to contact their Many learners enrolled in both virtual and instructors and tutors. traditional classrooms are working full time and also have family responsibilities. We observed A successful implementation that uses Lotus (as many other researchers have before us) that Notes and Internet Technology can be found in many learners do not have an overall plan and Athabasca University in Alberta Canada goal when they register for their program. (reported by Dr. Stephen Murgatroyd at the Successful New Learners, on the other hand, GlobeComs conference in Calgary, June 1997). have a clear goal and realistic planning of what By using the Internet and email, learners' group they can achieve and the time needed to discussions can take place both synchronously devote to the course to be successful. and asynchronously.
Of course, the difference that we see in the With asynch learning, messages and comments successful virtual learners is precisely this issue: are exchanged when convenient and discussion they understand that they cannot plan to simply and feedback can be retrieved when the learner show up and expect the learning process to is again available out of their busy schedule. happen magically (and blame the instructor This makes the learning more efficient and when they don't learn). If the instructor were effective when many recipients can be sent the only more entertaining, I would have learned the same email of a discussion. An added benefits material successfully! is that learners have time to organize their questions and formulate their arguments clearly The successful learners in our study had in writing. realistic goals, they knew what they could and could not accomplish with the time they had Universidad Autonoma de Nueva Leon (UANL) available amidst job, children, aging parents and in Monterrey, Mexico, has been presenting its their own needs for exercise, recreation and degree candidates in electrical engineering and relationships. The optimists (who have been networking with the challenge of sending and praised in best-sellers for having the best receiving course materials via the Internet, list mental and physical health) actually performed servs, and an internal network. Learners who substantially less well, grades-wise and use the online study services most extensively happiness-with-the-process-wise, than the are the higher-grades earners, but realistics who did NOT think they could pull comprehensive studies of the reasons for this additional hours out of their magic hat at will - or have not been completed. We hope to report short-change other areas of their life without these results later. Professor Leopoldo Villarreal paying a price. Jimenez (lvillaregamailme.uanlemx) is heading up this networking effort.
Other factors that are advantages to learners in MU found that those who engaged in group mixed synch/asynchronous mode include: interactions did better, and not just by "picking each other's brains." Parenthetically, we (1) Virtual library To supplement the trips to discovered that the tendency of the lazy ones to the library, many New Learners, in our study "use" the group was limited by the group's ability and others, made use of Internet searches for to eject un-collaborative persons. And information. Marpet University does not have finally, of course, group effort and the laziness Internet access provided for learners, but other factor are endemic aspects of business life in institutions do. (We assume everyone has a North America. We relied on the threat of Web browser and ISP connection.) It can be ejection (and having to work alone for the rest of argued that the purely synchronous mode of the quarter) to keep flagrant cheaters in line. learning can also utilize public databases and We only had 3 failures in 3 quarters. the Internet as a supplement to the learning process. The advantage for learners with some (2) Higher degree of comfort in participation asynchronous training is that they have fewer needs to travel to the classroom and therefore In early types of asynchronous training, could use such time to access the Internet. learners did not meet face to face. Even in advanced systems like ours and other similar
469 50 0 systems, much work occurs via email. This can * Classes where we provided step-by-step sometimes be an advantage! (Although some instruction on How to Learn on Your Own and contact is important, as we have reported How to Run A Study Group "got with the earlier.) Here is how anonymity helps: When it program" faster. comes to debate, discussion over email or questions to instructors, learners often enjoy a Persons with rigid attitudes toward the higher comfort level in terms of their perceived PROCESS (I've never done it that way before; embarrassment of wrong answers. This is well- my culture doesn't do that, etc.) tended to known to have an impact in Asian, and Asian- cluster in the lower grades. Unfortunately, derived (immigrant) cultures, but we consider immigrants tended to be the most resistant to the disinclination to *look stupid* pretty darn new processes. This is a problem for them, as close to a human universal! more learning will be presented in unfamiliar ways in the 21st century. The persons in our In addition, some persons involved in the study who most resisted learning new skills learning process are not as ready to face the dropped back to traditional lecture classes in 21st century challenge of multi-cultural, non- subsequent quarters. sexist, non-racist, non-agist life as they would like to be - or others think they should be. These * The most intrinsically motivated, most individuals have told us that they can work more entrepreneurial and most realistic people also comfortably with each other when they DON'T were most open to learning new modes of have to see them in person (and confront their learning: they were most open to changes in the prejudices). These individuals will improve their process because entrepreneurial experiences overall achievement level in an asynchronous ahve made them more open-minded in general. collaborative effort. More realistic people also tend to be more flexible in their thinking. In summary, there are definitely indications that a successful New Learner can be brought into * Those who were more computer literate and existence with training in How To Learn under had more experience online did NOT the new regime. necessarily do better as New Learners. They were not necessarily more open to new Conclusions processes in general, nor were they easily shifted into self-motivation. They did not spend In the synchronous model, learners may over- mroe time on task, which is always the chief rely on the instructor to provide them with the predictor of a successful learning outcome. We learning experience. Learners too often today look forward to more studies on teaching New play a passive role in the learning process. Very Learning skills. Please contact us at often, instructors feel themselves and are marpetuehome.com for more detailed considered to be responsible not only for information. coaching learners through the material to be learned, but also for motivating learners to participate.
In the combined synchronous & asynchronous model, some learners develop a high degree of self-discipline, maturity and self-directed learning once they get adjusted to the system. Others, of course, will need more time to learn how to be New Learners, and we are experimenting with ways to teach these new skills.
Teaching New Learning Skills
We did a 1 quarter study of effective teaching of New Learning skills, not enough for a statistical analysis but enough for some generalizations.
470 5 of Social Welfare Consequences of Privatization in the Telecommunications Industry
Seung-doo Choi Korea Telecom Seoul, Korea
Abstract
This paper measures the changes in economic performance of formerly state-owned enterprises (SOEs hereafter) under the alternative regime of government and private ownership. The analysis is focused on the changes in the performance of privatized telecommunications operating companies (telcos hereafter). Further, this paper sheds some economic lights on three fundamental questions of privatization: 1) should the firm be sold? 2) at what price should it be sold? and, 3) to whom should it be sold? I empirically tested above research questions and found that the economic effects of privatization in the telecommunications industry were desirable. Empirical results shows that the widely used privatization scheme of underpriced, partial offering through capital market is optimal and this scheme might be preferred to tender sale to the third party.
1. Introduction telecommunicationsindustry.Finally,Iwill analyze the term of selling contracts, e. g. selling We have witnessed a significant global shift price, selling fraction of stake, and analyze the away from state socialism towards stylized fact of gradual, partial, underpriced sale entrepreneurialcapitalismforthelasttwo of privatization program. decades. Governments around the world have This paper is organized as follows. Section soughttogenerategrowthandtoreduce 2introducesthefundamentalformulaof structural inefficiency by removing the artificial privatization along with implications for the barriersand opening the economies up to privatization decision by the government. Cost competition. In this trend, privatization- the function and empirical findings are presented in transfer of assets from the state to the private section 3 todecidethesocialwelfare sector - has played a major role in economic consequences of privatization in the liberalization. Privatization represents a natural telecommunications industry. In section 4 and 5, response to the pressure of global competition, Iconsider the economic effect of terms of especially in the telecommunications industry, contractsusedinprivatization.Section6 which has been traditionally regarded as natural presents summary of the findings. monopoly in the domestic market. Governments have promoted the private 2.Welfare consequence of privatization ownership of formerly state-owned enterprises, recognizing that investors in the markets will 2.1 The fundamental formula of privatization provide more efficient monitoring on the worth of an investment than taxpayers and government When the government considers privatization of that represent them. an SOE, the first question that should be raised The economic effect of privatizationis is "Should the SOEs be sold?" In general, the usuallyanalyzed bycost-benefitapproach.' SOEs arestate owned because thereexists Empirical findings are few using this approach, market failure or natural monopoly. This means because the arguments in the model are too that public production of outputs may be more abstract. Thus, I will introduce cost function to socially desirable than private production. Thus measure thesocial welfare consequences of an SOE can be privatized only if there is positive privatization.Theoreticalanalysiswillbe economic consequences resulting from applicable to all of the industry considered, but privatization. empirical evidences are obtained only for the Toanalyzetheeconomiceffectof privatization, let us define key variables.
V,g : socialvalue of the firm under Cf. Jones et al. (1990) and Choi (1997) 471 502
estimates of AgCountry kg estimate Researcher Colombia 2.5 Schohl (1979) Egypt 1.2 Page (1982) Malaysia 2.2 Bruce (1976) Philippines 3.48 Bruce (1976) Thailand 2.54 Ahmed (1983) Turkey 3.37 Mashayekhi (1980) US 1.17-1.56 Ballard et al (1985) lcrmrrel Imes et al. (1990) continued government operation, Then, if the inequality [ V,p - Vsg > 0 ] holds or is V5p : social value of the firm under private not significantly negative, then the government operation, should sell the SOE. I will ascertain the relation kg: shadow multiplier on government revenue, by comparing cost function of each privatized Xp: shadow multiplier on private funds, telco. Z : actual price at which the sale is executed
If the government decide not to divest the SOE, 3. Should the SOE be sold? then society would enjoy Vsg. Otherwise each potential buyer calculates V5p which may be 3.1 Cost-benefit approach and cost function different for each buyer sinceitsability to reallocate the assets of a firm is different. Thus The cost-benefit approach has been developed we can define the change in social welfare as a and widely used for last 20 years and is the most result of the sale to any potential buyer; widely accepted approach among economists. AW =Vsp- Vs8(kg- kp)Z---- (1) But empirical estimation of the variables in the modelisnexttoimpossiblebecausethe The combined effect of first two terms measures variables in the equation are too abstract. Thus I changes in social welfare resulting from the new will compare cost function of the respective incentive structure after sale, and the last term regime. shows the social value of the sale proceeds. This This approach is based on the duality equation is developed by Jones, Tandon and theorem, which means that,in Vogelsang (1990) and iscalled fundamental competitive formula of privatization. equilibrium, profit maximization is equivalent to cost minimization.Privatization changes the incentivestructureofthemanagersand 2.2 Privatization decision employees, and allows them to pursuit profit maximization. Thus we can ascertain the effect Now wecandecidethesocialwelfare of privatization by the cost function. If the firm consequences of the privatization decision. To produce more output using the same input, then improve social welfare, AW must be positive; we can say the privatized firm increase the social otherwise the government should not sell the welfare assuming that the price (rate) level is firm. In short, unchanged. Sell only if AW = Vsp - V,g + (kg - Xp)Z > 0---- (2) 3.2 Costfunctionandtheregression parameters In inequality (2), we are sure that the last part of right hand side of the equality is positive. First, Assume Cobb-Douglas production function, Z isalways positive. Next,itis La2 generally Y = (3) accepted conceptinthe academics that the where Y = annual output, relation [ Ag > Xp ] holds, based on the ability of taxation by the government. This relationis supported by the empirical studies for various countries. Empirical estimates of Xg, assuming X = 1, for selected countries are presented in
. 472 503 K = capital stock, Around the world, 31 state-owned telcos L = labor, have been privatized through private sale and 24 a, + a, = 1, state-owned telcos have been privatized though A = constant the capital markets share offering. Thesum of privatization proceeds from private sale is US$ and cost function 20,050 million and that from public offering is C = PK -1( +13, (4) US$ 55,472. Total proceeds from privatization where PK, 13, are factor price of K andL, around the world are estimated to US$ 599,749 respectively. million. Thus sale proceeds from the sale of state-owned telcos explains 30% of the proceeds Then, profit function can be transformed as; fromthe 122 privatizationacrosstheindustry, 7C = AT- Ka'. PKK - PL -L (5) around the world by the first half of theyear where P is sale price per output. 1997. The UK baseddatabasePrivatisation Differentiate the profit function with respect to International summarizes that private sale of K and L, and equatethe twofirstorder telcosis accomplished in the less developed conditions, then countries whose capital markets are K = P, L (6) underdeveloped.The membercountriesof OECD haveprivatizedsmallerstate-owned Substitutes equation (6)in equation (3), and telcos through private sale. rearrange the terms, then, Average issue size of private sale of state- K = Ad-acal a2 a2 PK' .13,,a2 Y --- (7) owned telcos is US$ 647 million and that of public offering is US$ 2,331 million. So,we can Substitute equation (7) in equation (4), then conclude that the incumbent or majorstate- C A-a2 [ 1 + A-i.a -a2. aia2] pKa I .pLa2.y owned telcosare privatized through capital (8) markets. Unfortunately, thereis no publicly availablefinancialdatafortheunlisted Take logarithm both sides in equation (8), then companies. Thus I will focus on the privatization log C = log a0 + a, log PK + a2 log 13, through capital market. + log Y --- (9) TheWorld Bankandthedatabase where a0 = laia2a2a2] Privatisation International identify about 25 public offerings from 21 countries. Detailed data To know theeffectof privatization, on (initial) public offerings of telcos, are shown introduce dummy variable D in equation (9), in which takes value 1 if the firm is privatized and 0, otherwise. Finally, the regression model to be Sixfirmsareselectedforregression estimated is: analysis: KPN, Singapore Telecom, TCNZ, Tele log C = 13, + (3, log PK + 132 log P B, log Danmark, Telekom Malaysia and NTT. Other Y +134D --- (10) companies are excluded from the dataset because I could not collect enough series of accounting data. In this equation, proxies are defined as follows: average return on capital for PK, sales 3.4Results per employee for 13,, revenue for Y. We can conclude that the efficiency of the telcos are shows the result of the regression improved, andthus thesocialwelfare analysis. The coefficients of dummy variable consequences of privatization is desirable if the are negative in the 4 telcos out of 6 sample telcos. coefficient of dummy variable is negative. Thecoefficient The null and alternative hypothesis is of dummyisstatistically significant negative for Telekom Malaysia and is H. : Theeconomic is performance significant positive unchanged after privatization. for NTT. This resultis H. : The economic performance is changed consistent with prediction of the model basedon the theory of information asymmetry such after privatization. as Perotti (1995), Branco and Mello (1991) which 3.3Sample assume that the performance of the privatized SOEs will be improved.473 504
Initial Public Offering in the Telecommunications IndustryCompany(Vendor) IPO Issue Size Stake Initial Gvt Stake Date (US$, Mn) sold Return in 97 C&W(UK) Dec 81 466 50% 32% 0% BT(UK) Nov 84 4,763 50% 33% 0% Sirti(Italy) Jun 85 148 40% n.a. n.a. STET(Italy) Nov 85 103 3% -37% 51.7% NTT(Japan) Feb 87 15,097 13% 55% 65.4% TOJ(Jamaica) Sep 88 19 13% n.a. n.a. Telefonos de Chile Sep 90 90 90% 6.3% 76% Bezeq(Israel) Sep 90 74 9% n.a. n.a. Telus(Canada) Oct 90 825 60% 0% 0% Telekom Malaysia Oct 90 872 24% 5.6% 0% Telmex(Mexico) May 91 2,170 15% 15% 46% Telecom New Zealand Jul 91 819 100% 20.8% 0% Telefonica de Argentina Dec 91 849 30% 15% 87.5% Singapore Telecom Oct 93 1,590 7% 75% 0% Telecom Argentina Mar 94 1,050 30% 7.3% 51% OTE(Greece) Jun 94 530 8% 8% 92% Tele Danmark May 94 2,894 38% 7.3% 51% KPN(Netherlands) Jun 94 3,868 30% 7% 48% Pakistan Telecom Sep 94 997 12% 117% 88% Indosat(Indonesia) Oct 94 1,060 35% 20% 65% Portugal Telecom Jun 95 998 27% 7.5% 51% PT Telkom(Indonesia) Nov 95 1,590 19% 20% 81% Telefonica del Peru Jul 96 1,100 24% 10% 5% DT(Germany) Dec 96 13,500 26% 19% 74% France Telecom Oct 97 n.a. n.a. 13.0% n.a. date - offer price).ivi e by offer price.
I do not exclude the possibility of obtaining insignificantresults because the number of efficiency. observation is limited. But the empirical finding Vickers and Yarrow (1991) summarize shows that the effect of privatization may not be that the efficiency of privatized firms in the harmful but beneficial to the economy. And the competitive industries are significantly improved reported resultsin
give us some while thatin the monopolistic or protected meaningfulimplications becauseprevious industry such as electricity, telephone are not. studiesreportsthat the economic effect of Megginsonet al.(1994)documentthat privatization in the monopolistic industry is not privatized firmsincreaserealsales, become substantial. more profitable, increase their capital investment Similar approaches are applied tothe spending, and improve their operating empirical studies on the impact of privatization; efficiencies. Caves and Christensen(1980)appliedthis However, my resultssuggest thatthe approach for Canadian railway industry, Levy privatization in the telecommunications industry (1981) for Iraqi manufacturing industry, and may be socially desirable, because the last term Yarrow(1986)forsteelindustryin the in inequality (2) is significantly positive. Thus I developing countries. But all of them find no conclude that the state-owned telcos should be evidence that privatized firms outperform SOEs. sold to the private sector as soon as possible and Wortzel and Wortzel (1989) also report that theprivatizinggovernmentcanbemore privatization does not contribute on improving confident on the economic consequences of privatization of state-owned telcos474 505
Results of RegressionCompany PL PK Y Dummy Observation -0.457 0.124 1.678 -0.021 KPN 1988-1996 (-1.06) (0.61) (3.74) (-0.96) (8 years) Singapore -0.353 0.004 1.157 -0.063 1983-1996 Telecom (-2.59) (0.16) (5.41) (-1.12) (13 years) -0.185 -0.139 1.410 0.006 TCNZ 1988-1996 (-1.65) (-4.31) (5.37) (0.12) (9 years) -0.022 1.911 Tele Denmark -1.007 -0.187 1988-1995 (-1.47) (-1.08) (2.64) (-4.23) (8 years) Telekom 0.987 0.009 0.170 -0.11 1988-1996 Malaysia (1.14) (0.16) (0.23) (-2.8) (8 years) 0.605 NTT -0.0216 0.0038 0.029 1981-1996 (-0.57) (15.521) (0.247) (1.515) (16 years) * The numbers in the parenthesis ( are t-statistics
4.At what price should the privatized firmbe sold? equilibrium if there exist the policy uncertainty e.g., re-regulation, taxation, changes in regulated Inequality (2) says that the sale price Z shouldbe rates and entry deregulation. maximizedtoimprovethesocialwelfare. Based on these theoreticalarguments, Vickers and Yarrow (1988)suggest that a public Jenkinson and Mayer (1988) findthat the tender sale should be chosen in orderto allow privatized utilities of UK is more underpriced the state to capture the full increase invalue of than the privately-held IPO companies. thefirmZ,and maximizesocialwelfare. Perotti(1995)predictsthatsuchfirmsas However, the evidences on actual privatization monopolies, protected industries will tend to be programtaketheformofgradualand privatized with smaller fractions of shares and underpriced sales as shown in Perotti andGuney larger underpricing. Thus we can expect that (1993), Perotti (1995). The
also shows formerly state-owned telcos are more similar information. underpriced in their IPO than in the IPO of But the opponents of privatizationargue privatelyheldfirms.ButDewenterand that the state sells the valuableassets of the Malatesta (1997) present evidence indicating nation too cheaply. For example, SirAlan that it is not a general tendency for privatization Walters (1988) remarks that itseems that no to be underpriced to a greater degree than private privatizationcanescapetheaccusationof IPOs. giveaway.' Inthissituation,Iwill compare the In case of initial public offerings(hereafter underpricing of formerly state-owned telcosto IPOs) of BT and NTT, therewere significant theaverageunderpricingof eachcountry excess demand andtheinvestorsenjoyed assuming that IPO returns for a givencountry substantialcapitalgains.Andprivatizing are independently, identically distributed. authorities expressed their satisfactionon this Average initial return data for each countriesare phenomenon. This attitude of thegovernment takenfrom Loughran,Ritterand Rydqvist can be justified by the theory of information (1994). The sample countries and theiraverage asymmetry. Grinblatt and Hwang (1989) show initial returns are as that a partialsale and underpricing byan informed issuer on the value of theasset is a The null and alternative hypothesis to be tested reliable signal of high value and lowrisk of the is; prospect of the firm. Further, Branco and Mello H,: Initial return of SOEs is the same as (1991), and Perotti (1995)prove that the partial, that of private IPOs discounted fixed price offering by theprivatizing Ha : Initial return of SOEs is different state maybe necessary for separating from that of private IPOs2 Branco and Mel lo (1991) 475 506
Initial Return of Selected CountriesCountry Initial Return Country Initial Return Canada 5.4% Mexico 33% Chile 16.3% New Zealand 28.8% France 4.2% Singapore 27% Germany 27.1% Portugal 54.4% Italy 27.1% the Netherlands 7.2% Japan 32.5% UK 12.0% Malaysia 80.3% (..rrp) T ntlohran Ritter and Rvdavist (1994) and teststatistics, whichisdeveloped by they have virtually complete power over these Dewenter and Malatesta (1997), is T = firms, and can direct them to pursue any political objectives. State ownership is then an example 2 0.5 of concentrated control with no cash flow rights EE(r -r )÷{(E(N*a ) andsociallyharmfulobjectives.Thus,the ic inefficiency of state firms is not all surprising. where the subscript c means country, i means Inmostcasesprivatizationreplace political control with private control by private the privatized firm within the country. investors. The result of the switch of ownership a' is sample variance of the initial structure is typically a significant improvement return in performance of privatized firms. But, if SOEs are privatized without the creation of strategic Under the null hypothesis, the statistics T has t- investors, agency costs of managerial control distribution with (N-1) and is asymptotically may rise even when the cost of political control normally distributed. Resulting statistict = - falls. This outcome is not surprising, given that 0.0485 < t*, a trivial value. So we do not reject the controlling outside shareholders no longer exist in these firms, leaving managers with more null hypothesis and conclude that theinitial return on the privatization IPO is not different managerial discretion. from that of private IPOs. Thus it is difficult to It is widely used approach that the shares of theprivatizedtelcosarepreferentially concludethatIPOsof SOEsaremore underpriced than IPOs of private firms in each allocated to the domestic small investors. Such country. countries as Japan and UK impose explicit limitation on the share fractions of telcos that a person can hold. This means that there may arise 5.To whom should the SOE be sold serious agency problem in the privatized telcos. 5.1 Corporate Governance and Privatization If it is true, the shareholders of the privatized telcos are worse-off than the shareholders of Boycko etal (1996) theoretically show that privateIPOs.Then,thewidelydiffused privatization will lead to effective restructuring ownership of privatized telcos may be harmful to of SOEs only if both cash flow rights and control the welfare of the investors and the economy. rights pass from the government to private hands. 5.2Welfareconsequencesandeffectof Consistent withthisstatement,Shleifer and Vishny (1997) analyze the economic effect of ownership structure privatization as follows: Corporate governance If the reasoning of Shleifer and Vishny (1997) is deals with the ways in which suppliers of fund to correct, the potential exploitation of wealth of the firms assure themselves of getting a return on their investment. The bureaucrats controlling shareholders by the managers may be resulted in ofthe state firms have at best only an indirect concern the long-term underperformance privatized telcos. So I summarize 1 year and 3 about profits (because profits flow intothe year holding period returns, net of initial return budget), and have objectivesthat arevery of different from the social interest. Nonetheless, of eachfirmand marketindexreturn respective countries, on 10 privatized telcos in
. 476 ')07 Holding-Period ReturnsCompany 1 year return 3 year return C&W 10.6% -25.8% BT 104.6% -9.9% STET 65.5% 218.5% Telus 14.7% 16.9% Tele Danmark -48.1% 82.4% Telekom Malaysia 89.7% 203.4% Telmex 83.1% 94.15% TCNZ 30.9% 40.4% Singapore Telecom -20.8% -15.8% KPN 3.8% -14.9%
The table shows that there is no evidence that beneficial to the economy as a whole, regardless privatizationoftelcos leadstoanother of the ownership structure. inefficiencyduetotheagencyproblem. Moreover, on the performance of private IPOs, 6.Conclusion previous studies provide evidence of short-run price over-reaction and high initialreturns but long-term underperformance relative Ihave provided a simple formal model to to market explainthesocialwelfareconsequence of index.' Thus, we can think privatizedtelcos outperform private IPOs. privatization. Although the model is cast in an abstract cost-benefit framework, and the number In
, only two firms, Telmex and of observationsinthe empirical analysisis TCNZ have been sold to strategic investors. But the table shows that there are limited,Ifindthatprivatizationisa good no significant measure to improve social welfare. This is true differences in the holding-period return between both for the west European countries that have the firms who have controlling shareholders and suffered from the large treasury deficit, and for the firms who have widely diffused shareholders. the developing countries that have suffered from I also tested the differences in the holding-period chronic shortage of capital needed to construct return using the stake of government in the first necessary infrastructures. half of 1997,butthere isnostatistically I also find that the initial offering prices of significant evidence that the privately held stake is relevant to the holding-period return of privatizationisunderpriced, butitisnot a the generaltendencyforprivatizationtobe privatized firms. These resultsare consistent with Sappinton and Stiglitz (1987) who underpriced to a greater degree than private IPOs. argue These results are inconsistent with the assertions that the tender sale of SOEs may not be optimal raised by the opponents of privatization. Further, if the potential buyers are risk averse or if there are good investment exists information asymmetry between vender privatized telcos and potential buyers alternatives because long-term holding period privatizedtelcosoutperform Thus, we may conclude that privatized returnsof the private IPOs. In sum, welfare consequence of telcosare better investment alternative than private IPOs and the welfare consequences of privatization in the telecommunications industry is beneficial to the investors and the economy as the privatization of state-owned telcos may be a whole. This outcome holds regardless of the corporate governance structure. 3 cf. Ritter (1991) for US, Ulhir (1989) for Germany, Keloharju (1992) for Finland, Mario Aggarwal,ReenaandRicardoLealand (1993) for UK, and Aggarwal, Leal and Leonardo Hernandez (1993), The aftermarket performance of initial public Hernandez (1993) for Brazil, Mexico and Chile offeringsinLatin America, Financial
477 508 Management 22, pp. 43-53 Finance Journal 2, pp. 165-199 Allen, Franklin and Gerald R.Faulhaber (1989), Megginson,William,RobertC. Nash and Signaling by underpricing inthe IPO Matthias Van Randenborgh (1994), The market, Journal of financialEconomics Financial and Operating Performance of 23, pp. 303-323 Newly Privatized Firms: An International Boardman, Anthony and Aidan R.Vining (1989), Empirical Analysis, Journal of Finance, Ownership and Performance in June, pp. 403-452 Competitive Environments: A Megginson, William., Robert C. Nash and Jeffry Comparisonof thePerformanceof M. Netter(1996),The Long Term Private, Mixed, and State-Owned ReturnstoInvestorsinShare Issue Enterprises,Journalof Lawand Privatizations, mimeo Economics, April, 32(1), pp. 1-33 Perotti, Enrico (1995), Credible Privatization, Boycko Maxim, Andrei Shleiferand Robert American Economic Review, September, Vishny (1996), The Theory of Vol 85, pp. 847-859 Privatization, Economic Journal106, pp Perotti,EnricoandSerhat Guney (1993), 309-319 Successful privatization plans: Enhanced Branco, Fernando and AntonioMello (1991), A credibility through timing and pricing of Theory of Partial Sales andUnderpricing sales, Financial Management, pp. 84-98 in Privatization, mimeo Ritter, Jay (1991), The Long-run performance of Choi, Seung-doo (1997),Divestiture Policy in a initialpublicoffering,Journalof Cost-Benefit Framework, AsiaTelecom Finance, pp. 3-27 97 Strategic Summit, ITU Sappinton, David E. and Joseph E.Stiglitz Dewenter, Kathryn L. andPaul H. Malatesta (1987),Privatization, Information and (1997), Public Offerings ofState-Owned Incentives, Journal of Policy Analysis and Privately-OwnedEnterprises: An and Management, Vol. 6, summer, pp. InternationalComparison, Journal of 567-582 Finance, September, pp1659-1679. Shleifer, Andrei and Robert Vishny (1997), A Grinblatt, Mark and Chuan YangHwang (1989), Survey ofCorporate Governance, Signaling and the Pricing of NewIssues, Journal of Finance, June, pp. 737-783 Journal of Finance, June, pp.393-420 Vickers John and George Yarrow (1988), Ibbotson, Roger G., Jody L.Sindelar and Jay R. Privatization: An Economic Analysis, Ritter (1988), Initial publicofferings, Cambridge: MIT Press, Journal of Applied CorporateFinance, Vickers John and George Yarrow (1991), Summer, pp. 37-45 Economic Perspectives on Privatization, Jenkinson, Tim and CollinMayer (1988), The Journal of Economic Perspectives, Vol. 5, Privatization Process in Franceand the No. 2, Spring, pp. 111-132 U.K.,EuropeanEconomicReview, Yarrow, George, (1986), Privatization in Theory March, pp. 482-90 and Practice, Economic Policy 2, April, Ingo Jones,Leroy,PankajTandon,and pp. 324-364 Vogelsang (1990), Selling Public Wortzel Heidi V. and Lawrence H. Wortzel, Enterprises, London, The MITPress Privatization (1989): Not the only answer, Jones, Steven, WilliamMegginson, Robert Nash World Development, pp. 633-641 and Jeffry Netter (1996),Share Issue PrivatizationsasFinancial Means to Political and Economic Ends,mimeo Keloharju, Matti (1993),The winner's curse, legal liability, and long-runperformance of initial public offeringsinFinland, Journal of Financial Economics33, pp. 241-260 Levis, Mario (1993), Thelong-run performance of InitialPublic Offerings: The UK experience, Financial Management,pp. 28-41 Loughran, Tim, Jay Ritter andKristian Rydqvist (1994), Initial Public Offerings: InternationalInsights,PacificBasin 478 5C)9 The convergence virus: infecting media services with telecommunication bugs
Mark Armstrong, Director Media and Telecommunications Policy Group, RMIT University Melbourne, Australia
1. ABSTRACT
Telecommunications liberalisation has produced a 'hands on' approach by governments and regulators. There has never been so much regulatory activity. Free speech has rarely been an intense issue in telecommunications, because carriageand con- tent were clearly separated. Broadcasting and the press, on the other hand, have benefited from long experience of politically and socially sensitive material, which has produced a 'hands off approach. They generally enjoy the protection of interna- tional and domestic freedom of communication principles. Freedom of communication may be threatened by application of the high level of 'hands on' telecommunications regulation to content providers, by the broadcasters' loss of control of their own transmission, and by legal pressures on carriers to monitor content. The solution is to reject the content-carriagedis- tinction, and recognise that carriage systems also require freedom of communication.
2. INTRODUCTION Regulation is not a quantifiable phenomenon. It is a de- scription for a very complex range of relationships, which This paper questions the assumption that all aspects of tele- are difficult to describe in objective terms. Most of the communications are becoming less regulated.' It provides a ideas about 'how much' regulation we have come from broad summary of the many trends which pose a threat to economists who like to quantify, and who do not have long the economic and social role of media in the environment of experience of how regulatory schemes actually work. This telecommunications regulation. It points to the danger that paper is not concerned with regulation itself, or the ideo- media content, the all-important justification for expanding logical debates which it raises. It is concerned with regula- networks and systems, may have less opportunity to flour- tory activity, the amount of regulatory writing, talking, ish unless the new systems of regulation are made more meeting and deciding. There are some crude indicators of sensitive to media freedoms. regulatory activity, which suggest that it is increasing. From any overview of Asia and the Pacific, we need to ex- The central point to be made is that the increase in tele- clude the US, which appears to have had a high level of communications regulatory activity may infect on-line serv- regulatory activity and a large legal establishment surround- ices. The 'bugs' are a number of regulatory, economic and ing the FCC for decades, probably since the Communica- legislative trends which may leave on-line services more tions Act of 1934. For the rest of the region, these are weak and vulnerable than traditional media such as broad- some trends: casting and newspapers. This view is not fashionable. The number of people engaged in regulatory activity is Politically correct thinking, particularly in North America, increasing. Twenty years ago, there were very few law- is that telecommunications is less regulated than ever be- yers who would answer to titles such as 'communica- fore, content is more free than ever before thanks to the tions lawyer' or 'telecommunications attorney.' Now we Internet, and regulation of carriage does not affect content. have specialist firms dealing with the area, departments This paper questions those comfortable beliefs. within larger firms, associations of lawyers, journals and conferences' 3. THE INCREASE IN REGULATORY ACTIVITY The number of communications regulators and authori- The current fashion is to regard nearly all Asia-Pacific coun- ties is increasing in most countries. We now have tries as undergoing a process of deregulation and liberalisa- communications authorities, commissions and boards tion. So they are, in the sense that virtually all telecom- dealing with licences, spectrum auctions, competition munications markets in the region are being opened to regulation, content, multimedia development and other competition. Regulation is regarded as a quantifiable phe- areas. Even where the purpose of an authority is indus- nomenon. Thus there is discussion of 'more' or 'less' regu- try development rather than old-fashioned regulation, it lation, 'light' regulation and 'heavy' regulation. still adds to the complexity of the mix.
479 5 0 The volume of laws is increasing. New telecommunica- governments to telecommunications development remains tions laws seem as plentiful as leaves in Autumn. It is unchanged. At the beginning of the century, politicians and difficult to find any country which has not enacted at governments were proud of the progress they were making least one new telecommunications statute in the last five in extending telegraph lines, and later telephone lines. In- years.' Not only do we have more laws, but they are be- deed, business and citizens expected governments to get on ing amended and replaced more frequently. Every new with the job as quickly as possible. In that era when, ex- law tends to be more voluminous than its predecessor, cept in the US, only governments commanded the resources to address this or that new 'challenge' in which govern- for the great network-building projects, there was no ques- ments and legislators are interested. One day soon, the tion of restraint or non-intervention. If they had taken a idea seems to be, these laws will produce the state of hands-off attitude, they would have been criticised for ne- perfect competition in telecommunications which will glecting development. make further laws unnecessary. One is tempted to make a comparison with the millennial faith of European By the year 2000, there may be few telecommunications Marxist countries, that once perfect communism had networks still provided by government departments, as they come into being, the State would 'wither away' to leave have been for most of the century. However, the general everyone co-operating in perfect harmony without fur- attitude of government towards telecommunications devel- ther need for regulation. opment has not changed. We still have a 'hands on' culture in which policy-makers, bureaucrats and regulators intervene The volume of standards and self-regulatory codes is continuously. The major difference is that instead of di- increasing. Regulation abhors a vacuum. When gov- rectly controlling a government monopoly PTO, they make ernment vacates an area, such as setting of technical decisions and laws which leave the overt responsibility for standards or the regulation of media content, voluntary actually delivering service to the private sector. But it is not codes and standards usually move in to fill the void. Of- a matter of setting up new structures and leaving them to ten governments require that industry take over its pre- the market. Supervision, monitoring and tax-gathering vious regulatory paperwork, and often there is a system continue. It is important to remember that 'liberalisation' of co-regulation, in which industry makes and applies refers to market structures and economic freedoms, not to codes in co-operation with a government or government liberalisation of content or social freedoms. agency. At the end of the day, codes and rules are still law. They still govern the activities and services of The Thatcher government in Britain set many of the prece- communications players. This is particularly relevant to dents and models for liberalising telecommunications which media, where codes are expanding rapidly to address gov- are now being adopted, directly or indirectly, in the Asia- ernment concerns. Pacific region. It should be noted in passing that, despite its great influence in the region, the US could hardly pro- To summarise, telecommunications regulation is changing, vide models from its system in which the carriers were al- probably for the better, but it is not disappearing. Regula- ready privately-owned. Most Asia-Pacific countries were tory activity is rising, but we are asked to have patience moving from government monopolies. The Thatcher gov- with this temporary phenomenon, which will subside once ernment pioneered a double standard in communications markets are fully liberalised. Governments are now more policies. Liberal economic reform of telecommunications active than ever in managing the transition to competition. contrasted with a censorious approach towards electronic And there is no sign that governments and their agencies media. It sought to increase restrictions on indecent and intend to abandon management of the competition. It tasteless broadcasts, and on broadcasts such as those relating would be naive to expect that the new regulatory activity, to Irish political figures which were seen as seditious. It and the new regulatory players in public and private sectors also introduced licence fees and auctions (since widely cop- and the professions, will naturally see any reason to keep ied in the Asia-Pacific region) which had the effect of weak- out of content issues. After all, media content is interest- ening the economic independence of broadcasters. ing, growing and well-resourced territory. 5. THE 'HANDS-OFF' TRADITION OF MEDIA 4. THE 'HANDS ON' TRADITION OF TELECOMM- UNICATIONS Traditional mass media such as newspapers and broadcasting have been accorded different regulatory treatment from tele- With so much change and liberalisation taking place in communications. Whatever the practice from country to communications, it is easy to overlook some things which country, the need for media independence has been recog- are not changing. Specifically, the 'hands on' attitude of nised for a long time. There is a large international body of
480 5 1 1 material which enshrines principles of diversity and free- some cases. Second, there were a few countries which did dom. The principles are recognised by governments of all regularly tap into the content and censor it. political persuasions. They are recognised in many United Nations and international documents, including Article 19 The conventions and laws to protect telecommunications of the International Covenant on Civil and Political Rights. content are comparatively weak, because the main content They are also recognised in the constitutions, express or was party-to-party voice conversation. Until recently, there implied, of virtually every Asia-Pacific country. There are has been no need to see telecommunications as a vehicle for many different national interpretations of what freedom of news and information. It has been regarded merely as 'con- communication means in practice, but there is little disa- tent', something almost incidental to the main game of in- greement about the broad principles. frastructure of networks. As media migrate from their own distribution systems to telecommunications networks, they Newspapers and broadcasters have always looked to their are migrating to alien territory, which gives them no special delivery systems to support their freedom. Commercial and recognition. public broadcasters have relied on transmitter ownership to protect their economic independence, and to make the pros- 6. CONVERGENCE OR COLLISION OF REGULA- pect of outside intervention more difficult. NHK in Japan TORY CULTURES? is required by law to maintain its own transmitters; the public broadcasters in Australia struggled for decades to en- The two traditions, of 'hands on' and 'hands off regulation hance their independence by gaining control of their trans- may now be in collision, as media structures integrate with mitters from government agencies; and commercial broad- telecommunications. Some of the main trends are: casters throughout the region have resisted planning schemes which would require them to abandon their own 6.1 BROADCASTERS' LOSS OF TRANSMISSION transmitters. INDEPENDENCE
The independence of broadcasters has been further enhanced Transformation of broadcasting services from vertically- by the ability of international HF broadcasting to cross na- integrated media controlling their own distribution into tional boundaries in order to deliver information and enter- mere 'content channels' on communications networks. For tainment which would be discouraged by national authori- example, the once-powerful TV networks so feared by poli- ties. The Internet is not really the first global medium to ticians are losing audience and influence, to join the multi- defy national restrictions. HF broadcasting has been doing channel environment delivered by satellite and cable sys- precisely that since WW2. Just as with the Internet cur- tems. Previously, broadcasters had direct access to their rently, there are some areas of restriction. It is possible to audience through their own transmitters. Satisfaction at interfere with HF broadcasting by jamming; but for most seeing these Goliaths humbled should be tempered with practical purposes HF broadcasting has been unrestricted. concern that powerful independent sources of opinion and The effect on domestic services of an international medium funding for programs are being fragmented. which is difficult to exclude should not be underestimated. There is far less motive and inclination to restrict informa- 6.2 NEWSPAPER DEPENDENCE ON ELECTRONIC tion, entertainment and even music which determined mem- DELIVERY CHANNELS bers of the audience can receive through the alternative in- ternational medium. Newspapers large and small also controlled much of their own distribution through delivery to shops, street-sellers The obvious contrast is between the media independence, and homes. Now their content is migrating to on-line and reinforced by factors such as these, and the 'independence' of multimedia channels, which need to negotiate access content in telecommunications services. There is no large through the hierarchy of electronic delivery systems. or widely-known body of principle to support that principle. It is true that in most countries of the region, the telephone, 6.3 DIGITAL RADIO AND TV DEPENDENCE ON mail services and data services are subject to minimal con- MULTIPLEXERS trols. Anyone who made a phone call or posted a letter could assume that the content was a purely private matter. Even in free-to-air broadcasting, digital broadcasting will see There were some exceptions. First, general laws dealing radio, the most direct and independent of all media, as well with sedition, vice and traditional crimes against person and as television, multiplexed through concentrated, shared or property did lead to phone-tapping or mail interception in centrally controlled digital transmission systems. Again, the broadcasters will lose some control of their distribution
481 512 systems. This is more likely in countries which follow the tion around the globe, can be used to impose onerous re- European approach than in those which follow the US ap- sponsibilities on carriers and ISPs. In the conferences lead- proach. The latter accords more significance to the tradi- ing up to the treaties, carriers and ISPs sought decisive ex- tional broadcaster. clusion from responsibility for copyright infringements flowing from on-line distribution. They did obtain an 6.4 CONTAMINATION OF THE COMMON CARRIER agreed statement in relation to communication to the public CONCEPT that: 'the mere provision of physical facilities for enabling or making a communication does not in itself amount to Just at the time when the integrity of the common carrier as communication within the meaning of this treaty or the a neutral pathway for all traffic should be expanding to pro- Berne Convention.' A lawyer's skills are not required to see tect the new, more sensitive, media content, the concept is how limited that interpretation is. There is a real possibil- being questioned or, in the words of Rob Frieden, 'contami- ity that national legislation implementing the treaties will nated.' As Frieden points out, some of the contamination make ISPs, or even carriers doing more than providing inert has been caused by carriers themselves seeking to expand facilities, responsible for on-line copyright infringements. into media-related content. The powerful concept of a neu- As with defamation law, the worst effect of this trend is not tral common carrier, obliged to carry all messages, and pro- the actual liability, but the chilling effect of requiring carri- tected from liability for doing so, has never been more im- ers and ISPs to 'cover their backs' by imposing an extra portant. layer of compliance on those who use their services.
6.5 ISPS AND CARRIERS AS CENSORS 6.7 AUCTIONS AND TAXES
Legislatures and courts are seeking entities who can be held Having gained a taste for massive restructuring through legally accountable for defamation, pornography, sedition liberalising telecommunications, governments are starting and other forms of perceived wrongdoing. The current tar- to show an increasing interest in restructuring content pro- gets are the ISPs, but carriers may also be affected. This viders: all in the name of economic reform. One example is range of liabilities is a separate topic, but the attempts in the increasing imposition of taxes on media, such as auc- various jurisdictions to hold ISPs responsible for 'offensive' tioning of frequencies suitable for broadcasting, and also content, whether under legislation or through industry code charging high fees for the right to broadcast at all. Then systems, raises the prospect that news media will be re- there is the prospect of auctioning channels for digital quired to submit to the commercially conservative censor- broadcasting, and rights to operate as digital broadcasting ship of an ISP instead of taking their own chances about multiplexers. Even in the last century, taxation of newspa- what they will print or broadcast. The insertion of another pers would have caused uproar. When presented as an eco- gatekeeper between the public and the content producer is nomic reform to allocate a scarce communications resource, likely to have a 'chilling' effect. Pornography is not the the taxes attract little protest. Whatever the form of the only battleground. An ISP which actively manages the taxation or auction, the ultimate effect is to siphon money content of its service may be found to have the liability of a out of content industries, and to increase the cost of provid- publisher. The current trend is not to impose liability on ing media to the public. an entirely passive ISP who merely provides carriage or a location through which defamatory material is dissemi- 7. CONCLUSION nated.5 Whilst the law, still in an inchoate state in most Asia-Pacific jurisdictions, does not appear to impose a new If media are to be economically productive and socially crea- level of liability, in commercial terms the danger is that tive, their special needs and special relationships with audi- corporations running and ISP business and keen to avoid ences must be respected. Network builders and policy- risk will impose tighter restraints on content than a dedi- makers have unconsciously avoided the complexity of media cated news or information service would impose. issues by first making a crude distinction between carriage and content; and then saying that they are concerned only 6.6 ISPS OR CARRIERS AS COPYRIGHT COLLEC- with carriage. The examples above have attempted to show TORS that in reality it is impossible to ignore the impact which the regulatory culture of telecommunications will have on Copyright laws may turn telcos and ISPs into toll- content providers. collectors on the new information highways. The new WIPO copyright treaties', now being considered for adop- Liberalisation and competition are just as important in the realm of ideas, news and entertainment as they are in the
482 513 economics of carriage systems. It is difficult to point to any place or period in history where culture has flourished were concluded in Geneva on December 20, 1996, and are open for signature at WIPO until December 31, 1997. within a closely regulated environment. The countries in Quoted and discussed in Australia, Attorney-General's De- which creative content does not flourish are likely to find partment and Department of Communications and the Arts, that they have built highways for exporting consumer and Copyright Reform and the Digital Agenda: Proposed Trans- mission Right, Right of Making Available and Enforcement investment cash, to purchase the media output of other Measures, Canberra, July 1997, paras 3.22ff, 4.69ff. countries. How do we avoid crushing the media in the rush to liberalise carriage and build new telecommunications systems?
The first step is to abandon the modern form of the Manichean heresy which artificially separates carriage from content. In telephony the two have been legitimately sepa- rated. In broadcasting the medium and the message have been inseparable. As television, multimedia, videophony, broadcast radio and other services migrate to the fibre and satellite systems, it will be necessary for carriers of their signals to put more effort into protecting the integrity of the content.
Carriers and their advocates will need to put more resources into convincing courts, governments and legislators that restraint is needed when dealing with media distribution systems. This is no easy task. As already explained, there is a vast body of learning about freedom of speech and free- dom of communication, but it has been confined only to the content side of convergence. Telecommunications,. the spectrum, satellites and cables have been seen as raising only technical and economic issues, in which there are no limits to the growth of official power and regulatory bu- reaucracy. The reality is that media will flourish only when communications systems are suitable for their needs. Courts and governments must be convinced that genuine freedom of communication must include freedom for car- riage.
The author is grateful to his colleague Mr Michael Hudson, Research Associate, Media and Telecommunications Policy Group, for valuable research on copyright, defamation and other areas incorporated in this paper. 2 Some indication in the increase in lawyer numbers in Austra- lia is provided in M. Armstrong 'And the Winner Is...?' Tele- communications Journal of Australia, 46(4) 1996. Estimates by practitioners suggest that in the East Asian region there are around 250 lawyers dedicated to communications issues. 3 In Australia, the numbers of sections of Acts dealing with telecommunications in the successive waves of new laws are: 114 sections in 1975; 185 sections in 1989; 409 sections in 1991; and 920 sections in 1997. Rob Frieden, 'Contamination of the Common Carrier Con- cept in Telecommunications' Telecommunications Policy, 19(9) 1995, pp 685-697. 5 Stratton Oakmont & Porush v Prodigy & Sears-Roebuck SC, NY, Oct 1995 is one of the celebrated US cases which sup- ports this view. The World Intellectual Property Organisation Copyright Treaty (WCT) and Performances and Phongrams Treaty. Both
483 4 A Canadian Perspective on Global Telecom Liberalization; Strategies for a Small Fish in a Big Pond Leonard Eichel, Director Regulatory Affairs-International, fONOROLA Inc. Tapio A. Knuutila, Director International Business Development, fONOROLA Inc.
Abstract This paper provides a Canadian perspective on the impacts and opportunities of global telecommunications liberalization, with particular emphasis on the WTO 1997 initiatives. An overview of the Canadian competitive environment and expected policy/regulatory developments to the year 2000 is given. The business challenges, strategies, and opportunities for a competitive carrier are explored; and some of the opportunities for global and Pacific rim partners are proposed. The network initiatives, plans,and business opportunities with one of the competitive carriers (fONOROLA) is provided as a case study of a successful smaller Canadian company's approach in this changing global environment.
1.0 The Canadian Business Environment foreign markets. However, these commitments and The World Trade Organization (WTO) negotiation global trends to increased competition and deregulation agreementsof1997undertookboldworldwide appear to place pressure, indeed in some perspectives commitments on basic telecommunications to diminish and threaten Canadian cultural autonomy liberalization. Of some 200+ countries in the world, the and ownership as it relates to telecommunications. This WTO agreement has 69 countries promisingfair isreflectedin some controversy over maintained market access for basic telecommunications service, foreign ownership limitations for Canadian and 65 committed to enforce fair rules of competition telecommunications facilities, and continued routing throughindependentregulatorybodiesorthe restrictions until the year-end 1999. Canada has largely equivalent. Some 40 developed countries are in the implemented a competitive telecommunications process of privatization of telecom and the introduction environment nationally and with the USA in the early of competition. These global agreements mean that we 1990s. The international sector is now the last frontier. face competition from the strong companies of at least these 68 other countries, and we can also compete Although Canada is a relatively sparsely populated directly in, or choose our business partners in these 68. geographically vast country blessed with a challenging Canada for its part committed to liberalize international northern climate, its telecommunications industry is a wireline telecommunications by October 1998, with healthy portion of the US$600 billion worldwide further actions which would includesatellite and telecommunications service market, and its network routing related restrictions eliminated by January 2000. and service capability form an attractive constituent of The Canadian Government expressed its desire and an integrated North American market. Within this objective to ensure that Canadians continue to benefit market the long-distance sector generates from world-class communications services at approximately CAN $8 billion revenues, and is an competitive prices provided by a. strong domestic attractive business for both domestic and foreign industry, while ensuring that Canadian companies. Figure 1 provides a financial overview of telecommunications companies have secure access to the Canadian telecommunications services market.
Fig 1: The Telecommunications Services Sector in Canada
*::" . ... . rE9230 99,P4-14FIT-979--;- Total Employment 142,157 129,621 120,217 126,910 127,529 144,551 Service Revenues $15.0 B $15.9 B $16.5 B $17.2 B $18.3 B $19.5 B Total Assets $31.0 B $33.3 B $36.2 B $38.6 B $39.3 B $40.6 B Profit Margin (%) 24.02. 25.00 24.86 20.64 20.36 16.86 Source: Industry Canada Statistical Revue 1990-1995; published May 1997 ($ Canadian)
484 515 2.0 The Regulatory Outlook with the blessing of the Federal Government. The Prior to the beginning of this decade, CRTC first allowed the full resale and sharing of telecommunications services in Canada were provided switched voice and data services for domestic long by monopolistic enterprises. These companies, which distance traffic.Then in 1991, they permitted the later formed an alliance named Stentor, had their resale of international switched services and allowed businesses regulated by an independent administrative those same resellers the ability to route international tribunal, the Canadian Radio-television and traffic over leased international private lines. Only the Telecommunications Commission ("CRTC") which Stentor member companies were left out of these resale approved the prices they charged, the profits they made markets due to a recognition by the CRTC of both their and the moneys they spent on capital programs. market dominance and the significant revenues their International telecommunications was not subject to switched voice telephony provided the monopoly regulation per se, but set by governmental decree and overseas carrier, Teleglobe Canada Inc. ("Teleglobe"). implemented by the CRTC. International telecommunications later came under the auspices of Resale proved to have business limitations. It does not the CRTC in 1994. Local telephony and public long allow a competitor to completely control its underlying distance services were provided by the individual network costs. The underlying carriers, which at this Stentor member companies, which were vertically time consisted primarily of the Stentor members from integratedwithinestablishedoperatingterritories which the competitors leased facilities or bulk services, whose geographic boundaries roughly corresponded couldeasilyengageinamarginsqueezeby with that of Canada's provinces. Stentor member aggressively reducing the rates charged for their own companiescooperated among themselvesinthe competitive switched services while leaving the rates sharing of revenues for traffic between their respective for bulk telecommunications services leased by the territories, and inthedesign,operationand competitors at higher levels. Significant pressure to management of a national long distance network as expand the scope for facilities-based competition was well as in the implemention costs of these national placed on the Canadian government. communications links. The Stentor member companies were permitted to operate as they wished as long as 2.2 Facilities-BasedNationalLong Distance theyfulfilledtheiruniversalservicemandates Competition regarding the support of service in rural and remote In June 1992, the CRTC ruled that it would be in the areas and other regulatory requirements, at least until publicinteresttopermitopen,facilities-based the arrival of competitors. Numerous smaller regional competition for the supply of domestic long distance independents have existed since the late 1800's, as well services. This decision has been called the true start of as significant private and data telecommunications long distance competition in Canada.The CRTC providers which were not interconnected to the public mandated the Stentor member telephone companies to telephonenetwork. Thelargestof these, CNCP upgradetheirlocaland longdistanceswitching Telecommunications, had its origins from the railways networks to accommodate Equal Access (also known telecoms; and was a predecessor to Unitel which has as1+ dialing) by 1994 which enabled customer now evolved through ownership changes to AT&T selection and pre-subscription of the preferred inter- Canada, one of the larger competitive carriers. Industry exchange carrier. These rulings also allowed open Canada and the CRTC have introduced measured market entry (as opposed to a market duopoly), competition in stages into this vertically integrated proscribed a system of fees that competitors would monopoly environment. have to pay to Stentor members to fund continuing low local telephone rates, and ordered the tariffication of all 2.1 Resale Competition interconnection arrangements. With the model of competition in the United States, aggressive entrepreneurs in Canada began to challenge As a result of the CRTC's decision, long distance rates the status quo in the late 1980's.After challenges tumbled relatively faster and farther than experienced before the cabinet of the Federal Government these intheUnitedStates.Competitive marketentry companies eventually won the right to operate. As a proliferated, and consumers were suddenly faced with result of these entrepreneurial moves, in 1990 the many choices for their long distance services. At one CRTC began its own 'long march' to open up the time,more thanthreehundredresellers were telecommunications sector to increased competition, registered with the CRTC. In the middle of all this, the
485 Federal Government finally passed into law its long- sector of the industry: "international awaited Telecommunications Act, which set out the telecommunications". Currently in Canada policyofthe Governmentwith respectto international telecommunications facilities and services telecommunicationsinCanada,awardedgreater are supplied by one company, Teleglobe, by virtue of powers to the CRTC in discriminatory matters and de- policy decisions taken by the Federal Government and regulation, and most importantly for the business, the discretionary power it has in granting licenses for codified foreign ownership limitations. submarine cables which land on Canadian shores and thelicensingof satellitesystems andspectrum. In the period after the implementation of Equal Access InternationaltelecommunicationsinCanada were in 1994, a number of the resale companies did not operated by private foreign companies for some time in survive and went bankrupt or were acquired; and their theearlypart of thiscenturyuntiltheFederal customers were absorbed by the stronger players in the Government expropriated (puchased and nationalized) industry. Today, the over one hundred surviving active the Canadian international assets of Canadian Marconi companies (both resellers and facilities-based carriers) Company and C&W to form the Canadian Overseas comprise also the four principal competitors to the TelecommunicationsCompany(COTC). This Stentor members:AT&T Long Distance Services company later changed its name to Teleglobe and was Company, which has both an equity infusion from privatized by the Governmentin1987 with an AT&T Corporation in the United States as well as a `exclusivemandate'torunallofCanada's license to market AT&T products and services in the international telecommunications for five years, with a Canadian market;Sprint Canada, which also has an renewal for another five years subject to the fulfillment equity investment from Sprint Communications LP in of performanceguarantees. This mandate was the United States as well as a license to market Sprint renewed in 1992 on the force of the arguments which products and services in Canada; fONOROLA Inc., an concluded that Teleglobe had indeed fulfilledits independent company with limited foreign investment performance guarantees.However, in extending this from venture capital funds and commercial banks; and mandate for another five years until April 1997, the ACC Tel Enterprises Inc., a wholly-owned subsidiary Government stated that it would review Teleglobe's of ACC Corporation based in Rochester, New York. mandate three years later, in 1995. This was done via a The first three companies have either built or will be public proceeding but no decision was taken on the constructing fibre-optic networks in Canada in order to basis of this proceeding, due at least partly to the providecompetition withStentor'sexistinglong potential effects of the WTO negotiations on basic distance facilities. The fourth, ACC, is a pure reseller. telecommunicationsservices.In WTO Canada committedtoopentheinternationalsectorto 2.3 Local Competition competition by October 1998. Not content to open just the long distance market, in September 1994 the CRTC proscribed in principle the 2.5 Trade and Telecommunications Services liberalization of the local telephony market. In May of During the time that the CRTC was introducing 1997, the general terms and conditions of entry into the competitiontotheCanadiantelecommunications local telephony market were established, thus formally services industry, trade negotiators were beginning to opening the local sector to competition by 1998. The consideraddingtelecommunicationsservices in CRTC has indicated that it will hold everyone in the discussions ontheNorth AmericanFreeTrade industry,including the incumbent carriers,tothe Agreement (NAFTA). Services of all kinds were being implementationdateof January 1 1998,while negotiated amongst the three parties at the table, but recognizing that considerable work remains to be done telecommunicationsremainedoneofthemost in the areas for example of Local Number Portability, controversial due in part to Canada's desire to avoid the establishment of appropriate technical interfaces any discussion related to cultural domains and to between the incumbent local exchange carriers and the maintain Canada's restrictions on foreign ownership of new entrants, and the appropriate procedures to allow the telecommunications industry in Canada. Mexico for the proper marketing of local and long distance was also refusing to budge on the issue of foreign services in this new environment. ownership beyonditsstatutorylevel of 49% for TelMex, their principal operator of 2.4 International Competition in October 1998 telecommunications services. The result was that the Whilecompetitionappearstobebreakingout three countries could only find common ground with everywhere in Canada, there remains one holdout respect to free trade of enhanced telecommunications
48651b.1 services.Basic telecommunications services, defined definition of whichisyet to be determined),is principally as facilities and voice services, are not scheduled to be relaxed at year-end 1999 although covered in the agreement. The three sides agreed to pressures are mounting to end this sooner. In October explore the inclusion of basic telecommunications 1997 the CRTC initiated a public hearing to determine services at a later undefined date.However, events the appropriate licensing conditions that will be applied within the WTO have now eclipsed the NAFTA, to all international market participants. This hearing is leading to a much more comprehensive agreement than currently in progress, with final comments accepted first envisaged between Canada, the United States and until 13 March 1998. A decision is expected sometime Mexico. in Spring or early Summer 1998. Companies in Canada now have the planning signals and policy The WTO negotiationsconcludedin1997 with direction they need to prepare for their entry into the precedent-settingagreements whichredefine how international market in competition with Teleglobe. telecommunications markets will be managed. Trade principles and WTO dispute settlement mechanisms 2.6 The Resulting Industry Structure will now be applied to basic telecommunications. Not This policy and regulatoryactivityhas therefore only did individual countries agree to open up their evolved an industry structure which was dominated by telecommunications markets, but they also agreed to a monopoly interests at the beginning of this decade, and number of trade principles which would ensure the implemented an environment with open competition at sameregulatorytreatmentforforeignfirmsas the local, national inter-exchange (long distance), and domestic firms. This agreement is significant because international levels.Itis important to note that the it ends the previous practice of nurturing national CRTC has introduced competition into the Canadian champion companies to the detriment of foreign firms telecommunications market in a manner that can only wishing to enter the same market. It ends any form of bedescribedasdeliberateand managed. The regulatory discrimination, favourable interconnection Commission has in each case taken all the necessary terms for domestic firms over foreign firms, and the steps to introduce competition into a former monopoly practice of regulating an industry as a department of a marketwhileensuringthatalltheappropriate national government. Legitimate policy choices will safeguards were put in place before moving on to the still be adhered-to but now under a much different next step. This has meant less of a free-for-all market framework. structure, market stability for new entrants, and has resultedintheintroductionof financiallystable So what does the WTO mean for Canadian firms? In competitors into the Canadian market. Within this thedomesticlongdistanceandlocaltelephony structure, the facilities-based operating companies are markets, not much at all.Canada already has an subject toIndustry Canada policy and a CRTC independentregulatoryagency,hadopenedup regulatory regime. Foreign ownership and control is competition in both market sectors and requires all restricted to a maximum of 46.7% of facilities-based competitors to adhere to non-discriminatory carriers. Specific "grand-fathering" provisions allow interconnection terms and conditions. The rates majority ownership by GTE (a USA company) in two charged by the new competitors areentirely de- regional operating telephone companies inBritish regulated and Stentor is expecting similar treatment to Columbia and Quebec serving over 10% of the total arrivein1998. However, for international long Canadian market. There is also an increasing trend of distance thereis an impact. Teleglobe's exclusive foreign ownership in the other Canadian competitive mandate will formally end on October 11998.The carriers to the extent where foreign participation in Government will also be open to awarding licenses to Canadian telecommunications as a whole exceeds the any company,regardlessof ownership,toland level prevalent in most other countries. submarine facilities on Canadian shores as of the same date. Trafficroutingrestrictions,wherebythe Figure 2 shows the emerging competitive industry Government requires all traffic leaving and entering structure in Canada. the country to be routed over Canadian facilities (the
487 518 Figure 2: Canadian Telecommunications Industry Structure
Teleglobe Monopoly International Teleglobe StentorfONOROLA & al. & others A A Stentor Inter- Mobile Stentor fONOROLA Mobile exchange Interexchange & al. & other Competition competitive (fONOROLA interexchange & others) carriers
Stentor Members Local Access Stentor Competitive Access Monopoly Access Access equal access equal access Status-quo to 1997 1998+ Competitive Environment
3.0 Technical and Market Challenges generation of systems is significantly lower. A decision There are unique challenges provided for smaller not to invest in successive generations of systems, or countries and emerging carriers by the international an inability to participate (whether due to financial, trends towards high capacity submarine fibre-optic political, or regulatory reasons) will result in being transmission projects, and the consolidation of business frozen out of the advantages of cost reduction and control within a limited number of consortia with efficiency, and eventual uncompetitiveness for the ownership by dominant carriers having a large home- carrier and the country as a whole. It is critical for a market base. This is particularly evident in Canada national policy and companies to attract such new with consequent impact on Canadian presence and venturestotheirshoreswithinterconnectionto viability in a global market. nationalsystems;thisbringstrafficflowsand opportunities to build a central positionin global 3.1 International Facilities telecommunications. The carriage of telecommunications minutesisa New service markets (Internet and image/broadband) commodity business with declining costs and prices; are enabled by these bandwidth and cost trends. Many but the cost of market entry as a facility based related national markets may not prosper without the competitive carrier is capital intensive. New global benefit of future fibre-optic networking on a global fibre-optic systems have capacities in the range of 10 scale(e.g.filmproductionandpost-production, to 40 Gigabits/second, with system costs in the order of animation, financial and data processing, and the US$300-700 Million for a trans-Atlantic linkage for Internet content industry). Consequently the example. Only companies and nations which are able implementation of national and internationalfibre to competitively terminate or transit large amounts of networking is recognized as a priority objective in traffic are likely to play a significant global role. Yet it many private and government driven "Information is a market reality that these new systems tend to Highway" initiatives. Within Canada, the impact of terminate where the large "sources" and "sinks" of these infrastructure trends is reduced costs and prices traffic are located. It is critical for a carrier, and a to customers, but increased barriers-to-entry for new country,tohaveparticipationinnewsystems entrants. This may imply a need to promote all new (particularly international submarine cable systems and entrantsdomestically in ordertoentrencha national fibre builds) since the cost/unit of each new competitive global environment going forward. J 488 customers (and make good exclusive partners for Certain countries have geographical advantages due to the consortia, or customers for the wholesalers). "short routes" between major markets, good national infrastructure, or geographic positioning which can be niche operators, by activity or customer. parlayedintoasystem hub beyond the normal expectations of regionally sourced or terminated traffic Canadian companies today are largely confined to the (e.g. Canada, Hawaii, Singapore, UK/Ireland). Canada last three categories. The major consortia are all owned andthefacilities-basedCanadiancarriershave and controlled by entities with no significant Canadian recognized this synergy between international systems, presence beyond regionaldistribution and market national systems, and geography. Several Canadian accessroles.WhilethethreelargestCanadian carriers and networks are well positioned by design to telecommunicationscompaniesarealignedwith provide complete North American connectivity and consortia (AT&T Canada with Worldpartners, Stentor market access, as well as overall cost-effective global with Concert, and Sprint Canada with Global One), or submarine fibre-cable routing and termination utilizing are at least partially owned by founding members, the the advantages of the reduced distances provided by otheremergingcompaniesareunaligned.The "great-circle" cable routings between continents. Canadian telecommunications companies with North Americanmarketaccessandexcellentnetwork 3.2 Global Consortia Dominate Traffic Flows interconnectivity are well placed to contribute to a In the 1990's a trend to consolidation in international leading global role and place Canada on the main-lane markets was attested by a series of joint service of the global information highways with overseas agreements, equity exchanges and joint investments partners.However,thiswilllikelyoccurinan between groupings of dominant carriers. The objective environment of increased (and cut-throat) competitive wasincreasedcapabilityinthemarketingand action worldwide, culminatinginfurtherindustry provision of international one-stop-shopping services consolidation over the next 5 to 10 years. to global corporate clients, however an additional benefit was the protection of their domestic customer 4.0 Capitalizing on the Opportunity base and reduction in competition between the parties The globaland Canadianmarketstructuresare within a specific consortium. The share of global changing, with the competitive freedom to choose traffic controlled by the largest four consortia has business models and partners on a case-by-case basis, grown from 41.5% in 1990 to 57% by 1994, with this in at least the WTO countries. Traditional international trend still continuing. Furthermore, privatization and interconnection mechanisms and associated accounting worldwide relaxation of foreign-ownership restrictions rate mechanisms are complemented by the use of is leading to the increased presence of well-capitalized resale,ISR,andcost-orientedsettlementrates, foreigncorporations castingtheireyes on North termination charges, and interconnect fees; all of which American, European, and Asian markets in an effort to are in use in Canada. "Bill & keep" and modified expand presence and revenues in markets outside of cascaded settlement has been a standard way of the home market they dominate, and which in some operating in data networks, the national environment, cases is shrinking if they are the incumbent monopoly. and resale for decades, but only now is being accepted The shake-out and mergers in the telecommunication ininternationaltelephony.The opportunitiesfor market will likely continue well into the year 2000. A entering the international market in this environment possiblescenario is thestratificationofthe are varied, with progressively increasing commitment telecommunications market into four groupings: and business benefit.
a limited number of "super-carriers" which operate A Canadian entrant wishing to enter the liberalizing on a global basis, offering premium seamless international domain has at least the following business networks and services. options as of January 1998:
carrier's carriers and independents, specializing in 1. Buy Gateway Access Service: interconnect to the high-volume low-margin transport and wholesale. gatewayofanotherexistinglicensedCanadian international carrier (the status quo). regionalandnationalspecialists,who have significant market and understanding of the local 2.Resale: use spot market purchase and sale of minutes. Many wholesalers/resellers have no
489 international infrastructure and the traffic will gravitate A partnership with Canadian National Railways in to facility based carriers. Short term deals proliferate, 1995gave fONOROLA accessto some 32,000 and there have been quality considerations. kilometers of right-of-ways. This, and other facilities partnerships has enabled the Company to undertake the 3. ISR (Leased-line resale): ISR is a margin play construction of over 12,000 kilometers of OC-192 fibre between IPL rates and the Gateway or resale Minutes facilities in both Canada and the USA, of which over rates.It requires minimal commitment and capital. 5,000 kilometers are already in place. Figure 3 charts However, as a "rule-of-thumb" several months' lease these developments. Figure 4 illustrates the resulting could buy the equivalent capacity ownership in the network commitments. same system. Canada has always had one of the most open ISR Figure 3: PNOROLA History of Growth environments with an extensive list of countries. Sin 'finials .1:4144:ririgfiatpin-,,Wo*Sai
edUe,TJ As ofOctober1,1998 the following additional 400 redo:4.4 0041-ThisBuf tiv, WO mil,* bcnil business options are available: 350 regal.'!"'F"cPtinet..2"00,6cn 300 4. Operate as a facilities-based carrier: receive an 1.94ply33029im LP9,1 250 "international carrier license" under the new Industry Vancouver, FCCWarnI Canada and CRTC procedures, and participatein 200 Toot °. Mreal facility acquisition projects and acquire underlying 150rartiiaGili I capacity to support operating agreements. Become a 100Ile* I I satelliteand/orcablesystemsignatory(suchas I I INTELSAT or submarine cable C&MA or IRU). This 50 opens the options to acquire wholly-owned or half 0 . IsarilalE311ffil /989 /990 1991 1992 1993 1994 1995 19961997* circuits, in both carrier or private cable systems. -50 mdyste mimics
Jufv1997 revenues a e.b.i.t.d.a a net income fONOROLA For well positioned facility-based carriers there is an opportunity to initiate and lead projects, create or Figure 4: ONOROLA Network participate in Joint Ventures for new systems, attract partners and organize funding. In particular Canadian entities with a complete North American perspective and market access can provide a valuable contribution to other partners which goes beyond purely Canadian interconnectivity. 5.0 A Canadian Industry Case Study The approach taken by Canadian governments and regulatorshas been anintroduction ofmanaged competitoninprogressivephasesover10years, starting from simple resaleandsharingandnow leadingtofacilities-basedcompetition atthe international level. Numerous companies successfully July 1997 fONOROLA entered the liberalized domestic (within Canada) and trans-border (Canada-USA) long-distancebusiness. fONOROLA's business decisions can be summarized One of these, fONOROLA Inc.,isoffered as an as: exemplary case study in the development of a business through this unfolding telecommunications a primaryinitialfocus on the corporate and liberalization. Although fONOROLA is not unique in wholesale markets, resulting in an ability to keep the ranks of successful Canadian carriers, it illustrates a SG&A(sales, generalandadministrative) company business development strategy which takes expensestightlycontrollableand coupledto advantage of each stage in Canadian liberalization, revenues(atapproximately 20% of revenue, from initial operation in simple resale in 1989, to the among the lowest in the industry). This focus is a progressive establishment of facilities-based operation.
490 521 factor contributing to survival in the initial resale provide price-competitive access to both US and market environment, which is characterized by Canadian markets. abundant competition and diminishing margins. bilateral and multi-lateral carrier and facilities an aggressiveimplementation offacilities arrangements (IRUs, transit, traffic exchange, infrastructure,primarilyinordertoreduce international circuit implementations). operating costs. These have been taken with a longer term view of a cohesive trans-national abilitytoparticipateinglobalinitiatives North American network. involving international facility termination in North America, and to provide a seamless high establish operations and presence in both the capacitydigitalinterconnectivity across the Canadian and USA markets, which provides continent. access to increasing volumes of traffic. deliveryof fONOROLA's North American a business approach involving partnering and joint trafficforglobalterminationonoverseas ventures, which minimizes risks and excessive carriers' networks. capital outlay requirements while taking advantages of synergies between companies. 6.0 Summary and Conclusion The Canadian telecommunications environment has awareness and exploitation of the opportunities been taken in managed stages from a closed monopoly created by governmental and regulatory policy at environment a decade ago, to an open competitive each step. environment in 1998, conforming with WTO accords withrespecttomarketaccess,fairnessand fONOROLA is one of the Canadian companies which transparency of regulation. Within this tempestuous sees itself as being advantageously positioned to take environment almost one-half of the entrants survived, advantage of the international business opportunities one-half have left the business, while a handful have created by1998 WTO implementations and the prospered significantly despite initial years of financial Canadian commitments. fONOROLA has built an and business challenges. The entire industry is growing advanced telecommunications network consisting of year-on-year during this time in absolute revenues owned and leased inter-urban fibre-optic systems, terms,even though thecost/unit of service has digitalswitchingcentres,andreal-timenetwork decreased; implying both the consumers and service- management systems which can bridge the largest providershave gained value. TheCanadian volume telephony and data routes in the world; from Communications Industry index (a stock performance North America to Europe and from Asia to North measure compiled by Industry Canada) has increased America. The Company is poised to capitalize on at an annual compound rate of 11.49% over the Jan international liberalization with its networks already 1993 to Dec. 1996 term, implying that the investors connecting Canada to the heavily-populated eastern have also profitted even with both winning and losing and mid-westernregionsoftheUSA. The industry selections included in the index. Canada establishment of international facilities-based provides a "living laboratory" demonstration of the competition in Canada in October 1998 opens several advantagesofliberalizationandthemanaged new service and strategic business opportunities with introduction of competition. international partners:
anon-alignedcarrierbusinesspartnerfor telephony, data,andvalue-addedservice Operating Agreements, with theabilityto
References: 1. Tele Geography 1996/97 edition, & 1995 edition 2. "A Bright Outlook for Telecommunications" by Sam Paltridge and Dimitri Ypsilanti, OECD Observer April/May 1997
491 5 2 2 3.StatisticalReview1996/1997Edition, IndustryCanada,SpectrumInformationTechnologiesand Telecommunications Sector 4.The Canadian Institute: International Telecommunications; June 1997- "Opportunities and Challenges in the WTO Regime: A U.S. Perspective" by Kelly Cameron International Bureau FCC 5. ibid.- "The WTO Agreement in Telecommunications: A Canadian Perspective" by Michael Tiger, Industry Canada 6. ibid.- "International Telecommunications; Opportunities and Challenges in the New WTO Regime" by Tapio Knuutila, fONOROLA 7. The Focus Report Vol. 6 No 3 June 1997; published by The Government Source, Ottawa Canada 8. The Financial Post; Aug. 5 1997 pp. 21 report on fONOROLA Inc. by Ian Karleff 9. Annual Reports fONOROLA Inc. 1995, 1996 10. Quarterly reports, press releases offONOROLA, 1995, 1996, 1997 11. http://strategis.ic.gc.ca; Canadian Industry Statistics Publication date 28/4/97
523 492 The WTO Basic Telecommunications Agreement: Does a Rising Tide Lift Those Without a Boat?
Richard D. Taylor' and Meheroo F. Jussawalla2
ABSTRACT
This paper locates the recent WTO Basic Telecommunications Services Agreement in the con- text of "globalization", free trade, and developments at the WTO. It raises questions about pos- sible unintended adverse consequences of the Agreement for developing nations, and suggests policy approaches to ameliorating some of these impacts, which might otherwise lead to adverse political and social reactions.
On February 15, 1997, 69 members of the decades. At this rate of growth, world pro- World Trade Organization announced that duction of goods and services will double by they had entered into an Agreement on Ba- 2020.3Developing countries now account sicTelecommunicationsServices (the for about 25% of world trade, compared with "WTO Agreement") to increase competition 20% a decade ago. in this sector. What can developing nations, and especially the poorest of the poor, look With this transformation has come a new forward to from this Agreement?Will the economic, social and political order. In expected "rising tide" lift them up along with every part of the globe, governments are theobviousbeneficiaries developed embracing liberal economic policies.Multi- countries, established global carriers and national companies are accelerating the suppliers, and large business users of tele- exchange of innovations and people across communications services? Or is it "lots of open borders.Investors are insisting that jam today" for the winners, and "a little jam governments and companies open their tomorrow" for the rest?More importantly, books and practice transparency in their will the WTO Agreement exacerbate pre- operations. The domain of international existingpolitical,socialandeconomic rule-making and policycoordination has stresses, adversely affecting the continued expanded, and the notion of "domestic" movement towards international free trade? policy has assumed a narrower focus, espe- cially in the economic area. 1. The Context of Globalization Advances in information and transportation To understand the implications of the WTO services and networks are forging ever Agreement, it is necessary to see them in stronger links between countries, regions, their larger context a broad, world-wide cities, and peoples, giving rise to a global post-World War II economic, trade and po- middle class that, in the words of Stanford liticaltrend captured in the phrase University Professor John Meyer, shares "globalization". "similar conceptsofcitizenship,similar ideas about economic progress,and a Globalization is said to represent a huge similar picture of human rights."4It is this opportunity for countries at all levels of de- social transformation, however, that causes velopment.The 15-fold increase in trade stress lines with traditional cultures, gov- volumeoverthepastfourdecades ernmental structures and religions. (compared with a sixfold increase in pro- duction), is considered one of the most im- In social terms, it is disingenuous to behave portant factors in the rise of living standards asifmarket-opening, continuinginterna- across the globe. Now, with a fresh wave of tional economic integration, and trade liber- market-opening initiatives transforming alization are always painless. Some people economies, forecasters predict global eco- will be displaced through the resource allo- nomic growth of 3.5% to 4% for the next two cation shifts that occur as a result of these
493 524 processes. While the efficiency gains from specialization through trade stimulate eco- "The introduction of trade in serv- nomic activity and create jobs, ultimately ices into a GATT negotiation was making up for what may be lost through job viewed with caution, if not opposi- displacement, managing this transition, and tion by many developing countries. dealing with the distributional consequences This was because trade officials of change, is a fundamental challenge for from developing countries recog- governments and participants.5 nized that many services industries were far less advanced than those Communications and information technolo- of industrial countries, and conse- gies have profound impacts not just on quently opening markets to foreign economies, but on politics, societies and services could retard the growth of cultures.Pressing forward without an ap- indigenouscapabilities,resultin preciation of these impacts may render unwanted reliance on foreign serv- planned developments vulnerable to delay ice providers as well as exacerbate or even denial based on both economic and balance of payments problems. "7 non-economic factors. Reactions to free trade, globalization and information tech- In the end, however, these arguments were nologies can result in political backlash in not as persuasive as a case for the benefits some countries whose traditions and poli- of liberalization of international transactions cies are inconsistent with such trends. in services, citing efficiency enhancements through improvementsinallocative and An example of this is the an article from the technical efficiency, expansion of consump- New Straits Times entitled, "U.N. Review tionpossibilities, increases inforeignin- Necessary, Says Dr. M." in which the Prime vestment,improvementsinaccessto Minister of Malaysia, Dr. Mahathir Moha- knowledge, and increases in productivity of mad, reportedly called for the United Na- factor endowments as the end-results of the tions to review and alter the 1948 United process. Nations Universal Declaration of Human Rights because it had been "formulated by In total, 116 nations participated in the Uru- the super powers, which did not understand guay Round negotiations.In December of the needs of poor countries."8 The West's 1993, the Uruguay Round concluded, hav- insistence that developing countries con- ing achieved a new legal framework for in- form to their high ideals on human rights is ternational trade in services that would be "oppressing" he said, and should not remain administered by the newly created World "a common standard of achievement for all Trade Organization (WTO). Known as the people and all nations."Will such view- General Agreement on Trade in Services points be further fed by aggressive globali- ("GATS"), it represented a major achieve- zation? Should the spirit of globalization be ment for the Uruguay Round. Consisting of totally insensitive to such concerns? And if a set of rules and disciplines applying to all it is, what will be the consequences? WTO members and a schedule of specific commitments, GATS provided a framework 2.Trade in Services/GATT/WTO for trade in services that embraces both Most Favored Nation (MFN) and national Since World War II, round after round of treatment/non-discrimination principles.8 international trade negotiations had shelved According to former U.S. Trade Represen- or ignored the problems emerging from tative official Jules Katz, a senior negotiator dealingwithservices,especiallythose in the. Uruguay Round, "The WTO was cre- based in new technologies.At the insis- ated in the image of the U.S. We are re- tence of the United States, the case of sponsibleforitsstrengthsandweak- services trade was brought under an um- nesses. "9 brella agreement considered by the GATT at its September 1986 meeting at Punta del As of January 1, 1995, the WTO became Este in Uruguay.Many developing coun- the legal and institutional foundation of the tries still voiced reservations to the liberali- multilateral trading system. The VVTO's zation of services, as Pipe describes: overall objective is to expand trade under
494 4;.)c- conditions of transparency and progressive access or are parties to bilateral agree- liberalization, as a means of promoting eco- ments. nomic growth of all trading partners, and, in particular, of developing countries. Any Newspaper headlines in Europe and the agreements and general principles of the U.S. trumpeted that the WTO "deal" will cut WTO extend to all WTO members on a prices heavily, break-up existing telecom non-discriminatory basis through the "most monopolies and opennationalmarkets. favored nation" and "national treatment" Much of the initial U.S. public media re- principles, unless otherwise excepted in a porting of the Agreement focused on the scheduled exemption.13 benefits to consumers. According to Reed Hundt, then Chairman of the Federal Com- 3. The WTO Basic Telecommunica- munications Commission, intensified com- tions Agreement petitionresulting from the Agreement is "greatnewsforAmericanconsumers". Negotiations on basic telecommunications "Today, the average cost of an international services commenced withthe "Uruguay call is almost $1 a minute," Hundt said, but Round" General Agreement on Trade in "the process advanced by this agreement Services, completed in April 1994, which will, over time, reduce that price by 80 per- containeda GATS Telecommunications cent."12 Annex,andconcludedwiththe WTO Agreement covering 69 countriesrepre- American consumers and companies spend senting nearly 95 percent of telecoms reve- about $14 billion on international telecom- nues worldwide.11 munications services each year.That in- cludes private data lines for computers, as The WTO Agreement covers all public and well as old-fashioned telex and even tele- private telecommunications services that graph services. A vast majority of the traf- involve the end-to-end transmission of cus- fic, though, is plain old telephone service. tomer-supplied information. The signatories The price of those calls is determined to a also agreed that both basic telecommunica- great extent by what the foreign phone tions services provided over network infra- company often owned by a government structure and those provided through resale charges for completing them. And so, the (over privateleasedcircuits) wouldfall per-minute rates vary greatly from country within the scope of the Agreement. As a to country and are often artificially high. result,themarket access commitments Developing countries defend such high set- cover not only the cross-border supply of tlement rates as necessary to help finance telecommunications but also services pro- theconstructionoftelecommunications vided through the establishment of foreign networks within their borders, but Americans firms, or commercial presence, including the see higher rates as trade barriers. "There is ability to own and operate independent tele- no reason that international calls should be communications network infrastructure. any higher than domestic calls that cover the same distance," said Diane Cornell, The 69 countries which committed to vari- chief of the telecommunications division of ous levels of market opening must allow the FCC's international bureau.13 suppliers of telecommunications services from other WTO members to provide serv- Rather than hand traffic to another tele- ices by any of the modes included in their phone company in the middle of the ocean schedule, without evaluating whether or not for a fee, companies can land their own that member provides a similarly open mar- lines in a foreign country, and pay no set- ket. The most significant implication of this tlement whatsoever. Although the WTO will be the requirement to permit telecoms agreement does not eliminate the old ac- operators based inother WTO member counting system, the fact that 52 countries countries to build network infrastructure and agreed to open their markets to international compete in the national market on an MFN competition may make it increasingly irrele- basis.Entry can no longer be restricted to vant.14The deal could cause global tele- those countries which provide reciprocal phone rates to fall by 15 percent in the three of four years after the pact goes into effect,
495 '. 526 estimated Tom L. Elliott, a partner at Arthur received by those who have struggled long Andersen, the consulting firm."Over a 10- against just such concepts. to-12 year period, a trillion dollars could be saved by consumers world-wide," he said.15 Around the world, the incomes of the richest 20 percent grew three times faster than the 4. Impacts of Globalization incomes of the poorest 20 percent from 1960 to 1990. As a result, the share in Since developments in the telecommunica- global income of the poorest 20 percent of tions sector must be seen in the context of the world's population has fallen from 2.3 the impacts both positive and negative percent to 1.4 percent, according'to the U.N. of globalization, it is useful to look at recent Development Program. The richest 20 per- commentary onglobalizationidentifying cent of the earth now earn 85 percent of the possible areas of concern. money, compared with 70 percent three decades ago. In recent years, there has been a stream of critical literature from the social left, decry- This growthininequality appears to be ing developments in free trade and globali- positively correlated with the new model of zation. However, the issue of negative im- economic growth in the developing world, pacts has now gone more mainstream, for driven by large increases in trade and pri- example, in a recent book by Dani Rodrik of vateforeigninvestment. As developing theInstituteforInternational Economics countries have adopted free-market poli- entitled,"HasGlobalizationGone Too cies, privatized state industries and opened Farr16Rodrik, an economist, concludes their borders, private firms and investors that globalization is beneficial on the whole, have poured $420 billion into their econo- but that it can impose significant costs on mies since 1988. But as international trade some groups within each country. Policy and investment leap over national bounda- makers, he asserts, must respond by en- ries,ithas become easier, too,for the suring that international economic integra- problems of inequality and poverty to cross tion does not contribute to domestic social borders. disintegration. Rodrikidentifiesthree sources of tension between the global mar- 5. Issues for Developing Countries ket and social stability. In some important ways, the telecommuni- First, globalization makes the services of cations sector is not typical of traditional large segments of the working population markets. Most of the demand for telecom- more easily substitutable across national munications products and transport is de- boundaries, and therefore transforms the rived demand. Money is spent on them not employment relationship.Second, globali- so consumers can admire theethereal zationengendersconflictsoversocial beauty of fiber optic cable, or the pleasing norms and theinstitutions that embody geometry of a rack of digitalswitches. them, both within and among countries. Telecommunications products and services Third, globalization has reached a stage at are merely a means to an end or, more which it has become exceedingly difficult for accurately, an array of ends. These "ends" governments to carry out one of their cen- include not only improved personal and tral functions: the provision of social insur- business communications,butenhance- ance. ments for education, health care, govern- ment services, national development, en- Rodrik does not believe a return to protec- tertainment, culture, etc.Consequently, in tionism is the answer. However, the answer the area of policy, there is a greater likeli- he offers, that external economic liberaliza- hood that discussions of the physical means tion must be complemented with internal of information transport will be conflated compensationandsocialinsurancefor with the ends of such transport. This is not groups who suffer from globalization and just a philosophical observation it has very who would otherwise increasingly oppose its real consequences, especially for develop- further evolution, is not likely to be easily ing countries. Some fear the network of telephones, computers and television will
4965 2 7 strip developing countries (and perhaps the Agreement will be a boon for some some developed countries) of their identity of the world's most aggressive phone and sovereignty, and that they do not have companies, it could hit emerging mar- the resources to participate fully in the pro- kets and their phone companies hard. jected benefits.17 William Laurent, an analyst at Robert Fleming in London, estimates that six of In addition, less developed nations have the largest Latin American phone com- additional hurdles to effective participation panies together could lose $1.2 billion in in the benefits of the Agreement. Services profits, almost a third of their earnings, liberalization is not a short-term panacea, fromincreasedinternational phone since the required changes take quite a long competition."I don't think the market time to produce results despite the high has fully factoreditin," says Andrew transition costs which must be undertaken in Harrington, a Salomon Brothers analyst. the early stages of the process. And multi- "The risk factor of the industry is going lateral agreements produce relative advan- to go up very substantially."19 tages and disadvantages which vary de- pending on the relative power and influence What will be the effects on employment of the parties, and their ability to take ad- in countries where many are already vantage of market opportunities. The tele- chronically unemployed or underem- communications playing field is "level" only ployed? In the best case, there may be, in a very peculiar sense in the sense that over time, a net employment gain from "the rich and poor alike are forbidden to competitive entrants.But will there be sleep under the bridges of Paris." retraining or support for those displaced in the meantime?If they are repre- The bases for these arguments, which are sented by government unions, will they typically described as protectionist by free- array theirpoliticalinfluence against trade absolutists, include: the desire to pro- further opening markets? Will there be tect companies in a service sector which is strikes and/or riots (France and India not yet able to compete effectively with for- come to mind as examples in the not- eign entrants; the view that the adjustment too-distant past) causing governments costs impose too high a social and eco- to retrench? nomic cost; likely negative balance of pay- ment effects since increased revenues from Will new foreign entrants, by offering call volume are unlikely to offset lost reve- higher salaries,drain the competent nues from lower prices; and a desire to management and technical manpower protect a sector which is considered impor- from national incumbents?Or, given tant for the preservation of cultural integrity the expectedworld-wideexplosive and national security. growth in this area, will the best immi- grate to markets where they can find These factors raise a number of troubling superior compensation? questions for developing countries18: What will be the effect on preferred or What will be the effects of lost revenues "national hero" providers, who provide to incumbent dominant (or monopoly) local employment and wield political in- nationalcarriers? Totheextent fluence?Will domestic companies be "excess" revenues were contributed to able to compete for contracts? general government funds, what other infrastructure or social programs will be What will be the reaction of nationalist effected?What will be the effect on parties and the military who see domes- that carrier's ability to continue to build, tic carriers both as symbols of national maintain or upgrade its system?Will honor and as facilities which must be there be a negative net effect on the controlled in the interest of national se- nation's balance of payments? curity?
What will be the effects on its ability to What will be the reaction of political raise capital ifitis privatized?While parties who believe the government
497 528 should serve a social welfare function to take advantage of these opportuni- (and such parties are not only to be ties. Conversely, their home markets found in developing countries)? will be open to entrants from any WTO member country. What will be the reaction of those who control the media and consider them- As barriers to cross-border telecoms serv- selves guardians of cultural (and some- ices start crumbling as of January 1, 1998, times religious) national integrity? there's little doubt that it will be the world's top carriers and suppliers, with experience Will the foregoing groups be driven to in operating in liberalized, competitive envi- unite politically to sabotage or reverse ronments, which will reap the immediate the ends intended by the Agreement? benefits. "United States companies are the most competitive telecommunications pro- Will "foreign" market entrants engage in viders in the world; they are in the best po- "cream-skimming"profitablebusiness sition to compete and win under this agree- and upscale customers, and in serving ment," boasted U.S. Trade Representative only desirable urban, and not rural, ar- Charlene Barshefsky after the deal was se- eas? Will this further reduce the ability cured .2° of the incumbent, with a national service obligation, to compete?Will new en- Asia-Pacific nations are watching these de- trants have any commitment to acces- velopment closely. "The world telecoms sible,affordable"universalservice" revolutioniscertainlyhappening,"says (however that may be defined)? Byung-ilChoi,directorforInternational Telecommunications and Trade Policy at Will "foreign" entrants, with more capital the Seoul-based Korean Information Soci- and more management and technical ety."But, the question is how do all Asian expertise be able to "game the system" countries take advantage of it?"21 and manipulateinstitutionalarrange- ments within the VVTO (such as dispute Overall, the WTO Agreement has ample settlement procedures) rulesin ways support among APEC countries.Critics, that disadvantage national incumbents? however, see APEC, following the lead of There is little acknowledgment that the the WTO, as a "Trojan Horse" for the insti- ability of different countries to manipu- tutionalization of unequal relations under the late these institutional arrangements will guise of a level playing field.According to vary considerably and that richer na- them, if this path is followed, hard won labor tions which are wellresourced with rights will erode; falling government reve- technical expertise are much more likely nues will generate a stronger push to dis- to benefit from the contradictions of a mantle social programs; and APEC will ac- system which is continually growing in celerate the "race to the bottom" - the har- complexity. monizing down of working and living stan- dards to the lowest common denominator. Will the predicted increase in interna- 6. Policies to Compensate for Unin- tional traffic put an overwhelming strain tended Adverse Impacts on existing domestic facilities, for which there is insufficient capital and man- power to upgrade? The authors believe there is considerable potential for mischief to the achievement of the desired ends of the WTO Agreement Will the WTO Agreement result in a latent in the factors set forth above.For one-way street for large companies go- free-market purists, theory dictates that all ing into developing countries? As a re- such issues are irrelevant, and only the re- sult of the liberalization in telecommuni- lentless forces of the market, in an envi- cation services, operators in the devel- ronment of totally free trade, will maximize oping countries theoretically have ac- the potential benefits of the WTO Agree- cess toalarger"foreign"markets. ment. However, as noted above, this is not However, only a small sub-set of the about trade in corn, or cement, or sneakers. developing countries' firms will be able
498 529 Telecommunications, politics, and the eration between trade specialists and tele- forces of development seem to go hand in communications policymakers, andfor hand, and a sensitivity to these issues sharing of expertise at the regional level seems to us to be good economics, good politics and good business. In the face of weakened nation states, one way that discipline may be imposed on The answer to the challenges presented by global telecommunications enterprisesis implementing the Agreement in developing through enhanced powers for supra-national countries does not lie in trying to roll back or regulatory bodies.According to Secretary- constrain the forces of trade, investment General of the International Telecommuni- capital and technology.In part, the answer cations Union, Dr. Pekka Tarjanne: lies with individual governments ensuring that they pursue sensible domestic policies "We already have the technology whichcouple enhanced competitiveness necessary for a global information with effective adjustment programs, and society.But the global information that they respect internationally recognized economy - and society itself - will social standards.An example might be require a new system of rights and supportforinitiatives like Australia's obligations, and a new system of "Casualties of Telecom" program, in which regulatory principles. actual and potential telecom stakeholders self-identify issues.22 Above all, regulators must strive to guarantee that everyone has access The answer lies as well with multilateral in- to basic telecommunication serv- stitutions such as the WTO which must seek ices.This, along with other human to mesh telecommunications services in- rights, is most certainly the issue of vestment and the social dimensions of eco- this decade as well as the next one. nomic development withinitsmandate. The authorities responsible for cre- Such multilateral organizations can also ating a common international regu- assist with the collection and tracking of latory framework will have to work pertinent data. They should identify ways to together in close co-operation. The measure the net inflow or outflow of re- relationship between national and sources to developing countries under the international regulation has changed Agreement. They should ensure that devel- forever.Today's issues are global oping countries have access to there- issues, and they require global so- sources necessary to fully understand the lutions."23 implications of whatever levels of commit- ment to liberalization they adopt. They Some business leaders see engagement should undertake a thorough factual analy- with these issues as simply a matter of cor- sis of the applicability of generalized con- porate enlightened self-interest. A good clusions about the Agreement to countries example of this kind of strategic vision (of of small size.They should study the rele- sensitivity to contextual issues) was given vance of "social clauses" (NAFTA is an ex- by IBM Chairman and CEO Louis Gerstner: ample) to telecommunications agreements. Their economists should look closely at A few decades ago, there was an- theories of "infant industries" and "market other "defining" technology. You failures" as they apply to developing coun- may remember it: nuclear power.It, tries. too, was going to change the world. It was going to make energy as The WTO, UNCTAD and ITU should offer cheap as water ... bring air condi- technicalcooperationprograms totrain tioning to deserts, heat to frozen government officials. They should assist in tundras. developing cooperation and information ex- change among developingcountriesto Reactors would power cars and make governments more aware of the con- ships, airplanes and spacecraft.In- sequences of their decisions. They should exhaustible energy. also establish mechanisms for close coop-
499 530 But what happened? The nuclear and health standards, sensitivity to power industry is a dormant industry the environment, support for educa- today. tion and the protection and nurturing of children are not only justifiable Those grand visions were neverre- within the context of morality and alized. Why? Was it because of justice. The simple truthisthat bad science, disappointing technol- these are good for business and in ogy? Not really. most cases lead to enhanced pro- ductivity, greater loyalty in the work While that industry was focused on force, broader community accep- megawatts and reactor cores, tance and ultimately to stronger communities and governments were profitability.25 worried about the implications of that technology. They stopped the He advocates the adoption of voluntarycor- industry dead in its tracks. porate codes of conduct, which he believes have the advantage that they provide policy Today,, our industry has grand vi- direction from the boardroom to the fron- sions. I've shared some of that with tlines of corporate operations in any part of you this morning.And they are the world. grand. And very ambitious. We're talking about no less than changing At least one company sees the developing the world in very fundamental ways. world as a challenge.Satellite company Teledesic Corp. says it will give away some Yes, too often, what are we focused of its telecommunications capacity to help on? What will you hear and see developing countries. Russell Daggatt, the here at Comdex? Megahertz, giga- company's president, told Reuters the offer bits and multitasking. There's a meant several regions and countries would disconnect between our priorities have free access to some of the fastest and those of a lot of people and communications available for health or edu- governments. cational purposes.26Perhaps enlightened leadership from the corporate sector will So, I'd like to leave you with the help address some of these issues. thought that the time has come to step up to these challenges. Even Yet multinationals answer increasingly to as we continue to innovate and cre- forces beyond their own control: stock mar- ate, we must now also think about kets driven by institutional investors ready the broader implications of the fu- to bail out at the drop of a fraction.And ture we are creating.24 who are the institutional investors? Pension funds, trade unions, mutual funds, all owned Another example comes from a leading Ca- by the "little people," many of whom are nadian businessman, who said: themselves ill at ease about the direct and indirect consequences of globalization. So, While some of those voicing con- ultimately, a part of the solution must be cerns are little more than protec- public education at every level, along with tionists and reactionariesindis- public debate which recognizes both the guise, the negative effects of eco- complexity and the sensitivity of the issues nomic liberalization must be taken at hand and is respectful of the fact that, as seriously.... yet, no one has all the answers. Whether at the World Trade Or- ganization, or at the OECD, or at the United Nations, a powerful case can be made that a universal ac- ceptance of the rule of law, the outlawing of corrupt practices, re- spect for workers' rights, high safety
500 531 1 Prof. Richard D. Taylor, J.D., E.D., James 13 Schiesel, S., "Telephone Pact to Alter R. and Barbara R. Palmer Chair in Tele- Rates and Services," The New York Times, communications Studies, College of Com- February 17, 1997, p. 46. munications, The Pennsylvania State Uni- 14 "Not Quite Magic," The Economist, Feb- versity. ruary 22, 1997, p. 68. 2 Meheroo F. Jussawalla, Ph.D., Emerita 15 Schiesel, S., "Telephone Pact to Alter Senior Fellow/Economist, The East-West Rates and Services," The New York Times, Center February 17, 1997, p. 46. 3 Ruggiero, R., "The High Stakes of World 16 Rodrik, D., Has Globalization Gone to Trade", The Wall Street Journal Interactive Far?, Washington, D.C.: Institute for Inter- Edition, April 28, 1997, Edit Page Features. national Economics, 1997. One Canadian business leader described 17 McEvoy, J., "Third World Wonders About these values as: respect for the rule of law, Information Highway," Reuters, February an abhorrence of corrupt practices, respect 28, 1995. for workers' rights, a distaste for discrimi- 18Special recognition must be given to the nating practices, acceptance of the impor- work of Dr. Gillian Marcelle in developing tance of safety and health standards, sensi- these concepts. tivity to the environment, and an unwilling- 19 Lavin, D., Naik, G. and Bahree, B., "Pact ness to exploit children. May Put phone Firms on the Line: Global 5 Ruggiero, R., "The Road Ahead: Interna- Competition Could Thin Ranks, Please tional Trade Policy in the Era of the WTO," Customers," The Wall Street Journal, Feb- The Fourth Annual Sylvia Ostry Lecture, ruary 14, 1997, P. A10. Ottawa, May 28,1996 (issued by the Infor- 20Andrews, E., "68 Nations Agree to Widen mation and Media Relations Division of the Markets in Communications," The New York World Trade Organization). Times, February 16, 1997, p. 1. 6 Erlanger, S., "Malaysia's Conspiracy The- 21-Islam, S., "Conference Call," Far Eastern ory Draws Criticism From Albright," The Economic Review, June 12, 1997, p. 45. New York Times, July 29, 1997, p. A8. 12 Lamberton, D., "Ethical Issues for Tele- ' Cited in Marcelle, G., "WTO Negotiations communications: An Australian Perspec- on Basic Telecommunications: Implications tive," Pacific Telecommunications Review, for Developing CountriesCase of Latin June 1997, p. 8. American and the Caribbean," presented at 23Tarjanne, P., "The Changing Relationship Telecom Americans, June 1996. Between National and International Regula- 8 Jussawalla, M. and Tehranian, J., "GATT tions", Center for Tele-Information (CTI) and Economic Development: Trade in In- Course for Telecom Regulators, January 28, formation and Telecommunication Services 1996. in Theory and Practice," unpublished paper, 24 Gerstner, L., Keynote Address (Untitled), East-West Center, 1996, pp. 3 et seq. Comdex '95, Las Vegas, Nevada, Novem- 9Jones, I., "What is the World Trade Or- ber 13, 1995. ganization and Why All the Ruckus About 25D T., "Globalization, Social Prog- It," World Trade, December 1996/January ress, Democratic Development and Human 1997, p. 27. Rights: the Responsibility of a Multinational 10 Marcelle, G., "WTO Agreement on Basic Corporation," delivered to the Academy of Services: Background of Trade Negotiations International Business, Banff, Canada, Under the WTO," September 27, 1996. http://www.analysys.co.uk/products/regulat/ 26 McEvoy, Feb. 28, 1995. wto/ (July 1997). 11 "Basic Telecom Agreement Joined by 68 Countries," Memorandum, Transnational Data Reporting Service, Inc., February 18, 1997. 12 Wilke, J., and Naik, G., "International Phone Calls Costs are Cut," The Wall Street Journal, August 8, 1997, p. A3.
501 532 Direct Broadcast Satellite Radio System Implementation
Robert D. Briskman CD Radio Inc. Washington, DC, USA
ABSTRACT
The first domestic satellite radio system is currently under implementation to provide mobile service throughout the contiguous 48 United States starting in late 1999. This will culminate almost a decade of deliberation and effort.
BACKGROUND
The technical possibility of providing radio critical satellite downlink (i.e., satellite to mobile service from satellites directly to listeners in user transmission path). However, the particular homes and cars was recognized in the late bandwidth selected for such satellite radio 1980s. This was followed by numerous service in a particular country or region must not technical and economic studies. The studies contain transmitters of other services which were done by governmental and private could interfere. The frequency range 1-3 GHz is organizations and contemplated the provision of free from attenuation/distortion effects both from satellite radio service on a domestic, regional the ionosphere and from atmospheric moisture and global basis. Most of these studies were and, therefore, has been highly used by other submitted to the then called CCIR Study Group services (e.g., radars, radio relay, navigation, 10/11S [1].In May 1990, a private United mobile aeronautical telemetry, space States organization submitted an application to exploration, etc.). An effort was made in the the Federal Communications Commission (FCC) early 1990s to allocate 1452-1492 MHz for the for permission to implement a direct-to-mobile downlink on a global basis. This was not user satellite radio service. The implementation possible due to the previously noted interfering of this service for operation in late 1999 is services and, consequently, at the World described subsequently, noting that several Administrative Radio Conference (WARC) in design changes were required over this long 1992, countries also allocated 2310-2360 MHz gestation period. Also, over this period, several and 2535-2655 MHz. nomenclatures for the service have been used such as DAB (Digital Audio Broadcasting), DBR Satellite Radiated Power. As described more (Direct Broadcast Radio), S-DARS (Satellite- fully elsewhere [2], the user antennas must have Digital Audio Radio Service), DBSR (Direct low directivity for use in mobile (i.e., automobile) Broadcast "Satellite Radio"), etc. applications where only a few decibels of gain are possible with low cost designs. This, TECHNICAL ASPECTS coupled with the need for transmission margins to overcome multipath fading and the desire to Certain key technical aspects are of major provide the user multiple radio channels for importance for implementation of satellite radio choice of music and voice programming, results service [2] to mobile users. in the requirement for very high satellite radiated power and correspondingly high power flux Radio Frequency. One reason for the length of densities (e.g., -134 dBW/m2/4kHz). the gestation period was the need to allocate Interference coordination with countries adjacent radio frequencies for provision of this service. to the service area is generally necessary due to The studies mentioned in the last section the high flux densities. Lastly, the high satellite showed that the frequency range from 1-3 GHz radiated power requires large and relatively was best suited technically for providing the expensive satellites and their associated launch vehicles.
502 `,-)33 Audio Compression. The use of video launch is scheduled for August 1999 and the compression has made direct broadcast satellite second for October 1999. television economically feasible. Similarly, the use of audio compression is fundamental in the Proorammino/Up-LinkfTT&C. A national economics of satellite radio. Compression of programming studio is being constructed in the Compact Disk (CD) stereo music by a factor of New York City area to provide the programming 12 has been successfully demonstrated and for the 50 previously mentioned audio channels. further work is on-going. Compression of voice A typical music format for the 30 channels is is similar, with MPEG 2.5 providing a wide range shown in Figure 4. The studio up-links the of compressed digital rates and associated programming to both satellites using the 7025- speech qualities. 7075 MHz frequency band. The studio also performs on-orbit TT&C using the 7025-7075 IMPLEMENTATION MHz band for transmitting commands and receives two beacons radiated from the satellite The system to be described was licensed by the near 2320 MHz for telemetry. TT&C during FCC in October of 1997 to provide a digital transfer orbit and non-standard situations is satellite radio service throughout the contiguous performed at frequencies in the 6/4 GHz 48 United States using the satellite downlink frequency band. radio frequency band 2320-2332.5 MHz. The service provides 30 CD quality music channels Vehicle Radios. The primary service users are and 20 voice channels to users, primarily in their expected to be mobile (i.e., automobiles, trucks, vehicles, on a subscription basis. recreational vehicles, etc.). Although eventually radios suitable for receiving satellite service will System. The system employs two be delivered incorporated in the electronics of geosynchronous satellites located at 80° and new cars, users are expected initially to obtain 110° West Longitude which broadcast the same receivers capable of receiving satellite radio transmissions so as to achieve satellite spatial service either by purchasing an adapter, called a diversity. These locations provide high elevation radio card, or by purchasing an aftermarket angles to users throughout the service area. radio. A simplified block diagram of the Combined with the further use of time diversity aftermarket radio is shown in Figure 5.It and spread spectrum transmission, the effects depicts a combined AM/FM/Satellite Radio of service outages from multipath fading and configuration with the darker boxes showing blockage are minimized. In core urban areas what is added for obtaining satellite radio and in long tunnels, where the satellite signals capability and the light boxes showing the are obstructed for long periods, terrestrial normal AM/FM capability. The two medium repeaters of the satellite signal are used to color boxes depict an additional possible future provide continuous high service quality. capability where a digital signal is broadcast terrestrially by a radio station combined with its Satellites. The satellites are being FM analog broadcast [3]. This is called IBOC manufactured by Space Systems/Loral. Figure (In-Band On-Channel). Figure 6 shows a 1 is a drawing of the satellite, and Figure 2 is the demonstrational working embodiment of the block diagram of the communications payload. aftermarket radio. The satellite radio capability The effective isotropic radiated power from each is achieved by a three chip "chipset". The same satellite is over a megawatt at the edge of the chipset is used in the radio card shown in Figure service coverage area shown in Figure 3. Three 7 which is inserted into the existing radio satellites are being constructed with two to be receiver tape cassette player. The only addition launched and a third serving as an on-the- is a wireless link from the antenna shown in ground spare. The satellite design lifetime is 15 Figure 8, which is adhesively attached like a years. cellular rear window mount, to the cassette insertion unit shown in Figure 7.It is also noted Launch Vehicles. The satellites will be launched that there is an encrypted service channel in by Arianespace using the Ariane 5 rocket addition to the program channels previously launched from Korou, French Guyana. The first described. Each receiver in the system is
503 5 3 4 SENSOREARTH TC&R ANTENNA S-BAND ARRAY PATCH X-BAND FEED (DSS's)DIGITAL SUN SENSORS / REFLECTOR X-BAND.75M DIA 2.4 M SOLAR SAIL S-BAND TRANSMITFEED ARRAY AND POLARIZER REFLECTORS-BAND 2.4M XPARABOLOIDAL 2.5M SOLARHIGHTWO FOUR-PANEL(PLUSEFFICIENCY ARRAYS SIUCON MINI-PANEL CELL ON YOKE) (NORTH) +Z +X +Y (EAST) (SOUTH) FIGURE 1 KEY COMBINERS CIRCULATOR WIN HIGH DIVIDERS DTWTAs TX ANTENNA POWER LOAD HIGH POWER LOAD SAT PAD, COAXIAL 240W HYBRID POWER DIVIDER
TEST COUPLER
COAXIAL CABLE 240W WAVEGUIDE
ISOLATOR TWT, 120W 0 REDUNDANT UNIT BAND PASS FILTER
DIPLEXER
HARMONIC FILTER PRESELECTED FILTER
ROTARY SWITCH
PHASE SHIFTER
BFNBEAM FORMING NETWORK BFN COAXIAL T-SWITCH 480W
480W '0(1
SOUTH PANEL LHCP 2326.2 5 2326.25 MHz NORTH PANEL MHz RECEIVERS 3:1 (4.740 GHz LO) CHANNEL RX ANTENNA MP.. Cri 7.06625 GHz
7.05046 GHz TEST PORT to TVA SUBSYSTEM oci
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Payload Block Diagram
FIGURE 2 505 536 10.0
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80° West, 0° North, S-Band Transmit Antenna
FIGURE 3
506 537 Channel Listing
1.Symphonic 16. Latin Rhythms Music from the masters. Bach, Mozart, Handel. The Move to the music of Ruben Blades, Albita, Juan Luis world's greatest classical composers broadcast in Guerra, and the legendary Tito Puente. brilliant CD fidelity. 2.Chamber Music 17. Reggae Elegant music performed by small ensembles of solo Pulsating rhythm from the musically prolific island of instruments such as the cello, violin and woodwind. Jamaica. Skanking all the way back to the Skatelites up through Bob Marley and Shabba Ranks. 3.Opera 18. Hip-Hop & Rap Experience the drama and spectacle of the greats. The forefront of contemporary music. The Fugees, Verdi, Puccini, and Wagner. Heavy D and Dr. Dre. 4.Today's Country 19. Dance The fresh, honest sounds of today's country stars Techno, club and pop remixes from around the world including Vince Gill, Alan Jackson, Leann Rimes and make this one of the hottest spots on the dial. Garth Brooks. 5.Traditional Country 20. Urban Contemporary All of your favorite country legends are here. Stars like The soulful sounds of Toni Braxton, Luther Vandross, Merle Haggard, Loretta Lynn, Hank Williams, Jr. and Keith Sweat and Mary J. Blige. George Jones. 6.Contemporary Jazz 21. Soft Rock The syncopated rhythms of today's jazz music. The Mainstream pop hits from artists like Celine Dion, Phil cool sounds of Kenny G, Fourplay and David Collins, Gloria Estefan and George Michael. Sanborn. 7.Classic Jazz 22. Singers and Songs The mood is magic when the music is improvised. The greats sing the standards, with legends like Frank Listen as musicians like Duke Ellington, Miles Davis Sinatra, Nat King Cole, Tony Bennett and Barbra and John Coltrane experiment and expand the sounds Streisand. of jazz. 8.Blues 23. Beautiful Musk The foundation of rock. The window to the soul. Memorable melodies of contemporary music B.B. King, Muddy Waters and Robert Cray. orchestrated with a full, lush and easy sound. 9.Big Band/Swing 24. Album Rock A time of great drama. Relive the memories with the Mainstream rock from veteran bands and new artists, sounds of Tommy Dorsey, Glenn Miller and Artie including Aerosmith, Collective Soul, Dave Matthews Shaw. Band, John Mellencamp. 10. Top of the Charts 25. Alternative Rock Today's hot hits from recording artists such as Sheryl Modern rock from such diverse bands as Beck, Live, Crow, Mariah Carey and Boyz II Men. Stone Temple Pilots, and Smashing Pumpkins. 11. Classic Rock 26. New Age Timeless tracks from the 60's and 70'san entire Sounds that soothe and transport. Relax with Jim generation of great rock music. The Who, Rolling Briclunan, Kitaro and Yanni. Stones and Eric Clapton. 12. 50's Oldies 27. Broadway's Best Sock hops and going steady. Tune in and experience it The Great White way shines with all your favorites all over and over again with Chuck Berry, Little from the past and today's hot new shows. Rodgers and Richard and Elvis Presley. Hammerstein, Marvin Hamlisch, and Andrew Lloyd Webber. 13. 60's Oldies 28. Gospel Put the top down and cruise to the sounds of the Soulful gospel sounds of joy. Mahalia Jackson, Al sixties. The solid gold sounds of Motown, Stax, the Green and the Winans. British Invasion and more. 14. Folk Rock 29. Children's Entertainment Thoughtful, inspired melodies from performers like Entertaining songs and storytelling for younger Joni Mitchell, James Taylor and Joan Baez. listeners. Fred Penner, Raffi and Tom Chapin. 15. Latin Ballads 30. World Beat The enduring romantic sounds of Latino vocalists. The Beat goes on...all over the world. Follow the sun Julio Iglesias, Nino Bravo and Roberto Carlos. with the music of Lucky Dube, Youssou N'Dour and Outback.
507 538 FIGURE 4 AntennaSatelliteS-Band K2) AntennaAM/FM Analog AMFM Receiver Receiver , 'Analog Demodulator AudioAnalog A IDigital modtilat I Demodulator J R t.,41,50,1 DecOMpreSsO....ri L Amplifier 44 ChannelService Front PanelControls - - - - - Control Signal -141f BEST cOPYAVAILAIM Display .1 Terrestrial DABSatellite DAR FIGURE 5 individually addressable, and one purpose of the service channel is the-authorization/termination of each subscriber's access.
SUMMARY
A new radio service for United States mobile subscribers is being implemented for availability in late 1999. The service is the first major advancement in radio since the implementation of stereo FM. It will provide digital transmission of multichannel music and voice throughout the 48 contiguous United States.
REFERENCES
[1] ITU-R, BO. 955-2, "Satellite sound broadcasting to vehicular, portable and fixed receivers in the range 500-3000 MHz", Section 11 (Sharing), Geneva 1994.
[2] R. D. Briskman, "Satellite DAB", International Journal of Satellite Communications, Vol. 13, July-August 1995, pp. 259-266.
[3] D. H. Layer and D. Wilson, "IBOC DAB: Its Potential for Broadcasters", National Association of Broadcaster's 1996 Broadcast Engineering Conference Proceedings, April 1996, pp. 14-19.
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33.3 St S HF Digital Broadcasting: Progress Using a System Designed by the Voice of America and the Jet Propulsion Laboratory
H. Donald Messer Voice of America Washington, DC
1. ABSTRACT
Digital satellite audio broadcasting technology developed by a joint Voice of America (VOA), Jet Propulsion Laboratory (JPL) project has been recently applied to a system for digital audio broadcasting in the short wave bands. A receiver has been designed, built, and tested in the field. This paper presents an overview of the VOA/JPL HF Digital System development to date.
2. INTRODUCTION A major objective of the September 1997 test was to interface a digitally modulated signal with Some of the propagation impairment mitigation a high power, non-linear, DSB AM transmitter techniques that were developed for digital and to investigate the effects on the resultant satellite audio broadcasting by VOA/JPL have signal spectrum of various parameters of this been applied to a system design for digital short interface. The modulator used with the linear wave broadcasting. A receiver incorporating transmitter was modified and interfaced with these techniques has been built and tested in the such a transmitter. Tests were conducted at field. power levels of 220 kW and 50 kW.
A total of three field trials have been 3. HIGH POWER TRANSMITTER accomplished with the VOA/JPL system to date. INTERFACE The first was accomplished in October 1996, with the main purpose being propagation The transmitter used in the September 1997 test measurements over a variety of transmission was DL-3, a 250 kW DSB AM transmitter paths. The transmit site was the VOA Delano, equipped with a solid state modulator. CA, Poppele Transmitting Station, while reception sites were at Austin Texas, Since a digitally modulated signal, which uses Washington DC, and Tenerife, Spain. pulse shaping to control the spectrum shape, has both phase and amplitude variations, the The second and third transmission tests were modulator was modified to separate these two accomplished in May 1997 and September 1997. components and interface with the transmitter as Signal reception took place at the VOA shown in Figure 1. One component becomes a headquarters building in Washington DC. These constant amplitude carrier with phase tests included both propagation measurements modulation. This is put into the transmitter and performance (bit error rate) measurements exciter input. The other is the amplitude, which with various modulation formats. Two is put into the AM modulation input. frequencies were used during both tests. The VOACAP program was used to select the best The factors that affect the resultant spectrum frequency that would provide a single hop path shape are as follows: to Washington DC, and another frequency that would result in a multiple hop path. The excess bandwidth factor of the pulse shaping. The lower the value, the steeper the A 50 kW linear transmitter, backed off to spectrum falls off. However the lower this approximately 12 kW, was used during the May value is, the larger the amplitude variation in 1997 test. Propagation and performance the signal. measurements were made with a range of test signals. The frequency response of the transmitter modulation input. A perfect frequency response would restore the signal spectrum
513 548 to its baseband shape, but the AM The frame sync sequence is always modulated modulation input of DL-3 is AC coupled using BPSK. and has a finite high frequency response. A data block can be an arbitrary number of bytes The timing between the two signal long, but should contain an integral number of components. The AM modulation input audio frames. When coding is used, the data produced a time delay which must be block length is set to have an integral number of compensated for. The JPL modulator allows Reed-Solomon and encoded audio blocks. The delay adjustment both in software, at data block length used in the field trials was thus 1/48000 sec. intervals, and in finer 255*M*8*40 data bits long. M is the number of increments in hardware. bits per symbol in MPSK (3 for 8PSK) and 40 is the audio frame length in bytes. The result of a typical spectrum measurement of the transmitter output is shown in Figure 2. The Interleaving is done at the symbol level. When modulation rate was 8000 symbols per second. interleaving was used in the testing, the frame The modulation in this case is 8PSK with root length was equivalent to the data block length raised cosine pulse shaping and an excess (320 by 255 symbols). This results in a rather bandwidth factor of 50 %. Using DL-3, sidelobes long interleaving delay (approx. 10 seconds) and on the order of -30 dB were achieved. At this would probably be made lower in a practical level, the sidelobes were somewhat broader than system. could have been theoretically achieved with a perfect AM modulator. A lower excess A symbol from a known sequence of training bandwidth factor was tried, but the higher symbols is inserted every N symbols. N was amplitude components in the signal made it more selected to be 4 (training symbol ratio 1 in 5) for difficult for the DL-3 AM modulator and did not the field trials. result in further sidelobe reduction. The transmitter was able to handle both PSK and 4. PROPAGATION AND PERFORMANCE QAM modulation at a close to full output power MEASUREMENTS level and the resultant spectrum was very similar for all modulation formats. The signal test sequences for all tests were similar and included the following types of 4. RECEIVER BASELINE signals:
A block diagram of the receiver is shown in Unmodulated Carrier - used to identify Figure 3. The receiver operates at a symbol rate interferers in the signal bandwidth of 8 ksps. The processing part of the receiver is implemented in software on a PC platform. BPSK with a pseudonoise (PN) code - used Currently the front end is a modified short wave to measure multipath (delay spread) receiver for tuning to the desired signal. It provides a 13 kHz IF which is recorded on a MPSK up to 32PSK and 16 and 64 QAM digital audio tape (DAT) recorder for non-real with random data - used to measure bit error time processing. rate
Both the receiver and modulator are flexible in 8/16PSK with compressed audio - used for modulation type (MPSK/MQAM), interleaving digital audio performance evaluation depth, coding, and several equalizer parameters. The audio compression scheme is the AT&T Analog DSB AM - used for evaluation of G728 (LD-CELP) at 16 kbps. AM reception
The signal structure consists of frame In October 1996 the test frequencies used were synchronization and data blocks. Frame sync is a 15.2 MHz and 5.9 MHz. 63 bit PN sequence with an extra bit added at the end to make it an integral number of bytes (8).
514 1549 In May 1997 the frequencies used were 17.895 number of bytes in error exceed 16, no MHz and 13.73 MHz, at a transmit power of 12 corrections are made and the decoder gives an kW from a linear transmitter. indication of -1. A plot of this parameter is thus a good indicator of receiver performance. The In September 1997 the frequencies were 15.24 following figures illustrate this for the MHz and 12.03 MHz with power levels of 220 September 1997 tests: kW and 50 kW, using a non-linear transmitter. 4.1 PROPAGATION RESULTS Figure 5 shows the number of byte errors corrected over the 4 minute sequence 17, at 220 In general, all propagation paths had some kW and 15.24 MHz. Note that the audio will multipath, with delay spreads in the range of 1 to have no errors except for two very short 3 milliseconds. The largest (3 millisecond) delay instances in the middle of the transmission. spread was at 5.9 MHz, while the delay spread at the higher frequencies was closer to 1 The results of the same format test sequence millisecond. (Seq. 33, 8PSK, RS coded, compressed audio) from the May 1997 tests are shown in Figure 6. The degree of multipath also varied widely. The The propagation in this case approximated a highest and most interesting multipath structure, three component Rayleigh condition, as shown with three approximately equal power in Figure 4. In addition, there was a signal fade components, occurred during the May 1997 tests during the first half of the sequence, which is the at 17.895 MHz. This is shown in Figure 4. There reason for the high error rate during the first two were also significant amounts of interference minutes. The signal fade is apparent from a from other broadcasts during some tests. recording of the received signal spectrum. Out of band noise is seen during the first half, which 4.2 PERFORMANCE RESULTS indicates that the signal was weaker and had been brought up, together with the noise, by the Signals with modulation levels up to 8PSK have receiver AGC. been demodulated with some success from both the May and September tests. Depending on the Since the transmitted test sequence is known, it particular test conditions, bit error rates were is possible to determine the actual byte errors obtained from near zero to greater than 5E-3. that occurred during the reception of this This is the point where an audio decoder would sequence. This result is plotted in Figure 7 and start producing noticeable distortion in the shows the coding overhead that would have been recovered audio. required to correct all errors during each portion of the segment. The performance results are best illustrated by the results of demodulating some of the 8PSK, Additional processing of this data was used to compressed audio test sequences (Sequence 17 indicate the byte errors that would have occurred from the September tests and Sequence 33 from without time interleaving. This is shown in the May tests). The compressed audio was Figure 8. It can be seen that, in this case, if no encoded with a Reed Solomon (255, 223) code interleaving had been used, additional segments and time interleaved with an interleaver of could have been recovered error free during the approximately 10 seconds. first half of the sequence.
The Reed Solomon decoder can correct up to 16 5. SUMMARY AND CONCLUSIONS bytes with any number of errors out of the 255 byte block. Thus with 16 or fewer corrupted A system for digital audio transmission in the bytes, the audio will be restored without error. If short wave bands was developed and tested over the number of bytes in error exceeds 16, the RS the air. Successful transmission of compressed decoder does not correct any errors. audio with up to 8PSK modulation was accomplished during several tests. Link The implementation of the RS decoder in the conditions during most of the tests were severe, receiver provides an indicator showing how as evaluated by listening to the DSB AM many bytes per block were corrected. If the 515 550 segments. Causes included low SNR, multipath, determine if higher modulation levels and and interference from other transmissions. therefore higher data rates are practical. There is also further work needed in determining Transmission at 8PSK in a 10 kHz channel optimum coding overhead and the amount of allows a data rate of approximately 16 kbps, time interleaving that is most effective under a which is near AM quality. Further testing is greater variety of propagation conditions. needed under more benign conditions to
D to A CONVERTER
48 kHz CLOCK
DEYAY
D to A CONVERTER 0°
CARRIER SYNTH.
190° D to A CONVERTER
Figure 1. High Power Transmitter Interface
516 551 MKR 15.239 9 MHz REF 0.0 dem ATTEN 10 dB -32.60 dBm 10 dB:
VIDEO BW 30 Hz
CENTER 15.239 MHz SPAN 100 kHz RES BW 1 kHz VBW 30 Hz SWP 10.00 sec
Figure 2. Transmitter Spectrum with 8PSK, RRC Modulation
FRAME SYNC DETECTOR AND CONTROLLER
SYMBOL 3 -30 MHz CARRIER DATA DE- I.F. INPUT MATCHED EQUALIZER DEMODULATOR DEMUX INTERLEAVER TUNER FILTER
NCO NCO BIT (CARRIER (SYMBOL DECISION REFERENCE) TIMING) 1-1. I F.E.C. DECODER CARRIER SYMBOL TRACKING TRACKING LOOP LOOP L AUDIO DECODER
AUDIO Figure 3. HF Digital Receiver Block Diagram
517 Time (Seconds)
KJ La) A cn m -4 m m 8 A a; al 4 O 0 O 0 o o o o ? 0 0 0 0 0 0 0
Figure 4. Multipath (Delay Spread) Measurement at 17.895 MHz, May 1997
R-S Decoder Performance (September1997, Sequence 17, 8PSK) R-S Block Errors 8PSK-15MHz-220 KW
16 15 14 13 12 11 1 10 9 8 I
7 1 6 5 ii 1 4 3 i 1
2 ii 1 1 I I 1 il 0 iiii ii I li 1
2 I I 1 I I I I I 0:00:00 0:00:42 0:01:25 0:02:07 0:02:50 0:03:32 0:04:15
Figure 5. Errors Corrected by Reed Solomon Decoder; September 1997 Test
518 R-S Decoder Performance (May 1997, Sequence 33, 8PSK) 17.895 MHz
16 15 I 14 13 12 11 10 9 8 7 6 5 4 3 2
1 0 -1
' I I 0:00:00 0:01:00 0:02:00 0:03:00 0:04:00 Time - Minutes
Figure 6. Errors Corrected by Reed Solomon Decoder; May 1997Test Number of Actual Reed Solomon Word Errors per 255 byte block. Seq 33 Large Antenna. RMGS FSE N1=66, N2 6, w=.993, Both IIR and Matched Filter. CLBVV--40Hz. After Interleaver 320x255 3bit symbols.
144
128 :.
112 .-f:... :7 :;:' . , 1 :.': 4.4: .
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0:00:00 0:01:00 0:02:00 0:03:00 0:04:0 Time (HH:MM:SS)
Figure 7. Byte Errors Before Reed Solomon Decoder; 8PSK, 17.895 MHz, May 1997 Test
519 554 Number of Actual Reed Solomon Word Errors per 255 byte block. Seq 33 Large Antenna. RMGS FSE N136, w=.993, Both 11R and Matched Filter. CLBV.440Hz. Before Interleaver 320x255 3bit symbols.
224 .; 208
a 192 - . . . i .7: . .. 176 ''''i . .,, . ; 160 - . 4. .. 144 :: . ,a . . . .: 128 .' . ..-.. . .
112 ; r. . . . . 96 - ...... :- 80 . :-. . . . 64 *- ..1 . . . 48 ', ,; .? .. -- '... - ' . . ,' 32 :. . '.. -:; i.'. 51: ':"-,.- A.5;:., s. 16 If,5- -,'`.; j.17,. L',4 ..e. ,: :..: .',.$ Ilgie.B.BylsFslos64.1.17- ,I7V401.11. IWIT., 0 . . ..
0:00:00 0:01:00 0:02:00 0:03:00 0:04:0 Time(HH:MM:SS)
520 555 An Onboard Processing Digital Satellite-to-Radio Broadcast System
DR. S. JOSEPH CAMPANELLA CHIEF TECHNICAL OFFICER WORLDSPACE MANAGEMENT CORPORATION WASHINGTON D. C.
1. ABSTRACT
In the last half of 1998, WorldSpace will launch AfriStarTM, the first of a constellation of three geostationary orbit direct digital broadcast satellites, to 21° East. An onboard digital processor will allow broadcasters to uplink channels from VSAT earth stations. An onboard demultiplexer-demodulator and routing switch connects 288 uplink channels to one, two or three downlink time division multiplexed (TDM) streams that are broadcasted in three L-band beams. Small personal radios receive and select the channels from the TDM data streams to recover audio, data, and images.
2. INTRODUCTION Figure 1. WorldStar Satellite Configuration
Three digital direct broadcast World Space geostationary orbit satellites are scheduled to be launched into locations at 21° over Africa, 95° West over the Americas and 105° East over Asia by the end of 1999.
Each satellite is equipped with three downlink spot beams, having beamwidths of about 6° that can be adjusted in position to achieve optimum coverage of the populations beneath them. Each beam covers approximately 14 million square kilometers within power distribution contours that are 4 dB down from beam center and 28 million square kilometers within contours that are 8 dB down.
The World Space satellites are capable of Figure 2. WorldStar Antennas broadcasting digital radio & multimedia signals directly to small hand-held portable and mobile radios that are in line-of-sight and in one of the three beams.
3. WORLDSPACE SATELLITES
The World Space satellites are being constructed by Alcatel Telecom as prime contractor. The communications payload is carried on a Matra Eurostar 2000+ platform. Sketches of the World Space satellite platform and its antennas are shown in Figures 1 and 2. Some salient features of the satellite are listed in Table 1.
556 521 Table 1. Salient Features of the WorldSpace Satellites sight elevation angles are greater than 30°, 45° and 60° respectively. Note that most of the inner coverage and a Launch Mass 2750 kg for Ariane large fraction of the outer coverage are at elevation Dry Mass 1238 kg angles of greater than 30°. At these elevation angles, Total Power 4000 W multipath reflections are at least 15 dB below the direct Solar Panel Span 28 m signal arrival and are insufficient to cause interference to Solar Panel Area 49m2 line-of-sight reception. Antenna Reflector 2.4 m diameter Apogee Engine Liquid Figure 3a AfriStar NW Beam Station Keeping ±0.1°. Wag' Life Time 12+ years -I 9.00 2100 61.00
ca
Power supplied by Nickel Hydrogen batteries will 4 Agilligallitillilliak'3 achieve 24 hour operation during eclipses when the satellite falls in the shadow of the earth for a fraction ° ..---- . 12ifr..14....01041 1.....441,...,_rf.n ik Np...IL of a day. 16,4 ,-: \i/4Mt!,14 1 'vs.IA Two communications payloads are carried on each WorldStar Satellite. One is a Processing Payload, eigw0115,46. '4
P 4tat -741.fay..) and the other a Transparent Payload. Each payload r supplies three TDM carriers, one to each of the \\ .....,...... illiW/ beams as described below. W./ .,,, ergo ______,_--., 4. THE SATELLITE BEAMS R. --:--v--. - The first WorldSpace satellite, AfriStarTM, will be located at 21° East directly over North West Zaire. It will direct three pairs of conical beams (one left hand circular polarized (LHPC) and the other right hand circular polarized (RHCP)) centered on the latitudes Figure 3b AfriStar NE Beam and longitudes listed below. Each beam has approximately 6° width at its -4dB contour (relative to Longitude (0.9) -19.00 21.00 61.00 beam center EIRP) and 8° width at its -8 dB contour. -- --.-- --fi ..-- cz ,AipAt '8 ...... NE Beam Pair .., itaid- 211., pr12.4"-- 11.8° N, 35.4°E LHCP -..-i-, . ....w0.111.. 7.9° N, 34.9°E RHCP . ss,41)%71p1-,...... 4 I NW Beam Pair #"aPrifa lEa... 21.7° N, 25.5°E LHCP 11p ..,isit.l_Miak. L 14 17.1° N, 25.6°E RHCP tm, bilitool. '7 South Beam Pair 3 v4414,.cialmairam , 16.8° N, 0.2°E LHCP 20.8° N, 0.7°E RHCP 4100M1 111111111 0.',11, The earth coverages for the LHCP beam of each .1,. . SAME
beam pair are shown in Figure 3-a,-b and -c. The 03 111. earth coverages for the RHCP beams, not shown here, are similar but shifted about 4° of longitude to PPIII the south. This angular shift between the LHCP and '11/01111 MI RHCP coverages is caused by a phenomena called beam-squint that is inherent in combining two opposite polarized carriers into the same feed horn. Within the contour designated as "inner" the signal level will exceed -141.4 dBW/m2/4kHz and within that designated as "outer" -145.4 dBW/m2/4kHz. Also shown are the contours within which the line-of-
522 557 Figure 3c AfriStar South Beam one to eight prime rate increments are multiplexed into Broadcast Channels (BCs). For each prime rate Long I thdo (099 increment, 6192 bits are assigned in a 0.432 sec -19.00 21 00 51 . 00 duration BC frame. These can be divided into several cl' I service components in the BCframe. A BC frame, as o I Ale' 441 t 1/21r- "" 1 / :i Figure 4. Broadcast Channel TDM Frame O01ice_ _ nlipalMOINgils , **V Frame Duration = 0.432 Seconds
wupymplk , n x 6912 bits I 4 ...Ail/ 1:Aiii...4=1.11ie I --... SCH Service Comp 1Service Comp 2Service Comp 3 eigoad n x 224 bits n i x 6912 n z x 6912 n 3 x 6912 lie, ., ., Service Control Header , Service Segment, n = (ni) , shown in Figure 4, starts with a Service Control Header Or (SCH). For each prime rate increment carried in the BC frame, the SCH contains 224 bits. With the addition of the SCH, a BC frame carrying n prime rate increments The earth coverages of the beams in the service will contain n x 7136 bits. The SCH provides information region of each WorldSpace satellite have been needed in the radio receiver to select service selected to maximize the listener population. Each components and to allow a service originator to remotely beam covers approximately 14 million square control service related functions. Radio functions thus kilometers within its inner contour and 28 million controlled can include encryption of subscription square kilometers within its outer contour. services, service category selection, addressing subsets AfriStarTMs beams cover countries of Africa, the of users, displaying messages, enabling and disabling a Mediterranean basin and the Middle East. service, etc. Broadcast frames are assembled at the AmeriStarTMs beams cover countries of Latin service origination's facility. America and the Islands of the Caribbean. AsiaStarTMs beams cover countries of the interior of To identify and demultiplex service components, the Asia and those on the rim of the Pacific and Indian SCH contains a Service Component Control Field Oceans. Reception is conditioned on locating the (SCCF) for each service component. This field identifies WorldSpace TDM carriers in bands of width the type and the length in bits of a service. sufficient to receive a wanted TDM carrier and clear of interfering L-band terrestrial transmissions. After their assembly, BC frames are forward error Conversely, the Worldspace TDM carriers should not correction (FEC) encoded first using an outer transport interfere with established terrestrial services. In each layer R255/223 Reed Solomon Block Interleaved Coder case, Worldspace will negotiate appropriate concatenated with an inner transport layer R1/2 agreements with the administrations so influenced. Convolution Coder. The outer coder is located at the point of origin of a broadcast channel and the inner coder In the following discussion, the terms Prime Rate at the feeder link earth station. The BC frames issued Channel (PRC) and Broadcast Channel (BC) are from the outer transport layer each contain n x 8160 bits. used. In the WorldSpace system, the traffic is carried If the feeder link station is located remotely, the BC in integer multiples of prime rate increments of 16 frames can be carried to the stations over leased kbit/s. A PRC is a channel that carries one such terrestrial or satellite links using Telco multiplexes. At a increment. A BC combines from one to eight PRCs feeder link station, for either the processing payload or to carry the services of a Broadcaster. The PRCs, the transparent payload, the n x 8160 bit Reed Solomon organized into BCs, are carried in time slots in a coded BC frames are R1/2 convolutional coded to form n single TDM carrier in each downlink beam. x 16320 bit inner coded BC frames.
5. BROADCAST CHANNELS
Transport over the the Worldspace system is formatted in prime rate increments of 16 kbit/s. From
523 556 6. PRIME RATE CHANNELS preambles and redundancy for forward error correction, the actual bit rate on each downlink TDM stream needed FEC coded BC frames are next synchronously to carry the 96 PRCs is 3.68 Mbit/s. QPSK modulation on demultiplexed into n parallel PRCs, each containing L-band carriers at a symbol rate of 1.84 Msym/s 16320 bits every BC frame period (0.432 sec). A 96 (2bit/sym) is used to transport the TDM stream to the bit synchronization preamble is added to each PRC radios. frame to accommodate on board rate alignment for the Processing Payload and PRC channel alignment Each World Space satellite is designed to transmit six in the radio receiver. Each PRC now contains 16416 TDM downlink carriers, three from the processing bits yielding a bit rate of 38 kbits/sec. These PRCs, payload and three more from the transparent payload. carried as service components in the BCs, deliver One TDM carrier from each payload is transmitted in digital services directly to the radios. How these each beam with opposite polarizations. A frequency PRCs are handled at the feeder link stations for spacing of 2.3 MHz between TDM carriers provides transmission to the processing and transparent sufficient guard band to allow operation with negligible payloads is discussed in later sections. intersymbol and adjacent channel interference at TWTA saturation. The TDM carriers channels are defined by 7. TIME DIVISION MULTIPLEXING OF THE rooted 40 % raised cosine filters with aperture BROADCAST CHANNELS equalization applied on the transmit side. The outer- bounds of the spectra of two adjacent TDM carriers are Time division multiplexing (TDM) of the PRCs in shown in Figure 6. terms of the BCs is used on the downlinks to the personal radios. In the case of the Processing Figure 6. Spectrum Bounds For Two Adjacent Payload, the TDM frames are assembled on board TDM Carriers the satellite. In the case of the Transparent Payload the TDM frames are assembled at the uplink feeder 14 2 3 MHz link stations. For both cases the following description -o of the TDM frame structure applies. 5 OUTER ENVELOPES OF THE POWER DISTRIBUTIONS OF TWOTDM 10CARRIERS AT 2.3 MHz SPACING A TDM frame assembler locates each PRC in one of 7 I -15 96 PRC time slot locations in a 0.138 s duration TDM 3 I 0 frame. Each PRC time slot contains 5244 bits and -20 the frame contains 96 x 5244 = 503,424 bits. The -25 TDM frame is shown in Figure 5. Each TDM frame c. I r starts with a 192 bit Master Frame Preamble (MFP) -so followed by a 4224 bit Time Slot Control Channel -35
-6 -5 -4 -3 -2 -1 0 1 2 3 Figure 5.Downlink TDM Frame FREQUENCY, MHz
Frame Duration = 0.138 Seconds The six TDM carriers of each WorldSpace satellite result in a total capacity of 576 of the 16 kbit/s PRCs. These MFP TSCC 96 TDM PRC TIME SLOTS PRCs, organized into BCs, provide a highly flexible 192 bits4224 bits 503424 bits communications highway from direct digital broadcast service providers to millions of users with small personal Rate = 3.68 Mbit/s = 1.84 OPSK Msvm/s radios.
8. FEEDER LINK STATIONS (TSCC). The MFP and TSCC are used by the radio receiver to synchronize to the TDM frame and to 8.1 UPLINKS TO PROCESSING PAYLOAD locate the PRCs comprising the various BCs carried in the frame and provide the information needed by a At an uplink station to the Processing payload, each radio to demultiplex the PRCs belonging to a PRC, which has been demultiplexed from the BC frame selected BC and to reconstruct the BC. and assigned to its own 0.432s duration frame, is Each TDM traffic stream is divided into 96 TDM time differentially encoded and QPSK modulated onto an IF slots each carrying a 16kbit/s prime rate channel at a carrier. Each is up-converted to a center frequency baseband rate of 1.536 Mbits/s. Due to the addition location in the band between 7,025,782,000 Hz to of service control headers, synchronization
Or? 5 9 524 7,074,992,000 Hz. The center frequencies are interference that can be encountered in the high power located are on a grid having 38 kHz spacings. These amplifier. are grouped in sets of 48 contiguous PRC carriers having a bandwidth of 1.824 MHz. Up to 26 of these 9. COMMUNICATIONS PAYLOADS groups can be assigned to center frequencies located on a grid of center frequencies having 608 A block diagram of the two communications payloads kHz steps. Only six of these groups, shared by carried on each World Space Satellite is shown in Figure numerous uplink stations, are needed to uplink a 7. One is the processing payload and the other the total of 288 PRCs to the processing payload on each transparent payload. Each payload transmits three TDM Worldspace satellite. Thus, there is sufficient uplink carriers each transporting 96 PRCs to small handheld spectrum space to flexibly coordinate frequency portable and mobile radios. locations with other services. Figure 7. Worldspace Satellite The uplink EIRP for each PRC carrier is from 45.7 to 49.7 dBW. When simultaneously amplifying several PRC carriers at a uplink station, their TRANSPARENT PAYLOAD OCT IF FILTER St A frequency locations should be judiciously spaced to L.BANDCONVERT lt X 41, minimize inter-modulation products generated by the OLT HYBRID IF FILTER A A2 non-linearitiy of each feeder link station's high power BANOCONVER MUX
IF FILTER a OUT amplifier. L.BANDCONVER1 1> MUX PARABOLIC ANTENNA L-BAND A The uplink PRC carriers are processed on board the X-BARD 11Y RID satellite to assemble three TDM streams on the IF CONVERT 300W downlink. TWTAs
Un OUT TDM MUX B MULTI /I 8.2 UPLINK TO TRANSPARENT PAYLOAD SW K CARRIER ITC 11 TOM MOD PARABOLIC DEMUX ANTENNA TDM For uplinking to the Transparent Payload, the TDM DEMOB frame is assembled at the uplink station. It is QPSK a MOD modulated onto an IF carrier that is upconverted to a PROCESSING PAYLOAD location in the spectrum from 7,025,782,000 to WORLIZPACII 7,074,992,000 Hz on frequency centers spaced on a grid having 608 kHz steps. Each TDM carrier requires a bandwidth of 2.3 MHz. The uplinked TDM 9.1 PROCESSING PAYLOAD carriers are repeated on L-band downlinks by the Transparent Payload. The downlink TDM carriers The processing payload receives 288 uplink SCPC precisely duplicate those transmitted from the FDMA carriers each transporting a PRC transmitted from Processing payload. The radio receiver sees no small low power VSAT type feeder link earth stations difference between those emanating from the conveniently placed at or near the premises of the processed or transparent payload. broadcaster. These are carried in six groups, each group comprising 48 contiguous PRC carriers. It down-converts There can be one, two or three hub TDM carrier each received uplink group to an intermediate frequency, feeder link stations transmitting three, two and/or digitizes the group by means of an analog-to-digital one TDM carriers. Because the TDM hub stations converter, demultiplexes the PRC carriers using a aggregate a large amount of traffic from many digitally implemented multichannel polyphase processor, Broadcasters, they use high power amplifiers, large demodulates them to recover their basebands, aligns the antennas and high EIRP. These hub stations are far bit streams to an onboard clock to prepare for routing, larger than the feeder link stations needed for the routes the bits of each PRC to one, two or three TDM bit Processing Payload. However, their economy of stream assemblers, assigns the bits to their appropriate scale helps keep the cost per broadcaster down. The time slots in a 96 PRC time slot TDM frame, issues each typical EIRP for one feeder link TDM carrier is 64.1 of three TDM streams to its' QPSK modulator, up- to 68.1 dBW. If single carrier per high power converters each TDM carrier to its assigned location at amplifier operation is used, high efficiency operation L-band, amplifies each to 300 watts via high power at low back-off can be realized. However care needs TWTA assemblies and then feeds each TDM carrier to to be exercised in selection of the channel filters to one of the three antenna feeds appropriately off-set in its minimize induced amplitude modulation intersymbol parabolic reflectors to form the downlink beams to the
525 560 earth. Up to six 48 PRC groups are simultaneoulsy translates and amplifies the uplink TDM carrier. processed in this manner. Thus, uplink noise in the carrier's bandwidth is amplified along with the uplink carrier. 9.2 TRANSPARENT PAYLOAD Small modestly priced VSAT feeder link stations, each of which transmits only the small number of the Each uplink TDM carrier is transmitted to the satellite FDMA SCPC FDMA PRC carriers needed to deliver from a hub feeder link stations located on the earth its broadcast channels, are used to uplink to the in line-of-sight of the satellite. The Transparent processing payload The power required is only that Payload is equipped with three repeaters that needed for its traffic. frequency convert uplink TDM carriers, assembled at the feeder-link stations, from locations in the 7025 to The SCPC FDMA PRC carriers can be assigned to 7075 MHz spectrum to locations in the downlink any of the uplink locations in the six 48 PRC carrier 1467 to 1492 MHz spectrum. In this case, no groups assigned in the uplink frequency spectrum. onboard processing or routing capability is needed. The frequency assignments can be changed if necessary to avoid uplink interference. In each repeater, a TDM carrier is down-converted to an intermediate frequency, filtered through SAW An onboard routing switch permits any uplink SCPC filters having a band pass designed to reject FDMA PRC to be routed to any one, two or three of unwanted and accept the wanted carrier spectrum the downlink TDM carriers. This provides a highly components, fed to an up-converter to locate the flexible onboard traffic routing capability that permits TDM carrier at its assigned L-band frequency, then any small VSAT feeder link to reach any and all of amplified to 300 watts via high power TWTA the downlink beams of each satellite amplifiers and then fed to one of three antenna feeds off-set in parabolic reflectors to form the downlink Regarding the Transparent Payload, the following points beams to the earth. This TDM frame format precisely are noted: matches that transmitted from the on-board by the Processing Payload. The format of the TDM downlink carriers is the same as that for the processed payload. The radios will not 9.3 ANTENNA FEED PORTS experience any difference other than a reduction of receive margin by 1 dB caused transparent repeating Each antenna feed horn has two feed ports, one to rather than onboard regeneration of the uplink signal. accept a Processing Payload TDM carrier and the other a Transparent Payload TDM carrier. The The TWTA power output is the same as that for the design of the feed horn multiplexer causes the TDM Processed Payload generated TDM carriers, viz. carriers to be radiated in with opposite polarizations 300 W. and pointed in slightly different directions. This latter effect is referred to as beam squint. In each satellite region, there may be three separate hub stations, each organizing and transmitting one 9.4 PROCESSING AND TRANSPARENT TDM carrier, or there may be two with one organizing PAYLOAD COMPARISON and transmitting two and the other one TDM carrier, or there may be one organizing and transmitting all The following summarizes key differences and three TDM carriers. The precise choice of hub commonalties between the processing and station deployment will be determined by need. transparent payloads. 10. RADIO RECEIVER PROCESSING Regarding the processing payload the following points are noted: 10.1 RADIO OPERATIONS
Achieves 1 dB better end-to-end performance Up to six downlink TDM carriers from various beams measured in receive margin compared to the may be received by the radio one at a time. Each TDM transparent payload. This is due to the onboard carrier is composed of contiguous frames of 138 ms signal regeneration inherent in the process of duration initiated by a Master Frame Preamble (MFP). demodulation to recover the digital baseband Each frame is divided into time slots that carry 96 prime and remodulation which eliminates uplink noise rate (16.518 kilobits per second) channels. Each frame on the downlink carriers, replacing it with a has a Time Slot Control Channel (TSCC) which contains maximum specified uplink bit error rate. The the information needed by the radio to locate and transparent payload only filters, frequency
526 5 6. demultiplex the PRCs of a any BC and to identify the 10.2 LINE-OF SIGHT RECEPTION BY SIMPLE beam and TDM carrier. PORTABLE RECEIVERS
Each radio receiver, can tune to any one of the TDM At elevation angles ranging from as low as 30° to as high carriers transmitted in one of the beam coverages.It as 85° direct line-of-sight signals will be easily received first demodulates the bits, synchronizes to the TDM indoors through windows and outdoors by simple frames and recovers the TSSC. Using the TSSC modestly priced yet highly sensitive receivers At information, the tuned beam and carrier are elevation angles lower than 30°, direct line-of-sight identified and the PRCs are demultiplexed are signals will be received indoors through windows and recombined to recover user selected BCs. outdoors where there are no strong multipath interferers. At very high elevations , say greater than 85°, line of A Service Control Header (SCH) of each BC sight outdoor reception will be widely possible, but indoor contains information needed to select desired reception through windows will be difficult unless the service components from the broadcast channel, to building is made of material that is nearly transparent at route the components to specific decoders to L-band. In the latter cases, a passive 1.5 m x 1.5 m recover the service, to send text messages and square metallic surface positioned to reflect line-of-sight labels to a liquid crystal display in the radio. received signal through a window should be sufficient to establish indoor reception at distances up to 5 m. In any The recombined coded program channels thus case, whenever direct line-of-sight indoor reception is recovered are decoded and de-interleaved to blocked, a simple outdoor antenna (a yagi or helix with 4 recover the original baseband prime rate bit stream to 8 dBi gain) placed in line-of-sight and connected to a that entered the system at the broadcaster's earth shielded indoor repeater amplifier radiating about 100 terminal. The recovered bit streams are next microwatts can provide excellent indoor reception. converted back to the analog audio signal by a source decoder. 10.3 RADIO PERFORMANCE
The radios can reproduce various audio qualities The system is designed to deliver a post FEC decoder ranging from AM monaural to CD stereo depending BC bit stream with a Bit Error Rate (BER) lower than 10-4 on the program channel bit rate. The table that at the radio. The margins for this operation as a function follows lists the various quality options available in of the radio's Gain to Noise Temperature ratio (GTT) for terms of the program channel bit rate required. the Inner and Outer coverages for TDM signals arriving from the Processing Payload are given in Table 3. Table 2. Bit Rates For Various Program Channel Qualities Table 3 . Operation Margins For The Processing Payload as a function of Racr o Receiver G/T Quality kilobits/sec Radio Receiver G/T (dB/K) Better Than HF(AM Monaural) 16 -17 FM Monaural 32 -11 -13 -15 FM Stereo 64 7 5 Near CD Stereo 96 Inner Coverage 11 Outer Coverage 7 3 1 CD Quality 128 The margins for TDM carriers coming from the The bit rates and consequently qualities can be Transparent Payload are 1 dB less than those given in mixed in any beam to meet the demand for service. Table 3. The bit-rate can be easily changed from ground command and can vary at different times of the day. The radios are also equipped with an antenna port to attach, by means of a cable, an external antenna located The radio receiver tunes by automatic search to at a convent place in the line-of-sight. downlink TDM carriers having center frequencies located from 1467.184 to 1490.644 in steps of 0.460 Non-blocked line-of-sight reception is always possible MHz. even for mobiles at speeds of over one hundred miles per hour. Under partial blocked conditions reception is possible within the inner contour provided the blockage loss is with in the limits cited in Table 3.
527 Digital Sound Broadcasting - Announced Implementation Plans in the Pacific Rim
James E. Hollansworth NASA Lewis Research Center Cleveland, Ohio USA Phone:(216) 433-3458, FAX:(216) 433-8705 E-mail: [email protected]
ABSTRACT
Generally, sound broadcasting systems share common frequency bands (allocations) throughout the world. Consequently, there is also great interest in finding common spectrum for the implementations of Digital SoundBroadcasting (DSB) systems. Terrestrial broadcasters in various administrations are considering the use of parts of the HF,MF, VHF and UHF bands, as well as the new allocations to the Broadcasting Service at L-band (1452-1492 MHz) and S-band(2310-2360 MHz and 2535-2655 MHz). For satellite DSB, administrations are examining the latter three bands which were also allocated at the 1992 World AdministrativeRadio Conference (WARC-92) to the Broadcasting Satellite Service (Sound). Since WARC-92, a number of administrations have conducted extensivetesting of both terrestrial and satellite DSB systems, followed by a formal announcementof implementation plans. There has also been an announcement of the planned introduction of an international DSB service.
INTRODUCTION 2. Announced frequency plan and spectrum use, and DSB programming from terrestrial and 3. Planned Programming. satellites directly to listeners in These combined factors for each mobile vehicles, primarily country yield a unique automobiles, trucks and motor homes implementation timetable, and in homes and offices are expected frequency/spectrum plan and to be available before the beginning programming plan preferred for of the 21st century. DSB will implementation. initially operate in one of three bands allocated at WARC-92. They are DSB Implementation Plans for the 1452-1492 MHz, 2310-2360 MHz and 2535- Pacific Rim 2655 MHz. DSB service will provide listeners with a diversity of radio This document has attempted to programming: agricultural, local, capture all of or a majority of the domestic and niche programming for announced plans of the Pacific Rim rural areas, and educational and Countries' and International Systems cultural programming on a nation-wide which call for a variety of basis. Technical development, implementation schemes and plans. manufacturing and industrial The most likely and first to appear development is also foreseen. would be the implementation of Providing a high quality DSB service commercial terrestrial-based system mandates that service outages be in two to four years. Implementation extremely infrequent. of satellite-based systems, or mixed terrestrial/satellite systems could DSB Implementation Requirements be expected in four to six years.
Each country approaches DSB with its own unique set of requirement(s): 1. mode of delivery (terrestrial only/satellite only/satellite 1 Defined to include all countries and terrestrial) that border on the Pacific Ocean.
528 :7) 6 3 Countries with Announced Plans measurements of DSB system performance were presented. CANADA Approximately, one year later in December 1996 the Field Test Data Canada has announced that it intends from experimental transmissions in to implement a terrestrial Digital the San Francisco, California area Audio System in the new L-band BSS were presented. Currently industry allocation beginning in late 1997, organization are studying the two utilizing the Eureka 147 System. On reports. The Federal Communications July 28, 1995, Industry Canada issued Commission (FCC)in January 1997 Notice No SMBR-003-95 entitled allocated the band 2310-2360 MHz for "Adoption of a System Standard for satellite-delivered Digital Audio Digital Audio Radio Broadcasting (DRB) Radio with associated Gap Fillers. in Canada" for terrestrial In April 1997 the FCC auctioned the transmission. Canada plans to replace band 2320-2345 MHz for Satellite all existing AM and FM radio stations DSB. The two winners were CD Radio, with Terrestrial Digital Audio Inc. and American Mobile Radio Corp. Broadcasting (T-DAB). Extensive Both have received their licenses terrestrial testing has been conducted from the FCC and have announced during the period 1994-1997 in implementation plans that would Montreal, Toronto, Ottawa and bring DSB into service throughout Vancouver. The Canadian Government is the continental United States around expecting to have available sufficient late 2000 or 2001. For further receivers for service introduction. information see paper by Briskman. Frequency coordination discussions Work is ongoing in the development have been ongoing with the United of both In Band On Channel (IBOC) or States for several months now. For In Band Adjacent Channel (IBAC) that further information see paper by would be used inconjunction with the Trenholm. current terrestrial AM and FM radio stations. MEXICO ANDEAN COUNTRIES (Bolivia, Columbia, Mexico in July 1995 conducted L-band Ecuador, Peru and Venezuela) satellite system tests using their Solidaridad 2 Satellite and the Eureka The newest DBS/DTH-related DSB 147 Digital Audio Broadcasting System initiative within the Pacific Rim in the suburbs of Mexico City. This countries is the Simon Bolivar test was the first time the Eureka 147 satellite. This proposed satellite system has been used for direct will be operated by the countries of reception from a satellite. Both the Andean Pact (Bolivia, Columbia, fixed and mobile receivers were used Ecuador, Peru and Venezuela) and in the Mexico City test. Recent will be used to provide information received through the telecommunications and DBS/DTH United States State Department services to these countries, and to indicated that Mexico has changed its the rest of Latin America as well. initial plans for DSB from an L-band Although this initiative is still in (1452-1492 MHz) system to an S-band the planning stages, its organizers (2310-2360 MHz) system. Detailed are moving quickly to put a plan implementation plans are not known at into place, and to sign a contract this time. to manufacture the satellite. Implementation is several years UNITED STATES away.
In the United States the Electronics AUSTRALIA Industry Association/Consumer Electronics Manufacturing Association Australia in June-August 1995 conducted a laboratory analysis of conducted L-band test using their various systems that might be utilized Optus B Satellite and the Eureka 147 in DSB service offering. In August Digital Audio Broadcasting System in 1995 the results of laboratory various cities in Australia. Both
529 JUG fixed and mobile receivers were used in the open literature. in the Australian test. The Minister of Communications INDIA indicated in August 1995 that the cities of Melbourne, Sydney and Indian DSB services are currently Brisbane would each get a Digital planned in three phases. In the Audio Broadcast transmitter by August first phase, ie. by year 1998, 1996. terrestrial DSB service in VHF It is planned to have a two phase simulcast mode will be initiated in introduction of DSB. Phase 1 will be a limited scale in four metropolitan the terrestrial implementation and cities (New Delhi, Bombay, Calcutta Phase 2 will be the implementation of and Madras). The regional programs satellite delivery. It is anticipated will be collected at New Delhi via that existing AM and FM operations satellite contribution links and will not be affected. subsequently distributed from New Delhi via S-band transponder of CHINA INSAT. DSB signals will be received, converted to VHF band II China began testing of a terrestrial and simulcast using the existing FM based German platform in December of transmitting antenna and tower. In 1995. the second phase, independent local China has indicated that it is transmitter transmitting a mix of planning a combined Digital Audio local, regional, national and Broadcasting and Digital Television sponsored programs, will be network. However the investment gradually added to a number of FM required to implement both systems may stations by year 2003. Finally, be too expensive and only the Digital satellite DSB services could Audio Broadcasting will be implemented commence after the year 2003. in the near term. Little else has Terrestrial transmission will be in been published about the Chinese VHF Band II and the satellite plans. emission will be in L-band. A lot of work is currently ongoing in China directed toward developing INTERNATIONAL SYSTEM solutions to the multipath environment WorldSpace Inc. founded in 1990 is JAPAN proposing to provide a "digital direct satellite radio broadcasting Japan Satellite Systems Inc. a service to the emerging yet under- subsidiary of Toshiba Corporation and served market regions of the 11 other firms plan to launch digital world"2. The WorldSpace network satellite broadcasting for automobiles will consist of three satellites in by year 2000. The service is described geostationary orbit serving the as offering 30 to 40 channels on African-Arab region including the dedicated portable terminals, similar Mediterranean Basin, the Asian in size to existing car navigation Region and the Caribbean and Latin systems. Proposed service include a American regions. Two of the three wide range of radio and TV programming satellites of the WorldSpace System including live sports, weather will have direct access to the forecasts and traffic conditions. Pacific Rim Area with service A lot of work is currently ongoing in beginning in late 1998 and mid 1999. Japan in developing various WorldSpace will use a receiver transmission schemes, coding designed for their system called techniques and receiver development. "Starman". WorldSpace has indicated in their literature that they will INDONESIA have sufficient receivers in the market place for their service. For Indonesia indicated that in 1995 it further information see paper by conducted a series of DSB tests from its L-Band domsat. Results of that testing have not been made available 2 WorldSpace Web Site
530 Campanella.
CONCLUSIONS
An initial survey of the current plans reveals that, at this time, there is little consensus emerging among administrations on what frequency band(s) should be used for terrestrial DSB service but there is a growing interest in implementing systems. From the information available at this time, broadcasters and regulators are looking at a number of terrestrial broadcasting bands ranging from MF to UHF using techniques such as IBOC, IBAC, in addition to the satellite/terrestrial DSB bands allocated in WARC-92.
NOTES
1 Defined to include all countries that border on the Pacific Ocean.
2 WorldSpace Web Site.
r 531 U Creating a Billing and Customer System to CopeWith Convergence of Telecommunications Services by Christopher Thomas Chairman Chorleywood Consulting Ltd. UK, Europe
Convergence is a current theme of telecommunications servicessupply around the world. Managing the billing for and customer support for convergent services is thetheme of this paper, focussing on providing a high level of customer care.
group of services is becoming It is wise to begin this discussion by more sophisticated through the making a number of definitions in order provision of user defined services that we have a clear understanding as to such as video on demand and pay what we understand by convergence and per view. how this needs to be addressed in billing and customer care. Advanced Interactive Services Frequently provided by the cable Convergence in telecommunications may operator, but more sophisticated involve the provision of multiple services services including access to by a single service provider or network entertainment services such as operator; these might include: interactive games, and business services such as video Wireline Telephony conferencing or broadband access Telephony of itself is a group of service which, aside from POTS, to the internet. might include Centrex or ISDN, or Of course there are many other more advanced intelligent network diverse services which might be based services. included in this list from access to the internet, through LAN Wireless Telephony Mobile telephony is becoming interconnect, to wireless data more sophisticated by the year and services. has now incorporated many of the type of services provided by the But convergence might involve the wireline networks such as closed provision of other, more diverse, services as the following examples illustrate. user group services. Fundamentally mobile services provide for user roaming and Electricity, Gas and Water Utility possibly for international roaming. Services Basic wireline telephony is becoming a commodity service Cable Television Geared towards entertainment, this required by the mass population,
532 567 as well as gas, waterand electricity, and in some countries is The allocation of funds in the being delivered by multi service instance of partial bill payment - providers. should one or more services be terminated because of partial Financial Services - Banking payment. Banks have excellent customer information and can settle In reality such problems can be accounts by electronic transfer of addressed by suitably tailored funds. They are therefore ideal procedures within the service provider, business partners for telecom but I bring them to your attention so that service providers seeking to you can think them through and formulate cultivate profitable business. your policiesbefore being confronted by these problems!
Providing multiple services to a single account has many benefits tothe service provider: Let me move on to give some real Better Account Control examples of the value of convergence in Reduced Billing Costs the marketplace. Examples are Reduced Collection Costs influenced by local traditions and Potential for Cross Service business conventions. One practice Discounting which is popular in one country will not Cross Service Loyalty necessarily be appropriate to another. Schemes - Tools for Nonetheless examples will stimulate your Customer Retention. thoughts and maybe generate ideas. In a competitive market there is a challenge to and to the consumer: telcos and service providers to tailor their Single Bill for Multiple services to particular groups of users. Services Some examples illustrate this. Reduce Payment Costs Simplification of Payment Around the world there are mobile Volume Related Discounts traders. They might be electricians, on the Whole Bill. plumbers or builders, or second hand car dealers. These individuals want seamless It would be naive to perceive that these service in telephony such that when at advantages are gained without some their base, they can receive wireline calls, potential drawbacks. These include the or when away from their base, they possibility of: receive their calls over a wireless telephonethe caller being aware of only 'Bill Shock' whereby the user, one telephone number. A useful previously receiving several small extension of this service is that of an bills at different dates in the electronic voice mail service, such that calendar, receives a single bill when the trader is busy on a job, which he or she cannot, or will not, messages are recorded for his or her pay. attention when available to speak with the
5333 6 8 contact. It is perhaps obvious to say that away from the primary site. The user of this group of users wants a single bill for the mobile will pay diverse rates for all the services which are described making or receiving calls depending on above, and a single point of telephone the tariffing principles of the service contact with a service provider to sort out provider. It may be that callers to the user questions which might arise concerning dial one single number to reach the service or billing. specific user while at his or her primary place of residence or work, or when Many residential telephony customers roaming. In this case the service provider also buy cable television service. It may is exploiting technology to provide a well appropriate for these customers to seamless service to the customer using receive a single bill for both telephony the intelligence of the network and and cable television. This is particularly advanced billing techniques. true where services are being offered which combine these communications Another group of customers we call I3s. tools: for example the ordering of a 'pay These are Information Intensive per view' video over the telephone from Individuals. They require access to the the cable television company. Or the internet and their personal or corporate participation in a local television show data and messages wherever they are over the voice telephone line. around the world. Often members of this group carry laptops around with them and There are large numbers of SOHO want easy access to the (Small Office Home Office) residential telecommunications network and a single offices in many countries. A high consolidated bill. proportion of the workforce is becoming home based, for part or for all of the working week. Such user groups can be What are the implications for billing and practically addressed by two wireline customer care of these developments in connections - or a single ISDN basic service convergence? circuit. One line provides for voice telephony and can be enhanced in value Each type of service provided by through the addition of call waiting or telecommunications operators has voice messaging. The other provides for specific issues. A few examples will a data service, either with a fax machine illustrate this point: or through Internet access. Combining the wireline service with peripheral Fraud is of major concern to mobile equipment - 'phone and fax' - together operators. This can take two main with a rapid repair service in the event of forms. Firstly the electronic cloning a fault offers a high value integrated of telephones; secondly the use of service to the customer. false identities to procure service.
Mobility appeals to the user of telephony Similar issues surround the services. It is now possible for a mobile provision of calling card services. instrument to act as a cordless telephone on a home or office base station, and to In the instance of cable television, act as a cellular telephone while roaming issues surround the access of
534569 minors to adult channels. billing within an overlay solution, it is likely that a systems integrator such as Andersen Consulting or CAP Gemini will Billing and customer care systems reflect be employed to undertake the integration the service types for which they are of diverse systems. designed: Cable television billing systems It is likely that it will be at this overlay level are designed around an address that overall discounts and benefits will be or location. calculated, the subsidiary systems providing event records and basic rating Mobile telephony billing systems of the data. With such a solution, are designed around an individual. consideration must be given as to the location of the customer record archive, Business telephony billing systems and the systems which customer care are designed around accounts agents should access when handling a which may include multiple query on a customer account. locations in order to facilitate volume discounting. An alternative approach is to purchase a billing solution which is specifically designed to bill for diverse services. One It is unlikely that operators or convergent of the most broad based systems which is service providers will seek to build a fully available internationally is 1CMS from integrated multiple service billing system. IBM. Based on the billing system of New Frankly this would be far too complex. Zealand Telecom which focusses on Rather they may exploit multiple billing wireline, IBM has developed the package engines, see Presentation Diagram 9, to bill for wireless, cable television and each tailored for the specific service, with other diverse services. Further the the option to present the customer with software has proven ability to bill several separate bills for each service, or with an million customers. integrated bill for multiple services, should the customer require this option. Such systems must also have the ability Overall co-ordination of the account will to receive payments from customers - or be provided by the billing integrator. to trigger automatic payment. Many service providers collect their bill from The effort to coordinate multiple systems customer credit card and bank accounts into an integrated billing solution should using automated processes. Discounts not be underestimated. It is likely that may be give to users in order to gain their each account will be allocated an overall permission to collect revenue in this way. reference number to facilitate the consolidation of information from multiple sources. Specific checks and balances To date consolidated billing experience will be required to avoid bill duplication has been, in the main, limited to those or the loss of data and revenue! While organisations such as Concert and generic billing engines such as Geneva Uniworld, who offer international services and rating engines like Prospero are on a 'one stop shop' basis. Complexity designed to facilitate multiple service due to multiple currencies and exchange
535 5 70 rates together with multiple language development and reduction in customer support and time zone differences churn. Existing customers can be illustrate the real difficulties which these approached to sell them service types organisations face. which they may not be yet using. Special incentives might be offered to existing Similar issues will face other customer to try a new service type or organisations attempting to introduce combination. Each of these possibilities convergent billing. can be efficiently implemented through the use of the billing and customer care system and associated call centres. Additional consideration must be given to the provision of adequate customer care for multiple service customers and as to how this can be organised and Christopher Thomas can be contacted at supported. Presentation Diagram 9 Chorleywood Consulting on: illustrates the diverse aspects of Tel +44 1494 765775 customer care from sales enquiry to fault handling. or refer to: http://www.chorycon.demon.co.uk Care agents handling customers with diverse service types will need to have access to and be familiar with the various customer care and billing systems to which they make reference, whether this involves access is to multiple individual systems or through a single integrated front end.
Very careful consideration should be given as to how customers of multiple services should be handled. In the UK Barclaycard, a VISA credit card issuer, and Cellnet, a cellular operator, have integrated customer care, the user being transferred between call centres through the user of a single keystroke by a customer service agent. In this case, the credit card issuer is responsible for customer credit rating and account management, freeing Cellnet to develop and manage its network - the business it knows best.
Offering users multiple services opens up many possibilities for account
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538 3 SHARED CORPORATE SERVICES Achieving Savings and Service Excellence
T.J. McKeown Kenneth C. Malley Vista Group International U.S. Department of Treasury
1.Abstract
This paper describes a proven methodology for strategically planning and implementing an information technology Shared Services environment over a corporate network. It addresses the benefits being derived through the quiet revolution of convergence by developing high performance, user-focused applications and services that achieve savings and an "inside" competitive advantage.
2. Introduction
Shared Services is a forward thinking strategy government organization is not unlike its that can transform internal staff and business counterparts in the private sector regardless of processes to achieve significant operational size or national affinity, since it still must performance improvements and cost reductions. discover and meet customers demands, within a Through Shared Services all levels of competitive, cost effective environment and organizational entities benefit. The business under the constant scrutiny of its citizen goals and operational missions of diverse but stockholders. The objective of this paper is to related corporate entities can be connected make a strong case for the economic through a strategic planning process that will significance of creating Shared Services inside a bring together common needs for services. corporation and how to go about it. Therefore During the planning process, the definition and the focus of the reader's attention should be on scope of Shared Services will then equate to the the innovative processes of developing and essential requirements of the corporate business managing Shared Services, the types of services base. The key features of this paper describe a defined and the exciting benefits that can be corporate process for planning, developing, derived, unbiased by government or commercial managing and implementing Shared Services. predilection. The convergence of The authors are using a Corporate Shared communications, computers and content can be Services model at the U.S. Department of exemplified through a process of planning, Treasury in order to explore the role of Shared developing, managing, implementing and Services within an existing corporate setting and monitoring Shared Services for the corporate discuss experimental evidence in place at a advantage major, complex government organization. This
3. The Planning Process.
At the outset when planning is discussed, it is strategy formulation. So it is strategic planning incredulous nowadays to think in terns of that is firmly grounded in practice today, that traditional long range planning or short range allows companies to define corporate goals or planning. That kind of planning drastically falls Visions to be achieved through a fundamental apart in the face of rapidly accelerating change. process of developing issues and Strategic Since the single most competitive competency Directions. In strategic planning while the challenging corporations today is how to Visions are relatively stable, the strategies are manage change or "change management", flexible and can be quickly adjusted to cope with corporations are discovering that the only type today's environment of relentless change. of planning stepping up to this formidable task Rather than becoming confused and tossed about must first embrace fundamental issues in in a sea of severe change, strategic planning
539 574 builds a framework for reaching goals and attaining corporate Visions.
Strategic Directions are specific courses to We have concluded that the strategic planning follow while continually navigating through the process to identify and define Shared Services obstacles and issues that eventually lead to goal begins with four essential elements: (1) top achievement. management involvement, (2) cross-functional team-based corporate planning, (3) a user or The pyramid illustrated in Figure 1 shows a customer-driven focus, and (4) a proven process process for developing Strategic Directions. with objective facilitation. The following is a Beginning with a base of data collection and brief description of the Four-Phased Process analysis, Visions or goals are stated, issues are that produces a Strategic Plan while identified for reaching each of the Visions, and encompassing the steps and results needed to finally the Strategic Directions are defined for develop the Strategic Directions. solving the issues.
IBMs
CAT Teams
Core Team
Industry Experts STRATEGIC DIRECTION
Standards Business Case Security
Technical Performance Measures ISSUES Information Services Corporate Objectives Technical Innovation Pubic Service Needs Techno-societal Trends Federal Requirements Telecom Services / Markets State / Local Government Nee VISION FOUNDATION
Core Team Meetings Interviews Questionnaires
Mission Statements Business Plans Information Systems Plans Industry Trends DATA COLLECTION (Fig. 1 Development of Strategic Directions Four Phases)
The Process Phase Two:
Phase One: Short Term Recommendations
Data Collection Process During the data collection process, certain A methodical procedure for obtaining all situations are discovered that offer near strategic planning data. term benefit. The data collected often Define The Corporate Visions reveals high leverage opportunities that Review, analyze and evaluate the should be acted upon immediately. results of the data collection process. Derive and understand corporate Phase Three: business goals, then define the corporate visions. Strategic Direction Development Identify The Issues After the issues are identified strategic From the data collection process, identify directions are developed, which will resolve issues affecting the realization of each the issues and bring about the realization of vision. the visions. New initiatives are defined, policies are proposed, technologies and standards are selected.
540 Jrjfj Phase Four: and Vision statements of capabilities for a variety of Shared Services. Strategic Plan Drafted The Strategic Plan reflects all theresults of the 4. A Vision of Various Shared Services Process and clearly articulates the Visions, Issues, Strategies, Technologies selected, the From a total of 25 Visions, unconstrained by implementative consideration and the methods technology considerations or costs, our cross- for Assessing Progress. functional corporate team settled on 12 Visions for Shared Services as shown in Figure 3. Issues In Phase One, the external and internal drivers associated with achieving these Visions were are identified that affect the requirements for the identified in team work sessions. The Issues types of Shared Services that are to be reflect the challenges, obstacles and concerns to developed and the potential customer base. The be addressed before transforming a Vision or external drivers include technology trends, goal into reality. Issues have significance on a competitive factors, cost of acquiring outside number of different dimensions, such as policy, services for each corporate entity, costs of technology, organization, operations, cost and consolidating and outsourcing, and the cost- culture. The specific actions for solving the benefit of consolidating and performing issues that lead to the achievement of each internally. The planning team carefully reviews vision became the Strategic Directions. the missions, corporate goals, business plans and operational needs of each division or agency The following paragraphs describe the (corporate division or subsidiary) to identify the Corporate Visions for Shared Services derived types of information services (Visions) that by the planning team from their analysis of would meet current and future requirements of business processes and objectives, their their respective organizations. The team collects interviews with all pertinent management and and analyzes all pertinent data through a variety user resources, and their identification of of means including interviews with top common, critical operations that can be management and a credible sample of cross supported now and in the future by Shared functional business users. The analysis process Services in our project lead to the development of Visions
Electronic Electroni Commerce Messagin Security Interne Services Services Services Service Muttim Netwaic- Video Conferencing Computing Services, and Broadcast Services ti Management and Public Access)o/ Control Servic General Informatieth Services/ Wireless Telecominutui Convnunicati tranntIntl-a/bit Go Support / ServicesEnforcemtFinancial Services/ NetworNetwork Service.Services
(Fig. 2 Strategic Visions of Shared Services)
541 57G (1). Electronic Commerce Services (3) Internetworking Services
Vision Statement Through Internetworking Services, corporate users will freely interoperate with multi Electronic Commerce Services offer an protocol networks and applications, taking full integrated (EDI and Web) set of IT advantage of information resources external capabilities that users may adapt to and internal networks using accepted national reengineer procurement, payment, invoicing, standards, security features and protocol shipping, warehousing and tax-related conversion as necessary. business processes, thereby increasing productivity, reducing paperwork, and saving Internetworking Services will allow the creation time in transacting business with trading of virtual private networks between affinity partners. groups, based on different missions, business functions, products and customers; all sharing a The plan for sharing Electronic Commerce common information infrastructure. Also, services calls for all Corporate Divisions or sub- promoting integrated, sharing of inter-division entities, vendors and other trading partners to or agency data, data warehousing, applications process solicitations, purchase orders, invoices, and processing capabilities. Internet access is contract amendments, payments, warehousing, provided along with appropriate firewall shipping and receiving on corporate-wide EDI protection. and Web-based systems. Due to its prominent position with respect to international trade and (4). Security.Services the banking industry, EDI is well positioned to be the focus for these automated Electronic VISION Commerce activities. However, the Internet and Web-based technology is dominating in most The integrity, confidentiality, and other vendor to customer business transactions. availability of the corporate network and those information resources, products, and (2). Electronic Messaging Services activities encompassed within the corporate IT domain will be ensured be Security Vision Statement Services, with full accountability to the level of the individual user and/or Electronic Messaging Services will build the transaction. essential infrastructure to link all users , creating a communications media that Security Services are critical to ensure the exemplifies all the advantages of availability, integrity, and confidentiality of convergence, the information age and information contained within the corporate the knowledge worker. network and at information sources connected to the network. Marketplace trends show The sharing of Electronic Messaging Services increasing recognition that encryption and will enable protected and secure access to the authentication mechanisms, such as smart cards Internet, World-Wide Web, and bulletin and digital signature, are necessary to reduce the board/kiosk information resources for the benefit vulnerabilities associated with distributed of the corporation, its personnel and customers. networks. A permanent Security Team is It can leverage the connectivity offered by the needed to audit and immediately detect and company's intranet, Internet Service Providers correct security compromises. Also this Security and public carriers to increase bandwidth Team should make frequent risk analyses, availability and reduce cost. A Shared Service approve all corporate security systems and can operate and manage directory services, conduct training. certification, authentication, firewalls and establish services that will convert facsimile, voice mail and other media to allow communication between disparate systems.
542 5 7 7 (5). Network Management and Control Services The network architecture to support Multimedia/Video Conferencing Broadcast VISION Services should follow user applications and be the natural derivative of user requirements. Corporate users will benefit from proactive Operational efficiencies, economies of scale, and problem isolation, diagnostics and dynamic management control can be improved through reconfiguration of network facilities and the use of Shared Services. The service offerings help desk problem solving capabilities for of the will address the ability of the user all common IT systems and applications. organizations to accommodate bandwidth This will allow a composite view of the demands. Coordinate the use of public carrier entire corporate information infrastructure alternatives to increase available bandwidth as with segmented domain administration and cost- effectively as possible. service privileges as required by user communities. (8). Network-Based Computing Services
Network management products that represent Vision the "best of breed," should be selected rather than opting for a single source provider of all Network-based Computing Services will management products. The best management empower corporate users with access to a system will be a heterogeneous mix of software menu of information applications & products guided by a unified standards process. computing resources tools, through value-added Services that include (6). Intra/InterGovernment standards-based messaging and directory Financial Network Services capabilities, shared databases, and security protection. VISION Corporate users and customers will realize Treasury will enhance its leadership role in the information management efficiencies and virtual networks created by local, state, and plethora of services by centralizing computing Federal government entities by using resources within a common network. For users, Intrafintergovernment Financial Network this set of capabilities will infrastructure as a Services to electronically deliver benefits, truly service-based utility. Evaluate the process tax- and duty- related information, and inclusion of specific service offerings on the coordinate a full range of banking activities basis of results from experimental implementation, such as pilot programs, proofs Evaluate, in particular, the Simplified Tax and of concept, and model /simulations. Wage Reporting System as an example of intra/interorganization cooperation. Select the (9). Public (Customer) Access To Government initiatives within the commercial EDI (Corporate) Information Services conventions relating to financial transactions that could be incorporated into the Shared Vision Service. Corporate users will respond to American (7). Multimendia, Video Conferencing public's desire (Customer need) for user- Broadcast Services friendly, accurate, and confidential access to Government (Corporate) Information Services Corporate users will select convenient by using different combinations of Shared desktop and group alternatives for Service capabilities. information exchange, conferencing, and training, by selecting from an extensive Public Access to Government Information and array of state-of-the-art technologies, Services will support the "outreach" aspect of an available through Multimedia/Video Electronic Government, to better serve the U.S. Conferencing Broadcasting Services. citizen and disseminate information more easily 543 5T and efficiently, using a variety of communi- (11). Wireless Communications Services cations media. Establish the Internet and World- wide Web (WWW) as primary methods of VISION supporting customer access to government (corporate) information. Provide 800 services, Users will require interoperable, transparent, kiosks, and bulletin board access as required. and secure Wireless Communications Services Define an Information Service Management to pursue corporate business processes Center infrastructure and design a technical regardless of geographical location, mobility, architecture for distributing and controlling natural disaster and emergency conditions, access to information and services designated desired application, or preferred for customers or the public. communications media.
(10). Intranntergovernment Enforcement Wireless Communications Services will Network Services facilitate remote access to data, voice, messaging, and extended LAN capabilities. (NOTE. THIS SERVICE MAY NOT HAVE Wireless capabilities are critical to mobile APPLICABILITY TO COMMERCIAO personnel conducting various activities, such as CORPORATIONS BUT IT IS VERY sales, repair work, installation, site visits, etc, PERTINENT TO INTERNATIONAL Wireless also answers certain operational needs GOVERNMENTS.) for telecommuting.
VISION (12). Telecommuting Support Services
IntratIntergovernment Enforcement/Network VISION Services will leverage the best available information technologies to coordinate and Telecommuting Support Services will promote achieve successful investigative and and support collaborative work efforts by enforcement activities at all levels, including linking corporate users at dispersed locations, international. including employee home sites, thus increasing productivity, maintaining essential business These services are essential for meeting mission services under exceptional circumstances, and enforcement objectives within and across encouraging employment of individuals covered jurisdictional boundaries in a cost-effective under the Americans with Disabilities Act. manner. All government agencies whose missions involve enforcement activities will Telecommuting Support Serviceswill offer a benefit from services that enable coordination solution to environmental, socio- with local, State, Federal, and international cultural, and business continuance issues that organizations. revolve around establishing alternative work sites. Studies indicate that Partition this Shared Service into subnetworks to significant cost and productivity accommodate the special needs of the advantages can be gained by allowing enforcement community. The partition must be telecommuting as a work process option. able to support multiple levels of security, user For example, employees could work from home access control, and wireless communications. or from a satellite center close to home, rather Make maximum use of existing legacy than travel to a more distant corporate facility. equipment and databases. Establish an International Enforcement Network Group to 5. Managing the Migration to a Shared identify the required information, databases, and Services Environment desired product of an integrated Information Infrastructure for enforcement and investigative The predominant driver that gets things moving purposes. toward a new work environment of Shared Services is the strength of consensus developed by an employee-based, cross-functional planning
544 9 team. We call this team a Core Team. It is at the knowledge of the companies mission, policies, center of all planning, but it is also a corporate current corporate services and future plans. requirements team and a Shared Services Members had experience in recommending integration team. This team must be truly strategic directions to senior management and convinced of their findings that Shared Services could quickly gain guidance and approval. will be useful to them and the corporation and it is equally important that senior management A strategic management approach for migrating advocacy be made obvious to the team. For our to a Shared Services environment was built purposes, team members possessed technical around the Harvard Business School text book and business knowledge of corporate functions, "Fundamental Issues in Strategy" written by locations and operations. They had a working Rumelt, Schnedel and Teece.
Integrates Technology and Agency R equirem ants Cross-Functional C orp orate Know ledge Corporate Requirements Team Requirements A nalyais (CORE TEAM) sossmettia..- A cquisition M anagem ent Sets Strategic Directions (Perm anent Bureau Representatives) Prepares D ecisions for CIO M anagem ent A ctivates/M onitors CAT Team (s)
Focuses on Services and A pplications Acts as "Learning" Team, Shares Knowledge CUSTOMER ACTION R ecom m ends Implementation of Pilots TEAM (C A T) Conducts Business Cases (Participating B ureau Representatives) Supports A cquisition Process M onitors and Measures Perform ance
(Fig.3 Decision Management Structure)
Therein the authors recommend: (I) design a select and test systems or services. Figure 3 decision management structure, (2) leverage shows a model Decision Management enterprise knowledge, (3) define goals, (4) Structure and briefly defines responsibilities. choose an appropriate level of scope, and (5) The following paragraphs will address the other recommendations.
6. The CORE Team/CAT Team Process incentive program, but surprisingly most customers are willing to participate and are The Core Team/CAT Team process is a quick to offer suggestions, knowing they will strategic management approach devised by the be heard. Each CAT Team gains customer- authors for systematically absorbing, driven results. They focus on making strategic responding and infusing evolving technology directions happen and they seek new and new requirements into the development applications for their business processes. and delivery of corporate Shared Services. When a new idea arises that may have merit CAT Teams are Customer Action Teams of from a business case point of view, CAT cross functional users or customers dedicated Teams recommend pilot testing to the Core to the life cycle development and performance Team and monitor implementation and of a specific Shared Service. A team oriented, progress. CAT Teams prepare performance customer-driven management structure measurements and scorecards for their Shared focused on leveraging enterprise knowledge, Service, and conserve time by employing each CAT team shares experiences and acts as Web-based, intranet, collaborative a "Learning Team as explained in "The Fifth applications among themselves and the Core Dimension" by John Engle. Under the Team whenever possible. A great example of guidance of the Core Team, a cross sampling an active team in today's information age is a of customers and technologists are encouraged Shared Service CAT Team dedicated to to join a CAT Team. In some instances, Telecommuting. It is working extremely well customers may be enlisted through an in our government model, combining
545 a a 530 technology requirements such as; that each bureau in our model(or commercial telecommunications connectivity and data Division) submits its service program needs up processing with a plethora of knotty the line where they are compiled for a total management issues to solve. The Core review of an enterprise-wide IT budget. Team/CAT Team process has been in effect However, during this process when requirements for over a year in our model, and it is an are filtered and analyzed through a Core Team exciting management approach that is charged with strategically identifying common producing emergent corporate strategies corporate needs, Shared Service requirements arising spontaneously from innovations never will emerge that may become obvious candidates anticipated or intended. for achieving cost savings and competitive advantage through economies of scale in 7. Corporate Shared Services Development management and implementation. Process
Within the corporate enterprise, each Division or Bureau will have unique mission related programs that may or may not lend themselves to corporate sharing of services. Figure 4 shows rTr , ThWarum Tftliirilrau c'docan°q, S aredSe MCeS ineTrieso riCorporate Needs/Services Integration rate ow ee I rateLeverage Services TiWitianent ustgr."-tgTeams gcr-4,agn 33:ic.ffists da,;2;is Isenteeraltr Plans wititOnigrantement °manceonitonng (Fig. 4 Corporate Shared Services Development Process)
Employment of a structured Shared Services Customer Action Teams must be completely Development process begins with participatory involved. This is not only important for the birth strategic planning, as explained earlier, concept of a Shared Service, but for its entire life cycle. formulation and requirements analysis. Figures When the service is in full swing, the CAT team 9 and 10 are flow charts depicting the several is monitoring its performance using stages our model employs for developing and performance measures created by them. If the monitoring a Corporate Shared team is not satisfied it should be empowered to require corrective action. As technology and requirements change, the CAT team refreshes Service. The essential elements of this process the life cycle of the Shared Service. The CAT entail the following: (1) Concept Definition and Team and its Shared Service are inseparable. Service Design, (2) Business Case Development and Review, (3) Service Development and Pilot (8) Summary Testing, (4) Acquisition and Implementation Planning, (5) Service Implementation and The key business technique for governments and Migration, and (6) Post Implementation Review. companies to successfully cope with the new Creating an effective team environment that is world of "convergence" will not be to engineer focused on customer service and on deriving a big technological breakthroughs; but to be return on investment is the most significant capable of managing relentless change and contribution to the success of the process. The
BEST COPY AI/ARABLE 546 581 developing new products and services by creatively combining rapidly evolving technology with customer needs and performance measurements. Innovation is the key competency of the new knowledge based corporation, and innovation in business today requires collaboration among those who may see the world differently, but team management if done properly lets conflict take place constructively. Shared Services managed by an empowered Core Team/CAT Team process can be applied externally as well as internally to profit through customer input and the fundamental issues of strategic planning.
REFERENCES
1. "Realizing the Information Future" National Research Council, National Academy Press, 1995
2.Druker, Peter; " Managing for the Future" November 1993
3.Naishitt, John; "Global Paradox" January 1995
4."Fundamental Issues in Strategy" Rumelt, Schendel and Teece, Harvard Business School Press, 1996
5. Smith, Douglas K. "Taking Charge of Change", March 1996
6.Smith, Douglas K. "The Wisdom of Teams" 1995
7."An Improvisational Model for Change Management, The Case of Groupware Technologies", Wanda J. Orlikowski & J. Debra Haman, Sloan Management Review, M.I.T. Winter 1997
547 5 5 2 SPOT MARKET FOR BANDWIDTH
Alex Mashinsky Chairman, CEO and Founder Arbinet, USA
Abstract
Arbinet Communications Inc. plans to operate the spot market for the communications industry withits Global Clearing Network which is operating today. Arbinet firmly believes that the replacement for theinternational settlement and operating agreements between countries and carriers will be a combination of a VisaTM type credit Clearing Network between switches owned by different carriers and an airline type yieldmaintenance system. This Clearing Network will allow carriers to exploit their existingnetworks by allowing them to manage their excess bandwidth in real time on a per call basis.
The New York Times, Monday August 4, 1997 wholesale market for Trans-border services. Watch 800 Companies Stuff Themselves Into One Deregulation and privatization have brought in Phone Booth literally thousands of new competitors. Investments in "...the transmission and the provisioning of long- growth oriented foreign communications systems. distance service is pretty much of a commodity These and other reasons contribute to the market operation, like grown wheat." drivers for a Spot Market for Bandwidth. (Show Overhead of Article: Summarize article on the position of the top 10 Global carriers and how they The growth of the communications industry has been want to stop the other 790 from further eroding the fueled by the realization of the internet, enhanced global long distance market) services like callback, fax bypass, pre and post paid calling cards, along with the high growth in Local The Economist, August 30th 1997 Exchange Carriers subscriber penetration. Wireless Commoditising telecomsPork Bellies Calling communications, mobile office environments, tele- "...in late June, the two have built what amounts to the commuting, and e-mail have enabled large first international commodities market in telecoms, a corporations to downsize staffs while increasing "bandwidth exchange" called Band-x based on the dramatically their communications requirements. internet." Financial transactions over communications networks (Show Overhead of Article: Summarize article and have changed the way banks and investment firms do how a clearinghouse for commercial companies has business. E-trading, ATM cash machines, and debit changed the way they purchase minutes from carriers) bankcards are now the standard for a growing majority of financial transactions. These services will require The Economist, September 12th 1997 larger and larger volumes of bandwidth from the cc...one day in 1993, Alex Mashinsky, a youngIsraeli existing global bandwidth pool. A recently concluded with a background in commodity trading, suddenly contract for a $1 billion commercial company's Voice realised that, around the century's end, conditions communications needs required 5 months of would be ripe for a spot market for international negotiation for a rate that was not the best rate at the telephone capacity..." time of contract signing. In the era of a Spot Market (Show Overhead of Article: Summarize article on how for Bandwidth, that transaction would be completed in the clearinghouse concept is here now and being minutes, and re-negotiated on a daily or on demand implemented!) requirement based on current rates and origination and destination locations. This clearing house concept creates the opportunity for a Spot Market for Bandwidth which hasarrived due to The United States representing over 80% of the many reasons, some of which are the excess world's Internet traffic reached a milestone during the bandwidth capacity currently available within many month of May, 1997. The number of data calls on the national and international carriers network's creating a voice network surpassed the number of voice calls for
548 S the first time in the history of telephony! All this on a Arbinet firmly believes that the replacement for the voice network designed to carry only 5% of data international settlement agreement and operating traffic. Alternative on demand resources for Internet agreements between countries and carriers will be a traffic are required to insure that users of the Internet combination of a VisaTm type credit Clearing Network do not get a busy and have the best response possible. between switches owned by different carriers and an This means carriers will have to spend Billions to re- airline type yield maintenance system. This Clearing dimension the data traffic or risk losing their licenses Network will allow carriers to exploit their existing due to poor Quality of Service issues. networks by allowing them to manage their excess bandwidth. For example the average usage of a major While a great deal of sound and fury has been directed carriers international network is around 17%. This at schemes to utilize the Internet and other data infrastructure cost in excess of $100 BN to put in routings to circumvent the existing switched network place. Despite this huge number of, by analogy to the infrastructure, remarkably little effort has been made airlines, "empty seats", there is no means of yield to properly utilize and manage the trillion dollars in management more efficient than offering lower night existing infrastructure. As part of a Spot Market for and weekend rates. There is no mechanism of offering Bandwidth, carriers will be able, for the first time, to transport to other carriers, or, for example, routing a intelligently manage their network bandwidth and call in the late afternoon US time when circuits costs by publishing to the Clearing Network the rates between say Japan and the US may be full, via unused and times for which it wants to transit and/or terminate evening capacity on US/Europe/Japan links. other carriers' traffic. What needs will drive carrier participation in a Spot Enabling a Spot Market for Bandwidth requires a Market for Bandwidth? centralized approach to the sale and purchase of this Are requirements for large volumes of Internet Traffic excess bandwidth capacity. This need for on-demand clogging your voice network? (near real-time), pricing and acquisition of bandwidth Do you have requirements for large volumes of traffic must be made available to carriers who have a pre- on a national and international basis that would benefit approved financial capability, and network quality to from reduced costs? take advantage of the sale and purchase of large How do you stay competitive with enhanced services volumes of bandwidth at Spot Market for Bandwidth that drive large volumes of bandwidth, like Fax, Pre- rates. Least cost routing of traffic plays a major roll in Paid and Debit Card programs? availability and rates for the Spot Market for Have you identified large volumes of traffic to and Bandwidth that by its very nature, is dependent on a from international destinations? Clearing and routing Network. Are your settlement payments out of balance? Are you a wireless carrier with significant origination One approach to distributed access of a centralized settlement payments? clearinghouse for bandwidth exists today in a rapidly Is your network underutilized most of the day (24-hour growing communications network environment. This period)? paper addresses the approach to the demands of global carriers requiring quick access to national carrier What if a carrier could meet these requirements by a networks with alternative access possibilities. Perhaps centralized clearinghouse network allowing instant this connection came about from other requirements, access to the sale and purchase of excess bandwidth? but it is here today to enable a Clearing and routing Allowing carriers to review on-demand, the rates for Network for a Spot Market for Bandwidth. standard large volumes of traffic. Allow carriers to lock in those rates most favorable to One way for this new Clearing and routing Network to current requirements at a QOS (Quality of Service) happen is with a highly communicative telephone customer's demand. switch operating as an overlay network directing the Allow carriers to split requirements to take advantage existing trillion dollar network, and having that same of a smaller volumes of bandwidth than required, but switch economically deployed worldwide in areas in total provide all the bandwidth requirements and at without an existing integratable infrastructure. better than current rates. 584 549 What if this Centralized Clearinghouse network being part of this clearinghouse network. Carriers allowed carriers to post rates for excess network now gain an advantage in operating at lowest cost capacity? Rates that would attract consumption and transport, which give carriers an ability to compete for bring incremental revenues for network resources new customer's traffic while keeping existing previously idle. customers happy. What ROI (return on investment) rate would be suitable to gain access to this centralized With even a modest number of initial participants, the clearinghouse network? 2 years, 1 year, how about 3 ability of the network to exploit arbitrage opportunities months? will dramatically lower the costs and routing of What if your largest competitor was participating in participating carriers. On a Foreign county/US route the Spot Market for Bandwidth, yet this participation for example, the rate would be $.10 per minute lower allows you to make substantial revenues and profits than current rates. This rate would not only capture using its network resources at great rates, purchased almost all of the traffic flowing to foreign country through the clearinghouse network. from the US, but it would also capture traffic from Europe to foreign country via refile in the US, and Assuming a Solution to the Spot Market for Bandwidth additionally, a great deal of traffic to other destinations clearinghouse existed today, what would it look like and into neighboring foreign country via refile through and how would it work for global carriers. This foreign country. Once this begins, carriers will either clearinghouse would allow for real-time purchase and join and compete, or suddenly find hundreds of sale of telecom minutes at the lowest price available minutes of traffic disappearing literally overnight. for a given guaranteed QOS. It should allow the potential to provide alternate access connections like Another example would be a carrier with 1 million IP networks between participants in the clearinghouse, minutes to a destination at current competitive rates thus utilizing data networks and freeing voice taking immediate advantage of a second carrier joining networks for the purpose they were designed. Quick the clearinghouse network and offering its excess and easy access to the central clearinghouse server for bandwidth from the same origination to destination updates of posting sell and buy orders would be point at a greatly reduced price. The original carrier provided after qualifying each new participant. can now increase profit margins on demand, offer its end-user customers a better deal on rates hoping to As additional carriers join the clearing house network, increase usage, or offer new enhanced services at great their route prices will immediately be included in the rates to drive up usage volume. rate offerings, and give participating carriers quick Rapid changes and improvements in technology are access to new network capacity and new rate driving the fast pace to a Spot Market for Bandwidth. possibilities. The new participants will also be able to PC based switching, adherence to telecommunication take advantage of available bandwidth at posted and computing standards and higher price performance prices. An Internet network will be enabled between from computer systems are some of technologies participant's countries and regions. Therefore all enabling solutions to this emerging market for a participants gain an instant incremental advantage to clearing house network.
550 5 Satellite Interference Reduction
Harley Shu ler, Director, International Sales, Loral Skynet® Mark Morgan, Customer Advocate, Loral Skynet® Dave Morgan, Customer Service Manager, Loral Skynet®
LORAL SKYNET® 900 Route 202/206 North Bedminster, N.J. 07921 USA
ABSTRACT:
With the use of satellite communications expanding globally, satellite operators must adopt measures to fight interference problems. Interference causes degradation in signal quality that can have a negative economic impact. The satellite community must work together to ensure an interference free product which is in demand worldwide.
Use of satellite communications is expanding control by the satellite operators, including globally. This expansion, coupled with the high costs intercarrier frequency planning and coordination, involved with satellite transport, has put satellite ensures consistent quality performance. However, transmission services at a premium. When satellite interference still can occur. Many users are pushing users are required to pay this premium price for their the envelope of useable transponder capacity as they services, interference goes beyond being a nuisance; strive to reduce their overall network costs including it becomes a costly service degradation. Satellite space segment and ground segment. This increases service providers and satellite operators must work the link's susceptibility to interference. The costs together to combat interference not only to increase involved with controlling the interference may then transmission quality, but also to allow for greater be greater than the overall network cost the user was financial growth of the satellite industry. To defray trying to achieve. some of the high costs of using satellites, many users are turning to occasional transmissions for their Many users are turning to occasional use services to satellite transport needs. However, occasional use, reduce satellite transmission costs. However, which supports many diverse market segments occasional services are the subject of most concern including news, sports, entertainment, syndication, due to the nature of the transmissions as well as the business television, and distance learning, tends to be transportable and flyaway uplinks used to provide a haven for interference if left unchecked. While the these services. While these uplinks are staffed with service providers and satellite operators carefully professionally trained technicians, improper satellite control most of the transmissions, occasional access or operation may occur. This can happen for transmissions require a collaborative effort among any number of reasons, including urgent broadcasts teleports, fixed earth station operators and of news or sporting events. This urgency can cause transportable operators. To ensure value in the improper satellite access, resulting in either market, satellite service providers must provide a intersatellite or intrasatellite interference. This can quality, interference free product. Many companies, affect not only the transmission of the interfering including Loral Skynet, have implemented programs party, but also the transmissions of customers on the to help educate, train, and sometimes force operators serving satellite or on an adjacent satellite. to comply with interference reduction techniques. Loral Skynet's objective is to achieve a 99.85% Interference is quite minimal from fixed earth success rate with our uplinkers. The chart in Figure 1 stations, those that do not move their antenna once indicates the percent of error free accessing to Loral the services are established and for which the antenna Skynet managed transponders. The chart covers the is locked onto a given satellite, is quite minimal. The period from October 1996 through October 1997 long-term nature of the services, coupled with careful measured against Loral Skynet's 99.85% objective.
551 Figure 1
UPLINKER ACCESS PERFORMANCE Summary Fo r Slope Managed Transponders 100
99.95
99.9
99.85 . . 1.5092
99.8
99.75
99.7
99.55
99.6
99.55
99.5 OCT96 NOV98 DEC% JAN97 FEB97 MAR97 APR97 MAY97 JUN97 JUL97 AUG97 SEP97 OCT97
While the 99.85% objective has generally been interference experiences and resolutions; developing achieved over the 13 month period, the overall industry-wide access and training procedures; and performance can always be improved. developing improved methods of locating interference sources. In order to reduce, or at least minimize, the costly effect of interference, a number of programs can be The most recent SUIRG meeting was held in Jakarta, implemented. The programs fall into two categories: Indonesia in October 1997. This meeting clearly preventive or demand. The preventive programs are established the international scope of interference designed to encourage training and educating considerations to satellite operators worldwide. This 'operators and technical staff. The demand program is is particularly important in Asia where there is less designed to quickly stop interference by identifying than two degrees of separation between satellites. In the offending site and requiring an immediate power this region, new operators with limited experience down of the transmitter. Any of these programs, and speaking many languages present challenges to when used effectively can help defray the costly operators. Developing inter-operator cooperation effects of interference throughout the satellite internationally must be made a priority if the satellite industry. industry is to continue its global expansion.
Preventive Programs The SUIRG meeting concluded that the need for international coordination is a necessity. It is The preventive programs include: Satellite Users important that all operators recognize the need to Interference Reduction Group (SUIRG), access insure a trouble and interference free environment. management, uplinker management and Loral New operators and language differences create Skynet's Uplinker of the Year Award. challenges to be met in the satellite industry.
It is important that as many operators as possible support the SUIRG and its mission. Satellite SUIRG communications quality must be improved to ensure continued global expansion. The Satellite Users Interference Reduction Group consists of all major US domestic satellite service Access Management providers, as well as many international satellite service providers. The main focus of this industry The intent of Loral Skynet's access management group is to reduce interference among satellite services through: establishing cooperative program is to provide uplinkers clear and precise information that allows safe and efficient access to relationships among all satellite operators; sharing of the Telstar satellites. The Access Management
552 r- 8 7 Manual is a guide that includes information regarding free accessing in the calendar year). Each winner the Telstar satellites, uplinker obligations, access must have a year long, incident free access record as procedures, technical parameters, Loral Skynet recognized by the Loral Skynet Satellite Control contact lists and customer earth station profiles. Facility located in Hawley, Pa. The "Uplinker of the Year" awards are divided into three categories Up linker Management depending on the user's frequency of access: Gold, Silver, and Bronze. Gold is awarded for 1000 or more accesses, Silver is awarded for 251 - 1000 Up linker management involves educating both accesses, and Bronze is awarded for 50 - 250 current and new uplinkers and ensuring they receive accesses. Loral Skynet's Access Management Manual. If interference occurs, Loral Skynet calls the interfering Loral Skynet recognizes all "Uplinkers of the Year" party to review the details of the incident and for their outstanding achievement with a certificate, a determine how to eliminate future occurrences. This gift, and a special reception held at the National information is then shared with any affected Association of Broadcasters (NAB) meeting in April customer. of each year. Recipients typically highlight receiving this award as part of their marketing and sales Up linker of the Year Award strategy. The recipients' names are also displayed prominently at the Loral Skynet booth at the NAB. Loral Skynet established the "Uplinker of the Year" award program to reduce interference by awarding The "Uplinker of the Year" program is well received those uplinkers who had perfect access performance by the satellite community, including customers and for an entire year. Loral Skynet implemented this competitors of Loral Skynet. If the world community program in 1991 to promote user education and continues its support of similar programs, the training, ensuring an interference free environment industry can extend past competitive barriers and for users of Loral Skynet and adjacent satellites. For establish an interference free, highly profitable the seven years that Loral Skynet has funded, telecommunications community. maintained, and promoted the "Uplinker of the Year" program, users of the Telstar satellites have The program has proved itself to be effective in its aggressively supported this program, and welcome first six years. Figure 2 clearly shows the effect of the industry recognition and rewards for excellent incentive-type programs such as the "Uplinker a the service. Year." The number of perfect uplinkers increased from 22 in 1991 to 137 in 1996. To qualify for an "Uplinker of the Year" award, each company must demonstrate perfection (100% error
Figure 2
553 88 In order to ensure an interference-free environment, drop. This could indicate you are on the wrong satellite providers are obligated to publish access satellite. procedures. This ensures all users are familiar with the steps involved in managing error-free accesses. 3.Wait for further instruction while your crosspol and frequency are checked. Access Procedures 4.When commanded, slowly increase power to When uplinking to Loral Skynet satellites, uplinkers operating level and stop. must comply with Loral Skynet's satellite access procedures. Loral Skynet's satellite services 5. Wait for further instruction while your crosspol personnel will work with all uplinkers to provide is checked again. procedures and training. The access procedures adopted by the SUIRG are the following: 6.When commanded, modulate the signal and verify your downlink. Before calling for access, check the following: 7.Wait for further instruction while your deviation Antenna aiming is checked. Exciter tuned to correct frequency with proper subcarriers 8. The control center will ask for, or verify your Polarization optimized and set for the uplink telephone number. The control center correct polarization. must be able to reach you at this number at any Transmitter status time during the uplink. Configuration of Waveguide Switched Automatic Transmitter Identification System 9. The control center will verify end time of your (ATIS) operation uplink and remind you to call the control center Have the order number and other specifics with a "goodnight." nearby Using a process similar to the one above, coupled When calling for access, provide the following with the preventive programs discussed earlier, can information: help the industry as a whole help combat interference problems, and hopefully encourage further training Uplink operator's name and education programs for all uplinkers. These Uplink name and location preventive programs have allowed the industry to use Satellite, transponder, frequency, bandwidth, demand programs less frequently. uplink polarization Start time of feed Carrier's order number Demand Programs
Performing the Access While much effort goes into preventing interference, operators must be prepared to take prompt action 1. During the access process, DO NOT change once interference occurs. With the industry becoming power, frequency, polarization, or antenna more competitive each day, and huge contracts under aiming without prior direct instruction from the negotiation, satellite operators can not wait for users access control center. If instructed to cease to rectify the situation or future business could be transmission, the uplink operator must comply lost. The demand programs address these actions, IMMEDIATELY without discussion. essentially ceasing an interfering transmission. However, determining the source of an interfering 2.When commanded, provide a lower power, carrier can be formidable. Loral Skynet has three unmodulated carrier at a power of about 5 dB tools available for this: ATIS, Anti-Intrusion above the transponder's noise floor. Tell the Defeator and Locator (AIDAL) and private control center you have done this as you throw interference locator services. the switch.
NOTE: If the control center does not see your low power signal they may instruct you to immediately
554 589 Automatic Transmission Identification System (ATIS) to provide high quality transmission is extremely desirable. Satellite operators have a responsibility to This system is applicable primarily for analog provide interference free transmissions to their transmissions, inserting the identification of the customers. By implementing programs to reduce the uplinker into the vertical blanking interval. Typical amount of harmful interference to their customers, information includes telephone number, site location, Loral Skynet is showing its willingness to lead the and FCC call letters. This information allows for industry in the global interference reduction effort. easy identification of an uplinker. The preventive program, focused on education, cooperation and positive incentives to customers, and Anti-Intrusion Defeator and Locator (AIDAL) the demand program, focused on finding and ceasing undesirable satellite transmissions. The Loral Skynet Telstar 4 satellite has the capability to use receive spot beams to minimize and eliminate interfering uplinks. This helps to reduce the uplink interference and locate the interfering party.
Interference Locator Services.
There are several private service providers that pinpoint the location of an offending transmitter using a triangulation technique coupled with satellite ephemeris data The interference locator service provides a geographical map that is usually a few square miles in size. This information, coupled with a good earth station database, is usually sufficient to identify an offending site. Assuming the site is staffed, a notifying telephone call may be sufficient for power down of the transmitter.
Summary
With users placing such a high value on satellite communications, it is imperative that the industry takes steps to make satellites interference free. Satellite communication is a valuable transport platform available to all types of companies and . educational institutions, but interference can add to company's or educational institution's costs for the service. Satellite service providers, such as Loral Skynet have taken major strides to prevent and control interference, but the industry as a whole must work together to reduce interference problems by educating and training operators. The savings are already becoming clear. As satellites become a global communications transport medium, it is imperative to share interference preventing methods across geographic and competitive lines. The end result will allow all participants the chance to use satellites to their utmost potential and to achieve the maximum value possible from their investment.
The use of satellite communications is expanding globally, and scarce spectrum is a valuable asset. Therefore, the efficient use of the satellite spectrum
530 555 The Impact of the Changing Telecommunications Environment on the Submarine Cable Industry Today
Mool Singhi, Hansen Long Tyco Submarine Systems Ltd. Morristown, NJ, U.S.A.
1. ABSTRACT
The decade of the nineties has witnessed a significant change in the telecommunications environment. This change has been characterized by many developments, including regulatory reform and with it a surge of privatizations which have increased the level of telecom infrastructure building and investment activity by both traditional players and a new breed of telecom entrepreneur/investor. Carriers, once wed to building capacity through traditional consortium participation, are now pursuing multiple options to meet the challenging needs of the new telecom environment. Such options include purchasing equity interests in private construction joint ventures, buying other carriers, as well as purchasing capacity from carriers' carriers. Further evidence of a changing environment is manifested by new options available to cable suppliers. Suppliers can either pursue their traditional role of building and supplying cable to owner-carrier specifications or create a new industry based on supplying, owning and managing cable network infrastructure; thus allowing carriers to concentrate on telecom services business. This paper examines these changes and assesses their impact on the ability of the submarine cable industry to accommodate them while still providing global telecom customers with the highest level of reliable, cost-effective and technologically advanced telecom systems.
2. A BACKGROUND OF CHANGE new telecommunications carriers to augment the services heretofore provided by the one or two 2.1 THE REGULATORY CLIMATE dominate carriers within a country.For example, as shown in the following figure, over 500' new telecom carriers were created in thirteen selected One of the most conspicuous changes in the global developed and developing countries representing an telecommunications environment has been the annual average growth rate of 368 percent. visible shift in the regulatory climate by state-owned and operated telecom authorities. This has been accompanied by a surge in telecom and other business privatizations that have been and are continuing to attract large-scale investment by entrepreneurs and Multinational Corporations (MNCs) who demand instantaneous and ubiquitous access to communications services.
2.2 MULTIPLE CARRIERS
The need to accommodate increased requirements for voice and non-voice broadband and data services Source: Datapro Information Services & CIT Publications, Ltd. has manifested itself in an almost universal drive for Figure 1 - Ten Year Carrier Growth domestic, regional and global connectivity. This, in turn, has, stimulated the creation of a multiplicity of
556j91 In a further response to the new era of privatization access speeds in excess of 1.544 Mb/s. These require and deregulation, especially that represented by the high transmission performance, large bandwidth, high coming wholesale deregulation of European Union security and low cost. Coupled to the growing demand countries in 1998, there has been a corresponding for broadband services is the extra demand most likely increase in the number of carriers seeking to be to be generated by the Internet and multmedia licensed in already open markets, such as that in the applications. This is giving rise to a new breed of United Kingdom, where almost 50 new non-facilities telecom service providers that include Internet Service based carriers sought and were awarded licenses to Providers (ISPs), network backbone providers and operate networks within the country. routers interconnecting the worldwide Web. Growth in Internet traffic is nothing short of spectacular!. Whatever the measurement, the Internet continues to 2.3 TECHNOLOGICAL CHANGE double in size every year. The following figure illustrates this fact; showing that the number of Internet Rapid technological changes have characterized the hosts (any computer linked to the Internet capable of international telecommunications environment supporting the TCP/IP protocol and possessing a unique during the past few years. The most dramatic global address) has been growing at close to 90 percent change took place in the middle 1980s with the annually since 19912. Should this trend continue, by the advent of fiber optic cable; eclipsing as it did, year 2000 there would be over 100 million hosts coaxial copper cable as the preferred transmission worldwide, and perhaps twice that the number of users. medium. Recent developments in the technology of fiber optics have witnessed the reality of heretofore unheard of transmission rates, such as 20 Gb/s per Growth In Internet Hosts fiber pair in undersea cable systems being offered today. Higher bit rates permit the transmission of 18,000,000 increased call volume between points and with it a 16,000,000 significantly lower cost per bit; greatly reducing the 14,000,000 per circuit calling costs associated with new cable 12,000,000 systems. This phenomenon is illustrated in Figure 2, 10,000,000 below: 8,000,000 6,000,000 4,000,000 2,000,000 0
Source: Internet Domain Survey - Network Wizards Figure 3 - Growth in Internet Hosts
3. TRADITIONAL MODEL OF SUBMARINE CABLE DEVELOPMENT AND OWNERSHIP
The ownership and control of facilities is well Source: -TSSL illustrated by the problems facing international Figure 2 - Declining Cost per Circuit for Undersea carriers seeking to own the transmission facilities Fiber Optic Cable Systems associated with submarine cable systems, as well as their effort to control the international traffic flowing 2.4 SERVICE OFFERING CHANGES through them.
With technological change has come the ability of the The dominant model of submarine cable industry to supply a new and innovative class of service development and ownership adopted by the major offerings featuring high-speed packet data services with international carriers has been the Traditional
557 592 Consortium Model. This model works best in a The need to provide a greater proportion of stable, well defined environment characterized by customer education and training time to new the unanimity in decision making, financial risk customer entrants into the marketplace. sharing, joint ownership and collective management Maintaining amicable relationships with of the cable system. These factors, for many years, traditional carrier customers in the face of a new made this model the most common cable planning industry dynamic - the infusion of capital into and ownership vehicle used by the major carriers to telecom infrastructure by profit driven build new capacity. This was an easily managed entrepreneurs hoping to seize major telecom traffic revenues for themselves. environment featuring predictable manageable An opportunity to expand their traditional roles growth. as suppliers to the industry by fulfilling a market need for ownership, management, marketing 4. CHALLENGES FACING INTERNATIONAL and financing of submarine cable infrastructure. SERVICE PROVIDERS As the market demands greater capacity and more 6. THE CHANGING ROLE OF INDUSTRY diverse and complex service offerings, the stable PARTICIPANTS environment of the Traditional Model is threatened by a host of new challenges facing carriers seeking to As previously observed,market demand for new and fulfill their role as international service providers. highly competitive service offerings, together with These challenges, briefly summarized below, the entry of a new class of industry participant - the include: entrepreneur investor - has produced multiple challenges for both carriers and suppliers, and with Vigorous new competitors, comprised of them a significant opportunity to change and/or facilities and non-facilities based carriers and expand their respective future roles. investor-based entrepreneurs offering new services with new network solutions which are Suppliers may choose to zugment their traditional eroding the market shares of traditional service role as systems suppiiers/integrators and assume providers. additional responsibilities as owner/operators, or as Cost pressures arising from heavy investment in commercial venture partners, offering sales agency facilities (cable systems), as carriers seek to and management services to their owner/investor protect their embedded transmission bases. customers. The threat to carriers of losing control of their plant, capacity or transmission vehicles to non- Carriers, on the other hand, could react to new carriers as investor-owned cable projects challenges in one of two ways. First, by creating multiply unchecked. incentives for entrepreneur investors to share in The rapid growth of broadband services, building cable infrastructure in commercially viable including Internet and multimedia that are and mutually profitable undertakings, or, second, by creating temporary capacity shortages due to mounting substantial resistance to drive entrepreneur heavy call volume and longer call duration, investors out of the marketplace. thus creating potential revenue loss. 7. ALTERNATIVE MODELS FOR 5. CHALLENGES FACING SUBMARINE CONSIDERATION BY THE INDUSTRY CABLE SYSTEM SUPPLIERS The extent to which carriers and suppliers decide to The changing telecom environment has also created pursue alternative commercial ownership/supplier challenges for submarine cable system suppliers in options is illustrated in the following industry today's highly competitive marketplace. These models 3. challenges include: Compression of manufacturing leadtime to 1. Traditional Consortiums - The classic accommodate the shortened delivery ownership model described in Section 3, above. requirements for providing installed cable It is based on collective ownership, management capacity.
558 593 and utilization of cable systems, such as End-users expect instantaneous, ubiquitous and TAT12/13. bandiVidth intensive services at ever decreasing prices. This will tax the ability of the industry to 2. Carrier Cable with Return on Investment Option respond in the rapidly changing telecom - Similar to consortium model, but offers environment described in the foregoing paragraphs. carriers the option of earning a return on Unless, an accommodation is reached between invested capital, as opposed to solely owning a traditional carriers and suppliers regarding their depreciable asset. Example: SEA-ME-WE3. changing roles and responsibilities relative to ownership and supply, the consequences are dire 3. Carrier Cable with Equity Investors- Offers a indeed! commercial equity investment opportunity to Nevertheless, there are solid grounds for optimism, as carriers and suppliers have recognized the private investors and permits carriers to advantages and benefits of constructive dialog that purchase capacity upon demand. Example: mitigates pernicious competition and serves the best Guam-Philippines. interests of all, carrier, supplier and customer alike.
4. Supplier Cable with Investor(s) - Broadens 10. REFERENCES supplier role by offering commerpial sales/ownership/management opportunity to I.T.U. 1996 World Telecommunication traditional cable suppliers. Example AC-1 Devleopment Report. International Telecommunication Union, CH-1211, Geneva, 5. Carrier Cable with ROI motive - Investment by Switzerland. carrier in international infrastructure for the purpose of attracting and selling capacity to 2 TeleGeography. 1995. Global Telecommunications others. Example:Gemini. Traffic Statistics & Commentary. TeleGeography, 6.Investment Joint Venture - Joint ownership of Inc.,Washington, D. C. an equity position in an equity-based venture as opposed to asset ownership/management. 3 TN33 Internationale Kabelsysteme. 1997. Future Example: FLAG. Activities in International Cable Networks. Deutsche Telekom, Frankfurt, Germany. 8. THE WIN-WIN SCENARIO
The alternative ownership models described above could potentially lead to fruitless competition between supplier sponsored and carrier/consortium cable initiatives. This portends competitive turmoil and introduces disorder into what is presently a relatively structured and stable industry. Thus, it is imperative that both carriers and suppliers create a "win-win" scenario going forward which redounds to the benefit of all. Based on constructive dialog and continuing communication between the parties, a "win-win" scenario ensure efficiencies in capacity planning, network design and utilization that would result in lower capacity costs, improved service capability and greater responsiveness to end-user needs.
9. END-USER EXPECTATIONS OF THE INDUSTRY
559 594 Long-Term Corrosion Behavior of Engineering Materials in Marine Atmospheric Environments
Bopinder S. Phull and L. Scott Marshall LaQue Corrosion Services 702 Causeway Drive Wrightsville Beach, NC 28480, USA and Randolph H. Smith Coastal Line Products inc. 950 Echo Lane, Suit 200 Houston, TX 77024
Abstract
Predicting long-term service performance on the basis of short-term accelerated corrosion tests is a highly desirable objective. However, despite their popularity, accelerated salt-spray tests performed in cabinets often exhibit poor correlation with service experience. Fortunately, long-term (e.g. 20 - 50+ years) corrosion data have been developed in actual aggressive marine environments over the past several decades; such data can be used for cost-effective materials selection to improve reliability, longevity, and availability of outside telecommunication plant hardware in harsh marine atmospheres.
Introduction Marine environments are complex but typically they are classified into the following zones : Corrosion of engineering materials is a formidable, multifaceted, and economic problem. Degradation of Atmospheric -- airborne salt and usually high relative materials in the service environments can result in humidity conditions structural failure or loss of function. This leads to Splash and Spray -- most corrosive zone; due to thin unscheduled downtime, requiring maintenance, repair, or layer of oxygen-saturated salt-water fihn, and wind and replacement, with attendant consequences pertaining to wave action loss of revenue, compromise of personnel safety, Tidal alternate immersion due to changing tide levels; pollution of the environment, etc. Marine environments also this zone is usually most prone to macrobiofouling in coastal applications on large landmasses, or on entire Immersion -- seawater containing a variety of ions, islands, represent among the most severe and challenging dissolved oxygen, and live macro- and micro-organisms conditions from a corrosion-control standpoint. (bacteria) Mud -- anaerobic, salt and bacteria-containing Corrosion engineering is a multi-disciplinary but sediments; soil in coastal areas can be regarded as fledgling field where long-term performance of materials somewhat analogous to the mud zone. cannot often be predicted reliably without the benefit of long-term test data and/or service experience. A number The scope of this paper is limited to only corrosion of "accelerated" tests have been devised or proposed issues of materials exposed in the marine atmospheric over the years in order to reduce the test duration. zone. Perhaps the most common, misused, and misleading test is the ASTM B117 salt-spray method(1)even for The supposedly "overtest" conditions of salt-spray tests marine environments. However, to date no reliable do not adequately duplicate marine atmospheric method has been found as a universally applicable conditions, which are highly influenced by factors such substitute for duplicating outdoor service performance as wind speed, direction, time-of-wetness, dewpoint, of materials. In addition to providing realism, long-term temperature, washing effects of rainfall, salt deposit testing in representative service environments is essential buildup in sheltered areas, etc. Furthermore, emissions for developing baseline data to serve as benchmark for from chemical, power, and manufacturing plants and checking the "correlation" of existing or new accelerated automobiles in the vicinity can exacerbate marine tests. corrosion problems; i.e. modify conditions that are often
560 595 either not considered or adequately replicated in atmospheres, the principal cathodic half-reaction is traditional salt-spray tests. oxygen reduction
Experience has shown that the most reliable performance 1/2 02 + H2O + 2e > 20W data are usually only obtained from long-term exposure of materials in natural marine environments. Such data The by-products of the anodic and cathodic half- have been generated since circa 1935 at LaQue reactions (ferrous and hydroxyl ions, respectively) react Corrosion Services' world-renowned test facility in Kure with each other to generate insoluble ferrous hydroxide Beach, NC; and also at Wrightsville Beach, NC, since corrosion products. In the presence of oxygen, ferrous circa 1950. hydroxide is further oxidized to ferric hydroxide -- the This paper provides an overview of the long-term familiar "red" rust corrosion product corrosion behavior of engineering materials such as carbon steels, galvanized steels, stainless steels, aluminum alloys, copper alloys, nickel alloys and Fe2+ + 20W --> Fe(OH)2 + 02 --> Fe(OH)3 titanium in marine atmospheres. Such data are If the corrosion product film is adherent and dense, it can invaluable to designers for materials selection for coastal serve as a protective barrier and slow down subsequent and offshore applications in a wide variety of industries attack on the base metal. such as telecommunications, cable, power, chemical, Materials such as copper-base alloys and weathering construction, shipping, oil/gas, etc., where plant steels rely on the formation of adherent protective equipment is exposed to corrosive marine environments. corrosion product films (patina) for long-term protection. Weathering steels contain small additions of copper (- 0.2 weight %) and phosphorous ( 0.15 %) which allow Basic Corrosion Mechanisms protective corrosion product films to form under specific conditions -- i.e., frequent washing of the surface salt For metals and alloys, corrosion in marine environments deposits and drying by the sun. On ordinary carbon is electrochemical in nature. The mixed potential theory steels, the rust films are not protective in aggressive postulates that corrosion is associated with DC current marine atmospheres; in fact, the corrosion products spall flow due to potential differences between anodic and off by exfoliation and corrosion of the substrate cathodic areas, either on the same or dissimilar materials, continues at high rates. in the presence of an electrolyte. In marine atmospheres, a thin moisture film containing dissolved salt and In polluted marine atmospheres, species such as sulfuric capable of supporting high rates of oxygen transport acid (derived from sulfur dioxide) can significantly (from the atmosphere, through the film, to the metal increase corrosivity of the salt-containing moisture film surface) represents a highly corrosive electrolyte toward by (a) facilitating additional cathodic half-reactions such susceptible materials such as bare carbon steel. The as hydrogen evolution : 2H+ + 2e > H2 , and (b) by chloride ion derived from sodium chloride (salt) becomes highly aggressive (oxidizing) in the presence of dissolving existing corrosion product films and/or dissolved oxygen. Potential differences between anodic preventing formation of protective ones. Materials such and cathodic areas on the same piece of metal result from as steel, zinc and cadmium are particularly susceptible to composition and metallurgical differences between local accelerated attack in polluted marine atmospheres. areas and/or concentration differences in the electrolyte. Stainless steels are iron-base alloys that contain > 10.5 % For carbon steels, the corrosion mechanism can be chromium (Cr). The Cr aids in the formation of a thin, represented as follows : air-formed, mixed chromium-oxide/iron-oxide "passive" film on the metal surface. Chloride ions are potentially Anodic half-reaction : Loss of electrons (e) results in the corrosive toward such films while oxygen is essential for oxidation of iron (Fe) in the metallic state to ferrous ion repassivation. Whether attack occurs, and its extent, is highly influenced by factors such as alloy composition, (Fe2+) in the ionic state. chloride concentration, crevice geometry, surface finish, etc. Thus all "stainless" steels are not stainless ! Fe - 2e --> Fe2+ Aluminum-base, nickel-base, and titanium alloys also Cathodic half-reaction : In order to maintain charge rely on the formation of thin, passive, oxide films for neutrality, the "surplus" of electrons resulting from the corrosion protection. anodic half-reaction above have to be consumed by some cathodic half-reaction(s). In unpolluted marine
596 561 Tvoes of Corrosion passivity. Marginal stainless steels and certain aluminum alloys, for example, are particularly Degradation of material properties due to corrosion can susceptible to localized attack in marine atmospheres. manifest in various forms. For instance, attack which Again, because of thin film electrolytes associated with occurs fairly uniformly is known as general corrosion. atmospheric conditions, localized attack tends to be less Predictions of service life are relatively easier to estimate compared to full immersion conditions. with this form of corrosion if general thinning rates are known. Carbon steels have very high rates of general Dealloying is the selective corrosion of one metal or attack in severe marine environments while passive phase from an alloy, resulting in a weakened structure. stainless steels, aluminum alloys, nickel alloys, and Dezincification, the preferential loss of zinc from brasses titanium have very low general corrosion rates. (copper-zinc alloys) is the most commonly observed form of dealloying. If there is a potential difference between two dissimilar metallic materials and they are in electrical contact with Preferential corrosion attack along grain boundaries in a each other, a DC current can flow between them in the metallic material is known as intergranular corrosion presence of an electrolyte. Depending on various (IGC) or intergranular attack (IGA). Certain stainless factors, attack on one metal may be accelerated due to steels are susceptible to IGC, due to depletion of electrical contact with the other. This is commonly chromium in heat-affected-zone areas, e.g. as a result of referred to as galvanic, dissimilar or bimetallic corrosion. welding or improper heat treatment. However, there is The more electronegative metal in the galvanic couple generally much less concern with this problem under serves as the anode, where corrosion is accelerated; atmospheric conditions, compared to full immersion. while the more electropositive metal is the cathode Certain aluminum alloys are also prone to IGC in marine whose corrosion slows down or stops. The extent/rate of atmospheric environments; because the voluminous attack is directly related to current density at the anode. aluminum corrosion products tend to produce expansive Under full immersion conditions, large cathode-to-anode forces that pry the structure apart, this form of attack is surface area ratios result in high rates of attack on the also known as exfoliation. anodic material; conversely, small cathode-to-anode area ratios are more desirable. Simple galvanic series or Stress corrosion cracking (SCC) of susceptible materials charts have been devised to provide guidelines for occurs due the conjoint action of tensile (residual and/or reducing galvanic corrosion problems(2). In the hands of service) stresses and specific corrodents. Alloys known inexperienced users , these guidelines are often to be susceptible to SCC in marine atmospheres include misunderstood and misapplied. For example, it is high strength steels, high strength aluminum alloys, and erroneously assumed that the bigger the potential certain stainless steels. Attack can be either intergranular difference between two dissimilar materials, the more (along grain boundaries) or transgranular (through severe the galvanic corrosion. In fact, polarization grains). Hydrogen embrittlement is a form of cracking effects influence kinetics more than potential difference that results from generation of atomic hydrogen, e.g. (Ohm's Law). Thus, for example, stainless steel during electroplating, or in service, e.g. due to galvanic fasteners in aluminum (relatively larger potential contact with a more electronegative material.Corrosion difference) are more compatible than, say, carbon steel fatigue is somewhat akin to SCC except that failures fasteners in copper (relatively smaller potential occur under cyclic loads in the presence of corrosive difference). Furthermore, in marine atmospheres, the species. anode-cathode ratio is usually irrelevant because the galvanic corrosion interaction distance between the Erosion-corrosion refers to attack under flow conditions; this is not applicable to most marine atmospheres. anode and cathode is limited to1/4" ( 6 mm) due to However, erosion associated with airborne sand may be ohmic resistance of the thin film electrolyte (3). of concern in specific coastal areas. Also, fretting corrosion may be an issue where there is minute relative Localized corrosion in the form of pitting or crevice movement between faying surfaces -- movement that attack can produce rapid throughwall penetration. allows removal of protective films and subsequent Conditions can develop on passive alloys that allow corrosion of the exposed surfaces and debris particles. corrosion attack to initiate and propagate locally due to breakdown of the oxide film and inability to repassivate. Stray-current corrosion results where DC current, Surface deposits, embedded particles, corrosion straying from its intended path, discharges from a metal products, tight crevices, laps, heavy weld scale, etc., surface into an electrolyte. Breaks in coatings tend to allow chloride ions to concentrate and initiate attack increase current density and hence exacerbate attack at while preventing access of sufficient oxygen to restore exposed areas. This is less likely to be a problem in
562 597 marine atmospheres, due to limiting ohmic resistance of Galvanized Steel -- Galvanized refers to a zinc coating the thin film moisture (electrolyte) path compared to usually applied by hot dipping finished parts in a molten full immersion or buried conditions. zinc bath, or by electroplating. Zinc functions as a barrier to the environment and galvanically Long-Term Corrosion Data (electrochemically) protects small areas of exposed steel by sacrificial action. The life of the zinc coating depends General corrosion is typically reported as metal thickness largely on thickness. 1 oz/ft2 of zinc on a steel surface rz,- loss, e.g. mils per year (mpy, 1 mil = 0.001"); or pin/yr 300g/m2 rz 1.7 mils r-t: 43 pin(5). Care should be or mm/yr. 1 mil = 25 Jim; 1 nun .-140 mils. exercised in converting weight of zinc coating to thickness values for flat products that have been Carbon Steel -- General corrosion rates can vary widely galvanized on both sides, such as sheet. Weight in those depending on location, degree of sheltering, rain cases refers to total mass of zinc per unit area but washing, etc. Typical examples of rates in marine counting both sides. Thus, the thickness of zinc on one atmospheres reported in the literature(4) are summarized side of a sheet that has been galvanized on both sides and below. has a total zinc weight of, say, 1 oz/ft2 (300g/m2) will be only half the value cited above, i.e., 0.85 mils or 21.5 Location Corrosion Rate per side. Thickness of zinc on hot-dip galvanized (univr) (mpy) hardware ranges typically from1 to 3 mils (25 - 75µm). Kure Beach, NC (250-m lot) 147 5.8 Lowe(6) evaluated the performance of galvanized pole line hardware on the windward shore of Oahu, Hawaii. Daytona Beach, FL 295 11.6 The marine atmosphere in this area is reportedly very severe because strong trade winds blow from the ocean, with waves breaking constantly over shallow coral- Cape Canaveral, FL covered reefs. The original thickness of galvanizing on (180-m lot) 442 17.4 carbon steel parts ranged from 1.9 to 3.9 mils ( 48 - 99 pm)average 2.7 mils (681.un); and on low-alloy steel from 4.7 to 8.9 mils (118 - 2261.tm) -- average 6.4 mils Point Reyes, CA 500 19.7 (162 jAm). Reportedly, no zinc was left on any of the parts after 3 years and the steel was beginning to pit. Kure Beach, NC Furthermore, threaded ware was badly seized due to (25-m lot) 533 21.0 corrosion. This clearly demonstrates the limitations of zinc coatings in severe marine atmospheres. The Galeta Point Beach thickness of zinc cannot be increased indefinitely on new (Panama Canal hardware. Tolerances on faying surfaces such as threads, Zone) 686 27.0 for example, limit the amount of zinc coating. Besides, coating thickness at corners and in crevices tends to be Cape Canaveral, FL even lower. Coating damage can occur during (beach) 1070 42.0 installation and in service. Furthermore, galvanic protection is afforded only to relatively small areas of exposed substrate. It is apparent that bare carbon steel can incur general corrosion rates on the order of 20 to 40 mpy ( 0.5 to 1 Stainless Steels (SS) -- There are several hundred types nun/yr) in severe marine environments. At these rates, a or grades of stainless steel covering a wide range of 1/4" ( 6mm) section can lose 50% of its thickness in compositions and properties, including corrosion 1.5 to 3 years if corrosion occurs from both sides; or resistance. They are generally classified into the 3 to6years if only one side is exposed. Under the following five broad categories on the basis of their right conditions, weathering steels may give corrosion metallurgical structures. rates50 % to an order of magnitude lower. However, very close to the ocean, constant wetting by salt spray Ferritic (e.g. Types 409, 430, 446, 29-4C) and little opportunity to dry, will sustain high rates of Martensitic (e.g. Types 410, 420, 440C) corrosion like with plain carbon steels. Austenitic (e.g. Types 302, 303, 304, 304L 316, 316L, 317L, 904L, AL6XN) Duplex (e.g. Types 329, 2205, 255, 2705)
563 598 Precipitation Hardening (e.g. 17-4 PH, cold work. Al alloys containing high levels of copper 17-7 PH, A286) (for strength), such as 2000 and 7000 series, generally have poor corrosion resistance in marine service. Typical compositions are shown below. General corrosion rates of "marine" alloys such as 1000, 3000, 5000, and 6000 series are very low, typically < weight % 0.01 gm/yr (< 0.25 mpy)(10). Even localized corrosion Type UNS No.CrNiMo C others resistance can be acceptable in marine atmospheres, 409S40900 11 - 0.08 Mn,Si depending on specific alloy; for example, maximum pit 420S42000 12 -0.15 Mn,Si depths ranged from 75 to 175gm ( 3 - 7 mils) after 7 304530400 18 8 - 0.08 Mn,Si years exposure at Kure Beach, NC, for a range of Al 316S31600 16 10 20.08Mn,Si 316LS31603 16 10 20.03Mn,Si alloys(11). 2205S31803 214.52.5 0.03 N,Mn,Si 174PHS1740015.53 - 0.07 Al,Cti,Mn,Si Since Al has an active corrosion potential relative to many other materials, e.g. copper alloys, steel, nickel Note : Cr, Ni, Mo min., C max., Balance Fe alloys, graphite, it can incur galvanic corrosion readily when it is in contact with more noble materials. Stainless steels remain "stainless" so long as the passive Resistance to SCC and exfoliation is influenced by alloy film on the surface, if damaged locally, can reheal composition and heat treatment. The high strength 2000 spontaneously. Otherwise, pitting, crevice corrosion, or and 7000 seies are generally most susceptible. stress corrosion cracking (SCC) may occur on susceptible grades. Embedded iron from Copper Alloys -- General corrosion rates of copper fabrication/handling, scratches, weld scales, improper alloys also tend to be very low in marine atmospheres, heat treatment, and deposits can all impair localized typically < 0.2 - 5 gmfyr ( 0.01 - 0.2 mpy)(12) due to corrosion resistance. Smooth, clean surfaces are more the formation of protective patina. Localized corrosion resistant than ground, dirty, contaminated ones. Surface resistance is generally even better. Despite these treatments such as pickling, "passivation", and attributes, runoff of copper corrosion products on to electropolishing enhance corrosion resistance. more active materials, e.g. Al, Zn, steel should be avoided as it can lead to galvanic corrosion. In marine Type 316 stainless steel (SS) is usually considered the atmospheres certain brasses (copper -zinc) alloys are "minimum" grade for aggressive marine atmospheres. susceptible to dezincification and SCC. Based on 15-year mass loss data for specimens exposed 250 meters from the ocean at Kure Beach, NC, the Nickel Alloys General corrosion rates of a wide general corrosion rate of Type 316 SS was calculated to range of nickel alloys exposed at Kure Beach, NC, for be < 0.03 gm/yr (< 0.001 mpy)(7) -- compare this to a periods up to 49 years have been found to be < 1 gin/yr corrosion rate of 147 pin/yr (5.8 mpy) for (< 0.04 mpy)(13). Pitting and SCC resistance have also carbon steel at the same location. In other words, the been observed to be excellent. Alloys such as MONEL® general corrosion rate of 316 SS is about 5000 times less 400 (nominally 70Ni- 30Cu) develop a beige/green than carbon steel at this harsh location. patina but exhibit very good resistance to galling, while Twenty-six year results at Kure Beach, NC, show that for alloys such as HASTELLOY® C (nominally 67Ni-15Cr- 15Mo-3Fe) have remained highly reflective, even after 316 SS, pit depths were 60 and 40 gin at 25 and 250 55+ years' exposure at Kure Beach. meters from the ocean , respectively(8). Crevice corrosion depths at spot welded joints were 140 and 50 Titanium Alloys -- These alloys are extremely resistant gm, respectively. While the specimens exhibited rust to general and localized corrosion in marine staining, there was no significant loss in mechanical atmospheres. General corrosion rates are typically < properties such as yield and tensile strengths, or change lgin/yr (< 0.04 mpy)(14). They also exhibit very high in ductility (% elongation). Moreover, the rust stains resistance to SCC. were amenable to removal by brushing with mild Summary scouring powder. Test results have shown that, other than in the furnace sensitized condition (i.e. improper Long-Term corrosion data are available which allow cost heat treatment) stainless steels such as Type 316 are effective selection of materials where long service lives highly resistant to SCC in marine atmospheres(9). are desired in harsh marine atmospheres. These data are Aluminum Alloys -- Corrosion resistance of Al alloys invaluable to designers since accelerated corrosion tests depends on composition, heat treatment (temper), and % do not usually give reliable service-life predictions.
564 599 For outdoor telecommunication plant in severe marine B. Bomberger, J. Electrochem. Soc., Vol. 101, Sept environments, the benefits of selecting more corrosion- 1954, p442. resistant alloys, such as the right grades of stainless steel, are apparent from long-term corrosion test data.
References
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Atmospheric Galvanic Corrosion, by V. Kucera and E. Mattsson, in Atmospheric Corrosion, edited by W. H. Ailor, J. Wiley, 1982, p567.
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Corrosion Resistance of the Austenitic Chromium- Nickel Stainless Steels in Atmospheric Environments, The International Company, 1970.
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565 6 0 New Undersea Cable Developments and Satellite Services: Toward Complementary Coexistence in the 21st Century
David Ross, Hansen Long Tyco Submarine Systems Ltd. Morristown, NJ 07960
1. ABSTRACT
A new generation of technologically advanced undersea cable systems that provide dramatic increases in capacity, with concomitant decreases in per-circuit costs is now being deployed . At the same time, a new generation of global satellite systems is looming over the horizon, promising to provide a diverse array of ubiquitous services to end users. The dramatic changes in undersea cable and satellite technologies have been accompanied by equally dramatic changes in our notions regarding the coexistence of what once were viewed as competing technologies. In the past, coexistence was characterized by uneasy and internecine competition for routes and revenues. In this paper, we will discuss the new reality, in which coexistence of satellite and undersea cable systems is based on making best use of the unique, complementary capabilities of each technology in a diverse and rapidly-growing market. We will discuss the need to establish a framework for interworking, in order that we may most efficiently develop the Global Information Infrastructure (GII), in an environment of mutual cooperation and collaboration.'
2. THE PAST from leasing capacity on a long-term basis to television broadcasters, telephone operators and to During the decades of the nineteen sixties, companies establishing private voice and data seventies and into the eighties, satellite networks. communications systems were the predominant carriers of transoceanic telecommunications At the same time, digital fiber optic cable systems traffic. In 1986, 78 percent of transatlantic and were introduced into the international telecom 95 percent of transpacific traffic was via fixed marketplace and began to seriously compete with geostationary satellite systems, the remainder satellite providers for major intercontinental being carried on analog undersea copper coaxial telecom traffic routes. The first transoceanic fiber cable. 2 cables, TAT8 in the Atlantic and TPC3 in the Pacific, were installed in 1988 and 1989 In general the satellite systems were administered respectively. The high quality and relatively low by intergovernmental state-owned organizations per-circuit cost of these began a revolution in such as INTELSAT, which launched its first international telecommunications. satellite in 1965 and currently has over twenty satellites in geostationary orbit. Undersea cables, Paced by advances in technology and increased on the other hand, were implemented by consortia competition among suppliers, rapid progress was of telecommunications carriers, who owned and made by the fiber optic submarine cable industry operated them to carry their own transoceanic in the capacity attainable on a single fiber. traffic. Between 1988 and 1996, the capacity available from a single fiber on a transoceanic system In the late 1980s, the first private satellite increased by a factor of 16, with a proportional systems, PanAmSat and Astra were launched; decrease in the cost per circuit. followed shortly by others such as AsiaSat. These providers derived their revenues principally
566 6'01 These developments reversed the trend observed the GII is quickly outstripping the ability of in the early 1980s, in which predominant suppliers to provide it. transatlantic and transpacific capacity providers were satellite networks. In fact, by 1996, 64 The development of optical wavelength division percent of transatlantic and 79 percent of multiplexing technologies and more sophisticated transpacific traffic was via fiber optic undersea optical networking techniques have allowed the cable. It appeared that satellite networks no longer development of very large optical networks posed a serious competitive threat to the growth connecting many countries simultaneously with and viability of transoceanic undersea cable ultra-high-capacity fiber cable, allowing cable systems. networks to attain some of the multipoint character once associated only with satellite networks. 3. THE PRESENT
Today, the forces of privatization and Although satellites are carrying a decreasing deregulation have been driving an explosive marginal share of telecom traffic, all carriers development of telecommunication infrastructure having access to both satellite and fiber optic worldwide. This has led to the creation, through cable technologies utilize both, recognizing the both government and private sector investment, of complementary nature of the two media. Though a vibrant global information marketplace, that is the number of long routes competitively served by boosting economic growth, job creation, satellite services is declining,satellites are still encouraging broad-based economic, social and the predominant means of serving remote or political dialogue within and among the nations of rural locations. the world and, perhaps most importantly, providing universal service to a great mass of As a result of the changing competitive underserved citizens of the world. This is the environment, and technological developments in "Global Information Infrastructure" (GII), created satellite and mobile communications technologies, by an information explosion that is generating there has been a recent evolution toward large rapidly growing demands on all types of scale private rather than governmental communications systems: terrestrial wired and involvement in satellite systems. These private wireless, undersea, and satellite. systems are not aiming at head-to-head competition with cable networks, but rather seek In the late 1990's, fiber cables have attained such to exploit the ubiquity and flexibility that only high capacity that it is no longer practical to even satellite-based networks can offer. back them up with satellite systems - there simply isn't enough spectral bandwidth available to There has been significant growth in the diversity restore traffic in the event of a cable break. As a of satellite services offered ranging from VSAT result, new transoceanic optical networks such as services, to direct broadcast satellite and direct-to- TAT 12/13 and TPC5 are connected as self- home services, paging, messaging, and point of healing rings. These noteworthy technical sale networks; as well as a plethora of new mobile advances have been accompanied by equally satellite services. dramatic reductions in circuit costs. Yet, in certain regions, such as the Asia-Pacific, capacity This trend has also manifested itself in the is quickly being oversubscribed by Internet traffic, proliferation of proposals for a new generation of forcing operators to produce temporary work- Global Mobile Personal Communications by arounds to accommodate their end-user Satellite Systems (GMPCS) - also known as customers. Clearly the service demand driven by Satellite PCS (S-PCS), as well as commercial Ka-
567 602 band broadband satellite networks to be deployed in the near future (1998 to 2002). Thus, the message for both fiber optic cable suppliers and satellite service providers is that there is an almost insatiable demand for The level of proposed investment in satellite bandwidth to be supplied and that the days of systems is extraordinary, and numerous pernicious head to head competition are past. The companies, and consortia of companies, are overriding issue is one of maximizing efficient participating in the development and marketing of interworking of satellite/cable networking on a these services.There are now more than double global scale: enhancing service where it already the number of satellite operators in the 1980's. exists, filling in the gaps where service does not exist, and providing for the efficient transport of At the sane time, the phenomenal growth of large volume traffic from all media on a truly international traffic generated by the internet and global scale. new multimedia services has drawn private investors into the undersea cable arena as well, Both fiber optic cable suppliers and satellite and some of the largest new cable projects are service providers have begun planning the being mounted by entrepreneurs, rather than introduction of a range of new cable systems and carriers. satellite services primarily designed to satisfy the expanding market for broadband services worldwide. Thus, establishing the relationship 4. THE FUTURE. between fiber optic cable systems and satellite services will be crucial in the first decade of the As we enter the dawn of the 21st century the next century. picture becomes more complicated yet. The impact of this colossal growth on undersea The future telecommunications environment will cable systems will be dramatic. Cable networks witness the entrance of new participants into the using new dense wavelength division multiplexing market, including major new and privately (DWDM) technologies will increase individual financed satellite system providers, new facilities fiber pair capacity to unprecedented levels, e.g., in based carriers, carrier's carriers, resellers, excess of 100 Gb/s per fiber pair, and more investor/entrepreneurs, CLECs as well as Internet sophisticated optical networking techniques will Service Providers (ISPs). They will all be make ultra-high -capacity, low-cost transport handling enormous quantities of telecom traffic, networks available throughout the world. One both voice and data which, as previously stated, proposed cable project would create in itself a will be driven by the explosion in broadband, complete global network. multimedia and Internet applications. Likewise, the satellite industry will bring to bear a number of new approaches to extend the range At the same time, the globalization of commerce and sophistication of services offered through a is creating a relentless drive by all segments of the new generation of satellite systems. Many of these market to increase domestic teledensity and systems will utilize satellites placed in low, regional/global connectivity, with ever increasing nonstationary earth orbits at (LEOs) and in needs for bandwidth to accommodate the higher-altitude nonstationary medium earth orbits explosion in multimedia and Internet applications. (MEOs). These systems incorporate This has created new and pressing capacity needs constellations of satellites ranging roughly from in all regions of the globe, which are just now fifty to over 250, interconnected through being fully recognized and appreciated. intersatellite links (ISLs). The new LEO and MEO systems are designed to handle a variety of
568 603 applications offering everything from narrowband mechanisms and protocols for interworking all paging to high speed data and compressed video technologies, including satellite and fiber optic up to 2 Mb/s. Other new systems will use cable, to meet growing needs for constellations of Geostationary satellites either telecommunication services worldwide. alone or in combination with LEO or MEO networks, to further expand the range of options available. 6. CONCLUSIONS
Although the GII has stimulated as well as The relationship between undersea cable suppliers responded to global demand for telecom services, and satellite network providers was once as much as 50 percent of the world's population characterized by rivalry for routes and revenue. has not made a phone call due to lack of Today, however, it appears to be one founded less infrastructure. Here the new generation of on upon strident competition and more on mutual satellite systems can play a vital role in providing cooperation and integration of network wide market entry which will combine "fill-in-the- capabilities. This is the result of forces leading to gaps" wireless voice telephony with fax, paging, the creation of the Global Information both high and low-speed data and other services. Infrastructure (GII). And it is through such They will bring service to areas with little or no cooperation and network integration that the long existing wireline infra-structure, and in most cases term health of the GII will be assured. are complementing rather than competing with existing terrestrial wireless/PSTN services. 7. REFERENCES
Thus, the satellite industry will provide for Organisation for Economic Co-Operation and delivery of a multitude of end-user services Development. 1988. Satellites and Fiber Optics - ranging from broadcast to broadband, at the same Competition and Complementarity. The OECD time the cable industry will provide ubiquitous Catalogue of Publications, Paris. ultra-high-capacity international connectivity.
5. CALL TO ACTION 2TeleGeography. 1996. Global Telecommunications Traffic Statistics & With the proliferation of new services and Commentary. TeleGeography, Inc., Washington, systems, it is not surprising that some confusion D.C. exists regarding the proper roles of satellite and fiber optic cable systems in addressing the future market for these services. Many, particularly those outside the telecommunications industry, still hold to an antiquated notion of competition between the technologies, or an either-or choice. The reality is the need to make best use of all technologies on a global basis, using the best attributes of each to create the most effective global infrastructure. We must jointly establish
569 604 Multi-Sensor Instrumentation on a Focus 1500 Search and Survey System
Edward Saade, Robert Morton, Gary Parker SAIC USA
ABSTRACT
AFOCUS-1500ROTV has been fully instrumented for deep water search and survey applications using acoustic, optical and magnetic sensors for operations to 1500 meter water depth. The recent deployments of the system mark a number of firsts for deep water applications, including Deepest operation of theFOCUSvehicle; deepest operation of a Laser Line Scan System; deepest operation of a high resolution Multibeam system; deepest operation of simultaneous surveying and mapping of an acoustic/optical/magnetic suite of sensors. The system has recently operated off the East Coast of the United States and the south coast of the Island of Hawaii. Additional deep water surveys will be completed by the end of 1997. The system was designed for the following applications: Pipelines inspection; telecommunications cable inspection; route surveys; environmental surveys; search operations and related studies. Data from all surveys is presented below, including a route survey and site investigation of the Loihi Seamount, located south of the Island' of Hawaii.
INTRODUCTION III. 240kHz multibeam IV. 100kHz side scan sonar A MacArtney A/SFOCUS1500 remotely operated V. Magnetometer tow vehicle (ROTV) has been fully instrumented by VI. Integratednavigation system with USBL Science Applications International Corporation tracking (SAIC) to conduct intermediate-to-deep water survey and search operations. The fully integrated system FOCUS 1500 Vehicle (ROW) (Figure 1) supports multiple sensors, including high resolution acoustic systems, imaging sensors and magnetic The MacArtney A/SFOCUS 1500ROW is a fully sensingdevices. The integratedsystems are instrumented and integrated vehicle package which discussedherein,operationalconsiderations are cansupportmultiplesensorsforconducting provided, data processing techniques are presented controlled, stable platform surveys to water depths of and example records are provided for review. The 1500m. The system is capable of flying excursions system is designed to fully transportable to vessels of of up to 50 meters - left, right, up, down- from its opportunity throughout the world. Design centered tow position. Includedin the onboard applications include: instrumentation are sensors for detecting/monitoring tow attitude, roll, heading and pitch. The system is I. Telecommunications cable inspection and designed to be slightly positive in buoyancy, weighing route evaluation 1200 lbs ( 500 kg) in air and measures 2.6x1.5x1.54 I. Pipeline inspection and route evaluation meters inoverall size.The system is currently II. Regional surveys in support of construction operated on a 4000 meter long fiber optic electro- related studies mechanical tow cable. Regional surveys in support of environmental assessments Laser Line Scan System-LLS (Figures 1, 2 and IV. Search, locate and identification 3) requirements A Northrup Grumman(formerlyWestinghouse INTEGRATED SYSTEMS Electric Corporation)SM 2000 Laser Line Scan (LLS) system has been fully integratedinto the The fully integratedFOCUS1500 high resolution complete package. The LLS system produces high system includes: resolution "picture quality" panoramic image surveys at rapid coverage rates. The basic system consists
I. FOCUS1500 vehicle of the underwater optical sensor and the topside II. Laser Line Scan (LLS) System 605 570 control console. Laser scanning, in essence, can be survey and tracking control on the vehicle. Key described as the building up of an image from a features of the system include: rapidly acquired series of spots on the seafloor, each sequentially illuminated by a pencil sized diameter I. Fully integrated PC controllednavigation laser beam.Display options include video, frame- system with multiple monitor displays for helmsman grabbed stills and photographic hard copy. and operators II. Multiple LOPs input, real-time swath Multibeam System (Figure 1) assessment and coverage analysis III. Krongsberg - SIMRAD, Model HPR 410 "full A RESON Model 8101 240 kHz multibeam system ocean depth" tracking for operations to 1500m water provides high resolution swath bathymetry to depths depths in mess of 1800 meters water depth. Key components ofthesystemarethehardware OPERATIONAL CONSIDERATIONS products built by RESON and the proprietary survey support software developed by SAIC. The system Figures 4 and5 demonstrate theoperational provides the following key features: capacities of the individual sensors and demonstrate the optimum multi-sensor mode application of the I. 100 beams with a vertical resolution of better system.Real applications tow speeds have varied than 0.2 meters between 2-4 knots, operational applications of the full II. 150-degree swath widths system have varied continuously between 20-1500 III. Phase and Amplitude bottom detection meters water depth.For planning purposes the IV. Greater than 3000 soundings per second following maximum water depth limitations apply for the various imaging systems: Display elements include real-time swath coverage monitoring, falselight shading, contouring, color I. Laser Line Scan 1550 meters shading, profiling and related techniques, all aboard II. Multibeam 1800 meters vessel. III. Side Scan Sonar 1550 meters
Data Products
Side Scan Sonar System (Figure 1) Existing data products are provided herein for review. In summary these products include: A KLEIN M-595 digital side scan sonar system has beenintegratedtoprovidesidescanimaging Laser Line Scan (Figure 6): capabilities for 100-400 meter wide swaths. The Continuous video tape system operates at 100 kHz, sampling the seabed In-field digital frame grab of individual between 4-16 times per second.The system is targets capable of detecting targets to less than 0.5m in size. Post survey processing: Displayoptionsincludehardcopy,videoand Linear and regional mosaics of computer enhancement. continuous data in hard copy GIS data base of isolated and Magnetometer continuous dataprovidedon CD-ROM or as a Web Site A Geometrics cesium magnetometer has been Multibeam (Figure 5): integrated into the system for detecting events at the Various color encoded visual displays in sub-gamma level. The system proved to maintain a real-time and post-processed background level of extreme quiet and could detect "False-lighting" displays from any known telecommunications cables throughout the operator selectable angle (side scan operating depth range of the system (600m/wdin this sonar type imagery) operation). Soundings, contouring, 3-D isometrics, profiles IntegratedNavigationSystem and USBL Provided in hard copy, CD-ROM o_ r as a Tracking Web Site
SAIC has incorporated versions of its proprietary ISS 2000 integrated navigation software for providing
571 60G Side Scan Sonar: (SAIC) to conduct intermediate-to-deep water survey Standard hard copy, digital and mosaic and search operations. During the Summer and Fall capabilities of 1997 the system was operated in a variety of Provided in concert with GIS data bases locations around the world including the East Coast listed above also on CD-ROM or Web of the United States, Hawaii and the North Sea. Site format Applications included testing and evaluation, cable route assessment, academic research, pipeline route CONCLUSIONS assessment and seabed hazards assessment. The fully integrated system supports multiple sensors, A MacArtney NS FOCUS 1500 remotely operated including high resolution acoustic systems, imaging tow vehicle (ROTV) has been fully instrumented by sensors and magnetic sensing devices. Science Applications International Corporation
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SENSOR PERFORMANCE vs. ALTITUDE
ROTV MULTIBEAM MULTIBEAM OPTICAL SIDE SIDE SCAN LASER LINE LASER ALTITUDE SWATH (M) BEAM SCAN SONAR RESOLUTION SCAN SWATH RESOLUTION (M) FOOTPRINT SWATH (M) AT MID- (M) (M) AT SLANT 45 (MA2) RANGE (M) 5 37 0.1 75 0.07 7 0.007
10 74 0.3 150 0.13 14 0.004
20 148 1.1 200 0.87 28 0.028
30 222 2.5 400 1.75 42 0.042
40 296 4.4 500 2.18
50 370 6.9 600 2.62
60 444 9.9 800 3.49
70 518 13.4 1000 4.36
80 578 17.6
90 572 22.2
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The Asia Pacific Satellite Market After 2000
B S Middleton Asia Pacific Aerospace Consultants Pty Ltd Canberra, Australia
1. ABSTRACT
Analysis of the drivers of the demand for GEO satellite services in the AsiaPacific indicates that this market is far from running out of steam, although recent economic problems indicate a slowdownin the short term. The region has some troubling problems, some of which could be alleviated by technologicaland business solutions. On the other hand, several interesting business trends are emerging. Five countries in the region are developing capability to build satellites and systems, and satellite manufacturers in Europeand the US should position themselves to benefit from these developments.
2. INTRODUCTION This paper reviews the drivers and trends impacting on demand in the Asia Pacific satellite market. It The rate of growth of satellite communications and discusses issues with the potential to hinder growth, broadcasting services in the Asia Pacific region is and developments that may facilitate growth.Finally, unprecedented.At the start of 1975, fixed point-to- it describes the increasing capability within the region point satellite services to the region were provided by to supply satellites to this market. three Intelsat-4 series spacecraft carrying a total of 36 C-Band transponders, each of six watts. A decade 3. DRIVERS IN THE ASIA PACIFIC MARKET later,at the beginning of 1985, there were 25 satellites in service carrying 310 transponders, with Prior to the economic events in Asia over the last four seven operators. The most powerful transponder was months, prospects appeared good for the present rate 200 watts on a Russian satellite, and Ka-Band and of deployment of GEO satellites for service in this the UHF spectrum were already in use.Direct-To- region to continue.Euroconsult estimated in 1995 a Home TV had started in the previous year. demand for 86-109 new communications spacecraft through 2005, an average of 9-11 per year and a A further ten years on, in January 1995, there were $US7b to $10b market.The recent trend supports 940 transponders on 59 satellites with 19 operators. these numbers. Eight GEO satellites were launched Inthedecade between1975 and1985,274 in 1995 for service in this region, thirteen in 1996, and transponders, 22 satellites and six operators had seventeen in 1997. been added. Inthe subsequent decade those numbers were 630 transponders, 34 satellites and 12 Future demand in the region will depend on economic operators. The rate of growth had doubled, but the progress and the fallout from recent developments, on pickup was just starting. the drivers for growth (now and in the future), and on the influence of public policy. Three years later, at the beginning of 1998, the number of active transponders in the region is over 3.1. IMPLICATIONS OF ECONOMIC 1800 on nearly 70 satellites.In just three years the DEVELOPMENTS nett increase in transponder numbers is nearly 100%. Nine new operators have entered the market in these Substantial currency devaluations in southeast Asian three years. countries in the third quarter of 1997 led to stock market adjustments around the world and IMF What are the prospects for three years further on, and intervention in several regional countries. The effects beyond?The total number of operators by 2000 are likely to be mixed in the short to medium term, but could be as high as 38. Asia Sat has estimated positive for long term prospects.Devaluations have regional demand to require 300 to 460 additional put added pressure on regional satellite operators transponders per year, depending on the growth who raised funds in US dollars but collect revenue in assumptions. devalued local currencies, and the general slowdown ineconomic activity is adding pressureto those
579 614 revenues. On the other hand the correction is leading 3.3. BROADCASTING to greater transparency in business dealings in the region, tighter government budgets and other reforms Broadcasting is a strong growth area, including video with positive potential for long term growth.National relay for terrestrial TV, Direct-To-Home TV (DTH) and economies are likely to experience reduced growth in satellite radio. In 1996 DTH services opened in theshortterm,butgrowthrateswillstillbe Indonesia, Japan and Malaysia.In 1997 Australia, substantial. China, India, South Korea, the Philippines and Taiwan launched digital services, and the number operating in 3.2. TELECOMMUNICATIONS Taiwan increased.The APSCC estimates that the 10.5 million DTH receivers in the region in 1994 will The demand for telecommunications remains high in grow to 50 million by 2001, by which year the number the region.According to the Asia-Pacific Satellite of satellite digital TV channels is expected to reach Communications Council (APSCC), the 180 million between 1,500 and 2,000.At an average of eight switched terrestrial telephone circuits in the region at channels per transponder, that translates into 190 to the end of 1995 are expected to reach 250 million by 250 DTH transponders. The launch of satellite digital 2001, with annual growth at 15-20%. Even so, Asia radio in the region late in 1998 represents a further still has less than 20% of the world's telephones for expansion of this market. half the world's population. Government policies restricting or prohibiting direct Terrestrial infrastructure cannot be installed as cost- reception of satellite TV are hindering the prospects of effectively as satellite capacity in many countries. DTH servicesin some countries, though blanket The 2.5 million switched satellite circuits at the end of enforcement has proved impossible. India and China, 1995 are expected by the APSCC to reach 3.5 million the biggest potential market, are two such countries. by2001,roughlyequivalentto3,300satellite The primary imponderableinChinais how the transponders of 33 MHz each. This would require a successors to the present leadership will manage the further doubling of transponder numbers over the next demandforpoliticalchange,whichinevitably threeyears. CurrentlyAsiahas around one accompanies economic change. Whileit seems transponder per 2.4 million population compared with unlikely that the pace of economic development will one per 300,000 in the US, notwithstanding the drop dramatically, a slowdown might relieve pressure growth in capacity over the past few years. on those resisting liberalisation.The ban in India appears to be a holding action designed to permit an Economic growth continues tofuel demand by indigenous DTH industryto become established business and private subscribers for basic and value before facingfullinternational competition. Itis added services.Business has difficulty securing the already under legal challenge, whichit may not services itrequires, and Asia's 400 million middle survive. class consumers comprise a potential market larger than either North America or western Europe.The The largest unknown in the field of entertainment penetration of basic telephone services remains very services is perhaps video-on-demand, which has yet low in some countries;in Indonesia it is 1.65%, in to become fully established in the region.Satellites India 1.3%, in Vietnam 1% and in Myanmar 0.5%. can deliver these services earlier than terrestrial systems, which require cable to be rolled out or Deregulationisplaying a partinthis growthin microwave to be installed. This new service also has demand. Competition has been introduced into many the potential to require lots of bandwidth to deliver national telecommunications markets, though far from hundreds of channels. allof them. Australia, Hong Kong, Japan, New Zealand and the Philippines are regarded as doing 3.4. MULTIMEDIA SERVICES well, while Brunei, Singapore, Taiwan, Thailand and Vietnam and considered to be moving slowly.The Multimedia services,includinginteractive services World Trade Organisation accord on and the Internet,are also growing strongly and telecommunications services is adding pressure on making increasing use of satellites.In the last two governments to open markets. As new services are years Internet use in Malaysia grew 600% (though off introduced into newly competitive markets, service a relatively low base), in Hong Kong 278%, in Japan prices are falling and traffic volumes are going up. 273% and in Australia 166%. In December 1996 Intelsatwas using the equivalentofthree
580615 transponders worldwide for Internet traffic, but the not identical.PSN will integrate the two systems, increasing demand is such that only five months later allowing subscribers to use a single phone number the organisation expressed concern at its ability to and switch between services. This powerful concept cope. suggests a promising future for integrated services catering for the regional market at appropriate pricing Intelsat'sconcern mirrorswarningsexpressed levels. elsewhere, that Internet traffic growth rates are so high that the service will soon compete with voice and 3.6. SOVEREIGN RISK data for capacity that suddenly may become more limited than network planners anticipated. Telcos, Political stability represents a potential risk element satellite operators and multimedia investors have to for the future of this market.Could there erupt a take account of the extremely high Internet growth political event so dramatic as to break current trends? rates in the Asia Pacific region.If the current trend Certainly there are zones of international tension continues, the demand for bandwidth willrequire within the region, with the potential to erupt. There is increasing satellite capacity well into the next decade. instabilityinNorth Korea and tension with South Korea, China has a tense relationship with Taiwan The developing market for high-speed data and video (and is involved in the Paracel and Sprat ly Islands services will also have an impact in this region. While disputes, which potentially involve Brunei, Malaysia, DTH TV was a major driver for regional satellites the Philippines, Taiwan and Vietnam), and there is launched in 1997, high speed data and video will instabilityinIndo-China(notablyinBurma and figuremoreprominently from 1998onwards. Cambodia). Of these, perhaps the Korean peninsula Indonesia's Multi-Media Asia (M2A) satellite, due for and the Taiwan straits are the regions with most launch late in 1998, is perhaps the first of this next current potential to erupt on a scale sufficient to wave. disrupt the region.
3.5. MOBILE COMMUNICATION On the other hand most governments in Asia, both socialist and capitalist, plan far into the future, as do Mobile communication using hand-held terminals many companies. Five-year plans and 20-year another market yet to developis also a driver. This horizons are common, and the current growth should market will to an extent be served by the global LEO be seen in that context.Most regional leaders now and MEO systems, of which Iridium and Globalstar accept thatpoliticallegitimacy comes more from are already being deployed. The Asia Pacific should delivering on the promise of economic development see the commencement early in 1999 of the first than from military adventures. We tend to believe that regional handheld mobile service operating from a the market will continue without major dislocation from geostationary satellite, Asia Cellular Satellite System this source. (ACeS). A second system, Asia Pacific Mobile Telecommunications (APMT) has suffered funding 4.CURRENT TRENDS AND ISSUES delays that suggest its future is uncertain. A third system, the Thuraya program led by Etisalat of the Some developments in the regional GEO market point United Arab Emirates, will commence services in to trends with potential. Others reflect issues of 2000. continuing concern.
One competitive advantage claimed for the GEO 4.1 COOPERATION AND CONSOLIDATION systems is lower airtime charges, though actual rates have not been announced. What may prove to be Cooperation agreements, such as that between the even more attractive is the integration of GEO-based operators of the Measat and Thaicom systems, may mobile services with fixed satellite services. PT be the harbingers of greater regional collaboration, Pasifik Sate litNusantara (PSN) of Indonesiais and perhaps eventuallyconsolidation. Thereis moving in that direction. PSN is a partner in ACeS substantial footprint overlap between many of the and will operate the program's satellite control centre. satellitesystems,especiallythoseoffering DTH ItscompanionMulti-MediaAsia(M2A)satellite services. For those systems focussed on the region, program willdeliver telephone services and TV rather thanprimarily on a single country, prime channels directly to homes throughout the region. markets include Chinese-speaking populations The footprints of ACeS and M2A are similar, though (China, Taiwan, and Singapore), major economies
58161 6 (Japan, China, Korea, Australia, India, and Taiwan) and increasing size.Agila-2 and Apstar-2R are the and major populations (China, India, Indonesia, and current regional "hot birds" with 8 kW, but Hughes' Japan). To dateithas beendifficultfor TV new HS-702 will launch in 1998 with 15 kW and broadcasters to make DTH services profitable, and it Space Systems/Loral's La Fayette will launch in 2000 would not be surprisingif some saw wisdom in with 16 kW.Aerospatiale is building the Spacebus reducing overheads through collaboration in 4000 with 20 kW. These large and powerful platforms addressing similar markets. offer the Asia Pacific the opportunity tofit more transponders on a platform, to some extent reducing The added financial pressure on some operators pressure for slots in the region. following the recent devaluations and the economic slowdown will provide more impetus to investigate Demand for bandwidth accompanies the demand for possible collaboration opportunities, both for power. The APSCC predictions of demand for synergies in business growth and to reduce costs. satellitecircuits and DBS transponders by 2001 correspond to around 120 GHz of bandwidth.Ku- 4.2. REGIONAL RESPONSE TO GLOBAL Band hasrainattenuationproblemsmakingit COMPETITION uneconomic to use for high quality voice services, especiallyin the tropics, and Ka-bandis worse. While satellite operators in the region are building Some have started to think about X-Band, where 1 business in core national and regional markets, they GHz of spectrum may be available and the rain are well aware of the plans of global operators to offer attenuation problem is reportedly less. competing services in the Asia Pacific.PanAmSat (now owned by Hughes, and part of that company's 4.4. PRESSURE FOR SLOTS global strategy) already offers global services and plans to double the number of satellites serving the There is a growing problem in the overcrowded Asia Pacific in 1998.Intelsat is soon to spin off a geostationary orbit in the region.The demand for commercial subsidiary, being referred to as "Inc", and capacity, a strong entrepreneurial spirit, and the lack the high powered DTH satellite ordered for the 95°E of authority vested in the ITU represent a potent location is likely to become part of the Inc network. combination for disputation.Two recent examples Columbia is providing transpacific services on NASA's illustrate how pressing the problem is becoming. One TDRS satellite and will launch its own Pacific satellite is at 134°, the other at 144°. in1999. Loral Space and Communications has acquired AT&T Skynet Satellite Service and Orion Apstar-1 a (owned by APT Satellite of Hong Kong) Network Systems in a global strategy, and will deploy currently operates at the 134° location, whichis the first Orion Asia Pacific satellite in 1998. Lockheed claimed by both Tonga and Indonesia. PSN claims to Martin has joined with Intersputnik and gained access have registered this location in 1993 but Tongasat to 15 slots around the globe, listing southern Asia claims an agreement in that year permitted PSN to amongst target markets. Russia willitselfoffer share the slot for a limited time.PSN asserts that servicesinthe region on new HS-601satellites Apstar-1 aisnot properly coordinated with other recently ordered. users, and is alleged to have jammed Apstar-1 a signals early in 1997. What might be the response by operators in the Asia PacifictoITUfilingsinthisregionbyglobal Japan's Superbird-C took up location at 144° after competitors? Some may collaborate, but others may launch in July.It is registered at that location for Ku- choose a more aggressive strategy.The financial Band, the only Band in which the Superbird operates. capacityinthe regionisstillquitesufficientto The slot is also registered to Indonesia for C-Band underpin a global response from Asia. We would not only.By agreement with Indonesia, the Philippines be surprised to see equivalent filingsfororbital has sought official co-ownership of the 144° slot to locations serving North America and Europe. accommodatetheAgila-2satelliteofMabuhay Philippines Satellite Corporation (MPSC) following its 4.3. BANDWIDTH, FREQUENCY AND POWER launch in August. However Agila-2 operates in both TRENDS C and Ku-Bands. Achieving acceptable levels of non- interference may well require power and frequency Market demand for DTH, mobile and broadband constraints, and a minimum separation of 1.6° is services is reflected in increasingly powerful satellites normally required.Coordinating frequency between C)1
582 the two satellites is therefore expected to require confirmed that Aerospatiale had ceased work on ongoing attention. PASI's first satellite (which to be launched late in 1998) due to payment difficulties. Facilitating resolution of slot disputes was hoped to be a function of the Asia-Pacific Satellite Orion Asia Pacific seems likely to use this strategy Communications Council when it was formed in late prior to the launch of its first satellite, also expected 1994, but the APSCC appears to have had no more late in 1998.It has been negotiating for capacity from discernible impact on the problem than the ITU whose Intelsat, Satelindo or APT Satellite. endorsement it enjoys. Coordination continues to be pursued on a bilateral basis, consuming time and As the GEO population builds, more ageing satellites energy and adding a layer of complexity to satellite may well become available at attractive prices prior to design and operation. retirement. We will not be surprised to see future new operators in finding this approach attractive. Limited relief may come from increased compression ratios, as well as higher satellite power levels and 5. SATELLITE MANUFACTURE frequencies.Speaking at a conference in London early in 1997, Koos Bekker of Net Hold (the company The Asia Pacific represents the largest market for that owns Irdeto) forecast that research might by early GEO satellites at this time, but to date regional next decade permit digital signal compression ratios companies haveplayedonlyalimitedrolein of 1,000 to one. This is not necessarily the harbinger supplying that market. Japanese companies are well ofreduceddemand,forthearrivalofdigital regarded for their communications payload systems, compressionservedtoincreasedemand,not butthereisnoregionalprimecontractorfor decrease it.Rather, much higher compression ratios commercial satellites. The suppliers of satellites could greatly reduce the pressure on bandwidth, purchased on the international market for service in frequency spectrum and orbital slots. A further huge the Asia Pacific currently are American and European increaseinusage couldresult,offeringregional - Aerospatiale, CTA (now part of Orbital Sciences), communities greater access to services, real time Lockheed Martin, Hughes, Matra Marconi Space and interactivity, and convergence of computing with TV. Space Systems/Loral. DASA of Germany has a co- operative agreement with China Aerospace, but has 4.5. STARTUP STRATEGY not itself supplied a satellite. Japan has built a series of Engineering Test Satellites and China and India One problem facing the new satellite operator is how havebuilttheir own operational communications to establish cashflow ahead of the launch of the first satellites, but no-one has sold one on the international purpose-builtsatellite. Two newPhilippines market. The lack of regional commercial satellite operators, MPSC and Philippine Agila Satellite Inc supplieris however soon to change, and other (PASI) started business by leasing satellites. In countries are developing capability. August 1996 MPSC leased from PSN of Indonesia the former Palapa-B2P at 113° and moved it to 144° 5.1 CHINA to provide services ahead of the launch of MPSC's own first satellite, Agila-2. The primary objective was China launcheditsfirst communications satellite, to provide services for the meetinginManilain DFH-15, in 1984 and has since launched another November 1996 of the leaders of the Asia Pacific eight. However it has never sold a satellite to a Economic Council. Palapa-B2P was retired in March foreigncustomer,anditselfrecently became a 1997 and did not continue in service through to the customer for satellitesbuilt overseas. It cannot launch of Agila-2 in August 1997. therefore be regarded as a potential supplier to the regional market. In a similar move PASI, (who have experienced difficultygettingtheirprogram funded andinto 5.2 INDIA service) arranged in January 1997 to lease for two years the elderly Gorizont-29 at 130°. The Gorizont Indialaunched itsfirstlocally-builtoperational was relocated to 161° to provide C-Band services in communications satellite, lnsat-2A, in 1992 following its global beam and Ku-Band services to Korea, the Insat-1 series that was built in the US.It has Japan and Taiwan, though we understandthis since launched four others, Insat-2B through 2E. particular venture did not proceed.It was recently Althoughno announcement has been made of
583 618 intention to offer satellites on the commercial market, multi-purpose satellite, KOMPSAT, is under recent offers for commercial launch services on Indian construction at TRW in California for launch in 1999, launchers suggests thisispossible. India must under a $US60m contract.Six participating Korean therefore be regarded as a potential supplier. companies have each contributed around $US5m to the KOMPSAT project. 5.3. JAPAN 5.5. SPACECRAFT SYSTEMS COMPETENCE Japanhastheengineeringcapabilitytobuild commercial communications satellites, as Systemmanufacturingcapabilityisalsobeing demonstrated in NASDA's Engineering Test Satellite developed in Australia, Malaysia, Singapore, Taiwan (ETS) series. To date high manufacturing costs have and Thailand. Australian companies developed deterred Japanese companies from enteringthe space segment design and manufacturing capability commercial market.Ever since the US launched its inthelate1980s to support thelocalcontent successful Super 301 action in 1990 to prevent 25% requirements of the Aussat-B program.They also NASDA-financedsatellitesgoingintocommercial supplied systems to GE Astro for theIntelsat-8 service with NTT, Japanese satellite operators have program. Through the publicly funded National Space consistently bought foreign satellites.Most of those Program that operated from 1985 through 1996 they satellites contain systems built by Japanese firms that undertook feasibility studies, managed projects, and have themselves recently confirmed ambitions to manufactured (and sometimes designed) complex become commercial satellite manufacturers by 2005. scientificinstruments,instrument subsystems and Mitsubishi has committed $US600m for ground support equipment.At present Australia is manufacturing facilities, NEC aspires to sell planning two LEO missions (ARIES and FEDSAT) communications satellites to neighbouring countries, that will further develop industrial capability. and Toshiba (which has a relationship with Space Systems/Loral) has signalled its interest.As with the Malaysia has set up a government-owned company, H2 launcher however, huge cost reductions will be Astronautic Technology Sdn Bhd, tofly a 50-kg neededbeforeJapanese-builtsatellitescapture satellite named TiungSAT-1 with the objective of significant market share. gaining the ability to design, engineer,build and launch spacecraft. The program is funded with 5.4. KOREA $US16m over two years. Surrey Satellite Technology (SSTL) of the UK have built the satellite and trained Korea may beat Japan to the market. It has a eight engineers to form the nucleus of an indigenous nationalgoalthatfuturereplacementsforthe Malaysian space industry. TiungSAT-1 is expected to Koreasat system be designed andbuiltlocally. be launched early in 1998. Experience has already been gained in the Kitsat microsatellite program and in the 30% local content in In Singapore, Nanyang Technological University built theKoreasat-1and 2 communications satellites. a communications payload to fly on the University of Hyundai Electronics Industries (HEI)is an equity Surrey's UoSAT-12 mission, launched in December partner in the Globalstar system, and will assemble 1997. Itisstudying a Singapore-owned micro- some of the first generation of Globalstar satellites;it satellite or mini-satellite to be flown in equatorial LEO aspires to build the second generation in Korea. HEI in 2000 or 2001. Developing local capability to build is also acquiring technology through an association satellite components is one of the program objectives. with Alenia Aerospazio of Italy. HEI has invested $US200m in a facility in which to assemble, integrate Taiwan established its space program as the vehicle and test satellites sized up to the largest, and is for developing high technology industry. Itsfirst supplying a Ka-band package for Koreasat-3, being project (ROCSat-1) is a satellitebuilt with TRW, built by Lockheed Martin. carrying communications, ocean colour scanning and ionospheric physics payloads. ROCSat-1 will be In April 1996 the Korean Government announced a launched next April.Studies were under way on a long-term space plan, to build and launch 19 satellites second satellite (ROCSat-2), proposed as a Ka-Band over the twenty-year period from 1996 to 2015, at an GEO communications system with regional service estimated cost of $US6b. The program will comprise capability, but the program has suffered setbacks and sevenscientificsatellites,sevenmulti-purpose ROCSat-2 is not yet authorised. satellites and five communications satellites. The first
G1 9 584 Thailand is aggressively pursuing the capability to strongest attraction in integration with fixed services buildsatellites with the objective of becoming a addressing market segments of special significance in regionalleader. SeveralThaiMinistrieshave Asia. We expect the number of satellites offering interestsinactive space programs. One is the these services to grow, but not to comprise a major National Research Council's Thai Remote Sensing part of the market in the near future. SmallSatellite (TRSSS) program, which has a secondaryobjectiveofbuildinglocalcapability. Two of the biggest issues facing regional operators TRSSS was funded with $US116m, but experienced arepressureonthegeostationaryorbitand delays and is understood to have sufferedin the competition from global operators. Although slot recent economic crisis in Thailand.Other proposed disputes are likely to continueinthe near term, programs areintheMinistryof Transport and technological and business solutions could reduce Communications (for an international co-operative this problem in due course. The pressure from global LEO project with several Asian countries) and the competitors will increase however, and we will not be Ministry of Defence, whose ambitions for GEO and surprised to see an aggressive response from the LEO satellites have also recently been frustrated by Asia Pacific community. the Thai economic stringencies. On the supply side, organisations in Japan and Korea In the private sector, Thai Satellite are planning to become prime contractors supplying Telecommunications Co Ltd spent $US12m on the spacecraft to this market, and India may join them. 50-kgTMSat-1projectinassociationwiththe FirmsinJapan, Korea and Australia have the Mahanakorn University of Technology. SSTL of the capability to supply spacecraft systems, and others in UK built the satellite, launched in December1997. Malaysia, Singapore, Taiwan and Thailand will soon have that capability. 6.CONCLUSIONS Satellite manufacturers in Europe and the US have a There are no convincing indicators that the growth of watershed decision to make with respect to this the Asia Pacific satellite market is yet running out of development. They could seek strategic partnerships steam, though it may slow a littlein the immediate with the regional firms building this capability.This future. Devaluations have put added pressure on would accord with the business culture of Asia, which satellite operators who raised funds in US dollars but is built on networks. Alternatively they could maintain collect revenue in devalued local currencies, and the theirtraditionalattitudetothe localcontent general slowdown in economic activityis adding requirements on which Asiaisinpartbuilding pressure to those revenues. However the WTO capability. That attitude can be characterised as continuestopressgovernments to free up minimum compliance and earliest possible exit from telecommunications markets, and economic obligations.That course is highly likely to generate development continues to drive demand for improved aggressive and increasingly-competent competitors telecommunications for both business and with a marketing edge in the Asia Pacific market. consumers. Lowteledensitiesandincreasing incomes mean that unmet demand for In summary the world's largest market for GEO telecommunications will continue, and satellites will satellites is going to get bigger in the foreseeable also continue to represent the most cost-effective future.As it does, and develops the capability to solution in many situations. supply satellites, regional operators and manufacturers will increasingly adopt broader, and Satellitebroadcasting,particularlyDirect-To-Home eventuallyglobal,strategies. Those companies TV, is growing strongly.The impact of limitations outside Asia that understand the dynamics and imposed by governments in China and India seems culture of this market have the opportunity now to likely to reduce, and video-on-demand is just starting position themselves to benefit from these with plenty of potential.Internet traffic, high-speed developments. data and multimedia services, though quite new as significant factors in the demand equation, seem likely to require substantial additional capacity.
Regional satellite mobile services will face competition from global operators, but may find their Addressing the Global Evolution in Telecommunications Services with Space-based Systems and Technologies
By Scott A. Snyder, Ph.D. and Eric V. Wallar Lockheed Martin Telecommunications Reston, VA
1. ABSTRACT
The rapid growth in global telecommunications is causing progressive evolution of telecommunications services which is tied to each region's economic and infrastructure development. A variety of space-based solutions exist which provide a mechanism for keeping pace with the rapid regional changes in user demand for services. In many parts of the world, fixed satellite services (FSS), mobile satellite services (MSS), direct broadcast services (DBS), and global broadband services (BBS) allow a much more rapid and cost-effective deployment of next generation services than do terrestrial, wireline-based solutions. Advances in satellite technology will support flexible and reconfigurable systems to address the wide variation in global user demands expected in the future.
2. INTRODUCTION GEO satellites.
A huge, unsatisfied, global demand for Telecommunications markets are dependent on telecommunications services exists today and will regional economy and existing telecommunications continue to increase over the next ten to fifteen years infrastructure. However, these different space- with the expansion and integration of the world based solutions will allow operators the ability to economy. This demand will result in an expanding keep up with the rapid changes in user demand for market for the entire range of telecommunications services at both regional and national levels services, from basic telephony and broadcast TV, to regardless of the variations in the economies and the most advanced digital data communications telecommunications infrastructures within a coverage networks supporting distributed multi-media area. In addition, these solutions generally provide a applications and delivering bandwidth-on-demand. more rapid and cost effective deployment of services than do traditional, wireline solutions. Thus, To date, the historical evolution of commercial advancements in satellite technology will make telecommunications services and service delivery space-based telecommunications services more methods has been primarily defined by the world's affordable, and accelerate their introduction into non- industrialized nations which were generally the first industrialized regions of the world. to introduce wide spread use of each service and delivery technology. As expected, the complexity of 3. TELECOMMUNICATIONS MARKETS, both the services and the delivery methods have SERVICES, AND SUBSCRIBER ASSESSMENTS increased over time. Today, however, rapid technological changes are driving down the cost of Industry analysts project the telecommunications both basic and advanced telecommunications industry will triple in size by the year 2000. This services, resulting in a break in the historical growth will drive satellite communications to expand paradigm. Advanced services are now being rapidly on a global scale within the next five years. introduced simultaneously in industrialized and Table 1 lists the expected revenue growth for developing regions. satellite-based communications services in each of the aforementioned market segments (3). The satellite service market can be divided into four segments: 1) FSS, 2) DBS or Direct-To-Home TABLE 1: PROJECTED SATELLITE service(DTH), 3) personal satellite service (PSS) and COMMUNICATIONS SERVICES REVENUE 4) BBS. PSS can be further subdivided into mobile GROWTH and fixed wireless service (MWS/FWS). This paper Type of Value in Value in Annual is focused primarily on geostationary (GEO) Service 1996($B) 2000($B) Growth satellites. Low and Medium Earth Orbiting Rate (LEO/MEO) are discussed later in the paper for DBS 4 12 32% comparison purposes. GEO satellites maintain a MSS 0 - 1 8 75% stationary, equatorial orbit 35,786 km above the FSS / BBS 5 9 14% earth. LEO and MEO satellites move relative to the Total 9 29 34% earth's surface at much lower orbital altitudes than
621 586 Worldwide teledensity (defined as the number of global telecommunications market is segmented into main phone lines per 100 people) is expected to emerging, developing, and industrialized regions, as double from nine to eighteen between 1990 and indicated in Figure 1 (1). 2010. The present teledensity of an industrialized region such as North America (approximately 60 main lines per 100 people) provides a good indication of the higher levels that global teledensity will reach beyond 2010 (2).
Despite this huge increase in telecommunications infrastructure, the growth in demand for telephony services is projected to be even greater. The number of people waiting for telephone service grew from 12 million in 1985 to 35 million in 1995. The cost of the infrastructure required to satisfy the unmet telephony demand is estimated to have been $3 trillion in 1995 and $5 trillion in 1997, and continues to increase (1, 2).
Some regions have millions of people waiting for telephone service, while in others it is available on demand. The low number of main lines per capita in FIGURE 1: MARKET SEGMENTATION BY the developing and emerging regions has generated REGION worldwide waiting lists of 30 to 40 million people for basic telephone service. The associated wait times The rapid growth in the demand for global vary from a few months to greater than ten years, telecommunications is causing an evolution of with 1.1 years being the world average. Table 2 telecommunications services in every region of the shows waiting periods for several emerging, world. However, because some regions already developing, and industrialized countries (2). have extensive and sophisticated telecommunications networks, while others have little TABLE 2: TELEPHONY WAITING PERIODS IN or almost none, the evolution is not uniform in every SELECTED COUNTRIES region. For example, taken as a whole, Asia and the Country Waiting Country Wait Pacific Rim is a developing region which is Time Time experiencing tremendous growth in (yr.) (yr.) telecommunications demand. However, individually, China 0.2 Greece 0.6 the nations in this region cover the entire economic and telecommunications infrastructure spectrum. India 1.3 Mexico 0.3 Kenya 6.6 Germany 0.0 There exists a strong positive correlation between a Thailand 1.9 US 0.0 region's GNP (a measure of economic development) Philippines 3.6 Japan 0.0 and its teledensity (a measure of Indonesia 0.2 Australia 0.0 telecommunications infrastructure). For example, Czech 3.3 Korea 0.0 industrialized regions with high GNPs tend to have Republic Republic higher teledensities. Similarly, emerging regions with Argentina 0.2 Viet Nam 1.1 low GNPs tend to have lower teledensities. This has been the regional trend for about the last ten years. In addition to fixed telephony services, all other Figure 2 shows worldwide teledensity and GDP per telecommunications market segments including fixed capita doubling between the years 1990 and 2010 telephony, personal communications services (PCS), (1). cellular markets, internet growth, corporate intranet growth, direct-to-home (DTH), video teleconferencing and network services are also projected to increase dramatically on a global basis in the next five to ten years.
A central issue on everyone's mind is how this global growth will be distributed across the various regions of the world. For the purpose of this paper, the
587629 9000 20 already available, and it provides a cost effective method to deliver high quality, high capacity 18 8000 television services to developing regions with no 7000 16 O0 existing broadcast or cable infrastructure. Figure 3 C) 14 I: illustrates the convergence of cable TV and DTH 6000 monthly subscription costs in Asia. DTH, however, 12SI 5000 fi is still more expensive on average than cable TV C) 10 c (11). 4000 2 8 c c 3000 o--GDP per Capita 0 oTeledensity 6a 02000 4 1000 2 0 0 1990 1995 2000 2005 2010 Year FIGURE 2: GLOBAL GROWTH OF TELEDENSITY AND GDP PER CAPITA
The Asia-Pacific region is estimated to maintain a FIGURE 3: AVERAGE MONTHLY BASIC COST high growth rate through 2005 and possibly longer. FOR CABLE AND DBS SERVICE IN ASIA At current growth rate projections, the Asia-Pacific region's percentage share of both the world's total DTH provides an excellent example of how international telephone traffic and the world's total technological development can change the number of main lines will converge towards the same evolutionary path of telecommunication services value (about 25%) by 2005, coming close to its between regions. The demand for higher quality TV percentage share of the world's GDP (also about reception and additional channel selections resulted 25%). Asia's portion of the world's wealth is in cable TV access being provided to 97% of all predicted to rise significantly over the next decade households in the US, at a huge cost, in the 1970s which will positively affect the development of and 1980s. At that time, DTH was not a cost telecommunications services in that region (12). effective service delivery option. Today, however, DTH is a very attractive alternative to cable TV The growth of basic television service provides an because technological advances in satellites and example of regional variations in the set-top boxes have made it more affordable. In telecommunications services evolution of regions with little cable infrastructure, DTH is industrialized nations. Recent growth in basic expected to be the dominant source for TV. In television service has been small in the industrialized Eastern Asia and South America, DTH is already and emerging markets, but it has shown marked ahead of cable in terms of market penetration. increase in the developing regions. In the industrialized nations most people who want a The industrial regions, especially North America, television already have one, along with access to accounted for most of the initial global growth in very basic services. The majority of people in the small aperture antennas (VSATs), mobile phone, emerging regions can not afford a television, and/or and cellular service growth. In contrast, the they do not have access to television content. developing regions are expected to be the primary However in the developing regions of Asia and the market for the latest satellite-based regional mobile Commonwealth of Independent States (CIS), the and fixed wireless phone systems, and the satellite- growing economies are supporting the demand for based broadband network services which will be television services and the number of television introduced in the next several years. users is growing rapidly. One-way and interactive VSAT network sites in the In contrast, the rapid expansion of DTH television Asia-Pacific region increased from 5,000 to about service provides an example of an advanced 21,000 between 1992 and 1994 (48% of them in telecommunications service being introduced and Japan). China's share of the region's VSAT sites is growing simultaneously in both industrial and expected to grow significantly from 12% in 1994 to developing regions. The reasons for this are that 30-40% in 1997, and 50-60% by 2005. Industry DTH offers a competitively priced alternative to analysts predict that the region's installed base will existing cable offerings in regions where cable is
588 623 reach 95,000 terminals by 2000 and 175,000 For mobile and fixed telephony, this coverage terminals by 2005 (12). advantage means that a single MWS/FWS satellite could replace the equivalent of hundreds of cellular Since the late 1980s, mobile telecommunications base stations or thousands of square miles of markets have been extremely dynamic in the Asia- wireline infrastructure. In regions of the world where Pacific region. The 13 largest cellular markets in the it is impractical to install terrestrial infrastructure due region more than tripled their total cellular telephone to distributed land masses (e.g., the islands of subscribers from 1990 to 1994. This significant Indonesia) or rough terrain (e.g., the Himalayan increase in cellular subscribers (from 1.54 to 9.05 mountains in Nepal and Tibet), satellite-based million) corresponded to a compound annual growth MWS/FWS provides an ideal solution. rate of 56% (12). For video broadcast systems, the satellite coverage Many low-income countries in the Asia-Pacific region advantage allows single or multi-source use cellular telephones and pagers as overlay or programming to be delivered to a broad coverage bypass systems because of the low density and area normally covered by hundreds of local other limitations of the existing fixed networks. The terrestrial broadcast stations. This capability enables more developed countries (e.g., Singapore, Hong greater market access and revenue potential. The Kong, Taiwan, and Australia) in the region are one major limitation of DBS systems is they do not achieving cellular penetration rates well above the have sufficient capacity to offer local content in all of regional average. Regular price decreases are also the markets they serve. However, this limitation is occurring now due to rapid competition developing rapidly disappearing as the available spectrum is among cellular operators in almost every Asian being used more efficiently with advancements in country. In addition, the region is moving from technology such as an increased number of analog to GSM or code division multiple access transponders per satellite, improved digital (CDMA) technologies to provide for the increasing compression, and spot beam capability. subscriber demand (12). The coverage advantage inherent in FSS and BBS is Forecasts, published to the year 2000, of the Asia- that regional and global connectivity is provided for Pacific cellular telephone market estimate a range distributed intranet users (e.g., multi-national from 19.5 to 37.5 million subscribers. These corporations) with multiple network nodes, which dynamic cellular markets coupled with the ultimately translates to higher reliability and reduced geographic characteristics and low teledensity of congestion. The ability of satellite-based systems to many Asian-Pacific countries make the region an bypass the terrestrial network will be a key attractive market for mobile communications satellite discriminator for businesses with time-critical data operators (12). communications requirements and offices in non- industrialized regions. In many of these areas, 3. ADVANTAGES OF SPACE-BASED SYSTEMS terrestrial network availability can be intermittent and service outages can last for days. The major advantages offered by the new space- based telecommunications systems are coverage, 3.2 USAGE COSTS usage cost, time-to-market, and services flexibility. Space-based telecommunications systems, 3.1 COVERAGE particularly GEO systems, provide a lower cost solution in almost all cases where Space-based telecommunications solutions offer a telecommunications infrastructure does not already major advantage over terrestrial networks on both a exist, or only partially exists. There are multiple regional and global scale. Specifically, satellites in dimensions to cost for each major product area GEO orbit have been deployed commercially since consisting of both installation and usage costs. 1965 for wide area communications. Depending on However, two facts are true for all satellite the application and communications link telecommunications.First, the cost of transmitting requirements, a single GEO satellite can effectively information via satellite is essentially independent of provide coverage to one-third of the earth between distance. Second, the large coverage area and the latitudes of +/-70 degrees. This provides the bandwidth provided by a single satellite gives it a capability to communicate from any point to any huge potential subscriber base. Even at initial other point within the coverage area using remote penetration, the satellite system can begin to make a terminals creating a major advantage in areas where profit for the operator in the local markets it serves. terrestrial communications infrastructure does not exist.
58962 4 3.2.1 MOBILE/FIXED WIRELESS SYSTEMS last three years, and in some markets they will be (MWS/FWS) given away for free in an attempt to gain market share. The monthly subscription cost ranges from For MWS/FWS that supply voice and narrowband $6 to $35, depending on the premium channel data applications, the primary cost parameters to be selection, which is essentially the same as that for considered are installation cost per subscriber and cable TV. usage cost per minute. Table 3 compares these parameters for different transmission systems (1,4). DBS service provides an excellent example of the This shows that the GEO satellite system clearly cost advantage provided by space-based systems in provides the best solution for wide-area coverage regions with limited telecommunications and difficult terrain. GEO satellite systems may also infrastructure. The cost to establish a representative be the best choice for smaller areas where U.S.-based DTH system is approximately $750 infrastructure does not yet exist. million. Now consider that the global average of the cost to install a new main phone line is $1,500 per TABLE 3: MWS/FWS VS. WIRELINE COST line. The cost to install cable TV is somewhat less COMPARISON FOR REGIONAL SERVICE because it does not require the local exchange Factors TerrestrialGlobal Regional switch associated with a phone line.If the average Systems LEO / GEO cost to install cable TV is $750 per home (one-half MEO Satellites the cost of a phone line), the $750 million used to Satellites launch the DTH system (providing service to the entire continental U.S.) would have only been able to Installation 10 X 10 - 20 X $25,000 - wire about one million homes for cable TV. Even if Cost Regional Regional $40,000 the subscriber antenna and set-top box are sold at a ($NEC) GEO GEO (to wire (to loss by the DTH service provider, a DTH system is new achieve still often cheaper than laying cable. regions) regional concen- 3.2.3 BROADBAND SYSTEMS tration) The price of available bandwidth (or cost per bit) is Mainte- Medium High Low the key cost measurement for broadband systems. nance Cost As with DBS, improvements in satellite technology ($ / VEC) have enabled satellites to provide more economical Retail $0.35 - $1 - 3 / $0.35 - solutions than terrestrial systems in recent years. 1.00 / min Subscriber 1.00 / min min More available power on-board has resulted in more Usage Cost radiated power from the satellite and added Capacity Limited byLow to High functionality such as digital signal processing (DSP). over populationMedium (relative DSP technologies reduce the RF uplink signal to a Region density, to global bit stream, or a packet, and route it to the terrain & LEO /MEO appropriate user downlink beam. This results in a capital systems) reduction in data overhead and allows more user-to- Voice 0.1 - 0.15 0.1 - 0.150.24 - user data circuits (packets) to be compressed into Delay sec sec 0.27 sec the available bandwidth allocated to the satellite. VEC = Voice equivalent circuit Also, with the availability of the Ka-band spectrum soon to be licensed by the FCC and ITU for global 3.2.2 DIRECT BROADCAST SYSTEMS communications, smaller spot beams from on-board antennas will allow more efficient frequency re-use The primary cost measurement evaluated for DBS across a given coverage region. systems is monthly cost per channel. With compression technology being equivalent for both All of these near-term improvements will drive the space-based and terrestrial systems, this cost per bit down even further, allowing satellites to measurement translates into available bandwidth or compete even more favorably with terrestrial number of transponders on-board the satellite for a systems. This is illustrated in Figure 4 which given cost. Improvements in spacecraft bus compares the cost per T1 minute of several planned technology have enabled satellite broadcast systems BBS systems to current terrestrial leased line costs to become extremely competitive with cable (1,10). broadcast systems in some parts of the world. The price of a DBS antenna and decoder has dropped from about $700 to below $200 in the US over the
625 590 3.4 SERVICES FLEXIBILITY
1.75 New technologies and designs are rapidly making 1.6 satellite-based telecommunications systems highly reconfigurable. In the past, almost every satellite 47> 1.2 was optimally designed to provide a specific service for a predefined coverage area (e.g., FSS for Australia, DBS for China). Once the satellite was 0.8 launched, neither the type of service it provided nor 0 0.488 Q. its coverage area could be changed. If the revenues 0.4 U 0.18 generated from the satellite underperformed for any 0.163 reason, the satellite operator would experience a reduced return on investment (ROI) with no ability to Astrolink SpacewayCyber Star Teledesic T Avg. change coverage patterns. However, with the advent of new technologies such as active array FIGURE 4: CURRENT NETWORK PROVIDER T1 antennas, digital beamformers, and digital signal COST VS. PLANNED BBS SYSTEMS processors, satellite operators will soon be able to change coverage patterns (and even service types) Table 4, which compares usage costs for equivalent after the satellite is in orbit thereby maximizing the terrestrial leased line circuits over varying distances, system's revenue and reducing business risk. illustrates how satellites offer a clear cost advantage These technologies are discussed in detail in section at medium to long distances (1,7). This is especially 4.3. true for international networks, where the cost for the international connection alone exceeds the BBS 4. FUTURE TECHNOLOGY ASSESSMENT system usage cost. In order to further improve the advantages provided TABLE 4: CURRENT NETWORK PROVIDER by satellite telecommunications systems today, LEASED LINE VS. BBS USAGE COST companies must make focused investments in COMPARISON FOR 54 KBPS technology which will increase the revenue earning Distance Terrestrial BBS Usage Cost capacity of their systems. The major areas of (km) Leased Line ($/min) technology development which increase the market Cost advantage of space-based telecommunications 25 0.03 0.10 systems are higher capacity spacecraft platforms, 100 0.07 0.10 higher capacity launch systems, and reconfigurable 500 0.21 0.10 payloads. The following are costs for international leased lines, which are in addition to source and 4.1 HIGHER CAPACITY SPACECRAFT destination country line charges PLATFORMS US - UK 0.16 0.0 US - Greece 0.26 0.0 The payload capability of communications spacecraft has steadily increased in the last decade and is US - Japan 0.29 0.0 expected to increase dramatically over the next five years. By 2002, the payload power capability is 3.3 TIME-TO-MARKET projected to increase by a factor of three (from 6kW to 16kW). Given that a typical communications satellite takes 18 to 30 months to deliver on-orbit, space-based The technologies supporting the rapid increase in systems have a clear advantage over terrestrial power are larger solar arrays with high efficiency systems (e.g., wireline, cable, fiber, and microwave) silicon, gallium arsenide (GaAs) and multi-junction in regions where such services do not already exist. solar cells; high capacity nickel hydrogen (NiH2) Another advantage of a satellite system is that once battery technology, and high capacity power the system is in place, additional subscribers within regulation units. Lithium ion batteries will provide the coverage region can be added by the service even higher energy storage capacity for a given provider immediately at no additional systems cost battery mass (90W to 150W-hours per kg vs. 45W to (except for terminals) because no additional 60W-hours per kg for NiH2) on future spacecraft. infrastructure is required. In conjunction with the increased payload power capability, advances in lightweight materials, advanced thermal control, and high efficiency
591 propulsion have increased the spacecraft payload with launch masses above 5,000 kg into the required mass capability for a given launch mass. Graphite geosynchronous transfer orbit (GTO). With the epoxy and metal matrix composite structural desire of operators to place as much revenue elements and mechanisms have enabled a 25% earning capacity on orbit as possible with each asset weight reduction in the overall spacecraft structure launched, this may become the limiting factor in the vs. traditional aluminum structures. In conjunction growth of communications spacecraft platforms. with the weight reduction, stronger advanced Looking beyond five years, future launch vehicles materials also support increased loading required for such as the EELV (11,000 kg to GTO) and RLV multiple launch vehicle compatibility, and higher (8,400 kg to GTO) programs will provide another overall structure size and launch mass to support surge in available lift capability. larger payloads. 4.3 RECONFIGURABLE PAYLOADS Advanced thermal technologies such as deployed radiators with flexible heat pipes and capillary With the advent of larger spacecraft platform pumped loops enable spacecraft to accommodate capability, the functionality and flexibility of the higher thermal dissipation over the same payload payload can be increased in other ways besides just mounting area. This allows increased packaging increasing the number of transponders. density of high dissipating payload components Technologies such as active array antennas, digital (such as solid state power amplifiers and traveling beamformers and digital signal processors that were wave tube amplifiers) to maintain an overall structure once too power and mass intensive for earlier size that can fit within available launch vehicles while spacecraft platforms are now realizable through increasing payload output power. improvements in device technology and the growth in bus capability. This evolution in spacecraft and Advances in propulsion technology such as high payload technology is depicted in Figure 5. The performance liquid apogee engines (LAEs), Hall- increased capability provided by incorporating these current thrusters (HCTs) and ion thrusters will also technologies into future spacecraft will dramatically have a dramatic impact on the payload capability of change the way communications satellites are the spacecraft. Over two-thirds of the spacecraft deployed and operated. propellant at launch is used to boost the spacecraft
from transfer orbit to geosynchronous orbit. SUMS 1996 - 1920 FSSRIB3 Improving the specific impulse of the LAE enables a Power. 2-31KW 1992 - 1694 Man: 2300-2510 kg POWS!: 41NV SSS/093 Land Mobilo Mass: 7002 kg 199447 1997-9B large reduction of overall launch mass, or an Pamir. 6kW Power akW increase in payload mass/capacity for a given orbit Maw 1302 kg Masa 4000 kg lifetime. ,,ty 4 "<' IMMEMEmmic italta>1.\ HCTs and ion thrusters can be used for stationkeeping and also to supplement the transfer Erarom 9.am mama. > , orbit of the spacecraft. HCTs use high energy I ; electrons to ionize xenon gas and create a charged plasma to develop thrust. With specific impulses ranging from 1,300 to 3,500 sec. vs. typical bi- Future Variations propellant thrusters at 300 sec and arcjet thrusters at 600 sec., HCTs can save over 800 kg of propellant for a 4,000 kg class satellite when used for stationkeeping and transfer orbit boost. Once again, this savings can be translated into reduced launch mass and cost, or to increased revenue earning Active Array High home F33/1133 payload capacity on-board the spacecraft. FIGURE 5: GEO SATELLITE EVOLUTION 4.2 LAUNCH SYSTEM CAPACITY INCREASE
With spacecraft sizes increasing at such a rapid pace, significant pressure has been placed on the launch vehicle providers to increase their lift capability at a similar rate. However, evaluating the current and planned commercial launch vehicles for the next five years reveals a limitation in these vehicles. Only Proton and Ariane can lift satellites
592 627 4.3.1 ACTIVE ARRAY ANTENNAS DSP technology has improved dramatically over the last several years. The improvements allow more Active Array antennas have the capability to shape functionality and throughput to be packaged on and electronically steer multiple beams anywhere component boards for a given power and mass within the satellite's field of view by changing the envelope. Table 5 shows the DSP capability phase and amplitude weightings of each individual improving for past and future satellite missions. element within the array. With this capability, operators will be able to: TABLE 5: PAST AND PROJECTED DSP CAPABILITIES Reconfigure coverage patterns with changing Program Year Ops/ DSP Functions market demand to capture otherwise lost /Hardware Began Sec revenues (B) Periodically reconfigure the beam pattern(s) to ACTS 1993 0.11 TDMA track the peak demand for services across a Processing region Digital 1998 240 TDM / Circuit Provide a universal spare for a fleet of satellites Channelizer Switching, with different coverage patterns Channelization Create multiple isolated beams within a Digital 1999 800 TDMA coverage region to allow for multiple re-use of Beamformer Processing, the same frequency Channelization, Defer configuration of the payload until later in Beamforming the program or on-orbit to reduce business plan Broadband 2000 3900 Channelization, risk DSP Demod, Decode, Provide surge capacity to crisis users such as Fast Packet the government, military, or news agencies Switching, Encode, 4.3.2 DIGITAL SIGNAL PROCESSING Modulation, Resource DSP allows an RF signal to be digitized and routed Control at a packet or circuit level from one user beam to another user beam within the coverage region.It can also be used to provide beam reconfiguration, 4.3.3 FREQUENCY AGILITY similar to an active array, by digitally weighting the phase and amplitude of each antenna element. Using programmable synthesizers and filters for Figure 6 compares conventional and DSP payload receivers, upconverters, downconverters, and block diagrams. DSP technology integrates many multiplexers, payload frequency plans can be functions into a single unit, resulting in an overall reconfigured on-orbit to provide flexibility for decrease in the number of components and addressing new market requirements. Within a increases in system reliability. DSP also provides given band (e.g., Ku-band) there are multiple sub- increased isolation between uplink and downlink bands allocated for DBS and FSS in varying regions signals which yields improved link margins. of the world. Reconfigurability, especially to other service segments (e.g., DBS to FSS), greatly reduces the business risk associated with a satellite- . . based system. If the planned service turns out to be
9 unprofitable, the satellite can be reconfigured and deployed in another venture. . 5.0 FUTURE MARKET ASSESSMENT .J Space-based telecommunications systems are well rj positioned to capture a large portion of the 0 0 expanding telecommunications services industry. In
FA, general, the largest FSS/BBS markets are projected to be in the industrialized regions where there is an increasing demand for high-speed, multi-media services and internet/intranet access. In addition, FIGURE 6: CONVENTIONAL AND DSP PAYLOAD FSS/BBS systems have an opportunity to provide BLOCK DIAGRAMS solutions for reliable worldwide enterprise networks
BEST COPY AVAILALE 593 G23 of multinational corporations in emerging and 8.Gordon, G.D. and Morgan, M. L., Principles of developing regions. Communications Satellites, John & Sons, New York, NY, 1993. The largest DBS and MSS markets are expected to 9.Schirmann, Save ly, "Commercial Geostationary be in the developing regions, such as Asia and the Satellites: A World Market Forecast 1993 - Pacific Rim, where the ability of these systems to 2007," Satel Conseil, Montrouge, France, May rapidly and inexpensively provide basic television 1993. and mobile and fixed wireless telephony gives them 10. Hastings, Daniel, Kelic, Andjelka, Shaw, a significant economic advantage over terrestrial Graham, "Comparative Study of the Astro link, systems. The use of DBS systems is also expected Cyber Star, Spaceway, Teledesic and Voice Span to increase in industrialized regions because DBS Satellite Communications Systems Using a Cost can deliver a competitively priced high quality per T1 Minute," Space Systems Laboratory, alternative to areas where cable TV previously had a Department of Aeronautics and Astronautics, monopoly. Massachusetts Institute of Technology, January 6, 1997. Future technological advances such as higher 11. Kagan World Media, "Kagan's Asia-Pacific capacity platforms, active array antennas, Cable/Pay TV," April 1996. reconfigurable payloads, digital signal processing, 12. Euroconsult, "Asia-Pacific Satellite frequency agility, and launch systems capacity Communications and Broadcasting Market increases are achievable in the next three to five Opportunities," Paris, June 1995. years. They will provide a major impact to space- based telecommunications systems in terms of reduced cost per voice circuit for mobile and fixed wireless systems, reduced cost per transponder for DBS and FSS systems, and reduced cost per bit for broadband systems ultimately providing increased flexibility in business planning.
The new generation of flexible and reconfigurable satellite systems are well positioned to offer both basic and value-added services, particularly to Asian-Pacific customers, well into the next century. The ability of space system suppliers to capture future market share in the expanding telecommunications market will be directly related to how aggressively they pursue these opportunities.
REFERENCES
1. Lockheed Martin Telecommunications 2.International Telecommunications Union, "World Telecommunication Development Report, World Telecommunications Indicators," March 1997. 3. Bear Sterns Equity Research, "Satellite Communications," November 5, 1996. 4.Smith Barney, "Initiating Coverage of the Satellite-Based Communications Industry," October 1995. 5.Pyramid Research, Inc., "Telecommunications Markets in South America," Cambridge, MA, October 1996 6.North American Telecommunications Association, "1995 Telecommunications Market Review and Forecast," 1995. 7. ITU Web Site,"Tariffs for International Leased Lines"
594 322 Crowded Skies Is There Room For More Satellites Over The Asia-Pacific?
David J. WHALEN, CHAN Yat-hung, Harry LEUNG Asia Satellite Telecommunications Co. Ltd., Hong Kong
1. ABSTRACT
Since the late 1980s, the rate at which geosynchronous satellites have been launched has exceeded the rate at which saturation of the orbital arc would be achieved. This has been especially true of the Asia- Pacific. The skies are already too crowded. Complicating this crowding issue has been a trend toward ever decreasing antenna sizes.
1. SATELLITE SPACING OVERVIEW famous in US history, but it also marked the most From 1965 to 1972 there was only one desirable "slot." This desirability was enhanced commercial satellite communications by the closeness of the "stable point." A location organization: Intelsat. The United States military (105W) where the East-West acceleration on a forces had communications satellites, but they satellite due to the earth's triaxiality is near zero. used different frequencies. The USSR had Indonesia carefully placed its first satellites at communications satellites in "Molniya" orbits. 108E, 113E, and 118E--all 5 degrees apart. There was little or no need to "coordinate" with other satellite systems. Beginning with Canada's As more and more North American satellites were Anik satellites in 1972, domestic satellites launched, they were place closer and closer to quickly overtook Intelsat in numbers--and they each other. The FCC in 1983 established a long- used the same orbits and the same frequencies. term goal of 2 degree spacing. This was By 1974 the United States had also launched it implemented in 1993. There were several first domestic satellites. Indonesia launched its problems--especially with thin route and VSAT first satellite in 1976. networks--but most operators successfully adapted to the rule. By the late 1970s there were four organizations operating communications satellites over North With increasing affluence and increasing needs America: Telesat Canada, Western Union, RCA, for entertainment and business communications, and AT&T partnered with COMSAT. Each the problems which had afflicted North America wanted at least three satellite "slots." The main rapidly became problems over the Asia- Pacific -- North American land mass extends between but without the guidance of an FCC. roughly 70W to 125W--about 55 degrees of longitude. This was not quite enough to provide 2. PROBLEMS OVER THE ASIA-PACIFIC 5 degree spacing, especially given the advantage of the central slots or perhaps those a little West Starting in the 1990s, many satellites have been of the midpoint. A compromise spacing of 4 planned and launched over the Asia-Pacific. A degrees was adopted. The 100th meridian was variety of problems have arisen including: (1)
595 630 paper congestion at the ITU caused by excessive never fly--there is not sufficient orbit/spectrum filing, (2) satellite congestion in space, and (3) the resource. growing tendency to ignore ITU rules. The new "crowded skies" require increased cooperation 2.2 ORBITAL CONGESTION among regional administrations at the very time when competitive factors seem to be reducing this When Indonesia put its first Palapa satellites in cooperation. New frequency bands must be orbit in 1976, it was reasonable to expect that 5 exploited and the old ones must be cooperatively degree spacing would remain the norm. This is used to prevent excessive interference. no longer the case. Within the next year, the original Palapa locations will have satellites in 2.1 PAPER SATELLITES adjacent orbital slots within 2 degrees to 3 degrees. There are satellites expected to be If we assume that satellites are located every 2 launched within the next two years into 120E, degrees around the globe, and further assume that 121E, 122E, 123E, 124E, and 125E. These they are all hybrid C-/Ku-band satellites with satellites will have difficulty operating with the overlapping coverage, a maximum of 180 large amounts of adjacent satellite interference. geosynchronous satellites can be placed in orbit Newcomers are filing for clearly inappropriate around the globe. There are currently over 170 in orbital slots in the hope that by the time they orbit. The present trend in satellite lifetimes is launch some accommodation can be made. about 15 years. Failure rates are about 15%. The saturation replacement rate can be calculated 2.3 SCOFFLAWS using this information--it is about 14 satellites per year. The launch rate since the late 1980s has Perhaps of greatest concern are the number of averaged more than 20 satellites per year. operators and administrations who follow neither the letter nor the spirit of the ITU rules and Given the saturation or approaching saturation of regulations. Instances of satellites launched the geosynchronous arc, many operators/countries without coordination and of jamming are filed for more satellite networks than they could becoming frequent, if not commonplace. Systems reasonably expect to launch in the immediate are planned which are clearly incompatible with future in order to ensure that some orbital slots neighbors in the clear hope of scaring off the law- would be available when they actually began to abiding operators with bullying tactics. implement their networks. In 1979 there were 25 ITU satellite filings for orbital slots. By the early A problem which has some law-abiding 1990s, filings had reached 100 per year--greatly operators/administrations acting outside of the exceeding any likely replacement rate by a factor spirit of the ITU rules and regulations is the use of seven to ten. Recent filings have exceeded 500 of FSS bands for Direct-to-home (DTH) per year and show little sign of diminishing. transmission. DTH marketing seems to require During 1997 there were more than 1000 filings. excessively small dishes (45 cm) which tend to This has caused an unreasonable glut of "sterilize" a part of the orbital arc. This is paperwork which exceed the ability of the ITU to discussed in somewhat more detail below. process filings in a timely fashion. This global problem has also been encountered by individual administrations who have also been inundated with these filings. Most of these satellites will
596 6 k3.1 The tables below shows the differential gain in dB with 2 degree spacing:
4GHz 6GHz 12GHz 14GHz Ant (m) AG AG AG AG 0.4 0.3 0.6 2.6 3.5 0.6 0.6 1.4 5.8 7.8 0.8 1.1 2.6 10.2 13.9 1.0 1.8 4.0 14.1 14.4 1.2 2.6 5.8 14.5 1.4 3.5 7.8 22.9 1.6 4.6 10.2 22.7 24:1 1.8 5.8 13.0 231 25.1 2.0 7.1 14.1 24.7 26.0 2.2 8.6 14.3 253 26.8 2.4 10.2 14.5 262 27.6 2.6 12.0 20.9 26.9 28.1 2.8 13.9 21.6 27.6 28.9 3.0 14.1 222 282 29.5 3.2 14.2 22.7 3.4 14.4 232 3.6 14.5 23.7
In general, the 14 dB differential gain criterion is met by the first sidelobe, but the 20 dB criterionis not met until beyond the first sidelobe. The ability of a small antenna to operatein this crowded spacing is primarily dependent on the difference between the maximum gain and the gain of the first sidelobe. Many small antennas are designed such that the first sidelobe is reduced to the 29-25log0level at transmit frequencies. Performance at receive frequencies is often worse--typically 32-25log0.
3.2 EIRP: HOMOGENEOUS SATELLITES 4. TWO-DEGREE SPACING IN THE UNITED STATES Non-homogeneous satellites can cause problems because the higher-powered satellite imposes In 1983, the U.S. Federal Communications antenna size constraints (due to C/I) on the lower- Commission (FCC), noting the large number of powered satellite. Beyond a certain EIRP level applicants for orbital slots, determined that 2 (about 39-42 dBw) there is no real advantage to degree spacing was the most equitable and increasing EIRP as the link budget is dominated efficient method of allocating orbital slots. by C/I. Homogeneous satellites are easier to Fortunately, it was not necessary to fully coordinate and should be at a specific agreed- implement this allocation for ten years, but upon EIRP level. operators were aware of the coming regime.
As part of its final ruling, the FCC amended Part 25 to define a new antenna standard. This improved the sidelobe standard from the then-
598 633 2.4 INEFFICIENT USE OF THE Thermal noise is a minor contributor in a link ORBIT/SPECTRUM RESOURCE. budget dominated by adjacent satellite interference. While many satellites today are launched with 24 C-band and 24 Ku-band transponders, there are 3.1 EARTH STATION ANTENNA SIZE still satellites in orbit with no usable AND ITS EFFECT ON C/I transponders, or three, or six, or twelve. These satellites occupy an orbital slot which could be The ultimate constraint on satellite spacing is the used far more efficiently.In some cases, the ability of earth station antennas to discriminate increasing cost of launching a satellite has meant between desired and undesired signals--to reduce that minimizing cost per transponder has become adjacent satellite interference. The differential imperative. Econmics may solve this problem. gain--the difference between on-axis and off-axis gain--is somewhat arbitrary, but in general should 3. SATELLITE EIRP AND EARTH be at least 14 dB and preferably 20 dB for digital STATION ANTENNA SIZE signals. This assumes that the adjacent satellite is similar in power and coverage (i.e., Interference from adjacent satellites is becoming homogeneous). Antennas as small as 1.8 meter in the limiting factor in link budgets. Earth station C-band and 45 cm in Ku-band are currently in antenna size generally decreases with increasing use. These antennas are clearly too small. There satellite power (EIRP). However, it can be the is a desire to use the smallest possible antennas- case that increasing EIRP does not increase the in part because of the aesthetics and ease of communications power to noise plus interference installation rather than just the cost. power [C/(N+I)] because, with homogeneous satellites, I increases at the same rate as C.
The formulas below allow us to calculate the differential gain at various frequencies for various size antennas. This. differential gain is approximately equal to the single entry C/I calculated for adjacent homogeneous systems.
Gm.= 10 log [ eff.(eD/X)2] Maximum on-axis gain 03dB = (65°) A./D 3dB beamwidth ®10dB=(112°)XID 10dB beamwidth G1 = 2+1510g (D/X) Gain of first sidelobe Om = 20X/D (Gm. - GI)" Angle to first sidelobe (start) Or = 15.85(D/X)-"
G (0)= Gmax -2.5x10-3 (D0/202 0 <0 Note:D is the diameter of the antenna reflector. is the wavelength of the carrier. 0 is the agle from the axis.
597 632 current 32-251ogO (ITU-R 465) to 29-25loge were proposed: (1) "due diligence," (2) (ITU-R 580)--but only in the plane of the GEO modification of the filing and coordination orbit. In addition, a polarization standard was processes (number of filings, timing,coordination approved that was designed with analog TV in arc), and (3) insistence on best technical practice. mind. The ITU is relatively conservative in its approach There are several items that should be noted about to these issues. There are always many points of this ruling: (1) it forced operators to move view on any question. There does seem to be satellites, (2) it imposed a new antenna significant support for many of the proposed specification, (3) it allotted orbital slots, (4) it solutions because most administrations are advocated homogeneous satellites, (5) it did not affected by the problems. set C/N requirements, but effectively set C/I requirements by establishing Eb/Io requirements, There remains one major problem. The ITU has and (6) it recognized that there were limited no enforcement mechanism. Theadministrations orbital slots and preferred orbital slots. are meant to enforce the rules andregulations. As the administrations are usually the culprits or Experience with this regime has been mixed, but accomplices of the culprits the question "who generally good. Analog TV transmissions were shall guard the guardsis obvious. well protected from each other. VSAT SCPC carriers had to avoid transponder centers and 6. RECOMMENDATIONS transponder edges to avoid interference from TV signals. C-band VSAT antennas needed to be 2.4 There is a need for a regional organization backed meters or larger and offset-fed to reduce by the major nations of the Asia-Pacific, sidelobes. Ku-band VSAT antennas needed to be especially East Asia, and especially the major 1.0 meter or larger. satellite operators who would gather together to agree on, and then enforce throughcoordination 5. THE ITU AND RESOLUTION 18 and public reprimands, a set of standards for the region. These standards should be the ITU Resolution 18 of the 1994 Kyoto Plenipotentiary standards with the addition of requirements Conference of the ITU recommended a review of similar to those impose by the FCC on American international satellite network coordination and operators: spacing, homogeneous EIRP/SFD, low planning. The problems noted were those sidelobes, good cross-pol protection, and others discussed in 2. above. Three major solutions as seen necessary. These mightinclude: a) spacecraft:
Maximum EIRP 41 dBw (C-band), 54 dBw (Ku-band) Orbital Spacing 2 degrees Maximum Downlink PSD -34 dBw/Hz
599634 b) earth station
Sidelobes 29-251og® including first sidelobe Cross-Polarization Isolation 30 dB at -1 dB contour Minimum antenna size 2.4m (C-band), 0.8m (Ku-band) Maximum Uplink PSD -39 dBw/Hz
Without these agreements on the regional level, entered into a trilateral coordination agreement coordination is based on bilateral negotiations in which has simplified coordination in North which the administration/operator with the most America. A similar arrangement in Asia will be clout can impose solutions on the other party. more difficult because there are far more than Several proposals are currently being considered three administrations (governments)--but the to implement multilateral coordination meetings. benefits greatly outweigh the problems.. The United States, Canada, and Mexico have
Communications Satellite Launch Rate (1957-1996)
25
20
15
10
5
0 rig S kr)
soo G 3 5 Geostationary Orbit Filings (January 1997) SNGCHNADM ST-1BCHINASAT-3CHINASAT-22SATELLITE NAME 98.5098.00E98.00LONG E ANS 07/05/9628/06/94ADVPUB16/01/9617/12/85 891257ASEC1108 RC/PUB16/06/87 CSEC1039 URSRUSSNG STATSIONAR-T2STATSIONAR-TEXPRESS-13ST-2BST-1B 99.0098.50E98.50 E NCA 08/07/8001/06/7605/11/9609/02/9319/11/91 2769891101834 22/06/9310/09/9614/12/9319/05/81 230423707 GMEXINDUSA ASIASAT-EASIASAT-DBAMEGASAT-8INSAT-KA100INSAT-ES100USASAT-32X 2 99.00100.50100.50100.00 E E E AC 05/11/9120/08/9630/04/9610/05/9416/07/96 75010661688155215381658 10/03/9224/09/96 21102559 GPAK PAKSAT-HDTV-EPAKSAT-EASIASAT-EKXASIASAT-EKSASIASAT-EKAASIASAT-EK1 100.50101.00100.50 E E AAC 21/05/9610/09/9617/12/9112/09/9514/03/9503/12/96 78318511583133712331727 20/10/92 2236 oa) CHNUSATHA THAICOM-AlCHINASAT-45CHINASAT-11USASAT-32YTHAICOM-AK1THAICOM-A1KA 101.50101.00101.00E E AC 04/06/9104/06/9117/09/9617/12/9116/07/9614/01/97 710710173216591888777 25/06/9621/07/9211/08/92 251621952184 CHNG DFH-3-0BCHINASAT-21SKYSAT-C3DFH -4 -OC 101.50103.00E103.00 E E NAC 08/11/8828/06/9406/02/9621/03/9525/02/97 469110712431915 02/07/9117/12/96 26231955 KORINDCHN INFOSAT-AINSAT-X103INSAT-EK103RINSAT-EK103STW-2DFH -4 -OB 103.00103.00E E AN 30/04/9623/04/9629/10/8525/02/9713/02/96 24514191560153115241914 09/06/87 1023 URSRUSLAO636 STATSIONAR-21LOUTCH-5VOLNA-103EEXPRESS-9L-STAR2STATSIONAR-21 103.00103.00103.00E E E NACN 22/10/8502/06/9228/05/9619/11/91 2442438177651585 11/11/8624/03/8723/11/9322/06/9313/02/90 90596623612300 637 Satellite Strategies and Policies: Lessons from the Asia-Pacific Region
Dr. Heather E. Hudson University of San Francisco San Francisco, CA 94117, USA
Abstract
Asia's vast land area, its population of more than 3 billion, a teledensity of fewer than 3 lines per 100 inhabitants in the lower income countries, and its unserved rural areas and isolated islands of South East Asia and the Pacific, all make the Asia-Pacific region attractive for satellite communications.
Yet not all of the potential customers in the region may benefit from the current proliferation of satellites, as restrictive policies and lack of terrestrial infrastructure may preclude access to new satellite services. This paper examines the issues surrounding the increase in satellite capacity serving the developing countries and emerging economies of the Asia-Pacific region, and derives lessons from the Asia-Pacific's satellite experience.
1. The World's Largest Satellite Market infrastructure may preclude access to new satellite services.Thispaperexaminestheissues Asia's vast land area, its population of surrounding the increase in satellite capacity more than 3 billion, a teledensity of fewer than 3 serving the developing countries and emerging lines per 100 inhabitants in the lower income economies of the Asia-Pacific region, and derives countries,and its unserved rural areas and lessons from the Asia-Pacific's satellite experience. isolated islands of South East Asia and the Pacific, all make the Asia-Pacific region attractive for 2.The Proliferationof International and satellite communications. Indeed, the Asia-Pacific Regional Satellites region now lags only North America in number of commercial satellites in orbit, and leads the world Intelsat continues to provide global and in the number of satellites on order.' regional connectivity, but has also developed new strategies to serve Asian nations. In addition to The racetoadd capacityinvolves providing more capacity, higher power and international systems such asIntelsat and greater connectivity on its Intelsat VIII series, PanAmSat, regional systems, and domestic Intelsat has negotiated with China's China Sat for satellites, many of which are designed with the use of half of the transponders on China Sat 5 regional coverage. In a few years, the Asia-Pacific to give additional C band coverage of the region region has moved from a shortage of satellite and has leased 11 C-band transponders on India's capacity to a potential excess: "In fact, so many 2-E for additional capacity over the Indian regional birds are being launched that a glut of subcontinent.Intelsathasalsocreatedan capacity exists, driving down prices for end users. additional Asia-Pacific customer service area with This scenario could lead to consolidation or an initial satellite located at 91.5 degrees East.3 business losses for operators in the region."' PanAmSat achieved global connectivity Yet not all of the potential customers for including coverage of Asia and Africa in 1995. Its satellite services in the region may benefit, as Pacific and Indian Ocean satellites cover the restrictive policies and lack of terrestrial region, and provide links to Europe and North
G38 602 America. PAS-4, which covers South Asia and the satellite club including Thailand, Malaysia, South Indian subcontinent, now carries numerous Korea, the Philippines and Laos (see Table 1). international television signals on its South Asia/ These national systems are being designed with Middle East beam.4 regional beams so that they can provide services to their neighbors, but the neighbors seem intent Asiasat 1, launched in 1990, opened a new on procuring their own satellites. As notedabove, era in Asian telecommunications,offering high capacity is also available from regional and powered capacity for television distribution, data international systems including Asia Sat, Apstar networking and domestic telephony. Based in and PanAmSat, as well as from Intelsat. Hong Kong, Asiasat is owned by Cable and Wireless,ChinaInternationalTrustand 3.1. Indonesia Investment Corporation (CITIC) and Hutchison Whampoa. Television broadcasters from China, In1976,Indonesia became thefirst Mongolia, Pakistan and Myanmar (Burma) use developing country with its own domestic satellite Asia Sat for domestic distribution. However, system. Indonesia's second generation satellites Asia Sat's most significant impact has been coverbothitsown archipelagoandthe through its distribution of News Corporation's neighboring ASEAN nations. Its third generation Star TV, a group of commercial channels designed Palapa C series provide coverage from Iran to for pan-Asian audiences. Asia Sat 2, launched in Vladivostok and south to Australia and New 1995, covers 53 countries including Asia, the Zealand. Middle East, Australia and Eastern Europe.5 In 1993, state-owned PT Telekom and PT APT's Apstar, also based in Hong Kong, Indosat established a joint venture called PT became Asia Sat's first major competitor with the Sate lit Palapa Indonesia (PT Satelindo) with launch of Apstar-1 in 1994. Apstar-l's footprint privately owned PT Bmiagraha Telekomindo to reaches from Korea and Japan to Indonesia and operate the Palapa system. In 1995, De Te Mobil, west to eastern Russia. Apstar 1A includes a subsidiary of Deutsche Telekom, bought a25 coverage of India. Apstar 2 was lost in a Chinese percent stake in Satelindo. Another consortium launch failure in 1995, but is being replaced by called Indostar comprising state-owned and Apstar 2R, with a total of 44 transponders and private companies is investing in four small coverage of Asia and Australia and partsof satellites designed for domestic direct-to-home Europe and Africa. digital TV and audio services.°
3. National Satellite Systems 3.2. India Satellites have many advantages for India began experimenting with satellite countries such as Indonesia and the Philippines, communications for rural development in the with archipelagos consisting of thousands of 1970s, when it "borrowed" NASA's ATS-6 satellite islands, and for countries such as Vietnam and to transmit educational television programs to Laos with very limitedinfrastructure and community receivers in rural villages. India's first unservedruralandremotecommunities. domestic satellite was launched in 1982. The Insat However, there is not necessarily enough demand system is now in its second generation, providing in each developing country to justify its own television distribution, long distance domestic satellite system. telecommunications, data relay and meteorological earth observation. To date, all Nevertheless, Indonesia, India and China transponders are provided without charge to state are being joined by new members of the national agencies; the Department of Space is considering
60* 3 9 leasing transponders to private users.' colocated at 116 degrees E to provide additional capacity. The Koreasat system has high-powered 3.3 China Ku band capacity for DTH services and high definition television as well as private VSAT data China began using satellites for domestic networks and public voice and data services. communications in 1985 when it leased Intelsat capacity to link the remote centers of Urumqi, 3.6. Malaysia Llasa and Hohhot with Beijing and Guanzhou. Intelsat is now used to link other remote locations Malaysia's satellite system, Measat, began and to transmit China Central Television (CCTV) operation in 1996. Measat is a privately owned as well as for private VSAT networks. venture ofBinariang, which alsooperates domestic fixed and cellular networks. Beams cover In 1988, China launched two domestic the ASEAN nations as well as southern India, and satellitesthat have been used totransmit as far as northern Australia and southern China. television and FM radio programs as well as voice The system is used primarily for direct-to-home and data. A VSAT network provides voice pay television, as well as for distribution of Radio- communications for Tibet an and for remote TV Malaysia and for VSAT networks. provinces. The Tibetan network first used Asia Sat-1, but has been transferred to Apstar-1.8 3.7. The Philippines
3.4. Thailand ThePhilippineshasusedsatellite technology for domestic services by leasing Thailand's first domestic satellites, Thaisat capacity on Indonesia's Palapa system. In 1995, a 1 and 2, were launched in 1993 and 1994, and are consortium of 17 companies called Philippine owned and operated by Shinawatra Public Agila Satellite Inc. (PASI) announced plans for a Satellite Company, which has a monopoly on national system. However, the largest member, satelliteoperationsin Thailanduntil1999. Philippine Long Distance Company (PLDT), left Thaicom 1 and 2 are used for national and cable the group and founded another consortium called television distribution, educational television, MabuhayPhilippineSatelliteCorporation VSAT data networks, and rural telephony. The (MPSC), whose members include several domestic next generation, beginning with Thaicom 3, telecommunications and broadcasting companies launched in April 1997, has a C-band footprints as well as Indonesia's PT Pacifik Satelit Nusantara that cover Asia and parts of Australia, Europe and China's Everbright Group.' and Africa, and a regional footprint from India to Indochina.ItshighpoweredKuband President Ramos stated that he wanted a transponders are designed for direct-to-home Filipino satellite in orbit in time for the APEC televisiondistribution forThailandand (Asia-Pacific Economic Council) meeting held in surroundingregionswith beams covering thePhilippinesin November 1996. MPSC Thailand and India as well as switchable beams. managed to comply by obtaining Indonesia's B2P satellite (now called Agila I) and moving it into a 3.5. South Korea slot at 144 degrees E obtained from the operators of Japan's Superbird. Agila II is to be launched in Koreasat-1 was launched in 1995, but did late 1997. not reach geostationary orbit during the launch. Onboard thrusters were used to boost the satellite into orbit, but at an expense of 4.5 years of its projected 10 year life. A second satellite has been
604 64.0 4. The National Flag Carrier Syndrome national balance of payments deficit at a faster pace since scarce foreign exchange would not The "national flag carrier" syndrome that longer be needed for foreign transponder rental." seems to require every country to have its own Yet these systems themselves represent an airline appears to have mutated to satellite enormous investment of hard currency,as systems in the Asia-Pacific region. Despite the domestic satellite systems (including the satellite, introduction of competition in international and launch, insurance and master control stations) regional systems with beams shaped for domestic typically cost at least $200 million. (During the and subregional coverage, Asia's developing APEC summit, the chairman of the US Export- countries appear determined to have their own Import Bank signed a letter of intent with MPSC satellite systems. The symbolic value of a national for up to $225 in direct financing for Agila satellite system is reflected in a trade press article Revenue for transponder leases from foreign on Filipinosatelliteinitiatives entitled "The customers could, however, provide foreign Philippines Comes of Age."" currency to repay loans to build and launch the satellites. This sentiment can be traced back more than two decades to the origins of the Palapa With coverage on Thaicom 3 of the Middle system. President Suharto wanted Palapa to be East and parts of Africa, Thailand's Shinawatra launched before the 1976 elections; design and will now compete with global operators Intelsat construction were constrainedto meet this and PanAmSat as well as potentially Arabsat in deadline." The satellite policy environment in the addition to regional systems such as Asia Sat and Philippines in 1996 was remarkably similar to the Apstar. New generations of Palapa reach from situation in Indonesia in 1976. President Ramos Iran to Australia and New Zealand, while Measat stated that he wanted a Filipino satellite in orbit in has a similar reach and offers spot beams over time for the APEC meeting held at Subic in India and the Philippines. November 1996. MPSC, the PLDT-led consortium, was able to comply, ironically throughits 4.2. Flags of Convenience Indonesian member, who was able to arrange acquisition of both an Indonesian satellite and an The ITU allocates satellite orbital locations orbital location. to nations, not to operators. Thus, in order to obtain slots, operators must turn to national 4.1. From Domsat to National Flag Carrier governments to act on their behalf. Governments, in turn, may seek to obtain benefits in return for In order to justify investment in a satellite use of "their" slots. The Asia-Pacific region has system, countries are shifting their focus from pioneered an approach that could be called "flying strictly domestic coverage to regional and even flags of convenience," similar to the practice of intercontinental markets. Again, Indonesia was shipping companies that register their fleet in the pioneer. Although the first Palapa was countries with favorable regulations and tax designed specifically for Indonesia, later satellites policies. Countries too small or poor to have their included coverage of the ASEAN region; Malaysia own satellites can file with the ITU for slots that and the Philippines were major customers. they can then turn over to satellite investors in return for a negotiated compensation. It may have been Indonesia's success in attracting foreign customers that encouraged Foreign investors who anticipated that other ASEAN countries to invest in their own trade in orbital slots would be a good business satellites. An argument given for investing in a persuaded Tongan officials to sanction "Tongasat", Filipino satellite was that it would help reduce the an entity that filed for slots on behalf of Tonga and
605 641 then leased them to satellite operators. Although With a national teledensity of only .38, the principals in Tongasat may have benefited rural teledensity of .18, and a highly rural financially, it appears that the people of Tonga population, Laos would appear an ideal candidate have not benefited from improved to benefit from use of a satellite to close its telecommunications, despite their rural communications gaps. However, in return for a teledensity of only about 5 lines per 100 Laotian orbital slot, the Thai investors in the inhabitants, and the isolation of their northern system, who plan to use it primarily for television islands, which could be ideally served by satellite. distribution, have allocated only one transponder for Laotian telecommunications. While digital The apparent lack of connection between compressioncanexpandthenumberof the satellite slots and the potential of satellites to voice/data circuits that can be squeezed onto one improve Tongan telecommunications can be seen transponder, capacity will be very limited, in information on Tonga juxtaposed in the 1996 especially if the Laotians plan for television APT Yearbook. Under Government Policy, the distribution as well as telephony. Also, the very Yearbook states: limited existing Laotian infrastructure will require "An important condition to fulfil the additional investment such as wireless links to regional development objects of the Tonga neighboring villages, to extend service from each government is to ensure the provision of rural satellite terminal. appropriate telecommunications services to the isolated areas...Because of the long The Philippine government also hopes to distances involved and the low population benefit from slots obtained for private operators. density, particularly in the Ha'apai and When the initial PASI consortium was established, Vava'u Groups, the networks on these the government was to secure four orbital slots isolated scattered islands are invariably and associated frequencies from the ITU. In much more expensive to install than those exchange for the slots the consortium was to allot in Nuku'alofa, the capital...." the government one free transponder for every 12 available on the national satellite. As noted above, Under Satellite Systems, the Yearbook adds: PLDT left PASI, and its new group, MPSC, moved "To date, two companies have contracted Palapa B2P to 144 degrees East, and contracted for with Tongasat to places satellites into construction and launch of a second satellite. In Tonga'sgeostationary slots. These the meantime, the government acquired 153 and satellites will cover all of the Asia-Pacific 161 degrees E; it will let MPSC use 153 degrees region and will have footprints that can East in return for the original guarantee of free extent to Europe and the Middle East to transponders; other interested parties including the East Coast of the USA."' PASI will have to bid on the slots.' ...But apparently not to link Ha'apai and Vava'u to the rest of the country, nor Tonga to other 5. The Last Mile Problem countries in the region. While satellites are generally an ideal Another country that allowed a foreign means of serving isolated populations, to extend operatorto use its slot in return for some service beyond a public telephone colocated with compensation is Laos. The Lstar satellite, being the satellite terminal requires installation of built by Space Systems Loral, is ostensibly a terrestrial infrastructure, for example, to connect Laotian satellite, but is actually a venture of the other customers in the community or to link the Thai Asian Broadcasting and Communications station with surrounding villages. At present, very Network Company (ABCN), operating under a 30 littleruralinfrastructureexistsinmany year concession from the Lao PDR government.' developing countries of the Asia-Pacific. See Table
6 606 2. less than 1 telephone per 100 inhabitants. Insat alone has not been able to bridge the rural Of course, lack of infrastructure is a communications gap. problem that satellite systems are designed to solve, but additional investment is required to India lags behind the average of all low build out the network to connect other customers income countriesinbothteledensityand in a village or to link neighboring villages. The compound annual growthrate(CAGR). existence of rural satellite facilities can provide the Indonesia still lags far behind the average of all incentive to invest in local facilities because of the lower middle income countries, but its CAGR is revenue generated by using the satellite network. an impressive 14.8 percent. The critical factor For example, in Alaska, several rural telephone appearstobetherestructuringofthe cooperatives were established to provide local telecommunications sector in Indonesia, which telephone service after satellite earth stations were has created new opportunities and incentives to installed in the 1970s. However, two factors were extend services throughout the country. Indonesia important stimulants for this investment: first, the has begun to open basic telecommunications to settlement agreements between the "high cost" private investment through incentive plans such Alaskan rural phone companies and the long as Build Operate Transfer (BOT) and Build distance carriers enabled the rural cooperatives to Operate Own (BOO).India'srestructuring, keep most of the revenue generated by calls involving licensing of second local operators, has originating and terminating in the villages. become bogged down in political upheavals and Second, rural cooperatives could apply for federal allegations of corruption. However, investment Rural Electrification Administration (REA)" loans incentivesinIndonesia,Thailand, and the to build or upgrade their local facilities. The REA Philippines, which requires installation of rural program provided loans at below market interest lines in return for gateway and urban cellular rates and access to technical assistance on design, licenses, may spur the rural investment needed to installation, operation and maintenance of rural take advantage of the satellite links. telephone systems. Yet even this restructuring may not result Yet the existence of a domestic satellite in utilization of available satellite capacity. For system does not seem to have stimulated example, many countries have adopted the investmentinruralterrestrial"lastmile" "carrier of last resort" model, designating one networks in Indonesia or India, which have had carrier (typically the former PTT or national domestic satellite systems since 1976 and 1982 monopoly carrier) with the responsibility of respectively. Palapa was named for the Palapa serving rural areas if no other provider offers oath, made by Gjah Mada of the ancient service. If the carrier of last resort owns or has a Majapahit Kingdom, who vowed that he would to major investment in the domestic satellite system, continue to work until all the islands of the it would have an incentive to use the satellite. If archipelago were united." The government has not, it may choose instead to install its own long set an ambitious target of adding 5 million lines distance network, even if this choice requires a between 1994 and 1999, which would raise much larger capital outlay. By installing its own teledensity to about 2.8. Rural teledensity in 1995 network, it can depreciate its own equipment and was only 0.2 lines per 100, or 2 lines per 1,000 retain more of the revenues generated. Thus, for rural Indonesians. Thus, although the Palapa example, in Malaysia, Telekom Malaysiais system has been in existence for more than 20 planning a microwave network for remote areas of years, it has not linked most Indonesians in the Sarawak and Sabah, instead of using capacity on archipelago. Similarly, India, whose Insat system the privately owned Measat domestic satellite." is almost 15 years old, has a rural teledensity of
607 6 4 3 6. Satellites as Trojan Horses content can be monitored and controlled. For example, Chinese cable viewers were unable to Asian satellites have served as "electronic view CNN coverage of the June 4, 1997 rallies in Trojan horses", introducing both new services and Hong Kong in remembrance of Tiananmen Square new operators that governments were reluctant to were shown. condone. The most visible example is foreign television content, first introduced by Star TV, Satellites also provide a means to bypass News Corporation's package of commercial the public telecommunications network, programming carried on Asia Sat.Star now regardless of whether bypass has been officially estimates that it reaches 53 million viewers from sanctioned by national regulators. India's first Israel to Taiwan. 21 packet-switched satellite-based data network, known as Nicnet, was installed by the National Although Insat had an eight year head Informatics Centre (NIC), a government agency start on Asia Sat,itsnational TV network, that was able to make the case that it needed its Doordarshan, lost viewers to Star TV. There are own satellite network to transfer data because the now an estimated 900,000 TVRO (TV receive only) public network was so limited and unreliable. The antennas in India, but most of them are used to NIC now has 700 VSATs linking 500 centers; in receive programming from Asia Sat rather than 1994, it added high speed earth stations linking 14 Insat. India also has an estimated 40,000 cable TV cities.Itslatest project offerssatellite-based operators,22 an industry that was born as a means Internetaccessusing Hughes DirecPCto to redistribute StarTV, and now offers more than government agencies,government-sponsored 45 satellite channels. In response to Star TV, researchandeducationunitsandother Doordarshan has revamped its programming, government funded bodies.' adding more films and soap operas, and a channel aimed at wooing the elite back from Another innovative user of Indian VSAT foreign channels. Meanwhile, Measat, Thaicom networks is the National Stock Exchange (NSE), and other satellite operators have aimed beams at which has established a satellite-based trading India in anticipation of distributing both foreign system. The newest of India's 23 stock exchanges, and domestic commercial television to Indian the NSE began trading in 1994. By mid 1995, more viewers. India's Modi Entertainment Network than 225 members had been linked via satellite to willoffer a commercial DTH package on the NSE's mainframe computer, enabling them to Thaicom's India beam.' view online market information, place orders and execute trades directly from their offices.25 Yet National broadcasters in other Asian India's public telecommunications system remains countries are also revamping their program mired ininefficiency, with planstoallow schedules to lure viewers back from StarTV and competing operators not yet implemented. other imported satellite channels. Some countries have also attempted to prevent reception of In 1993, China's Ministry of Posts and foreign channels by banning TVROs. Singapore Telecommunications (MPT) deregulated VSAT and Iran are among nations that ban TVROs, data networks,spurring implementation of others such as China, Malaysia and Indonesia private VSAT networks and competition in VSAT officiallyallow reception onlyof domestic services. Apart from the MPT, several other state programming. To satisfy demand for more agencies havetheir own VSAT networks, television channels, Singapore and China are including the Bank of China, stock exchanges, encouraging construction of cable television Xinhua News Agency, People's Daily, Customs, systems. The advantage of cable, in addition to Civil Aviation, Ministry of Communications, controlling access to generate revenue, is that Ministry of Energy, and the People's Liberation
608 644 Army.' satellite systems. However, the Asia-Pacific has the longest experience with national systems, and In these and other Asian nations, satellite the greatest number of national and regional "Trojan horses" have introduced private and satellites outside North America. The lessons of its competitive value-added networks, even where past 20 years may yield valuable insights for the public networks remain public monopolies. future satellite endeavors in the Asia-Pacific and Though little publicized, these VSAT networks other developing regions. linking businesses and government agencies may generate the greatest economic benefits of all the Incentives for Investment: Perhaps most satellite-based services. important, investment in satellites alone will not overcome communications gaps. 7. Satellites: The Invisible Infrastructure? There must be investment in terrestrial infrastructure, and incentives to extend As notedabove,many developing this infrastructure in areas that are not countries in the Asia-Pacific have invested in highly attractive to investors. satellites to deliver television and to provide voice and data services. Others use Intelsat, PanAmSat Incentives for Usage: In addition, there and regional satellites for domestic must be incentives to use the satellite communications. Yet satellites do not seem to be system. Even where there is demonstrable considered part of the "information infrastructure" unmet demand, asatellite can soon being planned under Asian or Asia/Pacific become a white elephant if operators have InformationInfrastructure(AII orAPII) no incentive to use it, but may choose initiatives. instead to install their own networks, even if these are more costly. Most discussion of AII in the region focuses on extension of optical fiber networks for Regulatory Reform: Third, the regulatory Internet access and broadband services such as environmentmustfacilitatesatellite ATM. Malaysia promotes itsMultimedia operations, for example through Supercorridor nearKuala Lumpur asthe legalization of bypass and requirements showpiece of its Vision 2020 strategy; Indonesia for interconnection agreements between cites its microwave and fiber optic backbone satellite and terrestrial carriers. linking major cities. At a meeting of APT representativesin Bangkok on information Starting with Users: Finally, as with all infrastructure in June 1997, national and regional telecommunicationsplanning,itis satellites were almost completely ignored in the important to understand users. Satellite review of plans for AII. Yet satellites have operators that have recognized unmet enormous potential to provide not only basic demand for video and data services have telephony but also capacity for Internet access, been successful through responding to distance education, telemedicine and teleworking user needs. Among the factors to consider in rural and remote areas of the Asia/Pacific. are service requirements, pricing, and communities of interest, i.e. where users 8. Lessons from the Asia-Pacific Experience need to communicate. These factors may be particularly relevant for the new LEO Of course, the experience in the Asia- (low earth orbiting) and geostationary Pacific region is not unique; other developing satellite systems that plan coverage of the countrieshavefacedsimilarobstaclesto Asia-Pacific region. A satellite system that maximizing benefits from their investment in links a rural fieldworker to a home office
609 645 only by transitting through the terrestrial developing regions of Asia and the Pacific networks of another country is not likely requires more than investment insatellite to be able to offer affordable or even technology. As Arthur Clarke, the first to propose perhaps reliable service. A system that geostationary satellites, said in 1983: "We have cannot withstand heavy rain, humidity or now reached the stage when virtually anything dust will not deliver the reliable services we want to do in the field of communications is that users will come to expect. possible. The constraints are no longer technical, but economic, legal, or political."' As the above analysis demonstrates, the extension of reliable telecommunications to
Table 1: Developing Countries' National Satellite Systems in the Asia-Pacific Region
Country System Date of First Launch
Indonesia Pa lapa 1976 India Insat 1982 China China Sat 1988 Thailand Thaicom 1993 South Korea Koreasat 1995 Malaysia Measat 1996 Philippines Agila 1998* Laos Lstar 1998
*Agila 1 was purchased from Indonesia and moved to cover the Philippines in 1996.
Table 2 Rural Teledensity in Selected Developing Asian Nationsm
Country Teledensity Teledensity Per capita 1995 outside largest GDP: 1994 City: 1995 US$
Cambodia 1.01 0.05 $213 China 3.35 3.23 424 India 1.07 0.95 287 Indonesia 2.10 0.229 920 Laos 0.56 0.07 289 Malaysia 18.32 14.73 3,622 Myanmar (Burma) 0.38 0.18 1,348 Philippines 2.58 0.95 968 Thailand 7.66 2.94 2,439 Vietnam 1.58 0.71 1,262
6101546 Table 3: India and Indonesia: Change in Teledensity: 1984 - 199430
Teledensity 1984 1994 CAGR*
India 0.39 1.07 10.7% average of all lower income countries 0.36 1.48 15.1 Indonesia 0.33 1.33 14.8 average of all lower middle income 4.51 8.40 6.6 countries
*Compound Annual Growth Rate
REFERENCES "Internet Boost for NICSI." Asia - Pacific Satellite, June 1997, p. 4. APT Yearbook 1996. Bangkok: Asia-Pacific Telecommunity, 1996. ITU, Asia-Pacific Telecommunication Indicators 1997. Geneva: International Telecommunication Boeke Cynthia and Robustiano Fernandez. "Via Union, 1997. Satellite's Global Satellite Survey," Via Satellite, July 1997, pp. 32-38. ITU, World Telecommunication Development Report 1995. Geneva: International Dance, Teresa. "The Philippines Comes of Age." Telecommunication Union, 1995. Asia-Pacific Satellite, February 1997, pp. 23-25 ITU, World Telecommunication Development Hudson, Heather E. Communication Satellites: Report 1996/97. Geneva: International Their Development and Impact. New York: Free Telecommunication Union, 1997. Press, 1990. Narain, Ravi. "A Floorless Exchange." Asian Hudson, Heather E. Global Connections: Communications, June 1996, pp. 50-51. International Telecommunications Infrastructure and Policy. New York: Van Nostrand Reinhold, Waller, E. "All Systems Go." Asia-Pacific Satellite, 1997. June 1997, pp. 40-42.
6147 NOTES
1. Boeke Cynthia and Robustiano Fernandez, "Via Satellite's Global Satellite Survey," Via Satellite, July 1997, p. 38.
2 .Boeke, ibid.
3 . APT Yearbook 1996,Bangkok: Asia-Pacific Telecommunity, 19% p. 248.
4 .Ibid., p. 248.
5 .Ibid., p. 248.
6 .Hudson, Heather E. Global Connections: International Telecommunications Infrastructure and Policy. New York: Van Nostrand Reinhold, 1997.
7 . APT Yearbook 1996, p. 258 .
8 . APT Yearbook 1996, p. 342.
9 .Dance, Teresa. "The Philippines Comes of Age." Asia-Pacific Satellite, February 1997, p. 23.
10 Ibid., p. 23.
11. Hudson, Heather E. Communication Satellites: Their Development and Impact. New York: Free Press, 1990.
12 .APT Yearbook 1995, Bangkok: Asia-Pacific Telecommunity, 1996, p. 404.
13 .Dance, p. 25.
14 . APT Yearbook 1996, p. 556.
15 . APT Yearbook 1996, p. 557.
16 . APT Yearbook 1996, p. 264.
17 .Dance, p. 25.
18 . Now called the Rural Utilities Service (RUS).
19 . APT Yearbook 1996, p. 363.
2 0 . Both Canada and Australia have invested in domestic satellite systems, but still rely on terrestrial networks for many rural and remote areas. Bell Canada had no incentive to use Telesat Canada's Anik system in the 1970s, and chose to build microwave networks in northern Ontario, for example, using Anik satellites only to reach the mid and high Arctic. Telecom Australia (now Teistra) chose to build a microwave network to link isolated Outback communities in the 1980s rather than using the domestic Aussat system.
2 1 .Hudson, 1997. 648 612 22 .Waller, "All Systems Go." Asia-Pacific Satellite, June 1997, p. 41.
23 .Waller, E., p. 40.
2 4 ."Internet Boost for NICSI." Asia-Pacific Satellite, June 1997, p. 4.
25 .Narain, Ravi. "A Floorless Exchange." Asian Communications, June 1996, pp. 50-51.
2 6 .APT Yearbook 1996, p. 342.
27 .Quoted in Hudson, 1990.
28 .Derived from ITU, World Telecommunication Development Report 1996/97, Geneva: International Telecommunication Union, 1997 and ITU, Asia- Pacific Telecommunication Indicators 1997, Geneva: International Telecommunication Union, 1997.
2 9 .Source: APT Yearbook 1996.
3 0 .Source: ITU, World Telecommunication Development Report 1996/97, Geneva: International Telecommunication Union, 1997.
6 1 36 4 9 Information, Multimedia and Education: The Need for an International Content Classification System and Mark-Up Language
David (Cyri) Jones Dominion Directory Information Services Vancouver, Canada
1. Abstract
This paper proposes a Digital Content Mark-Up Language (DCML) that would address information overload by enabling content in a variety of media (especially the Internet) to be efficiently organized and retrieved. Applications would include a global electronic library, an electronic copyright clearance centre, a powerful new search engine, and an intelligent agent filter. DCML, catalyzed by a new-found and enlightened desire to share information and reform education structures, hasthe potential to create unprecedented opportunities for economic and social development and to help lay the foundations for a contagious period of Information Age Renaissance.
2. Introduction application, or bandwidth breakthrough, software engineers, business people and even governments Two hundred years ago Thomas Jefferson compared often lose touch with the big picture: the fact that our knowledge to a candle, which even as it lights multimedia content is so poorly organized. This another candle does not reduce the strength and paper will illustrate how the greatest unfolding vitality of its own flame. Instead, the two candles opportunity and innovation related to multimedia in shine more brightly together. Jefferson's inspiration the Pacific region, and indeed the whole world, lies is particularly relevant as the Manufacturing Age in the establishment of a simple, yet powerful passes on the torch to the Information Age. Never international content classification system and mark- before has there been such an opportunity for up language and infrastructure. This organization of humankind to truly share its knowledge, for candles information has the potential to help lay the to be lit across the world, at little cost - indeed at a foundations for a contagious period of Information tremendous gain - to all those involved. Age Renaissance, where the connection between people, ideas and concepts is facilitated, and most Every day the wheel is re-invented millions of times importantly, where an active, organized and by billions of people - hundreds of thousands of compounding discourse of knowledge is nurtured. businesses are working on problems that have already been solved, millions of social and natural 3. Background scientists are initiating experiments that have already been performed, and thousands of 3.1 Needle in the Haystack universities are training students to find answers to questions already answered in unread books hidden Anyone who has tried to find some particular piece far away in dusty library stacks. The culprit behind of information on the Internet, even if they are Net- this tragic waste of human time and intellect is not savvy, has likely discovered that there is room for lack of money, technology or wisdom. It's simply significant improvement with the current generation that we have long ago lost control of our ever of information retrieval software and with the expanding information universe. organization of information resources on the Internet. Maryanne McNellis describes this problem of finding Emerging telecommunications technology has done information on the Web in a recent editorial in the a great deal to improve the creation and transfer of Financial Post. multimedia content (audio, video, text, graphics, etc.), but it is more a contributor to information The World Wide Web is nothing short of incredible overload and information anarchy than its savior. the first time. Unfortunately, in the early years the Web Better multimedia Java applets, more vibrant video has been something like a library without either animation and audio, faster processors and modem librarians or a Dewey Decimal System. Imagine a transmission rates, and fancier interfaces are all football field full of books tossed randomly around. No exciting but they only address a small part of the that doesn't adequately describe it.Imagine a city block with single words or phrases stacked around. barrier to widespread and effective multimedia Netscape's founders made their fortune by creating a diffusion. In the race to develop the next great way to navigate around the Web. But it's still pretty software code, proprietary platform, specialized clumsy. (1) 614 650 Finding information resources from other media like really can help you deal with the massive amount of radio, television, and print as well as from the content. (2) Internet, adds further complexity as each media has its own quirky organizational structure. One can When one sends a file from one location to another spend weeks, months or years researching a topic (regardless of whether it originated as audio, text, and still have only scratched the surface. While the video, etc.), all the information about the file (its hypertext nature of the World Wide Web has its own format, its subject area, its copyright status, its creative benefits in expanding Net surfers' horizons publisher, an abstract etc.) would be contained in the and allowing for the unexpected, it does little for header. By logically organizing and classifying those who already know what they are looking for. information, browsers could be designed to be While it may sound ludicrous, when it comes to exponentially more powerful, and most importantly, indexing and cataloguing the Web, it makes more more practical, than they are today. sense for humans to adapt our behavior slightly so computer search engines know what we are thinking 3.3 End of the Information Rainbow rather than to try to build complex algorithms to try to make computers guess the subtle nuances of the There are four parallel and growing trends which human brain and the creative process. signal an incredible opportunity for the feasible creation of an embedded header-based contextual 3.2 Embedded Content Descriptors information retrieval and storage system: 1) the trend towards digitalization, 2) the emergence of Even when the first online databases in the 1960s commercial information markets, 3) the growth of and 1970s were small by comparison to today, it was the Internet, and 4) improvements in computer clear that simple keyword searching was inadequate. processing power and storage. What was really needed was a way to figure out what a writer really intended a document to be about. 3.4 Digitalization Even humans have difficulty in deciding what information is relevant to a particular question so Perhaps most important of the information trends, trying to get a computer to figure it out without help technology is increasingly moving in a digital is nearly impossible. direction, where all content is represented by a binary series of Os and 1s, allowing for a The best way to solve the problem is simply to have compatibility between diverse mediums that was a document's author or an editor describe the never before possible. This means that identifying material in a standardized and organized way for headers (information about the information) can also future reference by others. This has been underway be standardized across any media platform. in various shapes in forms for some time in libraries, Digitally embedded information about content where books are classified under the Dewey Decimal contained in an application such as the television System or the Library of Congress Classification. based V-chip can now be "media-neutral". Why But the more the body of information grows, the have a different hardware filtering device and more archaic these systems become. At the same different content standards for each medium - TV, time, there is an increasing need to attach a lot of PC, fax, etc. - when the same system could be used other non-subject information to a document for everything! (copyright status, publisher identification, language, format, etc.). The answer appears to lie in a 3.5 Emergence of Information Markets standardized system of information embedded within content itself, created by either the original author or Another important reason for the growth of an editor. Nicholas Negroponte describes the information storage and retrieval technology is functions of these "header" bits in his recent, best- simply that information has become such an seller, Being Digital. important part of the global economy. A comprehensive survey by Angus Reid of Canadian In the next few decades, bits that describe the other Internet users found that 54% joined the Internet to bits, tables of contents, indexes, and summaries will access information, 16% because of curiosity, 10% proliferate in digital broadcasting. These will be for conducting business, 7% for social interaction, inserted by humans aided by machines, at the time of and 5% for personal entertainment. The fact that release (like closed captions today) or later (by viewer information access is the number one reason for and commentators). The result will be a bit stream Internet use shows that a very large market is with so much header information that your computer
615 651 developing for information products and services. putting a billion transistors on a chip (100 times the Internet use is switching from curiosity and complexity of today's chips). There are millions of entertainment to that of an information tool. new documents and other items of content being created every day and trillions exist in our various 3.6 Internet Growth conventional library formats.It is hard to imagine ever having the ability to organize content databases Another important trend is simply the rapid growth of of this magnitude that would enable someone to the Internet. Half of all Internet users came on-line conduct an information search of all content sources in the past 6- months! (3) The estimates of current in existence in the entire world but with the rapid and future Internet size vary but all point to a high- increases in processing power and memory storage growth scenario. The Angus Reid Group estimates capabilities, we are closer than ever to this becoming there will be 160 million Internet users by 2000 while a reality. Internet and media guru Nicholas Negroponte (Professor of Media Technology at MIT, Founding 4 Digital Content Standardization Project Director of the Media Lab, and Columnist for Wired) predicts there will be one billion Internet users by the Just like a system of nomenclature was needed to year 2000! (4) It took America On Line four years to advance the cause of science around the world, so get its first 100,000 subscribers. Now it gets than too we need a system of information content many new people logging on every two weeks. (5) nomenclature to advance the cause of society. For the sake of simplicity, throughout this paper I will call The Internet and its explosive growth offers many this project the Digital Content Standardization valuable lessons about the importance of Project (DCSP). The project, at this point, is purely compatibility.With almost no centralized planning, conceptual, although there doesn't appear to be any TCP/IP has connected millions of computers across unsumnountable technological or organizational the globe, computers which operate under thousands barriers to implimentation. The DCSP would be of different operating systems but which can now combined of ten key components: 1) An Electronic communicate under a globalized, common Dictionary, 2) An Electronic Encyclopedia of language. Similarly, the rapid growth of the World Standardized Concepts, 3) A Digital Content Mark- Wide Web was the result of Hyper Text Mark-Up Up Language (DCML), 4) A Global Content Language (HTML). Like TCP/IP, HTML provided a Warehouse System , 5) A Publishers Registration common standard across the world, conveying Database, 6) A Content Transaction Clearing Centre, information to a software browser about a 7) A Filter-Base Query Language, 8) A Filter -It document's intended format and hypertext links. Browser, 9) Associated Tools, and 10) A DCSP TCP/IP and HTML provide tremendous examples of Overseeing Body. Figure 1 displays the how an information content protocol could also have interrelationship between these components and incredible benefits. Not only could computers from indicates the flow of information between consumer across the world communicate with one another from and producer. a technical standpoint, they would also be able to communicate from a content standpoint. Instead of With the rapid growth of the Internet, the potential for just computers and formats connecting and every person to become a content producer is communicating, people and ideas could more easily incredible. Just like the desktop revolution of the connect and communicate. The Internet also 1980s led to hundreds of thousands of specialty provides a valuable test market for new information magazines -- published by amateurs with low-cost retrieval concepts.It will be a long time before the hardware and software -- the Internet offers this world's libraries are completely digitized but the same revolution in a variety of formerly unaccessible fastest growing library today is the Internet.It's broadcasting mediums. Internet guru Howard electronic nature makes it an ideal starting point. Rheingold describes this phenomena.
3. 7 Processing Power The World Wide Web makes it possible for citizens, artists, scientists, activists, educators, entertainers, A final trend that is helping make a world content businesses worldwide to become global multimedia library feasible is the rapid improvement in publishers. Because the Web rides on the Internet, processing power and memory storage capabilities. anyone with a personal computer and a modem, Gordon Moore, the co-founder of Intel, predicts that anywhere in the world, can put up multimedia in a few more chip generations we can imagine billboards for all the rest of the (wired) world to see and hear. Every desktop computer within reach of a
616 652 Figure 1
Digital Content Standardization Project: Simplified System Overview
6. Content query request Clearance
query Centre search query query results results \/ Content & Account Descriptor 5. Reconciliation Storage
query query results request
Descriptor Search Encoding/ 8. Content Request Decoding Embedding (Encoding)
content content delivery request
Content Content Producer 2. 9. Consumer
10. Overseeing Body
1. Electronic Dictionary 4. Global Content Warehouse 7. Filter-Base 2. Electronic Encyclopedia 5. Publishers Registration Database 8. Filter-It Browser 3. DCML 6. Content Clearance Centre 9. Associated Tools
617 653 telephone is potentially a (color) printing press and placed in several categories at the cost of only a few (very slow) radio-television broadcasting station" (6) bytes. (8)
The only thing missing in Rheingold's vision is the It is clear within the library science community that difficulty that the hundreds of thousands of content we need a new system of classification for the producers have in letting the world know their world's multimedia content and thanks to the power information is available. Setting up a Web site on of relational databases, the electronic dictionary the Internet is like getting a phone number; unless could prove to be the catalyst for this progression to people have a way of knowing your number, who you occur. Surprisingly, the Internet community isn't are, and what you are all about, the phone will never much better than the traditional library sector at ring. What is needed is a universal, standardized classifying information resources. While the Internet system of identifying content so that producers of currently has some forms of content classification, it content (or physical products) and consumers can be is extremely limited. For example Internet efficiently and logically linked. While there are newsgroups are divided into very broad categories thousands of fresh, ongoing attempts to classify all such as "sci" (science), "rec" (arts, hobbies and content, there is a system that has been around for recreational activies) and "comp" (computer) and millions of years that already offers an incredible Internet domain names are limited to "corn", "org" degree of articulation and specificity: that and "net", etc. remarkable system is the organization of symbols and concepts which we commonly call language. 4.2 Electronic Encyclopedia
4.1 Electronic Dictionary Organizing words into an electronic dictionary is the easy part of content classification. The hard part The building block of the DCSP would be an comes in organizing these words into concepts, enormous, evolving electronic dictionary of which because of their subtle nature have been the worldwide scope. This electronic dictionary monkey wrench that has brought many ambitious database would "simply" be a tabled collection of all universal classification schemes to a grinding halt. words in existence, an enormous lexicon. The In fact, much of the debate over universal database would not necessarily be organized in standardization concept lies in the arbitrary nature of alphabetical order as this ordering system would defining information. For example, who is the best become redundent since the database key would be person to describe and define a published work. Is it based on a numerical series. Since language is the author? Is it an editor? Is it a business person? constantly evolving, so too would the DCSP Is it a literature expert? electronic dictionary. Although the electronic dictionary database would be enormously large While a perfectly absolute system of classification (English alone has more than 750,000 words), in may be impossible, the trick with a classification computer database terms it would be manageable. system is, as Einstein said, to keep it as simple as Since it would be organized by numerical rather than possible, but not simpler. The electronic alphabetical order, it would be much easier to update encyclopedia would essentially be another tabled than a traditional, hard copy dictionary. (7) In fact, database (although this time, much larger) of this ability to evolve would be a very important organized combinations of words (codified into strength of the DCSP classification strategy. numbers) from the electronic dictionary database. Just like language has different types of words ... evenlibrarians admit that the schemes used today (descriptive adjectives, active verbs, etc.), the word are antiquated and inadequate: the phrase numbers could be codified to describe their 'classification in crisis" has become a cliche in the functional qualities. Concepts would simply be library community. The most common systems in the strings of numbers (defining words and word US - the Dewey Decimal System and the Library of functions). For example, the concept "portable Congress Classification - were developed during the power generators under 5 kW" would simply be a close of the 19th century. Unsurprisingly, they are poor number combination of the individual words, at classifying knowledge in newly" established fields "portable", "power", "generators", "5" and "kW" and like genetics or electrical engineering. More important, context would be defined by the order the words library classification is bound by restrictions that the occurred (general to specific) and the type of word digital world is not. While a physical book can be they were (verb, adjective, etc.). (9) The best part of shelved in only one place, a digital document can be the electronic encyclopedia is that it would, like the electronic dictionary, be able to evolve to encompass
618654 all of emerging reality. This would transcend the DCML tag line provided by a producer of content. attempts at concept standardization in systems such Tim Berners-Lee, the creator of the hypertext and as the SIC (Standard Industry Code, created in graphical system known today as the World Wide 1948) that falls apart when entirely new industries Web, believes the power of content classification are created that no longer fit into a narrowly defined should be in the hands of the creator. numerical code.It would also transcend language and culture since the database would be numerically ...My gut feeling is that one should be able to linked to concepts (which can be identified in a negotiate how one's information is used. The variety of languages). information world is a market, it's up to the individual people - individual creativity - as to what sort of If you feel some marketer is 4.3 Digital Content Mark-Up Language (DCML) contracts they draw up. going too far (in a biased description of their own content product'), you (the user of content) can quit. Of course, words and concept descriptors are only That's what mean by negotiation. (11) one part of any useful content classification system. A °Digital Content Mark-Up Language" (DCML) This producer-based responsibility for the description would need to be developed which would offer a (DCML encoding) of content would also take the similar function to HTML. However, instead of burden off any one central classification describing display formats and hypertext links (like organization. The desirability of a content producer HTML), DCML would describe content. For based encoding system can be seen by imagining example, individual content descriptors might the consequences if one central authority was include: Abstract, Author, Compression Method, responsible for all HTML encoding! The World Wide Copyright Status, Country of Publisher, Geographical Web growth would grind to a stop (this is why Web Scope of Content, Culture, Date, Industry, Keywords, directories such as Yahoo! can't keep pace with the Electronic Encyclopedia Content Description growth of content; they are trying to single-handedly Numbers, Publisher Information, Price, Ethical Filter be responsible for all content classification!). Ratings, Security Levels, Type of Content Medium, Quality Ratings, Content Size, Billing Method, 4.4 Content and Descriptor Storage Delivery Availability, Related Articles, File Location, etc. The organized storage of descriptor tags and full content itself is an important part of a standardized The basic concept of DCML is simple: a universal content system like DCML (the classification of codified structure (much like a content version of content is of no use, if there is no capability to HTML) that could exist across computer platforms retrieve this content). A master database would be and even across media platforms (TV, print, radio, organized to contain all DCML header information. etc.) that describes a particular piece of content. This database would be enormous and would likely Like HTML, DCML could describe a small or a large be distributed into hundreds or thousands of "section" of content (a whole book vs. a chapter vs. a regionally linked Web-based "header databases". paragraph). Again, like HTML, the DCML code Electronic "warehouse space" would also be inputted by the producer could be as sophisticated available (for a storage fee) to content creators and comprehensive or as bare-bones as a content without the desire or capability to have their own publisher wished. (10) data warehouse. There is some debate in the content classification 4.5 & 4.6 Account Reconciliation & Content "community" about who should be the one to define Clearance Centre content. The philosophy behind DCML (like HTML) is that the author or producer of a particular piece of In order for DCML to reach its full potential, a content would be the primary one to describe that centralized system would be needed to coordinate content, although there would be fields within DCML content transactions. A publishers registration that would allow for the independent rating and database would be set up to facilitate the efficient description by more objective third-parties (editors, flow of content. Publishers interested in being part rating organizations, etc.). With the growth in of this global library would sign up (via an automated electronic commerce and electronic data interchange Web forms system) and receive a unique publisher (EDI), DCML would be extremely powerful, since in registration number (similar to an ISSN or ISBN addition to content description, information about which most major publishers currently use). With copyright status, price, etc. could be part of the this registration, content could be tracked to an
619 655 individual producer and copyright royalties could be speed) so that a users time would not be wasted obtained where applicable. A content clearance waiting for search results. A user would have centre would be the centralized hub of the DSCP incredible searching power. In addition to creating where accounts between content producers and subject based searches, they could also search on consumers could be reconciled.Although it would any of the DCML fields. be °centralized", due to sheer size, it would be organized as a distributed database. As well, there 4.8 Filter -It Browser would also likely need to be regional mirror sites to ensure fast access speed from anywhere in the The final critical component of the DCSP would be a world. "Filter -It" browser that could decode a DCML document (similar to an HTML browser which takes A consumer (who also would need to register) would out all the HTML tagging so the user can see a clear, receive a monthly information bill for all the content non-coded document). This would be a relatively they obtained during that month in the same way as simple program which would allow content they would receive a hydro or telephone bill. consumers the ability to conveniently browse Likewise, the producer would receive a monthly content. royalty payment from the content clearance centre for any copyright fees owed to them. With EDI, this 4.9 Associated Tools whole process could be automated so that no physical cash, or particular currency is needed. The The potential of DCSP tools are limitless. One of content clearance centre would allow for transactions the benefits of a universal content classification of micro-pennies (or yen, pounds, etc.) since the system is that a lifelong filing storage system could transactional economies of scale would support be easily kept. When seeing a good article in a extremely low variable costs. Producers would have newspaper, or a program on TV or an advertisement, incredible pricing flexibility, flexibility that is today one could just click a mouse or scan a barcode that completely impossible with physical rather than would contain a publisher number, and an article electronic copyright clearance centres. reference number. With the wave of a scan or click of a mouse, this information could be compiled and 4.7 Filter-Base a copy of the article could automatically be downloaded into your personal file or printer. In fact, From the consumer end of the DCSP, an information with an add-in Filter-Base program, a user could user could formulate an efficient search through the receive the benefits of the DCSP without even use of a °Filter-Base", a simple database language having to understand the workings of DCML. If one that would allow for simple or complex filtered was to try to obtain copies of all the references used content searches of DCML content, depending on in this paper, it would be at least a month long the need. The user could either use pre- research project (even with the references listed). programmed third party filters (Filter-Base add-ins), To do this legally (from a copyright royalty simple menu based filtering queries, or they could perspective) would take much longer. There is no write their own sophisticated query programs. Once reason why this all couldn't happen in minutes, if not formulated, a Filter-Base search could be incredibly seconds, using DCML scanner technology with a powerful since it would focus on content headers quick scan of a "group reference list" directly (DCML) and therefore could retrieve extremely attached to this essay. The content users would be granular topics (and avoid the problem with Internet happy in that they could locate the exact info they search engines where a simple keyword search wanted almost instantaneously and the content leads to a list of thousands and often unrelated creators would be happy because through the documents). A Filter-Base program could also act content clearance centre they could be compensated as an intelligent agent, being an excutable search for their content copyright royalties. file that is automatically run at pre-programmed intervals. One could have a weekly search for a 4.10 Overseeing Body particular information topic and all the searching could be done at pre-programmed "down time" The final requirement for the DCSP is for an periods (if a truly global electronic library did form, it overseeing body. The private sector is usually not might take several hours to do an exhaustive search very effective at establishing broadly-based of all documents in existence on a particular subject, standards. In fact, it is often in the best interests of even with the incredible evolution of processing most software and hardware companies to be
620 656 incompatible, unless they absolutely have to tie into Already, the World Wide Web, the Internet's book of network externalities. While it is not impossible to graphical pages, has been doubling every six imagine a scenario where a private company months. (15) initiated a worldwide content classification standard, In response to information overload, many Internet the more likely candidate would be a United Nations users are cocooning in virtual communities, missing Agency such as the International much of the excellent material on the Net simply Telecommunications Union. because it is too difficult to find. With tens of millions of Web sites currently listed with Internet 4.11 Diffusion Strategy search engines, the chance of finding the site you are looking for (or having your site found) decreases The success of enterprises such as Netscape's daily. Navigator browser has been its ability to rapidly build market share. (12) With the importance of network 5.2 Productivity Enhancer externalities in today's information technology and telecommunications market, being quick to diffuse a Business professionals spend roughly 60 percent of product is essential. The success of the DCSP their average workday dealing with documents - depends entirely on rapid and widespread diffusion newspapers, newsletters, magazines, financial and acceptance. While this kind of rapid reports, memos, etc. (16) If DCSP improved this dissemination was almost unheard of in the past, the information processing by even only 10%, the ability for users across the world to download files savings would be enormous. Imagine if every six from the Internet has made rapid diffusion possible. months we had to learn and communicate in a new DCML software could be given away for free on the language! While this sounds ludicrous, that is Internet and to publishers. Revenues would come in essentially what many people are doing every time the form of transaction fees charged to publishers for they learn a new computer interface and search collecting copyright royalties (based on a percentage engine protocol. The DCSP, although evolving of their "information traffic"). would provide a standard and therefore the learning curve would be "one-time only". Moving from If DCML became like HTML in its widespread use company to company or from one region of the world then there would be a great incentive for new to another would not require an an individual to learn content with DCML tags. There is nothing forcing an entirely new information search and retrieval anyone to post their material on the World Wide language. Web in HTML format, except for the fact that if they don't nobody will be able to access their information 5.3 Facilitates Push Technology in a clear manner! Content producers would have an extra incentive to use DCML since it would allow The Yankee Group, a Boston-based market-research their content to be conveniently found by content firm, predicts that within three years, nearly a third of consumers (and this linking is usually the goal of the projected $19.1 billion in annual Internet revenue content producers). - from advertising, transactions, andsubscriber fees - will derive from "push" based media(customized 5. Benefits of DCSP information automatically being delivered to the end user rather than the end user having to constantly try Besides making it much more efficient to classify, to locate information). This whole push-based trend store and retrieve information, the Digital Content could benefit enormously from the DCSP, since the Classification Project has some important side- software intelligent agent could access information benefits. universally with ease (because of the DCML header) 5.1 Addresses Information Overload rather than be limited to private networks which is the focus of most push-based software (e.g. There are now approximately 150 million Web pages Pointcast). in existence and this should increase to a billion pages by 2000. (13) The desktop publishing 5.4 Allows for Rating of Content revolution of the 1980s is being repeated with audio, video, etc. on the Internet. (14) Instead of the One of the barriers to the useful flow of information predicted 500 channel universe, it is possible to have over the Internet is the concern that there are no a 500 million channel universe with each Internet rating structures. DCML would allow for rating fields user being a broadcaster as well as a receiver. that could be used for everything from pornography
621 657 filters, to ethical business filters, to independent 5.8 Boosts Electronic Commerce content quality rating bodies. The biggest impediment to the growth of electronic 5.5 Up-to-date commerce is not security, it's not computer hardware or software barriers, the main barrier is simply the The information contained with the DCSP would be lack of an organized information structure describing incredibly up-to-date. As soon as a content publisher products and services. There are no easy ways to "posted" a document (or video, or audio content), it scan the Internet for particular products and as a would be available in a global library for all to result electronic shopping is still not meeting its access. Old documents would still be available but potential. While, hundreds of "middleware" using the date component of a Filter-Base query companies are trying to be the "meta-link" between user could avoid thousands of search "hits" when all the shopper and advertiser, there is no reason why he or she really wants is the information from buyers and sellers can't be more efficiently linked yesterday, not ten years ago. directly (without middleware). As long as there are different formats, standards, etc. there will always be 5.6 Medium-Neutral a need for electronic shopping malls, on-line communities, directories, etc. but once a basic The best part of the DCSP is that it is medium- content standard is developed, the middleperson link neutral, that is, it is not dependent on operating in will be increasingly software based and transparent. any one particular medium. Therefore, a radio station, a print product and a Web site could all use 6. Conclusion the DCML protocol. We wouldn't therefore have the ludicrous situation where a TV content rating system New technologies are often viewed with cynicism. is completely different from an Internet or a movie When television.was first introduced, American classification system. There are so many piecemeal inventor Lee De Forest commented that "while solutions being proposed around the world but they theoretically and technically television may be only temporarily plug a particular media boat from feasible, commercially and financially I consider it an leaking. As Marshall McLuhan said, "the specialist impossibility." (19) Similarly, an early executive at is one who never makes small mistakes while IBM said he couldn't imagine the world needing moving towards the grand fallacy? What is needed more than three computers. (20) The same cynical in this important period of telecommunications and attitude could easily be directed towards attempts at content convergence is a view for the big picture.It universal content classification. Nevertheless, the is difficult to predict what will be the delivery "electronic writing is on the wall", and it only appears mediums of choice in the future. Will it be Web TV, to be a matter of time, before the impossible and will it continue to be the traditional broadcasting absurd becomes a progressive part of everyday life. mediums or will it be completely new mediums such With the rise in computing power, combined with the as electronic book pads? (17) The benefit of potential for standardized content protocol (using DCSP's medium-neutral aspect, is that it doesn't HTML as a model) and the user-friendly nature of matter which content delivery approaches flourish, the World Wide Web, a universal content any and all can be a part of the DCSP. classification system appears to be closer than ever to becoming reality. What HTML did for platform 5.7 More Efficient Delivery Channel compatibility, a content mark-up language has the potential to do for the exchange compatibility of The current delivery channel of information products information and ideas.It's important to note that is inefficient and wasteful. For example, the "ritual both the rich and poor need access to participate in of trucking around books, newspapers, and the world's information economy. Any policy of magazines, it's so inefficient that half the copies of a information retrieval that does not address the typical paperback are thrown away, unsold." (18) disparity between the information rich and poor will Futurists and technologist have long been talking fail to bring about a truly global mind.If the DCSP about the shipment of data bits rather than physical is to benefit humanity, it must foster an environment objects. The DCSP would greatly help delivery that allows for what John Stuart Mill described in his move in this more efficient direction. landmark, On Liberty, as free-thinking and "possibility thinking". In order for this to occur, an enormous priority must be placed on both basic literacy and technological literacy by encouraging
622 658 more funding to education initiatives across the adventure, curiosity, and vibrant accomplishment globe. As Industry Canada Minister John Manley that swept through society. Five hundred years later, says, "access to information should be a basic right a new Renaissance is giving birth and once again, to every citizen in the world." (21) As well, we must the movement (although catalyzed by the invention face the serious questions that efficient information of the computers and the Internet just as in the past systems give rise to such as: What do you do with it was catalyzed by the invention of the printing the potential millions of employees that are made press), is ultimately centred on people and redundant by efficiency gains in "middleware" communication, not technology. software? How do we begin a passionate debate on how best to share the potential gains (and losses) of Technology does not drive change at al/. this information technology revolution? Once this Technology merely enables change. It's our collective occurs, then the digital information revolution canbe cultural response to the options and opportunities presented by technology that drives change. (26) transformed into a truly social revolution.
In fact, many sociologists and historians see the Given that society chooses intelligent, well-thought out technology paths, there are many indications that information highway as the biggest technological innovation since the Gutenberg printing press. (22) the Internet and its information access potential will Whether or not this is the case, there is no doubt that continue to profoundly change society. it will fundamentally alter the landscape of both It's similar to what the library was 100 years ago, or international commerce and society. "Ten years the telegraph.It will be bigger and better than from today, you won't recognize either business or television. We're not talking about a 500-channel culture. There are [technological] forces converging medium. We're talking about 250,000 channels that that will change things as we know them," says Mary speak across all borders.It represents who we are, Frost, a Managing Director in Price Waterhouse's how we act, transact business and engage in New York office. (23) But for positive change to relationships. The Internet is about information result from this unprecedented global restructuring, empowerment. I think it will change world culture." we must not only focus on the technical issues. (27) Alvin Toffler in his book, Future Shock, introduced many to the idea of information overload but Perhaps, the biggest potential for society to be somehow society is still fixated on the technical positively impacted from the Internet and a system issues of getting more information channels flowing such as the DCSP is if it raises the knowledge level faster and a technical solution is proposed for an of individuals and communities and leads us to essentially non-technical issue. With all due respect become global citizens. to the insightful Marshall McLuhen, the medium (despite still being incredibly captivating and Knowledge has the effect of freeing the mind from powerful) is no longer the message. The message is the brutal grip of bigotry. A knowledgeable person is the message! There is a growing realization of the unlikely to be intolerant, because if broad learning importance of content and how.much of a void the imparts any certainty, it is that men, women and Internet or TV is without quality and easy-to-access children the world over are more similar than different content. Ultimately, this message is primarily about under their variously configured and tinted skins. "To connecting people, not television sets or Internet understand everything is to hate nothing,' according to the French writer Romain Rolland. Mutual knowledge servers. among people of different backgrounds and faiths leads to mutual understanding, which makes a mighty In the long run, the real application is connecting bulwark against the tragedy of war or civil strife. (28) people. It's what is so profoundly wrong with the name 'information revolution'. this is not about While technology or access to information has never information. It's about people connected to people." in the past solved humanity's basic problems of (24) starvation, war, greed - perhaps the DSCP will allow It is no coincidence that the original hypertext Web us to at least head in a direction of more invented by Tim Bemers -Lee was originally designed understanding of one another, lead to further to let far-flung researchers to connect and efficiencies in our ability to respond to need, and collaborate on large problems, to create an most importantly, lead to a greater interconnection information space where scientists from across the between people and transformed will to make the world could gather. (25) The Renaissance in Europe positive changes we as a global village are truly from the 1300s to the 1500s was an age of capable of.
623 659 Endnotes 19. "The only limitations are those of imagination", Wired, October, 1995. 1. "Time to rewrite the computer industry," by 20. Ibid. Maryanne McNellis, Financial Post, May 25, 1996, pg. 2. 21. Investing in Knowledge by Hon. John Manley, Global Knowledge Conference, June 23, 1997. 2. Being Digital by Nicholas Negroponte, (Vantage, New York, 1995), pg. 179. 22. "The Internet: the next stage in man's evolution," by Curtis R. Curtis, Vancouver Courier, Feb. 18, 3. "Shopping on the Internet: What's in [the] Store? 1996, pg. 16. What's In it for Directory Publishers?" Kelsey Report White Paper #97-7, Kelsey Group, July, 1997, 19 23. "Technology Forecast: Entertainment, Media, and Communications by Price Waterhouse World pgs. Technology Centre (Price Waterhouse World Firm 4. "Canada and the Internet," presentation, Services, 1995), pg. 1 Vancouver, British Columbia, Angus Reid Group, 1997.; Being Digital by Nicholas Negroponte, Vintage 24. Paul Saffo, Institute for the Future, UBC Certificate in Internet Publishing, 1997, pg. 1. Books, 1996. 25. "Interview with Tim Bemers -Lee," by Evan I. 5. °The 21st Century CEO: Imperatives for Growth," Schwartz, Wired, March, 1997, pg. 140. Index Vanguard Team, 1997. 6. Howard Rheingold, UBC Certificate in Internet 26. Paul Saffo, Institute for the Future, UBC Certificate in Internet Publishing, 1997, pg. 1. Publishing Outline, 1997, pg. 1. 27. Michael Wolfe, Investor's Business Daily (from 7. "When a basic, old-fashioned dictionary just won't UBC Certificate in Internet Publishing, 1997, pg. 3). do," by Dominic Ali, Financial Post, March 29, 1997, pg. 31. 28. in Praise of Knowledge," Royal Bank Letter, Vol. 78, No.2, Spring, 1997, Royal Bank of Canada, pg. 3 8. °Seek and ye shall find," by Steve G. Steinberg, Wired, May, 1996, pg. 108. 9. This process would take more space to properly References explain. For the purposes of this paper, a superficial explanation must suffice. Ali, Dominic, "When a basic, old-fashioned dictionary 10. It is important to note that the basic concept just won't do," Financial Post, March 29, 1997, pg. behind DCML is not new. In fact, it has existed for 31 some time even before HTML, in the form of SGML "APEC ministers urged to streamline customs," (Standardized General Markup Language). Reuter, May 10, 1997. 11. °The Father," Wired, March, 1997, pg. 140. Beaufils, J.-M., "The Impact of Wavelength Division 12. °The browser war," by Steven Levy, Newsweek, Multiplexing (WDM) on the Asia-Pacific Network," April 29, 1996, pg. 48-50. Pacific Telecommunication Review. 13. "Push," by Kevin Kelly and Gary Wolf, March, Bennahum, David S., "The Internet Revolution." 1997, pgs. 12-25. Wired, April, 1997. 14. Brent Holiday, MultiActive Technologies, The "'Biometric' future has almost arrived," Associated Coming Bandwidth Explosion, lecture, BCIT, Press, June 7, 1997. Vancouver, Feb. 14, 1996. Blackwell, Gerry, "When push comes to shove," 15. °The 21st Century CEO," by the Index Vanguard Canadian Business (Technology edition), Summer, Team, Index Vanguard, 1997, pg. 2. 1997, pg. 27-29. 16. "The New Age of Documents," by John E. Bowers, Richard, "Internet appliance market Wamock, Byte, June, 1992, pg. 257. US$12.5 billion by 2001 report suggests," COMDEX 17. MIT's Joe Jackobson thinks a working electronic Computer Show Guide, 1997, January, 1997. book is just a couple of years away and will have a Busch, Earlene, "Search and Retrieval," Byte, June, retail price of approximately $400 (Source: "Digital 1992, pg. 271-275. Ink," by Charles Platt, Wired, May, 1997, pg. 210.) Canadians and the Internet, presentation, 18. "Digital Ink," by Charles Platt, Wired, May, 1997, Vancouver, British Columbia, Angus Reid Group, pgs. 162-210. 1997.
624 660 "Changes to Internet Domain Names will Encourage Index Vanguard Team, "The 21st Century CEO: Competition, Foster Growth and Stability," press Imperatives for Growth," 1997, 21 pgs. release, International Telecommunication Union, "In Praise of Knowledge," Royal Bank Letter, Vol. 78, April 29, 1997. No. 2, Spring, 1997, 4 pgs. Claymon, Deborah, "When push comes to shove," International Interactive Communications Society - Red Herring, April, 1997, pgs. 31-34. Vancouver Chapter, "Plug in to your Community: Computers and Education, television documentary, Barn Raising in Cyberspace," IICS email newsletter, CBC National Journal, CBC, July 8, 1997 (transcripts June, 1997. available from www.tv.cbc.ca/- newsworld /national). Ipsen, Erik, "Capitalism's King Spies Evil in Market- Cote, Raymond, "Searching for Common Threads," Mad Realm," Globe and Mail, 1997. Byte, June, 1992, pg. 290-305. "It's the revenues, stupid," Financial Times, January Darby, "Electronic Commerce, Security, Intellectual 2, 1997, pg. 39. Property, and the Internet, by George Darby, Pacific ITU, World Communications: A wholly new world Telecommunications Review. (International Publications, 1996), 365 pgs. Education and Computers, television documentary, Janson, H.W., History of Art (Prentice Hall, New ABC, October 6, 1996. York), 1969, 767 pgs. "Eighty organizations sign MoU to restructure the Kelly, Kevin, "An interview with Hazel Henderson," Internet", Foster Growth and Stability," press release, Wired, February, 1997. International Telecommunication Union, May 1, Kelly, Kevin, "Push," Wired, March, 1997, pgs. 12- 1997. 24. "Electronic tags planned to protect music copyrights on the Internet," Reuter, December 5, 1996, pg. 6. Kelsey Group, "Make Mine Meta: The Ultimate Inclusive Directory," Kelsey Report White Paper #97- Elkins, David J., Beyond Sovereignty: Territory and 8, August, 1997, 18 pgs. Political Economy in the Twenty-First Century, Kelsey Group, "Shopping on the Internet: What's in (University of Toronto Press, 1995), 308 pgs. [the] Store? What's in it for Directory Publishers," Emerson, George, "See Johnny. See Johnny Surf. Kelsey Report White Paper #97-7, July, 1997, 19 Sury, Johnny, Surf," Canadian Business (Technology pgs. edition), Spring, 1997, pg. 35-42. Kelsey Group, "Where to from Here? New Decision "Father," Interview with Tim Berner-Lee (WWW Rules for New Media," Kelsey Report White Paper founder), Wired, March, 1997, pg. 140. #96-11, November, 1996, 23 pgs. Frauenfelder, Mark, "Content-Based Image Lamberton, Donald M. "Ethical Issues for Retrieval," Wired, June, 1997, pg. 82. Telecommunication: An Australian Perspective,' "Get Wireless: Who Owns the Airwaves?" Wired, Pacific Telecommunications Review April, 1997, pgs. 142-147. Legere, John J. (President and CEO of AT&T Gillette, Dr. Jay E., "The Information Renaissance: Asia/Pacific), "New Technologies, New Environment: Toward an End to Rural Information Colonialism," A Blueprint for Continued Success in Asia Pacific" Pacific Telecommunications Review. Presentation, APEC Business Forum, Shangri-La Hotel, Manila, Philippines, November 22, 1996. Herwijnen, Eric van, Practical SGML, Kulwer Academic Press, 1990, 305 pgs. Levington, Jennifer, "What are the schools wired to?" Globe & Mail, June 26, 1997, pg. C1. Herman, Lawrence, "Canada can make a good case to defend Copyright Act," Financial Post, May 21, Leyden, Peter, "Interview with Gordon Moore," 1997, pg. 15. Wired, pg. 166. Honey, Kim, "Super-surfer rides Internet wave," Lo, Catharine, "Get Wireless: Who Owns the Globe and Mail, November 9, 1996, pg.C8. Airwaves," Wired, April, 1997, pg. 142-166. Locke, Christopher, "Making Knowledge Pay," Byte, Huxley, Aldous, Brave New World (Pengiun Books, Markham), 1932, 200 pgs. June, 1992, pg. 245-252. Mandall, Charles, "Prometheus on-line," Canadian Ikeson, Jean, "Wired Education in the Real World," Business - Technology, Winter, 1996, pg. 78-92. The Computer Paper, September, 1997, pg. 20-87.
625 661 Marshall McLuhan Centre on Global Simpson, Glenn, "Internet Users Spooked About Communications, Web site, May 1997, Spies' New Role," Wall Street Journal, October 2, www.mcluhanmedia.com. 1995, pg. B1 &B2. McCall, Mamie, "What's the pricetag to protect Snow, Marcellus, "Telecommunication Market originality," Vancouver Sun, Jan. 30, 1997, pg. All. Structure and Economic Theories of Trade and McCullough, Michael, "The Death of the Record Development," Pacific Telecommunications Review. Store," BC Business, August, 1996, pg. 45-49. Stanley, Dave, "The Information Age and its Effect McQueen, "Window shoppers hold out," Fin. Post on the Future of New Zealand and New Zealanders," Internet Special Report, March 22, 1997, pgs. 49-62. Pacific Telecommunications Review, 1996. MultiActive Technologies, "Converging Trends: Steinberg, Steve G., "Seek and Ye Shall Find Freem Fast and Easy Website Creation in Themed (Maybe)," Wired, May, 1996, pgs. 108-182. Internet Communities," White Paper. Stewart, Thomas, Intellectual Capital: The New Negroponte, Nicholas, Being Digital, Vintage Books, Wealth Organizations, Doubleday, 240 pgs. 1996, 255 pgs. Stiglitz, Joseph E., "Harvesting the benefits of Nusca, Mark, "Web commerce wins place in sharing knowledge," Financial Post, June 14, 1997, curriculum," Globe and Mail, pg. C4. pg. 23. Nyerere, Julius, Dilemmas of a New Nation, 1980, Stoll, Clifford, Silicon Snake Oil, DoubleDay, 1996, 150 pgs. 249 pgs. Ono, Ryota, "Obstacles to and Strategies for Toffler, Alvin, Future Shock, Bantam. Telecommunication Development," Pacific Torobin, Jeremy, "Rating system approved by CRTC Telecommunication Review. to curb TV violence," Vancouver Sun, June 19, 1997, Platt, Charles, °Digital Ink," Wired, May, 1997., pgs. Pg.1 162-210. Uzumeri, Mustafa, "ISO 9000 and other metastandards: Principles for management Porter, Michael E. & Victor E. Millar, "How practice?," Academy of Management Executive, information gives you competitive advantage," Harvard Business Review, July-August, 1985. February, 1997, pg. 21-36. Powell, Johanna, "The Net gold rush is on," Financial Wamock, John E., "The New Age of Documents," Byte, June, 1992, pg. 257-260. Post, September 21, 1997, pgs. 41-44. Weatherford, Jack, The History of Money: From Price Waterhouse, Technology Forecast: Sandstone to Cyberspace, Crown Publishers, 288 Entertainment, Media and Communications (Price Waterhouse World Firm Services, 1997). pgs. Web communities, White Paper, MultiActive °Push!" Wired, March, 1997. Technologies, May, 1997, Reynolds, Louis R., Steven J. Derose, "Electronic www.multiactive.com/catalyst/converge4.html. Books," Byte, June, 1992, pg. 263-270. Willson, Trevor, "Censorship -- Why or why not and Rifkin, Jeremy, The End of Work, 1997. who benefits? A Discussion of the relevant ides of Roche, Douglas, Justice Not Charity, (McClelland John Stuart Mill and Plato," Political Science course and Stewart, 1976), 180 pgs. paper (unpublished), University of British Columbia, Rowan, Geoffrey, "PC TV," Report on Business April 16, 1997. Magazine, June, 1996, pgs. 86-93. Wolf, Gary, "The Wisdom of Saint McLuhan" Wired, Samuleson, Pamela, "Intellectual Property," Wired, January, 1996, pg. 124-186. January, 1996, pgs. 135-191. World Communications: a wholly new world, ITU, Schwartz, Evan I., "The Father," Wired, March, 1997, Agostini Group, 1996. pg. 140. Wright, Haviland, "SGML frees information," Byte, "Search for the Asian Manager," Economist, March June, 1992, pg. 279-287. 9th, 1996. Zorn, Peggy, Mary Emanoil, Lucy Marshall, and Shenk, David, Data Smog: Surviving the Information Mary Panek, "Searching Tricks of the Trade", Online, Glut, HarperCollins Publishers Inc., 1997, 250 pgs. May/June, 1996, pgs. 15-36.
626 (3 6 2 The Role Of Network And Information System (NUSANTARA-21) In Speeding Up Development Of The Implementation Virtual Campus In Indonesia
Dr. Naswil Idris ([email protected]) Universitas Terbuka Jakarta, Indonesia
Prof. John Renner ([email protected]) Edith Cowan University Perth, Australia
ABSTRACT
Indonesia, with a population of over 200 million spread across 17, 000 islands experiences formidable telecommunication problems. The telephone penetration ratio is only 2,11% (1996) overall, with substantial differences between cities and small towns, urban and rural, and eastern and western Indonesia. Universal access though endorsed by the Telecommunication Act, 1989, has yet to be supported by adequate implementation and a range of social services including health and education which currently suffer from gaps in telecommunication coverage.
Yet from the 1970s Indonesia has been a leader in telecommunication developments in South East Asia. From 1976 the Palapa satellite served effectively to overcome geographical problems of distance and isolation. In a developing country, a unique archipelago, Palapa has provided strategic and supportive access to all parts of the Indonesian community.
This current telecommunicationinfrastructure could not properly serve educational institutions especially distance education institutions. However, NUSANTARA-21 (Network and Information System) as an innovation gives a big hope to overcome the problem of distance education by preparing more telephone lines for media such as the Internet (WasantaraNet) at post offices all over the country. WasantaraNet will strengthen the implementation of the of Virtual Campus in Indonesia, a concept originally developed by Edith Cowan University Perth Australia. This paper sets the scene for implementation of Virtual Campus Technology thereby enhancing university education in Indonesia.
1. INFRASTUCTURE In its subsequent stages, NUSANTARA-21 developments will match the development of regions In the early stage NUSANTARA-21 will be established and cities in Indonesia. Technology used must be able as an information infrastructure connecting the 27 to give infinite bandwidth as well as high transmission capitalsofprovinces in thewholeNusantara reliability. The area of various existing growth triangles Archipelago and beyond toregional andglobal in Indonesia must be continuously observed so that information infrastructures. Priority will be given to the the expansion of NUSANTARA-21 to the area can be development of the role of the Indonesian economy in carried out at the right time and can participate in regional and global trade, as well as Indonesia within encouraginggrowth in thatarea. In smaller the non-aligned countries. geographical and demographically units, development of industrial and trade areas in the whole Nusantara NUSANTARA-21 willalso be able to cover the (country)also becomes anintegralpartof the network and information system in several cities which NUSANTARA-21 objective. possesshighpotentialand/oractualeconomic activities. The network and information system in 1.1. DEVELOPMENT OF PHYSICAL cities can be in the form of a "ring-road" withits INFRASTRUCTURES branches, and likewise, at a national level a network and information system, comprising all of the existing Nusantara Multimedia Community Access Centers : infrastructure and technology can be developed.If The development of NUSANTARA-21 to cover all there are segments missing in a city, additional new levelsoftheNUSANTARA-21 communitywith capacity must use future proof technology. 'density' orientation is not realistic. In the context of
627 (3 6 3 NUSANTARA-21 a communityaccesscenters savings (through a Postal Bank), particularly among concept is developed covering broadband pay-phone, thelow-incomepopulationsegmentand rural broadband business centers, networked e-library, and residents; and to extend the payment system offered multimedia community kiosks. Aside of that the one by PT Pos (Giro Service) to remote areas to promote whichwillbecome themainpointtoprovide "cashless transaction", (vi) to expand and to extend community access to NUSANTARA-21 isservice the services of Wartels and Warpostels to include point owned and managed by TELKOM (Indonesia tourism services through a joint venture among tourist Telecom Company) and POS INDONESIA service providers. (Indonesian Post Office) in all regions of Nusantara. It is estimated that in the year 2.000 all capitals of sub- 1.3. INFRASTRUCTURE IN EDUCATION districtsin Nusantara will already have access to SECTOR NUSANTARA-21 at the requiredreal wide band through cheap satellite access, of PALAPA B, C, as Education sector is an area that is most ready for the well as D generation satellites. Garuda satellite, and utilization of NUSANTARA-21. In the national initiative other PCS satellite systems willalso operatein NUSANTARA-21 will immediately connect main state Indonesia's region. and private universities all over Indonesia including the Open Learning University (Universitas Terbuka) 1.2. THE EXPANDING POST OFFICE FACILITIES for education and scientificactivities as well as TO RURAL / REMOTE AREAS. education and administration activities. Aside of that, there are also a number of high schools, junior high The objective of the component of the Regional schools, and elementary schools which are Information Service delivery of NUSANTARA-21 is to considered ready to enter The NUSANTARA-21 era improve regional service provision by extending the and they will also be served by NUSANTARA-21. This basic communication network to cover all residents of plan is indeed considered to be the vision of Indonesia the country, intensify the postal network in the major in preparing the next generation to be ready and economic hubsofthecountry,strengthenthe capable of participatinginthe global information institutional capability of the postal service to be able communityera.Howeverformany elementary to respond to progressive deregulation of the sector, schools and junior high schools all over Indonesia and expand and enhance the information service which cannot be caughtintheinitialstage of providers such as Wasantara Net (Internet service NUSANTARA-21,theavailabilityofanon-line provider under PT Pos Indonesia serves Internet to electronic library will be programmed, and in due time rural areas and remote places and the Internet cafe at they will be integrated into NUSANTARA-21. a postoffice),Wartels(TelephoneKiosk)and Warpostels (Post and Telephone kiosk). The specific 2. UNIVERSAL ACCESS IN INDONESIA objective is to achieve the following :(i) to extend the postal network in a cost effective manner to provide a Information should be made accessible throughout the universal service by year 2001 (through a phased country, foritis the strategic factor of economic approach), (ii) to improve PT Pos's service quality and production.Consequently,Universal Accessisa operational efficiency, and extend PT Pos's delivery necessity in the age of information. The provision of capacity and capability through (a) internal institutional universalaccessmeansplacingan affordable development(b)privatesectorparticipation(c) telephone service within people's reach; for example, effective deployment of information technology, (iii) to by installing public or community telephones (Warfel) intensify communication in the economic centers by within walking distance of people's residences. (Over developing value added services (such as services time, the telephone service is going to evolve into through the Warpostels, Wasantara Net and hybrid more sophisticated telecommunications services).It mail). These services will also generate additional might be important to note that both availability and revenues and increase asset utilization of the retail affordability of services are two essential elements of outlets, and the postal services, thus contributing to Universal Access. the availability of the regional service expansion to remote areas, (iv) to establish a regulator regime to TELKOM and its KSO (Joint Operation Scheme) lower entry barriers and private sector development partners are required to allocate 20 % of their annual within the sector while providing sufficient regulatory investments towards financing the undertaking to protection to PT Pos for a sufficient period of time to achieve Universal Access. Other carriers are required build its competitive capacity, (v) to develop a vehicle to contribute to TELKOM and its KSO partners' costs to promote banking practices and encourage personal
628 664 towardsmeetingtheobligationstoaccomplish 3. SERVICES Universal Access. President Suharto declared the year of 1997 the year Even if the price for the physical access to the present of Telecommunications to encourage and networkwereaffordable, UniversalAccess in acknowledge Indonesia's rapidly developing telecom Indonesia would be not available soon. The reasons sector. However, with a teledensity of 2.11 lines per are the following. First, current penetration rate of the every 100 people of the world's fourth most populous telephone service is considerably low. Second, the nation, any year to come could be a resourcesdevotedtoexpandthenetworkto telecommunication year. underserved and unservedareas,as mentioned above, are limited. Third, the geography to be covered A recent Pyramid Research report entitled "Telecom is huge and extensive. Itis, therefore, obvious that Market in Southeast Asia" says national local operator Universal Access, is difficult to achieve in a short time PT Telkom plans to invest $6.7 billionin network with traditional network technology. development between1995and1998,thereby creating major market opportunities for switching, Fortunately, due to the new technology of global and transmission, access network and intelligent network regional mobile satellite systems (MSS), like Iridium, equipment vendors. Inmarsat P and Indonesia's Garuda be instantly and universally available. However, affordability of this In the government's current five year plan, which ends kind of physical access, may not be straightforward. March31,1999, some specifictargetsinclude According to reports from providers of MSS services, increasing local exchange capacity to 10.5 million it is generally higher than that for the current PSTN lines; achieving a call completion rate of 65% for local (Public Switched Telephone Network). calls and 45% for domestic long-distance calls; and repairing 75% of allline failures within 24 hours. The Universal Access Fund shall be used by the These mandates suggest a comprehensive desire to Government to lessen the price difference between develop an overall high-quality telecom system, rather physical access to the PSTN and that to the MSS than merely to meet the need for more lines, although service. Of course, it would not be possible to apply the latter would seem to be the most pressing issue. this across-the-board. A better strategy is to provide selective applications for the up most public benefit. Rallying to the telecom cause, PT Telkom has its own One approachistoprovide subsidies from the vision-Vision T2001-to launch itself into the world- Universal Access Fund to individual subscriber lines class operator status. that are mainly used by the public in areas where only MSS service is available. These lines might be those As PT Telkom does its part to meet the government's that served Wartel (telephone kiosks), public phones, 10.5-million-line goal by 1999, it is learning the tricks hospitals, school, etc. In this case, recipients of the ofthenetworkoperationstradefromLucent subsidy are no longer the network operator or the Technologies,inpartnership with AT&T. Through carrier, but the individual user or group of users that what is formally referred to as the Knowledge Transfer shall be selected according to social merit. (Source Program, Lucent is helping PT Telkom in its Vision Conference Background Note 1996) T2001 project to become a contender in the world telecom arena by 2001. (Sources: Global Telephony / With telephone density 2.11Indonesia cannot do June 1997) much to implement "accessibility" to reach students interactively in rural areas. That is the reason that the Main telephone lines in Indonesia is 4,186,000 (1996) Indonesian government introduced"servicepoint and expected 11,300,000 in year 2000, teledensity is policy" meaning to share telephone lines, PC, and 2.11 lines per 100 people in 1996 and expected 3.31 television for many people in the public places, what lines per 100 people in 2000, cellular is 563,000 in we called Wartel, Wasantara Net at the Post Offices 1996 and expected 3,700,000 in 2000. (Internet cafe) and Kelompencapir (Listener, Reader, (Sources: ITU Asia/Pacific Telecommunication and Viewer group) in the village centers. By using Indicators1997, Pyramid Research estimate and these facilities a large audience can be served and government projections) activities will take place from those service points.
629 665 UniversalServiceObligation (USO)inIndonesia In this respect the Open Learning University plays a includes :(i) basic services : telephone in rural areas; very important role in increasing the participation rate
(ii)enhanced services : remote health care and in higher education, as well as improving the quality of education, information access of public entities;(iii) human resources, currently in the market-place. This welfare services : the disabled, the bereaved, and is because 96% of Open University students are low-incomefamilies;(iv)emergencyservices : workingpeople.So far,theOpenUniversity emergency, security and safety networks; (v) public (established 1984) has graduated 198,536 teachers services : operator directory services, public phone and 18,025 non teachers. The total number of and telegraph. graduates is 216,561 .
Under "service point policy" the implementation of 4.1 WASANTARA NET AS A COMPONENT OF USO willbe more successful even though the THE VIRTUAL CAMPUS telephone density is relatively small, and individual students who live in 6,000 islands will be served by Because of WASANTARA Net has spread out to rural, telecommunication infrastructure to enable them to remote area in the whole country, the accessibility of have access through service points (Wasantara Net the people to use Wasantara Net as Interactive Media will be available in many post offices in the small cities has became a reality. WASANTARA Net has covered and rural areas). 131 cities and towns all over Indonesia, and operates Internet cafes in 31 locations. There will be more In caseofeducationalservices in Indonesia Internet cafe services in a few months. The benefit of Wasantara Net will serve students in urban and/or this accessibility is educational and the Indonesian rural areas, in the cities and/or the remote areas and Open Learning University (Universitas Terbuka / UT) on the beach or mountainous areas. will take advantage of these services. The Indonesian Open Learning University was established as a public There are 3 (three) possibilities for students to be institution in 1984 to provide access to post secondary served by Wasantara Net as follows : education for high school graduates as well as to improve the qualificationof teachers. Today, UT 1. Internet in Learning Centers. serves almost 400,000 students (300,000 of them are 2. Internet Cafe in Post Offices. teachers) through four schools and 32 regional 3. Internet in residential areas. centers. At present, the delivery methods used by UT to reach students is mainly print-based. In the very Due to socioeconomic constraints, option 1 and 2 will near future, UT intends to use (interactive) electronic be more appealing for educational purposes. delivery for about 5% of the instructional activities in addition to print and broadcast media. 4. EDUCATION. The big hope for the Open University is to accept Indonesia has more than 50 public universities and potential students from rural , islands ,and remote more than 1200 private universities. The only one areas as well as those who are already working as public OpenLearningUniversityisUniversitas teachers, armed forces, banks, pilots, policemen, and Terbuka serving students in the whole country. Both even prisoners. public and private universities serve the people in the neighborhood or the city close by. No more public The Indonesian Open University serves students who universities will be established. Any potential students live in almost 6.000 islands, 96% of them are working. who live far away from public or private universities The Open Universityservesitsstudentsmostly can enter the Open University and register his or her through printed material, very little broadcasting and name via the nearest post office. the Internet at an early stage. Students need more interactive media likethe Internet or the Virtual The participationrateinhigher education or the Campus because they prefer to stay in their own universities is only 1,5 million students out of 200 home, working in their current job while studying at million people and will be 2,5 million by the year 2007. theOpenUniversity.Therefore,studentsneed This number is very low compared to the South East multimedia for their learning process and will Asian countries like Singapore, Malaysia, and the manage their learning from home (if they can afford Philippines. to buy PC and telephone) or from a service point such as learning centers and post offices.
630 666 By having 2.11 telephone density for 100 population, old,ifonly tosatisfy those students with lower and most of the telephones lines centered in the cities capacity computers.Put differently, students using or urban areas, it is very difficult for those who live in 286 machines will still be able to log on to the Virtual the rural/remote areas to have access to a telephone Campus and interact in text-only mode by exercising line.Therefore, the Indonesian Government Policy to Terminal Emulation protocols. develop WasantaraNetthrough NUSANTARA-21 Project at the Post Offices will be a good solution. Terminal emulation is the most basic access method: a dial-up connection using standard communication 5. VIRTUAL CAMPUS (AT AN EARLY STAGE) software to a computer called Echidna for text-based information delivery. The student's computer acts as Oncelocalinorientation,universitiesare now a passive terminal leaving Echidna to run all the increasingly thinking nationally and globally. Using the applications.Students with more powerful machines Virtual Campus at Edith Cowan University (ECU) as may usePoint-to-PointProtocol. Point-to-Point an example, we find advanced convergent Protocol (PPP) enables the student to run applications communicationtechnologyprojectingon-campus on his/her own computer, thus providing enhanced resources and experiences intorural and remote presentations; graphics, color etc. The technology locations across the Australian continent and world- underpinning the new Virtual Campus has evolved wide. These services are achieved with minimal loss from its text-only origins and is now better described to what would be gained from on-campus, face-to- as a multimedia interactive electronic delivery system. face teaching and learning experiences. An integral part of this development has been the preparation and presentation of interactive multimedia Yet typically around the world, students at a distance courseware.The School of Computer, Information inthe 1990sstillrelyheavily on one-way non- and Mathematical Sciences at EC_ U has developed a interactive delivery of courseware by radio, television set of protocols and associated software to enable and postal services. Any interactivity in this context is speedy transformation of text-based courseware into restricted largely to regulated student feedback, e.g. html (WEB) and CD-ROM formats. by completing assignments and sittingtests and examinations. All of these technological developments are equally applicable to higher education in Indonesia. It follows ECU was one of the first universities in Australia to that at least five important reasons can be put forward break out of this mould by developing a user-friendly from implementing the Virtual Campus in Indonesia. computer-based system for interactive communication with students. The system, formally registered as the 1. To improve the qualityof education through "Virtual Campus" now supports over 10,000 users. "information" (knowledge) available at educational ECU has long been a major provider of tertiary level institutions,learningresources,media, home distance education and for at least a decade has been pages as well as tutors. concerned with communication delays and barriers 2. To reduce the quality gap among educational between the home campuses in Perth and students institutions (school, universities, non-formal located thousands of kilometers away. Research and education, professional education, post university development within the Faculty ofScience, education), no matter where these institutions are Technology and Engineering at ECU initially resulted located. in a relatively simple text-based interactive system, 3.To improve the quality of teachers no matter computer to computer, with services designed to meet where they live. the expressed views of students. Subsequently, with 4.To improve the quality of student performance. increasing bandwidth and computer capability, it has 5. To increase the participation rate of university beenpossibletointroducemorecheerfuland education. stimulatinginteractivity,includingcolor,graphics, audio and video via the Internet.This enhanced The Virtual Campus provides "lust-in-time" contact "Virtual Campus" now has strong student appeal. Yet and support, and is used in conjunction with traditional for some, it has decided limitations: e.g. to access the printed materials. Students can enter the campus new system, students need a suitably enhanced through Wasantara Net at the post office at any time, computerplatform. Moreov.erthe demandfor day,ornight,sevendays a week andavail increased bandwidth tests the capability of existing themselves of the many services provided for them. communication networks. Itfollows that the new Virtual Campus should retain the best features of the
631 667 The following services and facilities are currently The NUSANTARA-21 Projectwillspeed up the available on the Virtual Campus 24 hours a day, 7 development and the implementation of the Virtual days a week :email, chat, talk, library, news group Campus inthe very nearfuture.Edith Cowan and send & receive files (up-load/down-load). University,PerthAustralia,willhelpUniversitas Terbuka in developing the Virtual Campus in its early 5.1. PILOT PROJECT stages.
In order to test the validity and reliability of these But several questions remain unanswered : benefits of WASANTARA NET at the post offices before expanding accessibility, to take part in the Firstly, how do we install, promote and manage our Virtual Campus activities, we need pilotprojects emerging electronic networks and at the same time (experimental projects) in empirical situations. The achieve commercial viability ? The Virtual Campus for School of Education or FKIP-UT at this moment has example willbe dependent inIndonesia on the more than 300.000 students comprising elementary goodwill and support of Indonesian Post and secondary school teachers. They live and teach (WasantaraNet) and other government agencies. in all parts of the country and are still teaching in the public schools UT and PT Pos Indonesia have Then thereisthe issue of security. The Virtual identified three pilot projects under supervision of Campus system ensures that interactivity between Edith Cowan University,Perth,Australiainthree lecturer and student remains privateto the two locations (Padang West Sumatra, Bandung West parties. There are however examples of privacy being Java and Purwokerto Central Java). violatednotablybyso-calledhackers.Likewise, assignments and other intellectual property of the The first two pilot projects commenced inJuly 1997 students and the system need to be safeguarded. and the third started in August 1997. There are four steps to be examined in these Pilot Projects: Finally thereis the task of persuading telecoms worldwide that the era of interactivity has arrived; that 1.The familiarization of the technology equipment. voice is no longer the only option. Telecoms must stop 2. Implementing a simple email,mailinglistto regarding the Internet and Intranets as peripheral. We practice communication betweenstudents and must show telecomsthatelectronicdelivery in tutors or administrators. education (in Indonesia) multiplies telecom usage. 3.Tutorial services for one simple subject matter. 4.Preparation of suitable course materials. The thrust behind the implementation of the Virtual Campus in Indonesia is two-fold : Forthefamiliarizationprocessandforsimple administrative services there are also parallel pilot 1. To provide quality educational service to rural and projectsat 6(six)locations : Jakarta,Medan, remote students as if they were on campus and, Pekanbaru, Semarang, Ujung Pandang under 2.to equalize educational opportunities for supervision of the Center for Media Research UT communities that would otherwise be using Indo Net Service Provider. These Pilot Projects disadvantaged. are stillin progress and evaluation reports will be available mid 1998. The authors of this paper are hopeful that the Virtual Campus inIndonesia willhelp to achieve these 6. CONCLUSION important objectives.
By expanding post office facilities to remote and rural areas all over the country through NUSANTARA-21 Projects, there will be more accessibility for students to take advantage of Wasantara Net (Internet Cafe ). Open University Students who live scattered in almost 6000 islands will use Wasantara Net and the Virtual Campus(atan earlystage)tocommunicate interactively seven days a week 24 hours a day to enrich their educational knowledge in the teaching learning process.
668 632 BIBLIOGRAPHY
1. Conference Background Note, Ensuring National Competitiveness inthe Information Economy, Jakarta 24 26 April 1996 2.Corrigan, Mar lie. Virtual Campus. Remote Access to the University network and the Internet. Edith Cowan University, 1996. 3. Corrigan M.P. and Renner J.M. 1995. The Virtual Campus : Taking the university to the students, 5thInternational,IEET Conference,Bunbury, Australia. 4. Global Telephony, June 1997. Pyramid Research: Telecom Market in South East Asia 5. Idris, Naswil, Renner. J.M. 1997. The Availability of Interactive Media to Perform Better Educational Services to Individual Open Learning Students, Proceedings, 19th Annual Pacific Telecommunication Conference, Honolulu, Hawaii. 6. ITU Asia/Pasific Telecommunication Indicators 1997, Pyramid Research estimate and government projections. 7. Renner, J.M. 1995 Convergence of Communication Technologies to Achieve Educational Excellence : a case for the Virtual Campus, Proceedings, 17thAnnualPacific Telecommunications Conference, Honolulu, Hawaii. 8. Renner,J.M.1996 Implementing Convergent TelecommunicationinUniversities; How cost effective, how educationally productive. Proceedings 18th Annual Pacific Telecommunications Conference, Honolulu, Hawaii. 9. Setiawan, Suryatin, Towards Indonesian Information Society, Seminar Mastel, Bandung 27 Juni 1997. 10. Universitas Terbuka. Statistical Report 1996 & 1997 11. World Telecommunications. ITU 1996. 12. Vision and Concept of Network and Information System NUSANTARA-21, RepublikIndonesia, November 1996.
633669 ATMBased Distance Learning Project in Taiwan
Lung-Sing Liang, Chain-Chin Yen, Cheng-Sheng Lin, Sying-Syang Liu, Chun-Hsuing Wang, and Tsuey-Wen Tsai Chungwa Telecom Laboratories Tao-Yuan, Taiwan
1. ABSTRACT
Distance learning over a broadband ATM network is a pilot project of National Information Infrastructure in Taiwan to allow students having flexible education opportunities and to enable academic institutes sharing education resources. Three universities, including National Taiwan University, National Chiao-Tung University, and National Tsing-Hua University have joined the distance learning project. Students of these universities can register and take the courses offered by other universities. ATM-based distance learning has been tried successfully in Taiwan and has shown positive results and benefits. New projects of distance learning are under planning to extend the trial scope, to further facilitate the education opportunities, and to share education resources in Taiwan.
2.INTRODUCTION An ATM Virtual Path (VP) switching system and ATM LAN switching system were started in June Distance learning over an ATM network is a pilot 1995. A VP switching system is consisted of ATM project of National Information Infrastructure (NII) VP switches (BEX-VPX) and ATM multiplexers in Taiwan [1]. The ATM network has been deployed (BEX-AMX). User applications are based on by Chunghwa Telecom Co. (CHT) since July 1995. permanent virtual connection (PVC) with DS1 The network consists of ten ATM VP switches and circuit emulation, DS3 circuit emulation, and LAN thirty ATM multiplexers and provides a high bridging functions. An ATM LAN switching system bandwidth backbone for broadband services trial in is consisted of ATM LAN switches and ATM hubs. Taiwan. Distance learning is one of the services The goal of the ATM LAN switching system is to provided to allow students having flexible education satisfy high-speed transmission demand to opportunities and to allow academic institutes sharing interconnect legacy LANs. education resources. By June 1996, ten sets of ATM VP switching To establish a communication backbone for NH in systems have been installed at ten sites in Taiwan. Taiwan, CHT has set a strategy to migrate its Several pilot projects, including telemedicine, video existing networks to BISDN. According to the conference, distance learning, and campus strategy, the broadband ATM network trial will be networking, have been running on the nationwide created using the broadband related products ATM trial network. The ATM local area network at developed by Chunghwa Telecom Labs (TL) [2]. the GSBIP in Hsin-Chu has been providing high- During the trial period, a nationwide ATM backbone speed information transmission services for about network and a number of high-speed ATM local area seventy companies. Currently, two ATM LAN networks have been completed. The local area switches and ten ATM hubs are used for the LAN at networks are located in Hsin-chu Greater Science- GSBIP. Based Industrial Park (GSBIP), Tainan Intelligent Science Park, Nankung Software Park, and Harbors To enhance campus teaching and learning facilities of Keelung, Taichung, Hualien, and Kaoshiung. In and lower the difference of the edikation resources addition, international ATM trials between CHT and among universities, NH steering committee and Hong Kong Telecom, Singapore Telecom, and U.S. Ministry of Education (MOE) have been prompting Sprint have been scheduled to launch soon. a national distance learning project which serves domestic universities now and will be expaned to cover foreign universities in the near future.
634 C offered by other universities. Currently, five remote Figure 1 shows the network architecture of the ATM classrooms have been opened. The five classrooms VP switching systems. Based on the provided are interconnected through DS3 transmission services of DS1 circuit emulation, DS3 circuit interfaces. A Digital Cross Connect system is used to emulation, and LAN bridging functions, applications perform a broadcast function for multi-site teaching. on LAN interconnection, video conference, distance In the future, the distance learning will be expaned learning, telemedicine, image transfer, and from Taiwan to foreign countries, including Hong multimedia database retrieval have been under trying. Kong, Singapore, and USA. Based on the Many national pilot projects have been running on successful experience of international this trial network. They are telemedicine, distance interoperability test, the international distance learning, campus networking, multipoint video learning trial is expected to work smoothly. conference, and international ATM service projects. These projects are conducted by NII steering committee, Department of Health (DOH), MOE, and CHT. 4. CAMPUS NETWORK OVER ATM In order to extend the scope of distance learning, In this paper, distance learning related projects, Ministry of Education and CHT have conducted a including wide band distance learning system, campus ATM network project to connect the campus campus network over ATM, multipoint video ATM networks of seven universities to the ATM conference, will be described in detail. backbone network through DS3/PLCP interfaces. Distance learning has been one of the main 3. WIDE BAND DISTANCE LEARNING applications of this project. Courses in the areas of SYSTEM psychology, finance, sociology, information technology, and science education have been offered. Medical education is a very important area of technological education and has a good progress To share the education resources among universities, under the promotion of MOE. MOE, several national MOE has also been conducting a campus networking universities, and CHT have formed a joined national trial to interconnect the campus networks of seven research team for the development of distance universities, including Taiwan University, Central learning research project. In June 1995, under the University, Tsing-Hua University, Chiao-Tung support of CHT (was called DGT), two fiber lines University, Cheng-Kung University, Chung-Cheng have been implemented to the medical colleges and University, and Sun Yat-Sen University. The campus affiliated hospitals of Taiwan University and Cheng- ATM networks of the seven universities are directly Kung University. A DS3 (45Mbps) connection has connected to BEX-VPXs of the ATM VP network also been established. At the NII distance learning through DS3/PLCP interfaces. The network exhibition in July 1995, National Taiwan University architecture of campus network is shown in Figure 3. Medical College (NTUMC) used the ATM The circuits and interoperability test between ATM broadband network for the first time to perform a campus switches and BEX-VPX ATM switches have distance learning speech to GSBIP. The distance been completed. The interconnection testing among learning classroom in NTUMC is connected to the ATM campus switches through ATM VP network is remote classroom based on the Hsin-Chu broadband in progress. experimental network. In addition, National Tsing- Hua University, National Chiao-Tung University, Video compression cards and ATM interface cards TL, and National Center for High-Performance are installed on high performance workstations to Computing can also perform on-line teaching provide real-time conversation capability for more through this network. The network architecture is than three locations simutaneously. It can also utilize shown in Figure 2. electronic white board to perform multimedia teaching material transmission and broadcasting National Taiwan University, National Chiao-Tung functions. It further integrates academic networks University, and National Tsing-Hua University have and uses services BBS, Email, WWW, Gopher, etc. joined the distance learning project. Students of Internet function for live teaching system in the these universities can register and take the courses
635 6 (Tiing-ssu) NMS IL Chung-Li International Network Hsin-Chu (Ai-KuO (Kuan-Tun'
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636672 Central Taivvin University University NMSTL DS3, LCP Chun International Network
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Figure 3. Network Architecture of Campus Network over ATM
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Figure 4. Network Architecture of Multipoint Video Conferenc System
BEST COPY MAMA 637 673 ATM network can provide inter-school cooperation The distance learning system will connect to not for better communication on education resources. only National Taiwan University, National Tsing- Hua University, National Chiao-Tung University, but also other universities around the Taiwan island through the ATM switching network. The existing 5. MULTIPOINT VIDEO CONFERENCE broadband network and ATM campus networks of universities will form an island-wide distance In addition to the DS3 distance learning systems learning network. mentioned above, a domestic DS1 video conferencing system has been established in An international DSI video conferencing system has February 1996 on the broadband ATM network [3]. also been successfully tested from Taiwan to Hong The system has been used for distance learning and Kong, Singapore, and USA to create a potential for corporate video conference for ten locations around the offering of international distance learning the Taiwan island. Figure 4 shows the network applications. architecture of the system. A DS1 permanent virtual path is established on the ATM network to connect a In order to promote life-time study and to enhance location to a correspondent port of a multipoint campus teaching and learning facilities, MOE has control unit (MCU). been undertaking a distance learning application trial for domestic universities. The long-term aim of the The system use a MCU which is located at TL for distance learning project is to connect every school the control of conference. The MCU provides in Taiwan, from primary schools to universities, to networking capabilities with transmission rate from the NII backbone network and to provide better 56 Kbps to 2.048 Mbps. In the system, a DSI rate education programs. MOE has also been planning to has been selected and can support up to 8 sites and have teaching cooperation with.the universities in up to 4 pairs of multipoint videoconferences can be Hong Kong, Singapore, and USA. held simulaneously. The MCU complies with ITU-T H.320 with additional support on functionalities and commands. 7. REFERENCES Based on this video conferencing system, the employees of CHT and its district subordinate organizations can hold a meeting without the [1] J. C. Wang, et al., NH Distance Learning System limitation of distance and can save lots of time and Trial Project, Chunghwa Telecom Labs, transportation cost. Technical Report, June 1996. [2] C. S. Ling, et al., Deployment of ATM Broadband Network Trial and Services, Chunghwa Telecom Labs, Technical Report, 6. CONCLUSIONS June 1996. ATM-based distance learning has been tried [3] C. H. Wang, et al., CHT ATM Distance successfully in Taiwan and has shown positive Learning System Plan Report, Chunghwa results and benefits. New projects of distance Telecom Labs, Technical Report, Oct. 1997. learning are under planning to extend the trial scope, to further facilitate the education opportunities, and to share education resources in Taiwan.
638674 Globalization of Education: Web-based Education & Training Using the Internet
Larry R. Cross, Ph.D. & Massimo Fuchs, (WorldpointInteractive, Inc.) and Jon Blumhardt (HCC) Honolulu, HI USA
1. ABSTRACT
Web-based delivery of higher education and corporate trainingmaterials is a current reality. This paper reports on the lessonslearned from actually putting the first full and accredited course onthe Internet for Hawaii Pacific University, the region's most rapidly growingand private institution for higher learning. Issues related to the globalizatiion of education andbusiness are discussed. Present hot topics in global electronic commerce are reviewede.g., multi-lingual,intercultural, and multi-currency dimensions of the privatization of education and training. All of these importantaspects have converged now. Real websites using these convergent technologies will be shown.The presentation concludes with a glimpse of the future profile of the global virtual education (virtual.edu) system.
sessions, and so on. This website was like most 2. BACKGROUND/ HISTORY/ CONTEXT others: it is a PROCESS, not a simple project with a beginning, middle, and end.It is ongoing and We have been interested in distance education, organic as is explained and described in the telelearning, virtual training, and so forth for many following pages. years; however, it was only in the Autumnof 1996 that the project described in this paper was It should be noted that HPU and other institutions discussed specifically and in earnest. It was of higher learning have used the web to supplement proposed to the administration of Hawaii Pacific traditional classroom instruction for some time. University (HPU) that its first (and also in The specific market niche that EM635 targeted was Hawai'i as far as we knew), fully web-based course a fully web-based coursefor graduate students, be put online by the summer of 1997 to cover the many of whom were workingprofessionals enrolled same materials contained inElectronic Marketing in the HPU Weekend MBA (WEMBA)Program. (EM635) which had been running live, and in The globalization of the learning process must person, f2f (face-to-face) since 1995. necessarily take into account in its design the fact that students may be in different places on the Due to factors involving this significant paradigm world and that they have different cultural and shift, it was not until March 1997 that the final, linguistic backgrounds as determined by the formal approval to go online was received by the Keirsey Temperament Sorter. ON-GOING authors of this paper. Everything needed to be (involving the application of formative evaluation uploaded in early May '97; so needless to say, April techniques common to the Gagne' format of was a very busy month! instructional design) were used in developing and operating this web-based instructional platform. Fortunately, the skeleton of the course was on the The design of the course utilizes a combination of world-wide web by the first (and last f2f?!) session, synchronous and asynchronous methods of May 14, 1997. During the ensuing days and weeks, presentation, to meet the needs of time and place the course skeleton was fleshed out with details, independent learners typical of a growing segment improvements, enhancements, e-mails, chat of adult learners. The initial home page usesHTML
639 675 1.0 standard format, owing to the fad that learners snail mail, FAX, phones, and physical presences -- may enter the course with various levels of e.g., a field trip to an Internet company. browsers, helper applications, plug-ins, and desktop software. The instructional design of the course takes into account the preferred learning style of most The University of Phoenix has a similar target Business and Marketing Majors, SJ (sensate market segment, but their online delivery judgmental) or ST (sensate thinking) as this mechanism is restricted to e-mail. All of these and website was like most others: it is a PROCESS, not many more programs provide quality education for a simple project with a beginning, middle, and end. the "5 million distance learners," according to Pam It is ongoing and organic as is explained and Dixon (8). "According to a recent ACE 'Campus described in the following pages. Trends' survey, 60 percent of public universities said that they plan to offer more courses through In the initial phase, learners are walked through a distance education programs." (8) checklist menu system which allows them to: 1) review the syllabus (establishes a cognitive These virtual learners often cite convenience as the precursor for the course and allows the students to major reason for choosing this educational check their entering knowledge level), 2) review alternative. Research indicates that these the qualifications of the instructors, 3) determine cyberlearners have a high motivation to succeed, computer and systems requirements, 4) setup E-mail, and several studies have quantified and confirmed 5) set up Chat, and lastly 6) determine their significant qualitative differences in the temperament style using a on-line Keirsey educational performance of such distanced learners. Temperament Sorter. Certainly, their results are no worse than traditional methods of delivering educational At this point learners are then aware of the content. performance and technical requirements of the course, have their preferred way of learning In the area of online corporate training, there are established, and can chose to proceed or not. some nice examples such as microsoft.com, mcgraw- hill.com, zdu.net, and so forth. Next, the overall structure of the course, which uses a menu driven HTML 3.2 frames capable format has Due to time and space restrictions, the focus of this hot-links for all of the modules of the course paper will be the prospective online teacher's available to the student at any time. This provides perspective on offering a single or several web- a multiple learning path capability. This design based courses per year. Of course, this is only a feature is critical in that research has shown, that small part of the overall Virtual University different learners approach the learning process picture. The authors have intentionally left the via different means. SJ learnerS like an organized, administrative and support functions of such systematic approach, step-by-step, while NT virtual education for another paper.Also, the learners prefer a more globalized approach and student's viewpoint will only be considered may quickly move through the course in any indirectly.Furthermore, the entire K-12 modality or by various learning paths. experience is outside the scope of this piece of work which concentrates on tertiary (post-secondary) The course contains 10 learning modules, with education. hotlinks to: Chat, Frequently Asked Questions, Meet the Students ( an on-line bio sketch which 3. DESCRIPTION OF THE EXPERIMENTAL contains information about each student, a photo, COURSE and their E-mail address), Glossary of terms, On- line Course evaluation, and submitted student An outline of the course, using frames technology, projects. appears in Appendix A. It covers the same material as was historically presented in the live, Within each module there are performance-based f2f course. To provide for more interactivity, the learning outcomes stated as module objectives website was supplemented by regularly scheduled (again cognitive precursors), a self pre-test (so that (and spontaneous) chat sessions, listservs, e-mail, learners can determine their knowledge level with
640 676 respect to the content of the module), a generalized standard semester time period of the Autumn and overview of the module (for NT learners), In-depth Spring academic schedules. Content (for ST or SJ learners) which may refer to off-line text information, handouts, or course 5. SUMMARY AND CONCLUSIONS textbook readings, online text, on-line powerpoint presentations, and hot links to reference areas on Considering that this was a pioneering, the Web. There are also study questions, exercises, experimental course, it is deemed a success key words to remember, and homework assignments. according to the measure that ALL of the Lastly, there is a topical question that prepares participant-learners demonstrated the required learners to participate in the weekly chat session. course competencies by: 1. Posting to the class website before the deadline The next step in this on-going process is to revise a. Their own website the course, taking into account the nature of the b. Supporting Power Point presentation performance based objectives, and incorporating related to 1.a. above. various media formats into the modularized design 2. Passing both midterm and final exams that support the presentation of the content of the 3. Participating in the course via e-mail and other course, and moves the learner through the process forms of online interactions via multiple learning paths. In some instances we will be using asynchronous presentations, induding In summary, we think we have made a solid animations, still frame graphics, short audio clips, contribution to the foundation of the emerging and short video dips based on MPEG-1 formats. Global Virtual University (GVU) by actually running a successful, graduate-level course online. Both the teachers and learners in an online We have gained considerable experience and many environment must adjust to the new realities of the insights (e.g., compare and contrast a listsery vs. a workplace which is often remote. In many societies Netscape group e-mail) from this endeavor (see there is a problem (especially for the male) NOT to Appendix B for detailed do's & don'ts) which will go to the group workplace on a regular basis. As assist us in the continuing process of building GVU such we will have to recognize the home as a bit-by-bit and byte-by-byte. legitimate place to do work too. It is our conclusion, that the substantial benefits in terms of saved time, energy, parking expenses, 4. RESULTS reproduction costs for materials, and so forth outweigh for many students the inconveniences Using the same instructor evaluation forms and associated with the limited bandwidth of the processes, the student evaluations of this course virtual dassroom.If George Gilder is correct, even exceeded the university average and were that drawback will be overcome in the imminent comparable to the preceding f2f version of the era of "abundant bandwidth." course. Much of the informal and verbal student evaluations were positive and favorable. The 6. NEXT SI hP(S) following quote is indicative of such feedback. From a technological perspective, the next things "Thanks Larry, I really enjoyed the course. that the students want is Audio Enhancement. Getting a good grade was the icing, but the cake Naturally, this introduces another level of was the learning." complexity dealing with sound cards, speakers, microphones, and associated softwarenot to Moreover, from the teacher's perspective of mention bandwidth. evaluating the learner outcomes and results, the experience was once again quite favorable as all In addition, the hardest pieces of knowledge and students met our minimum expectations. In fact, skills to transfer appeared to be in the details of some the best students exceeded our course website design and construction. Half of the requirementseven though it was a compressed 10 students can do this remotely, but we're convinced week summer (quarter) session, instead of the that the other half of the class could greatly benefit from a hands-on session. Therefore, the
641 67? optimal delivery mechanism for these course 1. In Search of the Virtual Class:Education in an materials may be a hybrid solution in the range of Information Society by John Tiffin and Lalita 10% f2f learning by doing and 90% education at a Rajasingham, Routledge, London: 1995. distance. 80/20 and 70/30 are other possibilities 2. The Electronic University: A Guide to Distance that further research and development may shed Learning Programs published by Peterson's Guides some light on. in cooperation with the National University Continuing Education Association (NUCEA), Multi-lingual, intercultural adaptations of the Princeton, New Jersey: 1993. existing curriculum for the global market is one of 3. 'Distance Education: The Wave of the Future," the next steps. Also, making it convenient for Vol. 32, No.2, The University of Hawaii, Feb. 1997. people from all over the world to enroll and pay 4. "School's Out," Lewis J. Perelman, Morrow, New their tuition and fees in the currency of their choice York: 1992. is one of our next goals. 5. "Making the Jump(s) into Cyberspace: A Discussion on Distance Learning Paradigm Shifts 7. SUGGESTIONS FOR FUTURE RESEARCH Required for the 21st Century," Jon Blumhardt and Larry R. Cross, ED Journal, published by the United A reaonable extrapolation of current trends is that States Distance Learning Association (USDLA), this course will add audio capability in 1998, video January 1996. in 1999, and VR/ 3D by year 2000. Each such step in 6. 'Distance Learning," Peterson's, Princeton, New the evolution of technology requires considerable Jersey: 1997. research into appropriate hardware, software, and 7.Guide to Alternative Education Educational courseware.It is not at all dear what the optimal Research Associates, 8th edition, 1993. path is at the present time. Hence, we'll continue 8. Virtual College, by Pam Dixon, published by to follow the Internet Marketing Maxim of Launch Peterson's, Princeton, NJ, 1996. Pages 12 & 15. and Learn or Ready, Go, Set... 9. The Red Herring (August 1997) 10. Communication News (July 1997) Java, Marimba, Castanets and so forth are already on the planning horizon too (9). 9. APPENDICES Other ideas worthy of further research are as follows: Appendix A: Course Outline Using Frames Technology amount of time spent online, amount of time in chat/ dass, 0. First Time User Front End Matter productivity of time online in dass, 1. Chat utilization of class web site, 2. Learning Community too many/few online links, 3. FAQs dass goals met, 4. Module 1: Introduction & Course Overview time spent in traditional reading vs online 5. Module 2: Effective Web Marketing reading vs doing web page, 6. Module 3: Using the Net for Business dass interaction good/bad/ ok, workload vs 7. Module 4: Flowcharting your Website discussion and benefits of each, 8. Module 5: Making Homepages typing ability 9. Module 6: WWW Browsers & Sites knowledge of HTML or 10. Module 7: Future Developments web editing prior to dass vs after, 11. Module 8: Security & NetSuce$$ knowledge of marketing before/ after, 12. Module 9: PowerPoint Presentations knowledge of chatting and other Internet 13. Module 10: What's New resources before/ after 14. Module 11: Learner Projects 15. Module 12: Instructor's Comments 16. Module 13: Final Examination 17. Module 14: Course Evaluations 8. BIBLIOGRAPHY AND REFERENCES 18. Module 15: Glossary of Terms
642 673 Appendix B: Do's & Don'ts 12. Don't hesitate to contact us via [email protected] if you are interested in pursuing any of these topics. 1. Do take advantage of this new, interactive medium--e.g., provide for online chat sessions, e- mail by listservers, browsers, and regular. Appendix C:Related Hot links (Note: All Domain Names below are preceded by 2. Don't just stick your old courseware tip online- http:/ / www. e.g., think it through as to what is most suitable for telelearning giveristhe lowest common 0. www3.worldpoint.com/vu denominator of your cyberstudents.. 1. yahoo.com 3. Do realize that this is truly a paradigm shift that has implications well beyond your own course- 2. mcgraw-hill.com -e.g., registration now requires valid e-mail addresses (both primary & secondary). 3. greenleaf.edu 4. Don't be surprised at the little details that still 4. zdu.net trip you up-e.g., one enrollee had a valid e-mail account, but he found out much to his chagrin that 5. usdla.org his .mil account was not supposed to be used for personal distance education?! 6. hcc.hawaii.edu/ -digmed / PPDLA/ PPDLA.html
5. Do keep up with this emerging technology--e.g., 7. webster.commnet.edu /HP /pages /darling/ audio and video streaming. 8. uwex.edu/ dist ed / home.html 6. Don't go too fast for your students or your institution-e.g., 3D VR is here now, but would be 9. intersource.com-lifelong/ dlsites.html overgradient for most of your stakeholders. 10. ce.utk.edu 7. Do listen to your participant-learners and accommodate them in small steps where reasonable 11. nova.edu/ Inter-Links/ education/ clistance.html and practical-e.g., online chat sessions with automatic transcripts. 12. pbs.org
8. Don't expect too much out of your institutional 13. wiche.edu resources- -e.g., full support for a telecourse (especially a new one) requires weekly (if not 14. ed.gov daily) adjustments, enhancements, tweeking, and so forth. 15. petersons.com
9. Do follow the guidelines for good instructional 16. dc.enews.com/ dusters/ detc design. 17. caso.com 10. Don't be rigid and inflexible in the midst of this dynamic chaos where things change literally 18. mit.edu:8001 / people/ cdmello/ univ.html overnight.
11. Do conduct formative (process) and summative evaluations in order to supplement the ongoing feedback procedures (kaizen).
643.09 Appendix D: Standard Module Template
A. Module Objectives:
B. Pretest
C. Overview:
D. In-depth Content
E. Study Questions
F. Exercises
G. Important Terms to Remember
H. Issues for Discussion:
I. How to meet the Module Objectives
J. References
K. Homework Assignments
L. Tidbits:
M. Extra credit bonus
N. "Chat Session"
0. Special Comment
644 660 Digital Video Representation-and Transmissiona Tutorial
Reed M. Burkhart Imedia Corporation San Francisco, USA
1. ABSTRACT The reasons for using digital representations of video are multiple; but generally derive from the flexibility and power of digital processing with integrated circuit technology via the reduction of video to the common denominator of the bit, albeit vast numbers of bits.Digital has recently become an alternative to analog for capturing, representing, storing, and transmitting visual sources for selective display.The value of any digital alternative in each case must, of course, he measured against traditional alternatives and other digital alternatives (since there arc numerous alternative implementations of digital video that meet current digital video standards). Progressive developments in the speed of digital processing, the capacity of digital storage. and the quality & efficiency of digital encoding (compression), multiplexing, and transmission have made digital video possible, and further advancements in these areas will predictably lead to additional functionality and economy, and consequently more pervasive use of digital video. This paper vies to add clarity to the spectrum of issues in digital video; including practical uses and restrictions for transmitting digital video in the environments of satellite, cable, and high-frequency terrestrial.
2. STRUCTURE OF PAPER. TV programs per each transmission channel. Although TV channels and programs are synonymous in the old hierarchy In order to understand how to get the most out of using we must now distinguish between one TV program (one digital video this paper reviews the basics of digital video exhibition of entertainment, news, or other content) and one techniques for the layperson in the following sections: channel (which is the space and resources employed to carry I.Abstract one digitally modulated signal).
2. Structure of Paper 3.3 Compatible Applications.A secondary advantage of using digital transmission for video is predicted to be the 3. Aim of Digital Representation inclusion of adjunct data in the broadcast bitstream for 4. Review of Analog Representation various compatible applications. The first such applications have been conditional access for pay-per-view or other 5. Review of Digital Representation differential service levels, an interactive program guide, and 6. Characteristics of MPEG Digital Video audio services.Anticipated future services include local weatherinformation,education,electroniccommerce, 7. Important Cases: Origination, Retransmission, and electronic mail, gaming. etc. Switching Digital representations for video also empower broadcasters 8. Conclusion and other video producers to employ digitalnon-linear 3.AIM OF DIGITAL REPRESENTATION editing, special effects,faster (or slower) than real-time transmissions, and other computer processing and synthesis 3.1Cost Savings.The video quality experienced via the of video. Many editing operations have begun employing first major digital video broadcast entertainment systems has digital uncompressed (unencoded) representations, although generally been judged superior tothat of their analog in the near future, digitally encoded video may also he used alternatives a competitive but not a technical necessity. for a very limited set of studio production and editing The main advantage of using digital transmission for video operations. Encoding of video (not only digital, but analog has been and will be the ability to use less bandwidth and as well) has been crucial to the successful implementation of equipmentforreducedoperationsandinfrastructure all video transmission systems. and is dealt with as such a expenses per program (or more programs at the same cost). key topic in this paper. Additionally, broadcast automation (made easier via digital) may also lead to operating cost reductions. 4. REVIEW OF ANALOG REPRESENTATION 3.2 Multiple Programs per Channel (Multiplex).Instead The current analog video framework is introduced briefly of one TV program per transmission channel as provided here for two reasons.There is a strong parallel between by analog technology digital technology permits multiple analog and digitalinthe use of unencoded formats for
645 BEST COPY AVAILABLE 681 production,versusencodedformats fortransmissionor video is predominantly used in video transmission.Each distribrution; and from this perspective, the situation for choice aims for the highest quality and lowest cost feasible. digital video isvirtually identical to the current analog The same rationale should he applied in selecting which situation (only with many more sub-options). Secondly, digitalrepresentation is best foranyproductionor digital video does not exist in a vacuum it often will he transmission application.Fortunately or unfortunately for preceded or succeeded by an analog format so the analog broadcasters, the flexibility of the digital video standards formats are relevant to the big picture. developed means thatthere are farmore choices to be made for digital video implementation than for analog. Traditionalanalogvideorepresentationsinclude the consolidated representations of NTSC, PAL, and SECAM 5. REVIEW OF DIGITAL REPRESENTATION (termed composite or analog-encoded) and the color-basis 5.1Unencoded and Encoded Formats Again.Digital representations of RGB, YUV, and YPRPB, etc. (termed videorepresentations,liketheiranalogpredecessors, component or analog-unencoded). involve unencoded and encoded formats; and there is a 4.1 Composite Analog. The goal of the composite similarsensibilityinusingthe unencoded formatfor encoded representations (NTSC, PAL, and SECAM) is to production(highestqualityvideo,butlessbandwidth providebandwidth-efficientvideo representation for cost- efficient) and the encoded format for transmission (still high effective live transmission.The transformation of visual quality video, and very bandwidth efficient, but with the sources into composite electronic formats is called encoding possibilityof qualitydegradationarisingfromdigital since a complex and generally lossy transformationis encoding artifacts). required to represent the signal efficiently in a limited 5.2Transitional Video System Design.Since a digital bandwidth. video system may involve display on current analog TV Composite analog encoding of video has its downsides.It sets,a digital system design should consider thefinal sacrifices the independence of color and luminance (by conversion to analog component or composite video.A fitting them in the same bandwidth), is very susceptible to transmission system is never any stronger than its weakest corruptionduringtransmission,anderrsinmotion link, and there will he some digital -video data-rate above representation for line-interlaced formats (et al.). These which there is no quality improvement for transmissions to attributes of analog encoding lead to a variety of analog be displayed on analog TV sets. encoding artifacts, including: ghosting, inaccurate color, Summarizing this example, digital transmission to digital- jagged edges of moving objects, herring-bones and other to-composite-analog converters avoids analog composite- patterns. These artifacts were deemed reasonable in order to encoding transmissionartifacts,but analog composite- achieve technologically and economically feasible color encoding representation artifacts will remain in the TV set video transmission.Digitalvideo mustalsobeencodedin itself. And since digital encoding for transmission involves order to reduce its bandwidth for feasible transmission, additionaldigitalcompression-encodingrepresentation leading to a new set of digital-encoding artifacts.Itis artifacts, there is a tradeoff between: (I)analog composite- preferable to avoid composite analog sources for MPEG encoding representation andtransmissionartifacts, and (2) encoding, sinceartifactsofbothencodingsystems analogcomposite-encoding and digitalcompression- (composite analog and MPEG digital) will then be present. encoding representation artifacts (digital transmissionis 4.2 Component Analog. The goalof component essentially free of artifacts as long as the signal-to-noise unencoded video representations (RGB, YUV, and YPRPB) ratio exceeds a threshold Eh/No signal-to-noise level). is highest accuracy representations (more robust with higher Noting this example, but thinking in general, itis always quality and fidelity) for electronic production or editing but important to consider the entire current and future system not for transmission except over short distances between environment when designing a digital video transmission studioequipment. Analog componentrepresentation system. involves three separate video waveforms, usually transmitted via three separate wired connections. 5.3Steps in Digital Representation for Transmission. Component representations are considered to he unencoded, An analog source (film, original visual material, composite and are essentially free of artifacts, but are uneconomical for or component video) is prepared for digital transmission by long-distance transmissions. six successive steps: (I) sampling, (2) digitizing, (3) source encoding (or compression which removes temporal and 4.3Analog Composite vs. Analog Component. The spatial redundancy), (4) multiplexing (in the instance of choice of analog video representation appropriate for a more than one program per channel which will frequently specific requirement demands consideration of the entire he the case), (5) channel coding, and (6) modulation. system althoughitis clear that component videois predominantly used in video production while composite
64i 2 Although thelastthreestepshavelessto do with 525 for NTSC and 576 active out of a total 625 for PAL) representation than transmission, they are necessary to one gets the pixel dimensions of a framethe higher the understand in order to evaluate performance of various numbers, the better the resolution (e.g. PAL DI is 720 x options for the former three in the context of the entire 576,NTSC 3/4 DI is540 x 480,etc.) MPEG system including determiningthetotalnumber of implementations generally require these numbers to he even programs (at a particular average hit rate) which may he multiples of 16, so 540, for example, becomes either 528 or transmitted on various media (such as cable, satellite, and 544. terrestrial). The various resolutions for color are 4:2:2, 4:2:0, etc. Since 5.4 Sampling and Digitizing. The first two steps involve a color resolution is less perceptible, color is usually provided rectangular grid of picture samples (pixels) with dimensions 1/2 to 1/4 as frequently as luminance. In 4:2:2, chrominance is according to the aspect ratio and quality level desired from 1/2 as frequent as luminance (same vertical resolution, 1/2 the representation. The horizontal and vertical dimensions horizontal resolution). In4:2:0, chrominance is 1/4 as of the sampling are termed the resolution (since pixels can frequentasluminance (1/2 verticalresolutionand 1/2 be square OR rectangular,thehorizontal andvertical horizontal resolution). In 4:4:4, chrominance and luminance dimensions in pixels does not dictate the aspect ratio). The samplesareequallyfrequent. While samplingand digitization (second) step is quite fundamental, employing digitizing are important as the first steps in generating a either 8 or 10 bits per sampled pixel. Color and luminance digital video signal, the quality of the source materialis resolutions are sometimes the same, but usually color perhaps more important.Up to this point we have been resolutionismadelessthanluminanceresolution talking about parameters of unencoded digital video. The reflecting the differential perceptibility of the human visual next section discusses digitally encoded representation. system. 5.5 Encoding with MPEG. While sampling anddigitizing Quantitative parameters exist for uncompressed have the quantitative measures detailed in the last section, (unencoded) video resolution via shorthand: for luminance encoding has no similar scientifically quantitative measures resolution (DI, 3/4 DI, and 1/2 DI), and for chrominance (at least not yet) which tell us what we would really like to resolution (4:4:4, 4:2:2, 4:1:1, 4:2:0) with vertical and know how good the picture is in some absolute sense. horizontal dimensions according to Figure I. Subjective tests where expert or inexpert viewers grade
FIGURE 1. SAMPLING DIMENSIONS OF UNCOMPRESSED DIGITAL. VIDEO
HORIZONTAL VERTICAL SAMPLES SAMPLES NTSC and PAL NTSC PAL Nimioro-CtltSOLUTIONS (L.R.) DI 704 or 720 480 576 :.528 or 544 480 576 1/2 Dl 352 480 576 WHIWMISTANCE:R-EsoLuTioNs* 4:4:4 L.R. L.R. L.R. ,rrz 4:2:2 L.R. / 2 L.R. L.R. 4:1:1 L.R. / 4 L.R. L.R. 7.Z.V" 4 :2:0 / 2 L.R. / 2 L.R. / 2 4:0:0 Monochrome DI (or full Dl) is shorthand language for full horizontal video quality on some numeric scale is one current resolution of luminance sampling (usually 720 active out of approach to quality assessment, but businesses relying on a total of 864 samples per line).Vertical resolution is encodedrepresentationofvideoareconcernedwith generally coincident with the number of active lines of additionalissues.particularlyqualitycomparisonsto video.3/4 Dl, and 1/2 DI have 34 and 1/2 the number of alternative video sources.Recognizing the lack of any horizontal luminance samples as Dl, respectively. Together uniform quality measure l'or digitally encoded video, the with the number of lines per frame (480 active out of a total further discussion on encoding seeks to clarify the basics of
647 683 MPEG encoding and multiplexing, including both what is MPEG digital bitstream.An example of MPEG temporal required and what is sacrificed in order to gain efficient dependence is that by design a frame encoded as B-type is MPEG video compression. insufficient to replicate the original unencoded frame (which it was intended to represent) without access to past and The aim of source encoding is maximizing video quality future reference frames (I and/or P). Therefore, editing and while minimizing channelbandwidth requirements by switching of MPEG is no longer as simple as it was with encoding at the lowest possible bit-rate. To do this, MPEG NTSC, PAL or component video. In fact, the more efficient encoding assigns bits to represent video (and audio), taking the MPEG encoding, the longer the periods of bitstream advantage of redundant or predictable characteristics. The interdependency (GOP lengths,betweensuccessiveI- current video source-encoding standard-set derives from frames) and the more difficult the bitstream is to edit or MPEG-2 (actually a decoding standard, also known as ISO switch.Spatial dependency similarly inhibits any editing 13818 or H.222.0, developed by the Moving Picture Experts which involves alteration or superposition of images. Group a joint technical committee of the International OrganizationforStandardizationandtheInternational 5.7 Options within MPEG. Therearecategorical ElectrotechnicalCommissionwith the International groupings for MPEG encoding regimes (termed Profiles and TelecommunicationsUnion,respectively). MPEGis Levels) accordingtoFigures 2 and 3(adaptedfrom described in detail by a variety of sources',","'. reference i. for an excellent review of MPEG, see Dr. Sikora's complete referenced article).The most popular MPEG is a suite of standards for digital video decoding (it MPEG application category for broadcasting is Main Profile specifies an MPEG bit-stream structure so that all MPEG at Main Level, and includes 4:2:0 color resolution and up to decoders can take it apart, but it does not specify how the bit stream gets put together).Thinking of the broadcasting FIGURE 2. UPPER BOUND OF PARAMETERS FOR environment, the underlying algorithms for MPEG were EACH LEVEL OF MPEG selected so that MPEG decoders could be made much more cheaply than encoders by putting as much of the MPEG LEVEL PARAMETERS complexity in the encoder (and as little in the decoder) as 1920 samples / line (horiz. samples) possible. 1152 lines / frame (vertical samples) HIGH MPEG uses mathematical algorithms that represent TV 60 frames per second (fps) frames as composed of macro-blocks, and blocks, with 80 Megabits per second (Mbps) associated motion-prediction vectors using only frame- 1440 samples per line internal references (for I-type frames); internal- and past- 1152 lines per frame HIGH 1440 frame references (for P-type frames); or internal-, future- 60 fps and past-frame references (for B-type frames).For the 60 Mhps uninitiated, a frame is analogous to one of a sequence of still 720 samples per line pictures, which in quick succession (for example, 24 to 30 576 lines per frame per second) become motion video.It is common to use a MAIN 30 fps repeating pattern of, for example, one I frame, followed by two B frames, followed by a few triplets of PBB, then 15 Mbps repeating the entire pattern. The frames from one I frame to 352 samples per line 288 lines per frame the next are called a group of pictures, or GOP, such as LOW IBBPBBPBBPBB (followed by IBBPB...). 30 fps 4 Mbps 5.6 Redundancy in Moving Pictures Spatial and Temporal Dependence in MPEG. MPEG takes advantage full D1 luminance resolution at up to 15 Mhps although of predictability in the picture and in picture motion also actual data rates in use are generally below 7 Mhps. termed spatial and temporal redundancy which MPEG MPEG deals differently with the different source types of vies temporarily to remove for transmission efficiency, then film (film-mode MPEG encoding, suitablefor 24fps replace again, to recreate an accurate representation of the progressively scanned content), frame video (for video original. The higher the redundancy during a portion of a captured frame by frame), field video (for video captured video program, the lower the hit rate required to represent it field by field) and telecine video (for film converted to during that time.The most efficient encoding yields a video).Use of film-mode encoding for field-format video varying bit rate inversely related to spatial and temporal sources wastes bits and yields aninefficient encoding. redundancy. Noting this example, but thinking in general, it is important Removing spatial and temporal redundancy comes at the to match those particular MPEG implementation options cost of creating spatial and temporal dependence in the best suitedtoaspecificrequirement (whether source
648 664 material requirement or another requisite element of the implementation of an -MPEG-based broadcast transmission application environment). structure that takes advantage of MPEG's rich feature-set for the entire range of possillle source types and system 5.8Multiplexing. Remember that the aim of digital configurations. representation for transmission is primarily to reduce the transmission bandwidthandtransmission equipment An easy but inefficient multipleximl solution is to employ a required per program, to implement automation, and to CBR allocation for each program.In this case, selection of permit the transmission of adjunct data. The primary issues CBR programs from among a CBR multiplex of one for digital video multiplexing are that: (I) MPEG's most transmissionsegmentfor a different CBR multiplex efficient representation of a program is a varying hit rate grouping in a successive transmission segment is virtually (equivalently variable hit rate, or VBR) representation with unconstrained. average hit-rate between I and 4 Mhps, and (2) most Alternatively. using the most efficient VBR MPEG digitally transmission channels are designed for constant hit rate encoded representation with stat-muxing (inherently VBR) (CBR) use at between 20 and 50 Mhps.The method creates a dependency among the programs inthe VBR employed to lit multiple VBR programs in a fixed CBR multiplex: and selectionof programs from one VBR channel is termed statistical multiplexing (or stat-muxing). multiplexfor inclusionina successive VBR multiplex Stat-muxing multiple VBR MPEG-encoded programs into a requires further management of the second multiplex. This CBR channel is necessary to reach the most efficient use of is called statistical re-multiplexing. MPEG encoding for transmission. FIGURE 3. ALGORITHMS AND FUNCTIONALITIES SUPPORTED WITH EACH MPEG PROFILE
PROFILE ALGORITHM HIGH(the Advanced Television Supports all functionality provided by the Spatial Scalable Profile plus the provision Systems Committee, ATSC, in the to support: U.S. standardized U.S. HDTV as a I. 3 layers with the SNR and Spatial Scalable coding modes subset of this profile) II. 4:2:2 YUV-representation for improved quality requirements SPATIAL SCALABLE Supports all functionality provided by the SNR Scalable Profile plus an algorithm for: I. spatial scalable coding (2 layers allowed) II. 4:0:0 YUV-representation SNR SCALABLE Supports all functionality provided by the Main Profile plus an algorithm for: I. SNR scalable coding (2 layers allowed) II. 4:2:0 YUV-representation MAIN Nonscalable coding algorithm supporting functionality for: coding interlaced video II. random access HI. B-picture prediction modes IV. 4:2:0 YUV-representation SIMPLE includes all functionality provided by the MAIN Profile but: does not support B-picture prediction modes 4:2:0 YUV-representation
Early implementors of MPEG did not implement stat- Statistical remultiplexing is accomplished in one of two muxing (theyused CBR multiplexinginwhich each ways: either using MPEG VBR encoders to control the program was allocated a fixed hit rate), since they were aggregate hit rate (encoder -dies ted stat-muxing). or using a happy to achieve a 5-fold transmission-cost reduction at the new technique whereby the aggregate bit rate is controlled time, although 10 or even 20-something fold transmission within the multiplexeritself (such as with arecoiling costreductions mayhe possiblewithstat-muxing multiplexer). (depending on other system parameters and quality desired). 5.9Encoder-effectedStatistical Multiplexing. Current The challenges of such stat-muxing come about because stat-mux implementations either employ feedback from the transmissionrequirementsfrequentlyinvolvemultiple multiplexer to the encoder for each pro gram making up the transmission segments (each of which may employ stat- multiplex or employ a control circuit among these encoders muxing) and the program multiplex groupings mar change to effect the statistical multiplex.In either case a useful and from transmission segment to transmission segment and also descriptive term for this type of statistical multiplexer is an from time to time.A related challenge is the uniform encoder-clpried In the instance of
649 685 remultiplexing,encoder-effectedstatisticalmultiplexers operators) are expected to use one of the more efficient 64 require decoding of incoming multiplexes so that a set of or 256-QAM (Quadrature Amplitude Modulation) -.at about VBR encodersallworking together can constrainthe 6 or 8hits /sec. /Hz..orperhapsI 6-VSB atabout8 maximum aggregate hit rate to the channel capacity. In fact hits /sec. /Hz (implementation inefficiencies practically you could call an encoder-effected slat -mux an encoder- reduce these integer factors by 10 to 30%). This means that constrained stat-mux since all of the encoders must he cable & terrestrial channels can carry about 2 to 4 times the colocated (generally next to the multiplexer). One downside number of digital TV programs as satellites on: similar of this approach is that a second MPEG encoding must he bandwidth channels. performed; and in all current implementations, this second A coarse rule -of -thumb is that cable & terrestrial can carry encoding involves further erosion of video quality, called the same number of channels in their 6 or 8 MHz as in a 20+ generational loss (some estimate that a single regeneration MHz satellite transponder channel.Of course, the lower causes a 30% quality reduction).Other downsides of this modulation efficiency of satellitesis counter-balanced by approach are that all of the encoders and multiplexers must he from the same manufacturer, and many additional their continental reach which is not available via cable or terrestrial broadcast. encoders and decoders are required. 6. CHARACTERISTICS OF MPEG DIGITAL VIDEO 5.10Recoding Statistical Multiplexing.An alternative approach is a stand-alone VBR multiplexer/remultiplexer, What is good performance whenit comes to sampling. which manages the aggregate bit-rate by making digitizing, vource encoding. multiplexing, channel coding quantization adjustments in the multiplexer itself, without and modulation? Analogvideobroadcastqualityis decoding the MPEG program (a recoding multiplexer- such measured ina convenient continuous scale with simple astheCherry Picket-1'm currentlybeingdevelopedby values like 54 dB signal-to-noise ratio: unfortunately, there Imedia).This approach avoids generational loss, and also is no comparable measure for digital video quality. avoids the additional decoders and encoders needed in the Only subjectivestandardsareuniformly agreedtohe encoder-effected approach to statistical remultiplexing. By adequate to fully characterize performance of video source workingautonomouslyof anyencoders, a recoding encoding and multiplexing.So we always ask. "hon does multiplexerpermits locally and remotely encoded sources the resulting picture look?''This will he the test for the selected from among any type of prior multiplexes to he efficiently combined in a new highly-efficient statistical foreseeablefuture,eventhoughmore andmoretest equipmentisbecoming availabletoquantify MPEG-2 multiplex,includinglocaladvertisementsorDigital parameters in useful ways. Versatile Disk (DVD). A common way to 5.11 Adjunct Data. An additional benefit of the recoding characterize MPEG -2encoding performance is to associate a described video quality (for multiplexer approach is that with free running VBR encoded example,"broadcastquality-)with acertainbit-rate. programs being combined by a recoding multiplexer, there However, some content (e.g. sports) requires more hits for will he occasional space over for latency-insensitive adequate .representation than other less-complex content. adjunctdata. Itisour understandingthatno such and MPEG-2 encoder performance varies among statistically spare space is available for adjunct data when an manufacturers duetovariationsinMPEG-encoding encoder-effected statisticalmultiplexerisused, sinceit implementations and the complex nature of MPEG. seeks to fill the entire multiplex capacity with video. Francois Fluckiger, deputy head of networking at CERN 5.12 Channel Coding and Modulation. The last two parts (the research institute where the World Wide Web was of the digital transmission preparation process are channel horn) shows digital video Quality vs.Bit Rate without coding and modulation, which are closely related, and statisticalmultiplexing (included here asthefirstfour sometimes are one-and-the-same function. Channel coding columnsofFigure4) inhishook,"Understanding vies to minimize channel transmission errors by using error- Networked Multimedia'.-In these first four columns, Dr. correction and error-detection algorithms, and modulation is Fluckiger solely addresses the issue of source encoding, not the method of putting bits on a channel. statistical multiplexing.The hit-rates listed in columns 3
In order to work with the low signal-to-noise ratios of and 4 61 Table I arc constant-bit-rate (CBR) values (no satellite channels, satellite broadcasters typically use QPSK statistical multiplexing).Broadcast experts may not yet (Quadrature-Phase-Shift-Keying) modulation achieving a agree on the actual prelthed constant-hit-rates for various bits (per second) per Hertz of a little less than 2. Terrestrial quality levels and Dr. Fluckinger's CBR estimates in digital television broadcasters in Europe plan to use Coded column 4 of Table Iare aggressive (except for HDTV) - but Orthogonal Frequency Division Multiplexing (CO-FDM) it is useful to have someone's numbers as a reference point. and in the U.S., 8-Vestigial Side-Band (8-VSB) both at about 4 hits/sec./Hz. Cable broadcasters (i.e. cable system
650686 With CBR MPEG, the hit rate is constant, while picture (programs) happen to be gushing at that time. your mouth quality varies inversely with picture complexity; whereas can not accommodate the onslaught and some of the liquid VBR MPEG aims for constant video quality as picture is lost (buffer overflow).The solution for the analogous complexity varies, so does the hit rate to maintain more MPEG VBR transmission switching problem is always to. uniform picture quality. When employing the more efficient know about the decoder buffer status and to be able to adjust statistical multiplexing using VBR, the preferred average program hit streams to prevent overflow or underllow hit -rates of Figure 4 will he noticeably reduced.Typical conditions. Buffer management is required whenever using averagehit -ratesanticipatedfor VBR stat-muxed TV VBR. programs are shown in the last column of Figure 4.Of 6.3 VBR multiplexing.Much has already been said about course the performance of a single VBR program in a multiplexing. The initial consequences can he summarized multiplex is related to the entire statistics of the multiplex. thathitrate and hitstream management isrequired to including the number of programs in the multiplex. manage multiplex and decoder huller constraints: and that 6.1Optimal MPEG.Primary pre-requisites for efficient the best technique for such management avoids generational use of MPEG can he summarized as the use of VBR loss by effecting programhitratecontrolwithinthe encoding and VBR statistical multiplexing with infrequent multiplexerindependent of any MPEG encoders. I frames.Explanations follow, including constraints for 6.4 Infrequent 1 frames.Since I frames are entirely self- each pre-requisite. constructed, they forM a convenient reference point in the 6.2 VBR encoding.Just as your mouth buffers the liquid MPEG hitstream for switching (assuming closed GOPs. entering your throat when drinking from a cup while which means that I frames are only usedfor forward experiencing a bumpy ride in a vehicle, so the decoder video prediction, and consequently that GOPs are independent).
FIGURE 4. QUALITY VERSUS BIT-RATE Quality Technique Unencoded Encoded Encoded or standard Mbps(CBR) Mbps(CBR)Mbps(VBR) 2 3 4 5 HDTV 1920x1080/60fps
Uncompressed 2000
Compressed MPEG-2 25 to 34 10 to 15
Studio-Quality digital TV
Uncompressed ITU-R 601 166
Compressed MPEG-2 3 to 6 2 to 5
Broadcast-quality TV MPEG-2 2 to 4* 1.5 to 3**
VCR quality MPEG-1 1.2 1.0
Videoconferencing H.261 0.1 0.05
*4 Mhps and **2 Mhps will be used for subsequent examples inthis paper as straw/turn representative figures for CBR vs. VBR encoding and multiplexing. buffer buffers the varying number of program hits parsed Self-constructed frames (1 frames) have significantly higher from a CBR transport stream (the video stream formed by hit rate representations than predicted frames (P and B) by a nzultiplexing/remultiplexing multiple VBR programs).If you suddenly switch from one cup to another (analogy to switching between MPEG hit streams) and both cups
651 687 Figure 5. CBR Multiplexing vs. Statistical Multiplexing for Cable, Satellite, and Terrestrial
Channel Usable Total Typical No. Bandwidth Bandwidth Bandwidth Analog Digital Aggregate Channels (MHz) (MHz) Available Modulation Modulation Capacity 'A' `B' `C' `D' `E' 'F' (M bps) Cable 70 6* 400 450 AM - VSR 04 QAM 2100 Satellite 32 20+ 700 1000" Analog FM QPSK 96 Terrestrial 10 6* 60 60 AM VS13 8 VS13*" 20 *NTSC, PAL is 8 **with 2X freq. reuse *or CO-FDM
Approx. `A"B' MHz channels
Approx. 'C' usable of Old Analog Method `D' total MHz
CAPACITY in No. Programs CABLE 70 SATELLITE 32 TERRESTRIAL 10 Modulation = 'E'
B MHz CBR Multiplexing Bits @ 4 Mbps CAPACITY in Time No. Programs CABLE 525 SATELLITE 240 5 to 8 CBR TERRESTRIAL 50 programs per channel B MHz or-- Modulation = 'F' VBR Statistical Multiplexin @ 2 Mbps average Bits Time CAPACITY in No. Programs .2r CABLE 1050 10 to 16 R programs SATELLITE 480 per channel TERRESTRIAL 100 144 B MHz --0*
CAPACITY INNo.PROGRAMS = No.OF CHANNELS XNo. orPRooRANts l'ER CHANNEL . (Parameters are Chosen for Example Comparison OnlySignificant Variations Exist)
652 688 factor of as much as 10 or so (900% or so more bits). live (as in the case with news origination), the content is Therefore, itis clear thatitis desirable to use I frames played out from a storage device. sparingly to lower the bit rate, while still targeting the same The main goal of program storage(or archiving)is high picture quality. Each P or B frame between successive maintaining quality for subsequent use (editing or broadcast on another frame (I or I frames is dependent in general origination)at reasonable cost and operational convenience, P, or both), sacrificing bit stream independence. including the cost of space.The future is expected to The constraints associated with these efficiency- involve much more digital storage, as costs inevitably come prerequisites are the need for special advancedmultiplexing, down, and as capacity increases.But what digital video remultiplexing,andswitchingtechniques to achieve superior format is suitable for storage in the new multiprogram TV (generationallylosslbss and low averagehitrateper environment: uncompressed, lightly compressed, or highly program) digital transmission and switching. compressed? Of course, each fills a different role. 6.5 Program Capacity For Cable, Terrestrial, And After recognizing the transmission efficiencies of MPEG Satellite.The implications of statistical multiplexing on VBR encoding followed by scat-muxing, many broadcasters program capacity performance vary according to are currently investigating converting their analog archives transmission channel type: cable, satellite,terrestrial, or to MPEG VBR storage, so that the digital format is ready other. Figure 5 shows the comparative difference in number for efficient transmission.(media has introduced the first of possible TV programs using CBR encoding, token- media asset management system that encodes and stores multiplexing (simple combining) & transmission versus programsin MPEG VBR, and assembles them(via VBR encoding, stat-muxing & transmission are shown for software) in a statistical multiplexfor efficient playout. cable, broadcast terrestrial television, and satellite. The This system focuses on efficient storage for transmission, system parameters will vary significantly from one instance saving cost in both storage equipment and transmission to the next.For example, cable system bandwidths range equipment (for example, expensive satellite transponders). from 350 to 950 MHz or more, with common capacities Applications include pay-per-view, near-video-on-demand, between 450 and 750 MHz. or other pre-recorded content storage and distribution, Stat-muxing yields a significant increase in the number of including pre-recorded interstitials (e.g., advertisements). programs possible on a channel. Increasing the number of 7.2Efficient Transmission Of Live Content.Ideal live programs is only one of the options and implications of digital television transmission involves only encoding once. much higher channel transmission efficiency. Another clear Once encoded, a television program ideally propagates error implication is a reduction in the need (and related expense) free via channel coding which corrects errors through a for channel transmission equipment since fewer channels variety of possible channels, including multiplexing and are required to transmit the same number of TV programs. remultiplexing as in Figure 6.MPEG makes necessary Improving video quality or adding adjunct data services (for compromises to achieve this ideal goal. These compromises example Internet) are still other valuable options. are best understood in light of the associated constraints. thekeyperformance Now thatwe havereviewed Efficient-MPEGprerequisitesresummarizedareVBR advantages of digital video, and the key parameters which encoding and VBR multiplexing with infrequent I frames. are involved, we will look at specific issues for broadcasting The "Constraints resummarized are specialmultiplexing, archived and live content. remultiplexing, and switching techniquesincluding buffer 7. IMPORTANT CASES: ORIGINATION, management andrecodingmultiplexing (to maintain high- RETRANSMISSION, AND SWITCHING. efficiency remultiplexing without generational loss). In order to visualize the broadcast requirements that need MPEG has been implemented with suboptimal efficiency special handling in MPEG, refer to the general broadcast (better efficiency than analog, but less than what MPEG diagram of Figure 6. permits) via constant hit -rate (CBR) encoding and with frequent 1 frames to facilitatemultiplexing, remultiplexing, 7.1 Efficient Storage & Origination of Archived andswitching.Up to now, suboptimally-efficent MPEG Going from left to right in Figure 6, content Content. (using CBR with frequent I frames) has been the only originates at: the news van, prerecorded content originates at practicaloptionforswitchingMPEG; and,withthe the studio (live news from contribution satellites does not exception ofencoder-effected statistical multiplexing(which local programs & advertisements originatehere), and hasitsown additionalconstraints),alsofor MPEG originate at the three redistribution sights for satellite, multiplexing and remultiplexing. terrestrial, and cable (programs received from distribution satellites do not originate here).Unless the origination is 7.3Grooming Digital Multiplexes Also Known As Cherrypicking.Efficient grooming requires an advanced
653 689 techniqueformultiplexing/remultiplexing. Grooming 7.4 Bit Rate Adjustments.If hit rate adjustments become means the selection of desired programs from among necessary,theymustheclonecarefullytominimize various distribution multiplexes for remultiplexing into new perceptible video quality loss.At the same time, decoder downstream multiplexes for further broadcast or buffer conditions must hetrackedtoavoidover- & distribution. The terms grooming, cherry picking, and underflow conditions which translate to frame-skipping or remultiplexing (or remuxing) are interchangeable. frame-freezing (or perhaps worse).
FIGURE 6. Contribution Distribution Satellite Satellite Direct Broadcast Satellite
Studio
Tape 00
Local Program and Disk Ad- effl Insertion
Camera
As discussed earlier, efficient multiplexing (or Lossy hit -rate reduction m.ty he accomplished by fully remultiplexing) is variable-bite-rate and statistical. decoding the MPEG program to uncompressed digital or Statistical multiplexingreliesontheabilitytoadjust analog (the pixel level), followed by an additional reduced- program bit rates.In divvying up the bit-rate of an MPEG bit-rate MPEG encoding of the program (the way current transportstreamoneshouldlookineverypossible encoder-effectedstatisticalmultiplexers accommodate dimension to load it efficiently. remotely encoded sources).This is undesirable sinceit results in generational-quality-loss (continuous quality loss). By tracking the decoder buffer status, an advanced statistical Alternatively, a recoiling (re)multiplexer avoids multiplexer can delay or advance the transmission of bits generational loss by adjusting the hit rates internal to the from one program relative to those of another to avoid multiplexer (without decoding, to the pixel level) only as a coinciding bit rate peaks. If during some period the sharing- lastresorttomeetthe multiplexhit -rateconstraint of-program-spaceand the-adjusting-of-bits-in-time are (infrequent quality loss only as a last resort). insufficient to keep the instantaneous hit-rate below the channel capacity, the bit-rate must be adjusted for some or A common example application is satellite distribution of a allprogramsinthemultiplex. Ideally,suchhit -rate statisticalmultiplextocablehead-ends(orterrestrial adjustments will yield graceful and minimal degradation to broadcast network affiliate stations). followed by a different video-quality. statistical multiplex formed in the headend (with one or
654 6 more programs from the first statistical multiplex) to the 7.6Digital Editing. Editingmay range from simple viewer. Ifefficientgroomingwith a recoding switching to performing cross-fades and wipes, introducing (re)multiplexeris employed, then the program quality is logos or even warping images. Simpleswitchinghas minimally reduced only at therecodingpoints. On the other already been discussed.The other editing operations hand, if the program is fully decoded to the pixel level then cross - fades, wipes, logo-introduction, warping, etc. are re-encoded using one of today'sencoder-effected statistical generally not possible in the MPEG compressed domain and multiplexers,the quality will he continuously degraded. require full decoding to the pixellevel before the edit followed by re-encoding after the edit. There is a preferred Summarizing, a recoding(re)multiplexer accepts encoded bit way to fully decode for editing that minimizes generational streams and accommodates remotely encoded programs at losses. Generational losses are minimized when the original high efficiency and without generational loss. On the other encoding decisions are replicated during re-encoding to the statistical remultiplexer hand an encoder-effected extent possible. regenerates (decodes and then re-encodes) the video thus introducing generational loss. 8. CONCLUSION. 7.5Digital Ad-Insertion and MPEG Switching.Both The efficiency(quality,quantity, and cost) of current digital ad-insertion and local program insertion into MPEG implementations of MPEG-digital-broadcasting are limited bit streams require switching of the MPEG bit stream. The by the use of:constant-bit-rateencoding,frequentI frames, issues for switching MPEG are the temporal constant-bit-ratemultiplexing, orencoder-effectedstatistical interdependencyof the MPEG bit streams, variations in multiplexing. buffer and clock states between the two signals to he Advanced techniques, including arecodingmultiplexer, are switched, and remultiplexing the newly constituted currently being developed by 'media for introduction in multiplex. 1998 withnone of theselimitations. The advanced Remultiplexingisrequired since the introduction of a techniques will allow digitally encoded transmissions from different bit stream in a statistical multiplex may invalidate source todestination,including grooming of incoming the original multiplex coordination (exceeding the channel multipexes, MPEG-switchingforad-insertionorlocal bit rate).Therefore any solution of the switching problem program insertion, and multiplexing of latency-insensitive requires a solution to thestatistical remultiplexingproblem adjunct data without the current compromisesof (preferably using arecodingmultiplexer sinceit avoids regenerationalloss,bandwidthinefficiency,orsingle- generational losses). Thus, the following two solutions are vendor compatibility. These techniques include novel required for MPEG switching: (I) bit-rate and bit-stream transformation of an encoded bit-stream hit -rate, and novel management to manage multiplex and decoder buffer statistical multiplexing and address the most challenging constraints, and (2)bit-stream temporal-dependency implementation areas (encoding and multiplexing) for a management. The first of the two isnecessary for digital video transmission system. statistical multiplexing/remultiplexingand both are required Togetherwith educated and discriminating choices for switching. regarding other parts of a digital video transmission system Different approaches to dealing with temporal dependency (e.g.sampling,digitizing,channel coding,modulating, involve either accommodating it or temporarily removing it storing, automating) an optimum implementation can he around the switch point. The goalis minimal quality realized. degradation and flexible switching. Depending on the application, flexible switching may mean switching at the References nearest I frame (which is largely why I frames exist), or at an arbitrary frame (which is possible, but more difficult to T. Sikora, "MPEG Digital Video-Coding Standards," accomplish smoothly). IEEE Signal Processing Magazine,Vol. 14, No. 5, pp. 82- 100, Sept. 1997 Since a decoder has to wait for anIframe to begin constructing a new program which it has begun to receive, B. G. Haskell, A. Puri, and A. N. Netravali, "Digital the inserted program will always begin with an I frame. A Video:An Introduction to MPEG-2,"International terminatingprogram maybeterminatedjustbefore Thompson Publishing, 1997. transmission of either an I or a P frame. The simplest J. L. Mitchell, W. B. Pennehaker, C. E. Fogg, and D. J. switching technique involves buffering both streams enough Legal!, "MPEG Video Compression Standard," tointroduce them to one another at such appropriate International Thompson Publishing, 1997. switching points. irF. Fluckiger, "Understanding Networked Multimedia," It is important to emphasize that the problems ofswitching Prentice Hall. 1995. andmultiplexingare related and require a common solution.
"8 9 1 ALOHA TO THE WEB
Norman Abramson ALOHA Networks, Inc. 1001A O'Reilly Avenue The San Francisco Presidio San Francisco, CA, 94129 norm @ alohanet.com
1. ABSTRACT
Wireless access to the Web at the end of the 20' century is slow, unreliable, and expensive. In this paper we provide an overview of wireless Internet access, emphasizing four basic architectural features of networks which must be addressed before wireless data can achieve the levels of acceptability achieved by wireless voice. These features are (1) a client server architecture (2) asymmetric data rates (3) connection free operation and (4) wideband performance. Conventional ALOHA channels address the first three of these architectural features and ALOHA channels are commonly used for web access. But in a wireless setting such channels lack the wideband capabilities demanded by today's users.Spread ALOHA Multiple Access (SAMA) combines the proven simplicity and operational flexibility of an ALOHA multiple access channel with the high bandwidth and high throughput of a Spread Spectrum channel.
2. INTRODUCTION architectural features of networks which must be addressed before wireless data can achieve the Wireless access to the Web at the end of the levelsof acceptability achieved by wireless 20' century is slow, unreliable, and expensive. voice. ARDIS, Mobitex and CDPD each employs a variant of a conventional ALOHA channel to 3. WIRELESS ARCHITECTURE provide a nominal10 kbs to20kbs network. The useful data rate delivered to the end user is The first of these architectural fe6tures is that of well below 10 kbs for the same reason that a topology.Although some networks are based 10 Mbs Ethernet delivers much less than 10 upon apeer-to-peer RF architecture,most Mbs. Inadditionthe symmetric channels networksarebasedupona client-server employed by these data services are derived architecture in order to obtain significant RF link from a voice traffic model which seems ill suited advantages in both directions and in order to to the highly asymmetric traffic generated by better match the logic of most user applications. today's Web surfer. A second key architectural feature of wireless Asymmetric broadcast data channels offered by data networks, asymmetry,isrelated to the DirecPC and DirecDuo provide a nominal 400 client-serverdecisionbut is alsoclosely kbstotheuserbutrequire an awkward connected to the basic data rate asymmetry of telephone connection for the reverse multiple most network applications. Itis perhaps not access link from the user. Similar multiple surprising that surfing the Web and many data access limitations arise in the use of wired cable base applications provide highly asymmetric modems for data. data rate requirements for the network. But it is In this talk we provide an overview of wireless often not appreciated that many other important Internet access, emphasizing fourbasic 69? 656 applications such as Email and teleconferencing exhibit similar asymmetries. The third architectural feature discussed in this talk deals with the advantages of putting aside the two way voice paradigm of a connection oriented service. Ina connection oriented service a connection is established between the transmitter and the intended receiver before useful informationissent. The connection oriented service establishes a minimal value of latency for the transmission of packets in a packet network and dedicates a full time channel resource to a transmitter which may require only intermittent use of that resource. A connection free accessarchitecture,such as usedin Alohanet, Ethernet or theIP portion of the Internet TCP/IP protocols can provide zero latency and high efficiency in the use of shared channel resources for bursty data. The last feature required for truly pervasive wireless access to the Web is that of wideband operation. Conventional first generation ALOHA channels and their derivatives are all based upon a connection free, asymmetric client-server architecture, but in the wireless context they are condemned to narrowband operation for the same transmit power reasons which restrict TDMA architectures.
4. WIDEBAND WIRELESS TO THE WEB
SpreadALOHAMultipleAccess (SAMA) eliminates the restriction to narrowband channels required by first generation ALOHA protocols. SAMA isa second generation version of the classical ALOHA protocols which canprovidethe widebandmultipleaccess capabilitiesrequiredfortheapplicationsof today. SAMA combines the proven simplicity and operational flexibility of an ALOHA multiple access channel with the high bandwidth and high throughput of a Spread Spectrum channel.
693 657 How Telcos Can Make Money With The Internet
Mike Heller Cisco Systems, Inc. San Jose, California, USA
1. ABSTRACT
Traditional telephone companies worldwide have been relatively slow to get into Internet services perhaps due to a feeling that the Internet is mainly for computer hobbyists. While this may once have been true, businesses today are finding the Internet to be a key tool in selling new customers, in delivering quality customer service, and in managing operations costs.
But can the Internet be good business for a small or medium size telco around the Pacific Rim? In this paper, the author draws upon experiences with hundreds of telcos and ISPs around the world to identify the strategies and critical success factors for a telco to succeed with the Internet.
2.0 The Amazing Internet telephone networks revolutionized business in the days of the telegraph and messenger, the Internet is starting The Internetis rapidly becoming one of the most to have this effect today. amazing phenomenon of the 20th century, and may well hold that honor long into the next. Enterprises of The Internet began as a tool for university researchers, alltypes now usetelecomservicestogaina and then became almost a hobby for university students competitive advantage, and carriers that offer Internet- and othersinthe computer field.But withthe based services tailored to that end will grow revenues invention of the World Wide Web, the Internet added a and market share. But many traditional telephone new dimension, more akin to a worldwide library of companies have been slow to embrace this revolution, information than to a private messaging system. When or at least with much enthusiasm. Perhaps it's a feeling most business people today speak of the Internet, they the Internet is mainly for computer hobbyists, far from actually have the World Wide Web in mind, as it has the more familiar voice services. Or telcos, often run by rapidly become the part of the Internet that most people managers with a long-term view, may be thinking the are familiar with. Internet is just a fad, and will quickly fade away. What ever the reasons, it'sinteresting to see the leading So why is the Internet not just a fad? There are three telecom companies worldwide, with a few exceptions, major reasons: the emergence of high-value business do not seem to be leading the Internet movement, but applications, the development of intranets within large either bringing up the rear or, in some cases, watching companies and organizations, and the emergence of from the sidelines. various vested interests.
In this paper, the basis for the rapid growth of the Electronicmail between employees,once a Internet will quickly be covered, along with the factors convenience, is increasingly valuable. But increasingly, that will control its future success. The reasons the companiesaremovingtoputbusiness-critical Internet is a good business opportunity for a Pacific applications on the Internet. A recent example is NEC, Rim telco, what decisions are required, and examples the Japanese electronicsgiant. NEC hasseveral of services to offer will be explored. hundred key suppliers around the world, and has announced thatit will move all purchasing to the Figures 1, 2, and 3 offer a quick view of the growth of Internet. Naturally when a company puts purchase the Internet, past and future. The amazing growth in orders, shipping notices, invoices, and such on the usersisshown, along with forecasts of two key Internet, they are making a strong commitment. And applications, Internet voice traffic and Internet-based NEC is only one such example. Many people are aware electronic commerce. that catalog sales companies like LL Bean do lots of business over the Internet, and new companies, such as book-seller Amazon.com, have sprung up that do 3.0 But How Far Can It Grow ? business only on the Internet. As another example, Cisco Systems did over US$2 billion dollars worth of There are several reasons why the Internet is not merely business over the Internet, amounting to almost 1/3 of a new technology fad, but ratherisa fundamental its total sales. change in business communications. Much like the
658 694 Figure 1: INTERNET USERS AND GROWTH Usersin Millions Users Worldwide 145 Over 200% growth in number of Internet users 125 from 1994-2000 105 85 65 45 25
5 994 1 1995 1 1996 1 1997 1 1998 I19F91.2000 Source: eland 1996
Figure 2: IDC 1996 FORECAST OF INTERNET VOICE SERVICES USERS 16M
Number of Users
1996 1999 Source: IEJC/LItli:1999
Figure 3: IDC 1996 FORECAST OF ELECTRONIC COMMERCE
659695 A second reason to believe the Internet is here to stay 5.0 The Greatest Business Opportunity Ever in the rapid emergence of Intranets. These are the internal corporate networks of old, but builtusing So while the Internet is clearly a good game to be in, Internettechnologies. As shown inFigure4,a choosing exactly how is a little tougher. While major significant reason for this growth is the ability, using businesses will be attractive customers,it is also the Internet standards such as TCP/IP and HTTP, for area where a localtelco can expect thegreatest type of desktop system, be it PC, Mac, UNIX, etc. to competition. The author believes the Medium/Small access information on am type of host system, be it a Business market has tremendous potential for local UNIX minicomputer, an IBM mainframe running telcos, and that a major part of Internet resources MVS, a NT-based server, or indeed, just another PC. should be directed there. The local telco is well known to local businesses from many years of providing The last reason we can mention for the Internet's future PSTN services.This relationship is something to is that various major players are putting a lot of money build upon, since neither start-up ISPs or global behind it.It wasn't long ago that Microsoft didn't telecom companies typically have this. have any Internet products or interest, but today, Bill Gates and his colleagues have gotten inspired, turning Another factor supporting this market segment as ideal most of the development work at Microsoft towards the for telcos and service providers is the lack of knowledge Internet. This type of big-budget support practically among thesecustomers.GartnerGrouprecently guarantees the Internet will keep growing. conducted a study of business firms and asked if they were connected to the Internet, and if not, when they 4.0 The Key Decisions You Must Make planned to be. Figure 6 shows the results, comparing three different sizes of companies. Getting into the Internet in some way seems practically a requirement for local telcos. Traditional services are You would expect larger companies to be further along increasingly coming under competitive attack,and in making use of the Internet than smaller firms, but pressures on governments and regulators are keeping the reasons why may be surprising, and point to a great pressure on budgets. There are several key strategy Service Provider business opportunity. The medium questions to answer at the beginning, however. As and small businesses that had no plans to connect to shown in Figure 5, a telco needs to decide both which the Internet were asked why. The results are shown in customers to target, and exactly what services to offer Figure 7, and illustrate that these companies see their to each. Based on the experiences of telcos so far with biggest problem not as cost or security issues, which the Internet and other data-oriented services, in general might have been guessed, but simply a need for advice the easiest service to deliver is to just sell bandwidth and turn-key solutions. And there is no one better to small Internet Service Providers (ISPs). This is the positioned than the local telco to supply just that. course of action generally being taken by Cable & Wireless, for example. At the other extreme, providing Looking beyond the Internet, the trend among many services to the residential market will prove to be the businesses is to outsource more and more applications hardest, with 'easiest' and 'hardest' meaning both in to a trusted partner. Most often thisis because the terms of telco resources and staff training as well as in technical complexity and management responsibilities terms of likelihood of having a profitable service. associated with integrated mission-critical systems and networks is growing more and more difficultfor Selling transmission facilities and bandwidth to ISPs companies to handle. requires little effort, but reduces the customer contact the telco has. At the other extreme, providing complex 6.0 Differentiating From Competitors services to very cost-sensitive residential customers is sufficiently difficult that some large ISPs in the U.S. Services are the key to success in a market like the have completely abandoned this market. Internet. Just providing access to the Internet provides little differentiation, as other companies can provide an Larger business customers typically are looking for essentially identical service, sometimes at a lower total solutions, which may well include international price. One successful technique is to bundle services in services, and they often have a technical staff that can ways that competitors will fmd difficult or impossible. address implementation matters. The Medium/Small For example, offering packages consisting of some business market, on the other hand, often lacks an PSTN services and some Internet services, at an understanding of the benefits and technologies of the attractive, all-in price, provides immediate Internet, much less any staff to evaluate such things. differentiation,sincethe PSTNservicesarenot Taken together, these points stress the importance of a something others can usually offer. And this approach telco clearly deciding exactly what its Internet strategy also builds upon the reputation of the local telco as the will be, who the targeted customers are, etc. provider of voice services. But as the value of the service increases, the telco will find itself in an even more favorable position. For example, margins are generally much better on highly
660 69G N Figure 4: INTERNET STANDARDS FOR ANY TO ANY NETWORKING
UNIX, NT, Win95, OS/2 TCP / IP HTML HTTP, ( Internet / Intranet-
OS Independent
.,re 5: SERVICES VS. MARKET SEGMENTS V Services/Customers > I ISPs Lg. Business Med/Small Business Residential Security services ? ? ? Hardest Integrated voice / data services ? ? ? ? Managed network services ? ? ? ? Network-based Web caching ? N/A N/A N/A Web hosting ? ? ? ? Dedicated Access N/A ? ? ? ISDN Dial Access N/A ? ? ? PSTN Dial Access N/A ? ? ? Wholesale bandwidth Easiest N/A N/A N/A
Figure 6: WHEN WILL YOU BE CONNECTED TO THE INTERNET ? 100% Large Companies 80% (Over 1,000 Employees)
60% Medium Companies 40% (100-999 Employees)
20% Small Companies (20-99 Employees) 0% 1995 1996 1997 1998 1999 2000
6G1 b97 differentiated services. The Yankee group has studied Figure 9 portrays a schematic of how to deploy this the current and forecasted revenues for providing access type of performance-enhancing tool, and Figure 10 to business and residential customers, and those from illustrates a variation of this for larger networks that providing value-added services, and finds the business have server farms distributed at multiple locations. opportunity for the value-added services to be the fastest growing. See Figure 8. 8.0 Service-Level Agreements (SLA's) Picking certain industries or markets, depending upon Enterprise customers with VPDN or server hosting local circumstances, is another consideration. applications are more likely to outsource if there are Generally, business-to-business transactions over the agreed-upon levels of service. SLAs for end-to-end Internet willbe more popular thanbusiness-to- service across the public Internet are not possible using consumer applications, at least in the near term. For today's ISP peering model, but they can be offered for example, the electronics and computer industries tend single-vendor IP transport or public Internet server to be 'early adopters,' and the travel industry serves hosting. These agreements generally require that a many customers who may be short of time (and thus customer subscribe to a particular class of service seeking convenience) as well as have money to spend. (COS) such as premium or. standard, and then sign an SLA associated with that COS.Whileend-user Regardless of the exact set of services chosen, telcos performancelevelscannotbe ensured,packet need to take an aggressive stance, since new ISPs and throughput levels within a private-IP-network or server- other new carriersareeager toattractimportant farm-provisioned service definition can be measured and business customers away from the traditional telephone offered as part of an SLA. company. Depending upon the particular regulatory schemes in effect, these new entrants may be using Carriers can implement premium COS inan IP marketing programs and product strategies proven in networkbyusingIPprecedence fortraffic other markets to gain theattentionof monopoly prioritization and weighted random early discard customers who are not used to having choices of (WRED) for congestion control. In combination, these service providers. software technologies provide differentiated performance characteristics for different traffic classes/service levels. 7.0 Example Value-Added Services SLAs can be provided on a customer or service-specific Services ISPs can offer that offer added value to their basis. Regardless of the service definition, a network customers usuallyfallinto the categories of Web flow analysis and reporting toolisneeded to hosting, security services, and managed access services measure and report packet flowattributes.These (such as remote access and extranet services). detailed network measurements allow carriers to assess, and prove if need be, compliance with a particular Web Server Hosting: A Service Definition SLA. Additionally, they also allow service providers to introduce pricing based on application, usage, time- Web serverhostingsimplymeansputtingthe of-day,ortrafficpriority. Performancecanbe computer and its database at the ISP rather than at the maximized by using a flow analyzer that utilizes cut- end user customer. Not only does thisrelieve the through switching for each flow. This technology customer of selecting equipment, training staff, etc., but eliminates the need to analyze each packet by applying it usually results in higher performance as well, since it the attributes of the first packet to remaining packets in eliminates the terminating facility or loop from the ISP each flow, thus significantly enhancing throughput. to the customer site. An ISP offering a competitive Webserverhostingservicewillstresshigh 9.0 Security Services performance, high throughput, comprehensive security, 24 hour service, a wide variety of supported database For enterprises to outsource access to their networks applications, and perhaps even consulting services. and servers containing sensitive information, service providers must prevent unauthorized access, provide The ISP that offers Web server hosting will often have secure transport of data, and protect network elements multiple Web servers at their site. Within a local from unwanted external influence. As in the case of server farm environment, service differentiation can be virtual private dial services, security solutions can be accomplished through quick response time to HTTP offered separately or as part of a managed solution. In requests and avoidance of timeouts, known to Web either case, carriers can draw upon several technologies users as "no response, server down or not responding." toensurethesecurityof customers'networks, To claim these service attributes, carriers must utilize including: traffic direction tools that: Prevent the caching functionality of web browsers 1.AuthenticationVerification of login ID/password from identifying a multi-server farm as one entity 2.AuthorizationDeciding users' access privileges Seamlessly load balance among multiple servers 3.Accounting/AuditingReporting users' activities Provide for transparent failover if one server fails. while on the network
698 662 Figure 7: MEDIUM / SMALL BUSINESS - WHY NO PLANS ? 1. Do not see what business advantage I would obtain 2. Do not understand Internet technologies 3. Do not have technical expertise to evaluate/buy equipment 4. Too costly 5. Security concerns
Figure 8: MARKET OPPORTUNITY FOR VALUE-ADDED SERVICES oConsumer 5000 - Access ra Bus iness Access 4000 -0 Val ue-Added
3000 - 2198
2000 - 14221 845 844 1000 -384 353
0 1995 19 19 W 1998 1999 2000
Figure 9: DISTRIBUTING TRAFFIC ACROSS MULTIPLE WEB SERVERS
Internet/ Intranet User
LocalDirector
663 699 4. Packet FilteringAccording to IP addresses or included as part of the service. Encryption can also be applications e.g., email (SMTP) or Web (HTTP) implemented on network routers, most likely between 5.Restricted routingRestriction of users' access to the choke router and the POP router. Such network specific networks or transport paths layer encryption methods are preferable as itis more 6. EncryptionScrambling of transported data difficult to centrally manage premises-based firewalls 7. Remote monitoring and managementExternal and the security of router operating systems. alerting in the event of a breach or failure As part of thesecurityserviceoffering,asite Authentication, authorization, accounting are used to monitoring feature enables telco personnel to remotely validate user access to corporate VPDNs and ensure monitor the system when suspicious events occur. thatcorrect userprivilegesaregranted.Foran additional layer of authentication control, smart cards 10.0 Managed Access Services (cards that generate dynamic passwords) can be used, making use of industry standard protocols such as Telecommuting employees, mobileworkers,and TACACS and RADIUS. remote branch offices must have highly available access to corporate networks. While these customers could Packet filtering and server proxies allow the service dial long-distance or freephone numbers for access, a provider to provide very robust secure solutions, higher quality and more cost-effective approach is to whether for VPDN remote access or server hosting dial into the point of presence (POP) of partner ISPs, applications. Most packet filtering takes place on a and use the public Internet for transport to the corporate router, sometimes referred to as a choke router, used network. Through the use of tunneling protocols, between the server proxy and the internal corporate remote workers can securely access their corporate network. They can also be used to enforce security network through the public Internet and pay only local policy and restrict routing of packets to pre-determined access charges to participating ISPs',if applicable. networks, subnets, servers or hosts. This service (or feature if part of a larger definition) is known as virtual private dial access. (See Figure 11.) Firewalls are server proxies that mirror outbound server applications contained on internal servers and Enterpriseswishingto outsourceremotedial allowonlyoutboundconnectionstobemade. capabilities should be offered a stand alone virtual dial Firewalls can be simply resold as CPE (and managed service; however, mostservicedefinitionsshould by the customer), or can be part of a fully managed incorporate virtual private dial access as a feature solution (managedby the service provider). within larger and more bundled service offerings. (For Competitive differentiation occurs when securityis an example, see the hypothetical service definition for enhanced, when redundancy isimplemented, when VPDN remote access following thenext heading, networking is made easier, or when performance is highly secure networks.) Using virtual private dial maximized without compromising integrity. Examples access, carriers who provide virtual private dial network include using non-UNIX based software code (UNIX- (VPDN) services can differentiate themselves from based proxy server code iswidely available), hot many ISPs who can only offer remote connectivity standbyoptions,networkaddresstranslation through their limited points of presence. This,in (NAT) to allow IPaddress interworking between combination with the large network footprints of most internal andexternalnetworks,and cut-through carriers, satisfies customers' needs for widely available proxies thatincreaseperformance bynotusing access and provides a competitive advantage for carriers application layer packet examination. who provide IP services. Given that user data (whether content or authenticating Securityservices customersare prime targetsfor data) can potentially be intercepted, two encryption penetration with an eventual goal of a fully outsourced methodologies have been developed. First, public key solution, including IP multimedia applications, at the technology makes use of two "keys," one public and end of the migration path. As such, many service one private, for encrypting and decrypting data between offerings include security features as part of a larger communicatingparties.Second,symmetrickey service definition, especially as servers are outsourced. technology requires that both parties use the same key. The RSA algorithm isan example of public key 11.0 Extranet Service Definition technology, and the DES algorithm, used in Kerberos systems, is a symmetric key technology. Customers who haveanIntranetwithintheir organization often find their next step is to extend their Several methods currently exist to take advantage of network to their key external business partners and encryption within a service offering. Application layer customers. Called an Extranet, this service provides a encryption is used in firewall and server software. For secure way for those outside a company to access firewall security solutions sold as CPE, the encryption networkresourcesinsidethecompany.Typical process (key exchange) is managed by the customer. If examples include parts suppliers,regular shipping part of a fully managed securityserviceoffering, companies, distributors, and major customers. The management of encryption within the firewall should be remote users' access might be via dedicated access
664 Figure 10: HANDLING GEOGRAPHICALLYDISPESED WEB SERVERS
Local Traffic Director
Distributed Traffic Director
www.company.com
Figure 11 : VIRTUAL PRIVATE DIAL ACCESS USING PUBLICNETWORK TUNNELS Other Companies' Users tg, Internet Service Provider Corporate
Home Gateway: COrporate work.com Security Server
01111AWIR 1=n111. riCRING12, Remote Users of work.com
Figurel2 : PROVISIONING EXTRANET CLASSES OF SERVICE Priority Packet Handling .114.
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IP Precedence IP Precedence
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665 7 13.0 Conclusions lines, or via dialup PSTN connections. Encryption can be offered, especially for dialup access. Extranets (Figure 12) are becoming popular since they improve With all of the good reasons presented, why are some distribution channels, provide a new level of customer telcos holding back? Even among the Regional Bell care, and streamline operations while reducing costs. companies and GTE in the U.S., as an example, only a few are now offering Web hosting services. The reasons Extranet services provide a combination of access seem to be that carriers venturing into the worldof circuits, remote dial connectivity, transport services, value-added services require new skills, new personnel managed routers,Internetaccess,security/firewall and a new vision of competitive marketing. This is a services, and performance reports. Additionally, they major change for most, and many are just beginning to can includeserverhosting(includingtransaction develop the facilities, staff, and launch vehicles to processing), systems integration and content succeed. In the meantime, many traditional telcos are development. Therefore, the extranet service provides losing ground to aggressive ISPs, and sometimes to carriers with the best vehicle for IP services account globalcarriers,who possessthetechnicaland control. marketing expertise to bring robust services to market quickly. In many places on the Pacific Rim and around Business customerscanrealize a substantial the world, ISPs are well ahead of the incumbent local competitive advantage by aligning with a strategic telco in offering retail Internet access and services to telecom partner with the expertise and resources to both businesses and consumers. The market for value- adequately perform this role. Carriers who are properly added services is the next likely target.. positioned to address this reality are those that will achieve revenue growth today and account control Many carriers believe that retail Internet services pose tomorrowin ahighly competitive, dynamic only a minor threat to their base of telecommunications marketplace. services, especially if they are profiting by providing wholesale Internet transport or access to ISPs. But 12.0 Putting It All Together carriers cannot ignore the strategies of new ISP's to penetrate and control business accounts. These efforts We have described a variety of value-added services as havebeenmademoreviable bycontinuing if they were provided one at a time. Of course the best deregulation of U.S. and world markets. ISP business situationisfor the telco to provide an integrated plans include strategies to break into carriers' account package of services, tailored to each market segment. bases with Internet access and value-added services This provides the strongest competitive position, as with the intention of replacing traditional many new entrants will be offering a single service, or communications applications such as voice, fax, and only a few. An integrated, turnkey solution with both conferencing with IP-based solutions. As the gradual public Internet applications such as server hosting and consolidation of ISPs continues, combined entities will security, and applications such as VPDN, intranet, or gain significant market share, and some will eventually extranets, provides an excellent method for carriers to construct their own access and transportfacilities. secure or maintain account control. Carriers that ignore the opportunity to either compete with, or acquire, ISP competitors willsoonfind While this package approach is optimal for a telco, themselves losing account control, revenue and market there are situations where it is not possible, and a more share. The time to act is now. incremental approach to sales must be taken: Remember, too, the important role that o Customers who have existing data comm telecommunications plays in advancing the economic equipment, are reluctant to accelerate its and social development of a country. On the Pacific replacement, and need to maximize its utilization Rim, and around the world, the Internet is rapidly fa- o Customers who have contractual commitments to becoming the preferred technology and service other service providers conducting business of all types. Who better than the Customers not yet understanding the benefits of local telco, with intimate knowledge of local markets, working with a single service provider regulatory issues, and customer needs, to be at the center of this new initiative? The individual value-added services outlined above, including remote access, security services, and high Communications carrierstoday have a great performance hosting, can be incrementally offered in opportunity -if they can move beyond just seeing addition to backbone WAN transport to provide a themselves as providers of transport services. They are customermigrationpathtowardanend-to-end uniquely situated to provide the expertise, storage solution. facilities, and transport mechanisms toenable the convergence described above. To generate new revenue and protect market share in the future, however, service providers must move toward offering end-to-end, turnkey solutions that move enterprise customers in the direction of external and internal integration within the Internet's technical paradigm.
702 666 Business Opportunities in Digital Broadcasting
Fred Fourcher CEO Mira lite Communications, USA
Abstract
Advances in digital technology have made Digital Broadcasting a viable business opportunity for Satellite operators, Telcos and Cable companies. New products and services based upon digital technology are being introduced as never before. What are the market barriers and what are the opportunities? Explore these questions as well as some of the innovative applications for digital broadcasting. Look a head at the possibilities for unique audio, data and video services.
Opportunities change as technology evolves. When as they relate to digital broadcasting, I wanted to technology moves rapidly there is an abundance of emphasize that success doesn't happen by chance. business opportunities available to those who perceive Thomas Edison, perhaps one of the greatest inventors them first. Take the telephone as an example. The put it this way, "Genius is one percent inspiration and telephone has operated on fundamentally the same ninety-nine percent perspiration." Sure, it is always principal for over a century. Suddenly the transition good to have some investment capital and strong from analog to digital has provided incredible new business partners, but more than that today's opportunities. I am sure many of your businesses in telecommunications President or Investor must work telecom are as a result of efficiencies provided by hard to create or leverage innovation, just to stay digital technologies. Similarly, what we know as competitive. Television has operated fundamentally the same for over half a century now. Theoretically, the original The title of this presentation is Business Opportunities vacuum tube TVs would be able to receive the X-files in Digital Broadcasting. Let's discuss some without any problems. As the world evolves to digital fundamental changes in technology and opportunities technology, television as we know it will undergo a that exist today. radical change. Three years ago DirecTV started broadcasting digital signals direct to the home. This In the analog world, broadcasting has been confined to had been tried before and failed. However, at transmission mediums based on radio frequencies, approximately the same time that DirecTV first such as satellites, TV, Radio and Cable systems. launched, digital compression technologies had Thanks to digital technologies you can combine media evolved to the point that direct to home broadcasting such as MPEG-2 Digital video with digital infrastructure became a viable business opportunity. Recently, I was such as ATM allowing broadcasting to break free of its flying out of LAX and saw a large banner on the former limitations. DirecTV building that said, "Thank you America. 3 Million Subscribers in 3 years." In the case of DirecTV, At the same time broadcasters now include Telcos, technology evolved and opportunity was perceived. Cable, and Satellite operators. The Telcos, Cable and Satellite operators each build upon their existing Moreover, opportunities abound throughout the entire infrastructure and ability to innovate to develop their spectrum of telecommunications. The blending of own flavor of products and services. So although the technologies and companies is promoting the methods are different, the goal is the same. The development of new telecommunications products and market forces will always reward operators that services. This market synergy has generated provide desirable content in the most efficient manner. revenues in the billions of dollars. A solid testimony to It is important to point out that the value created is a this evolution can be found in the stellar rise of combination of effective innovation and marketing. companies like WorldCom and Turner Broadcasting. The success of direct-to-home broadcasters has been Companies like these have perceived opportunities especially politicized, as there are only so many slots before the competition, leveraged technology, and then in each country. The licensing requirements alone worked diligently for their success. Before I present require Broadcasters to match their services with the some of Miralite's specific interests and perspectives political and cultural values of their constituents.
667 Clearly, it is not just market forces that influence the Video Services mix of products and services. Let's discuss the opportunities beyond just re- Supposing that a combination of Telcos, Cable and broadcasting CNN and Movies. With digital video you Satellite companies get licensing approval and enter can adjust the resolution and frame rates to increase the direct to home market, lets make a basic compression. Applications that are price sensitive can comparison to gauge competitive advantage. In the be broadcast at half the cost of regular channels case of direct to home broadcasting, Satellite provided quality could be sacrificed. An example of this operators appear to have a competitive advantage. would be distance learning. Distance learning can They do not have to build a massive terrestrial provide excellent profitability for a broadcaster. It is the infrastructure and have a cost-effective set-top box lowest cost content to produce. Students are willing to and dish. However, their annual satellite cost per pay for access and tuition. Geographical distances are digital video channel is about $300,000. This means overcome between students and teachers when live you cannot run a satellite direct to home business with video is combined with live Internet interactivity. a large number of channels and a small number of subscribers. Case in point would be last year's failure Digital video does not have to be broadcast live since it of Alpha Star. can be stored easily. There is a large oil company in the U.S. with convenience stores that will be On the other hand, in order for Cable companies to go implementing a system in 1998. Each store will have a digital they have a substantial investment to add more small video server that stores about 10 minutes of channels. One must ask if this investment will pay off video. The server plays the video back repeatedly until over the 50 or more channels currently delivered the updated video is transmitted either hours or days analog? Likewise, Telcos also have a substantial later (This must drive the store clerks nuts). Non- real investment and must be prepared to examine their time video can be delivered at much lower data rates return on investment. Interestingly, I have read that and subsequently lower transmission costs. Another when a cable company adds telephone to their large retailer is able to transmit video to a central service, a substantial number of people sign-up server in each of their stores and then play back video because they are tired of dealing with the poor service in each department. This video and audio will play of the Phone Company. When phone companies start back repetitively in some areas of the store and in offering video will a substantial number of people sign- other areas will be interactive with the customer. For up because they are tired of the poor service from the example, a customer can scan the bar code on a Cable Company? videocassette and see a 2 minute video clip of the movie on the monitor in that department. What are the opportunities? Digital broadcasting lowers the cost of transmission about 10 times lower In-store advertising is another profitable service since than analog methods. Look at your network and whom it delivers the message at the point of sale. it reaches. Consumers, Businesses, Schools or? Broadcasting live is very low cost and does not require What can you deliver that is of value? Data in the form expensive equipment at the receive site. Satellite of Internet, or Intranet, Video, Audio, Telephony, or? digital video channels cost between $7,500 to $30,000 per channel per month depending on receive antenna Audio Services size. $7,500 per month might be a 3-meter antenna whereas the $30,000 per month could be a half-meter CD quality music channels are part of most direct to antenna. Your choice of antenna size is driven by the home services and are one of my favorites. How potential size of your network. about selling audio channels like the airlines do, that Distance Learning can be profitable and is a desired offer infomercials to consumers. In-store music sells content. We have seen that Direct to Home for about $100.00 per month per store. One step broadcasters can generate additional sources of further is to offer customized music channels for large revenue and get political kudos by incorporating retailers providing point of sale advertising. Audio in educational programming into their business module. digital form can be stored and played at intervals for There is a direct to home broadcaster in Asia that will advertising or Music on Hold in stores or businesses. offer Distance learning for 1/3 of their programming. In the case of satellite, distribution of radio channels People will pay a monthly fee to receive various across a region for rebroadcast can be done more distance learning packages, then pay tuition for the competitively than current single channel solutions. classes they want to participate in and receive credit.
704 668 Foreign classes for high tech graduate level courses What's Next? can be taken using live Internet interactivity with the instructor. I read a statistic last month that nearly half of Colorado adults - 47 percentsaid they used a computer to In any city there are various sporting and news events access the Internet in the last 30 days. In countries on television channels that are transported locally or with much lower computer penetration how do you regionally by satellite or microwave. A digital deliver digital Internet Push type content? Rockwell broadcaster usually has an efficiency advantage over just released a new video encoder chip (Bt868 and single channels transmitted on their own. Selling Bt869) that will turn TV's into PC monitors. This new individual channels-to other broadcasters can be very flicker free video encoder from Rockwell will enable profitable and add content to your system. true living room PC applications. When the set top box can receive, store and display video, audio and data Business Television is very popular in the United either live or in an Internet format then we will be able States. Most major corporations have business to penetrate into many new markets. Imagine DirecTV television networks. By providing hourly rates for with WebTV, tuned up with content and features like corporate or educational users you can provide never before. corporate training and information into small antennas to be used in branch offices or stores region wide. Two-way by satellite is just around the corner. There is a company in San Jose that has a low cost system Data Broadcasting designed for 300 KBPS outbound and up to 30 MBPS inbound. This system would work with standard direct Everybody is talking about Push technology. An to home systems. Ka band satellites will be launching example of this is Point Cast on the Internet. With soon that will be capable of many small spot beams. Point Cast you fill out a user profile and specify the Like.cellular systems that use the same frequencies information you want to receive, such as specific news from cell site to cell site, a Ka band satellite is not or stock quotes. Pointcast will then broadcast to you limited to just one footprint that covers a region. This the specific information you requested on a regular will allow cost-effective delivery of Internet and Push basis. This information will be stored on your computer technology on a two-way basis. Think of the in the cache and be available to you immediately when possibilities. you point your browser to Pointcast. With broadband broadcast networks it adds a whole new dimension to Conclusion Push. You now can send quality video and audio that would not be possible over standard Internet I hope this discussion has been thought provoking and connections. allowed you to perceive new opportunities in your area of telecommunications. I encourage you to think about You read the newspaper because you have control some of the questions I posed throughout this over the content you view. You watch television presentation. Unlike Thomas Edison, you do not have because of the depth of the media. If a picture is worth to invent the equivalent of the light bulb in order to a thousand words what is video worth? create a new product or service in digital broadcasting. If you could control television and see only what you Likewise, you do not have to pursue opportunities want when you want it, what would that be worth? The alone. Loral, Hughes, Lockheed and others are looking technology to do this is emerging now. Loral's for regional partners for their direct broadcasting plans. Cyberstar will be one of the first to enter the market There have been many successes so far for those that with delivery of Internet and Push technology by have partnered with DirecTV in Latin America. The satellite. To deliver data you need a card in a PC DirecTV partner in Colombia told me that they are way capable of receiving the signal. If you can afford to ahead of projections since they initially projected 4,000 operate at 30 Megabits per second, such as a whole subscribers in the first year and now have 40,000 satellite transponder, there are low cost cards around subscribers in five months. $300.00 made by Adaptec and Hitachi. If you want to start small with specific information there are narrow Digital broadcasting is profitable and offers band cards capable of operating at a couple megabits unparalleled opportunities, some of which we have not per second. These cards cost about $1,200 each. This even thought of yet. As Francis Bacon wrote, "Time is is ideal for a corporate Intranet type service. the great innovator." Will you be the next to perceive a great opportunity in digital broadcasting?
669 705 The Price to be Paid: Assessing the Opportunity for New Cellular Franchises in Asia-Pacific Markets
Andrew Simpson Telesphere Ltd Level 2, 187 Raglan St Mosman NSW 2088 Australia Tel: + 61 2 9968 4020 Fax: + 61 2 9968 4011 Email: [email protected]
1. Abstract
Bidding for cellular licences is always a balance between offering too little for a licence and being outbid by less risk adverse competitors, and paying too much and finding that the long-term returns for the project are unacceptably low. One way around this dilemma is to concentrate on the business case closely with a view to finding new ways of adding value that others have not considered properly. There may be clever marketing options that can be applied that competing consortia have not thought though as well. This could include the application of the right value-added services, the right distribution structure and the right blend of promotion and advertising. Fixed or semi-fixed wireless local loop may be an effective way of boosting bid value. Finally, the business case must be realistic - avoid the temptation of applying an artificially high share of additions or high calling rates which cannot be borne out by the best available assessment of the market place.
affect the value of these opportunities and 2. Introduction ultimately affect the purchase price.
With theintensificationof competition in In broad terms the most important elements terrestrial mobile telephony in many countries which must be considered in making a realistic across the Asian-Pacific region, both assessment of the true value of licences are: developing and developed, the opportunities for entry into these markets is increasing. The Size and Wealth of the Market method of entry will differ with government Determinants of Marla Share tenders, private sales and public spectrum Patterns of Network Usage auctions being the most common types. But in CoststoSetup,Operateand each case those companies seeking to contest Maintain the Cellular Network the acquisition of new cellular franchises or StrategiestomakeyourBid purchase stakeholdings in existing operators Successful must be aware of the range of factors which
7 06 670 The purpose of the paper isto provide a calculation of latent demand to a S-curve. Like a framework to allow the evaluation of market range of consumer products,the product life opportunities while new cellular licences are cycle of mobile telephones is likely to exhibit being offered by governments or regulators. the classical shape of an S-curve. Ultimately the right price is a value that should not be influenced by sentiment or jeopardised While officially published statistics and market by lack of knowledge in key areas, but should studies are essential as a starting point of reflect the investment's true worth. household income levels, it is also necessary to estimate the size of the black market in order to derive maximum value from the opportunity. 3. Size and Wealth of the Market By its nature, information about the size of the The value of any cellular phone licence is black economy is difficult to obtain, but can driven fundamentally by the size of the market. represent 20% or more of official income. Even The size of the market is related not only to the market research studies may not capture the population of the region, but also the personal valueoftheblackeconomyaspeople income of its inhabitants. responding to surveys about their total income may be reluctant to disclose money which has A reliable way to estimate the potential demand not been declared to the government. The in a new market is using a model that relates question which is relevant is not simply the size the mobile phone service back to its affordability of the black economy, but whether its size is in each household income segment. The level of spread consistently across all income bands. As householddisposableincomeindifferent a rule of thumb, the size of the black economy is income groups is matched with the basic cost of likely to be greatest in the highest income bands mobile phoneownership. Acrossmost where money can be laundered by various telecommunicationsmarkets,ithasbeen means or in low income groups which rely on observed that households are prepared to the cash economy. The important middle spend between three to four per cent of their income levels whose income may be marginal mean household income on cellular in terms of being able to afford mobile phones telecommunicationsservices.Henceitis is likely to be boosted by the black economy less possible to estimate the latent demand for than those who can already afford them or cellular services over time. those who fall well below the threshold of affordability. In the early years of operation of cellular phone services in any country, it can be observed that thelevel of realised or actual demand is 4. EstimatingarealisticMarket typically well below latent demand as predicted Share for your Business Case by the affordability model of economic wealth. Nonetheless, in time it is expected that actual An understanding of the consortium's market demand will rise according to a logit or S-curve share is also a critical part of the business plan's with low growth initially, high growth in intrinsic profitability. The group's share of net intermediate years and lower growth in later additions must be assessed realistically through years, as penetration of cellular phones into knowledge of therelativestrength of the households reaches high levels. The size of the competition together with a plan for marketing market predicted by the affordability model is and operation of the carrier's own network. that which fits the existing level of demand and the long term saturation level predicted by the
671 707 One way is to look simplistically at the share of 5. Predicting how your Customers net additions. In a 4 player market, is it realistic to assume that 25% of net additions can be will Use the Network obtained in the first full year of operation? More systematically, it is relevant to analyse Together with market size and market share, gross additions in its constituent parts. This the level of utilisation of the network is a critical involves looking at the three sources of gross driver of the value of cellular businesses. If the additions: churners onto system, churners off total number of billable minutes is reduced by system and, most important in usual existing 50% for each year of the forecasting horizon, marketsituations,churnersfromother say from 200 to 100 billable minutes per month operators. per subscriber, this could be expected to reduce the NPV of total revenue by around 30% and Often there is strong dissatisfaction of existing create a massive reduction in project IRR. While cellular operators among their existing cellular billable minutes are clearly a critical line item, customers. A competent new operator can information about them is often difficult to expect to attract a strong churn from this group. obtain with regulators and government being This will be strengthened by a typical entry the most reliable sources. strategy which is to enter the market a price discount of between 10-20% and with a strong Secondly, an assumption is necessary in the commitment tocustomerservice.Such a model about the change to the existing level of commitment needstobe more than just usage over the forecasting horizon. In most posturing, but realised through an adequate markets a pattern of decay in billable minutes staff ratio for Customer Service Representatives. has been experienced over time because new Generally a ratio will be in the range of 1,200 to customers tend to be marginal in nature. They 1,500 subscribers per CSR for organisations who are lower users who were not attracted initially place a high priority on customer service. because of their lesser needs or lesser capacity to pay. This may be offset by a change in usage One key question to keep in mind is what level patterns of some customers who begin to of population coverage will be available at consider the telephone as the instrument of first launch with many operators being in the range choice or where the difference between tariffs 50% to 70% of the existing operator's demand between the fixed and mobile networks begins on the day of launch. Often a coverage which is to diminish. less may have a detrimental effect on the long term image of the new entrant. Of course the downside of a higher starting coverage is that 6. CoststoSetup,Operate and the launch will be delayed and revenues lost in Maintain the Cellular Network the intervening months. A goodunderstandingofcostsisalso Finally, it is important in the calculation of important. Costs are many and varied in nature, market sharetoavoid thetemptationof but broadly speaking can be classed into capital boosting the bottom-line IRR by apportioning expenditure (capex) and operating expenditure an artificially high share of additions to the (opex). consortium.Give yourself a higher market share than the encumbent only where there is a Equipment providers are a valuable source of genuine reason for doing so.. information but often their prices do not reflect their final offers. Some vendors will promote one type of technology, while another choice of
672 technology may be more suitable. Apart from licence fee payment and the possible payment the capital expenditure of MSC, BTS, billing ofinterestonthelicencefeemust be systems and the like, a good understanding of considered. The magnitude of the licence fee operating costs as they apply in each market is should be consideredatthe end ofthe essential. modelling process after core assumptions have been bedded down firmly. Both capex and opex should "flex" to changes in demand and other variables as fully as The most important opex components are possible. While it is relatively simple to flex ongoing maintenance of network installations, opex, capex is more difficult. The most precise sparesandreplacementparts,rentalof method to estimate capex for a licence bid transmission backhaul, site rental costs, staff, proposalistocarryoutaseparateRF promotion and advertising, bad debt and engineering study. This would use subscriber general overheads that that cannot be readily numbers provided to the engineering team allocated to specific opex categories. from the affordability model together with coverage objectivesdetailing the extent of population to be served in the licence area. 7. Strategiesto make your Bid Successful While this is a method which offers precision, it is slow, laborious and developed separately to the financial model. Hence, if the bid team The bid will be successful if your bid is the decides that a more optimistic set of subscriber highest and it is not disqualified by the local numbers is possible, or if coverage objectives regulator or a challenge by one of your need to be changed, it is not possible to see the competitors.Therearealsoa number of effect of this on capex (and hence bottom-line "facilitators" which will improve the chances of profitability) without a delay of perhaps days success in a practical sense. while fresh engineering studies are carried out. It is therefore suggested that financial models Adding Value to the Bid Submission should not accept external engineering studies passively, but internal modelling needs to be Making your bid the highest is not a case of used which, although not as accurate as a full bidding irrationally with the blind intent of engineering study,will provide immediate success. The correct way to tackle the issue is to feedback on the impact of any new subscriber search for ways which can add legitimate value or other numbers. to the business case which will provide the basis for your bid to be increased. Finding those Although capex extends beyond the cost of extra dollars might turn your unsuccessful bid network infrastructure, it is the most important into a winning bid. initially, particularly since the bulk of network rollout falls before launch and in years 1 and 2 One area where value can be added is value- added services. In the early years it would be post-launch.Ausefulrule-ofthumbin assessing the network capex costs is cumulative expected as a rule of thumb in a market of capex per subscriber is generally in the range moderate wealth that value-added services will US$400 to US$600 per cumulative subscriber constitute about 5% of total revenue. Rather after 10 years of operation. than relying on a simple percentage, a more systematic and better way to calculate the value Of course one of the most important areas of of value-added services is to separately itemise capex is the licence fee itself. The timing of the each service which is considered feasible in your market. Some VAS such as data will be
673 quite modest in early years but will pickup bidding process. .This will include contacts with significantly in later years. industry and government, local knowledge, locallanguageskills,andtheparticular Another important source of additional revenue expertise related to the partner's normal line of isfixedorsemi-fixedwirelesslocal loop business. services. For specific spectrum in the 800 MHz, 900 MHz, 1800 MHz or 1900 MHz many Timing is an important issue in hooking up licences will allow fixed wireless local loop, and with a partner. This will allow the full strengths even more frequently semi-fixed services. By of the partner to be assimilated into the fixed WLL, the idea is that customers will be consortium and will avoid pressure at a later given a handset which ties them to their home time as the tender deadline draws closer. or other fixed location. By contrast the concept of semi-fixed service is that people will be free A stable consortium, preferably with signed to move around within their home-zone at a agreements between the parties at an early date, lower tariff than for the normal cellular service. is critical. A consortium which dissolves as a It would be customary to define a home-zone as result of the withdrawal of a partner can set the narrowly as possible preferably down to a bidding process back many man-months. sector of a BTS. Where calls are made beyond the home-zone, the call charge would typically Other Inputs into the Modelling Process be more than for standard cellular services. Whether, fixed or semi-fixed, both services are Of course there is a range of inputs which are significant enhancers of licence worth. required for the modelling process. There are numerous factors which may be important in a Beware the winner's curse. Telecom bidding is specific bidding situation only, while other littered with cases where the price bid did not factorsarelikelyto be important inall match the true worth. Be prepared to lose. situations. Bidding is a number's game where there is luck. With realistic bidding success may only occur All cellular investments which are based in a with one in every 5 bids. Therefore, there is geographic region contain a country risk which merit in bidding in many bids where you can- could manifestitselfunexpectedlyinthe avoid bidding onlyifyour business case medium or long term. The country may be doesn't stack up. Conversely, beware of the subjectedtounforseeneventsincluding risks - these could be in terms of a deteriorating political upheaval, economic dislocation such as level of usage or unexpected price pressures. what occurredrecentlyinseveralAsian economies such as Thailand and Indonesia, or Partnership Issues currency devaluation against the US dollar which makescellularinfrastructuremore In a foreign market where the new entrant may expensive domestically. A price war may break not have stronginternalknowledge,the out among cellular competitors or inflation importance of the right partner should not be could reoccur. The local environment must be underestimated. In many circumstances the studied carefully to understand the nature of terms of bidding will mandate thatlocal these risks. partners are included in the bidding consortium often with a majority voting rights of 51%. Benchmarking is a valuable tool which can oftenbeusedin"sanity-checking" or Apart from the legal requirements, the partner "estimation" mode. A set of benchmarks taken can add skills which will facilitate the whole from comparable situations in other countries 1 0 674 or other cellular networks can serve as a check against local information. Are local estimates within the range that would generally be expected elsewhere? If not, what local factors could explainthedifference? Where local information is not available, benchmarking can also be used to derive an informed guess about the likely value of key variables. Ideally, the use of benchmarking as the primary information source should be used on a temporary basis until specific local information can be obtained from market research or other sources.
One twist to the process is spectrum auctions. This will require additional work from the point of view of the bidding party because the rules of the auction process must be clearly understood. A strong understanding together with a software bidding tool which can analyse the results quickly is important. One form of spectrum auctions which has gained popularity aresimultaneous ascendingmultipleauctions. These have been, or are being, conducted in the USA, Mexico and Australia. In the recently completed A to F block PCS auctions at 1900 MHz in the USA, the Federal Communications Commission (FCC) allocated 120 MHz of PCS spectrum in only 21/2 years. Using administrative decisions and lotteries, the FCC took 10 years to allocate 50 MHz of cellular spectrum.
675 711 Towards Internet Self-Regulation: A Survey of Ethical Models Ei Oh Vaibhav Parikh Geno Baruffi
1. BACKGROUND Internet access as of 16 September 1996, calling the regulation "anti-pollution measure in cyberspace." As the Internet continues to cross multinational Similarly, the Chinese regulatory law of 1 February 1996 is boundaries and permeate the daily lives of individuals and one of the most restrictive set of Internet regulations that corporations it becomes doubtful whether traditional appear in Asia." Even among Western countries the regulation is feasible within this new realm of regulatory trend exists. Reuters reported German telecommunications. authorities to have been among the toughest in the world in Conventional issues in telecommunication trying to curb misuse of the Internet and have recently regulations deal mainly with the means by which passed legislation setting the framework for government telecommunications are carried out, i.e., the "forms" of regulation of it." In the United Kingdom, the government telecommunications.' This is evident also in the plans to review the regulations concerning online lotteries promulgation of most telecommunications regulations.' following private plans to launch a online lottery in pubs With the advent of the Internet, however, the regulation of and shopping malls.'" In the United States, in light of the the "contents" of telecommunications, i.e., the materials U.S. Supreme Court's decision invalidating regulation of being conveyed by means of telecommunications, becomes "indecent" and "patently offensive" speech on the Internet," an important issue.' This is due mainly to the relatively President Bill Clinton backed private-sector efforts to ease in both the usage of and service providing over the protect children from Internet smut, without calling for new Internet (It is almost cliche to note, e.g., that almost laws or extensive government intervention in cyberspace.' anybody can post his or her Homepage on the Web). He endorsed the recommendations that companies make As in any other human endeavor, the usage of or available software to filter out inappropriate material, that service providing over the Internet can be both beneficial government should step up enforcement on the Internet of and deleterious to society. If properly used, the Internet has existing anti-obscenity laws, and that parents should get proved invaluable in, inter alia, humanitarian assistance', more involved in their children's Internet activities." education' ("The Pathfinder Web page . .. received 556 While the proposed American approach may seem million hits during the f i r s t 30 days of the mission ...'The to come close to attaining a delicate balance between biggest Internet event ever,'"6), commerce' (" Credit Suisse government regulation and freedom of the Internet, the
Group ...allows retail customers to make payments and authors believe that the eventual solution to a viable Internet buy and sell securities over the Internet."8), and medicine' environment lies in self-regulation. As Donald Lamberton ("A new Internet site aimed at helping researchers learn pointed out during PTC '97, "Under conditions of social, more about genetic links to cancer was unveiled""). economic and technological stability, behavior patterns of Historically, the Internet has thrived on lack of all parties may be so settled that an element of self- controls (by multinational companies, technical standards, regulation can develop."' In this paper, the authors government, and other external forces). Any attempt to propose an initial framework for self-regulation on the regulate the Internet may prove to be disastrous for its Internet - one that includes the moral and ethical survival. Yet it is important to regulate Internet to prevent consideration of Internet service provision and usage. its misuse by hackers, intellectual property thieves, child- pornography peddlers, etc. Appendix I contains a collage 2. METHODOLOGY of news items excerpted from Reuter's News Service which vividly shows some typical examples of Internet abuses and The purpose of this paper is to present-a set of ethical/moral presents some of the events which may invoke ethical principles which may be utilized as ethical/moral rules of concern in the usage of and service-provision over the thumbs in the course of Internet usage and service- Internet. provision. In order to find out if Internet users and service- In response to the perceived "anarchy" in the providers from a wide variety of backgrounds would reach Internet, some governments have attempted to regulate the any consensus in their preferences of ethical/moral content of the Internet. For example, according to Poon", principles, these principles were developed into a survey the Singaporean government agency responsible for Internet that consists of two parts. The survey is located on a content regulation would institute strict censorship laws for website (http://vic20.mso.hawaii.edu/entryform.cfm) which
712 676 can be accessed internationally. As shown in Fig. 1, The advantage you are strong enough Right ethic first part of the survey is made up of six demographic and powerful enough to take questions which prompt for the surveyee's primary Internet without respect for ordinary social usage, usage frequency, experience with the Internet, conventions and laws. gender, and continent. Fig. 2 shows the eleven 9. This is an age of large-scale Organization ethical/moral principles which were adapted from the works organizationsbe loyal to the ethic of Carroll,' Das,' and Steiner and Steiner,' the organization. descriptions (without names of principles) of which make 10. You should do only that Professional up the second part of the survey. While Carroll and Das which can be explained before a Ethic focused on the ethical/moral preferences of business committee of your professional managers and students, the present survey is targeted peers. exclusively toward Internet users and service-providers. 11. You should follow the Utilitarian principle of "the greatest good for Principle 3. INSTRUMENT the greatest number" Figure 2: Ethics ranking questions The purpose of our survey was to see if those that use the Internet could come up with a consensus on an ethical way 4. HYPOTHESES of regulating the Internet. We adapted Dr. Archie B. Carroll's survey to suit our needs. The questions consisted Based on the results of Das and Carrolls who did similar of six demographic questions (see figure 1) and 11 ethical surveys on middle level managers and business students, the ranking questions (see figure 2). authors proposed the following two hypotheses, which roughly correspond to the two groups above, respectively: 1. How do you use the internet 2. How often do you use the internet 1. North Americans in the age group 3049 who use the 3. How long have you used the internet Internet at least once or twice per week will most likely 4.Gender subscribe to the Golden Rule principle. 5. Age 6.Country of origin 2. Those under 30, regardless of location who use the Figure 1. Six demographic questions Internet at least once or twice per week will most likely subscribe to the Disclosure rule. Ethical Principles Name of Principle 5. RESULTS 1. You should not adopt Categorical principles of action unless they Imperative A total of 172 people responded to our request some returns can,without inconsistency, be came via email but most were submitted via our website. adopted by everyone else. The demographic information of the respondents is 2. Individuals should act to Conventionalist summarized below. further their self-interests so long Ethic as they do not violate the law. 10-20 3. If it feels good, do it. Golden Rule 20-2950 4. Do unto others as you would Hedonistic Rule 30-3951 have them do unto you. 40-4942 5. If you are comfortable with an Disclosure Rule 50-5926 action or decision after asking 60+ 5 yourself whether you would mind Table 1: Breakdown of Age of Respondents if all your associates, friends, and family were aware of it, then you Male 120 should act or decide. Female52 6. You do what your "gut feeling" Intuition Ethic Table 2: Breakdown of gender tells you to do. 7. If the end justifies the means, Means-Ends then you should act. Ethic Almost Everyday 150 8. You should take whatever Might Equals Once or twice per Week20
677 7 1 3 Once or twice per month1 interests so long as
Once or twice per year 1 they do not violate Table 3: Internet usage frequency the law. 3. If it feels good,1616121733307493025 When asked how they use the Internet, 47% of the do it. respondents reported that they used the Internet primarily 4. Do unto others26146 112124112161616 for work, the other results are summarized in table 4 and as you would have figure 3. them do unto you. 5. If you are 181414101123195 232621 comfortable with an action or Education 45 decision after Research 37 asking yourself whether you would Teaching 9 mind if all your Work 81 associates, friends, Table 4: How interne is used. and family were aware of it, then Internet Application you should act or decide 6. You do what 1516117 132112618915 education your "gut feeling" 27% education work tells you to do. r research 47% teaching 7. If the end 179 1397101471599 work research justifies the means, teaching 20% 6% then you should act. 8. You should take12191935 1118916139 Figure 3: Percentage of respondents- how Internet is used. whatever advantage you are strong enough and powerful enough to take without respect for ordinary social conventions and laws.
9. This is an age of2 11240 1 11271325155 large-scale organizations - be Figure 4: Breakdown of respondent origin. loyal to the organization. Ethic Ranking 1 234567891011 10. You should do6 82194926281499 1. You should not4046207742191420242433 only that which adopt principles of can be explained action unless they before a committee can,without of your inconsistency, be professional peers. adopted by everyone else. 11. You should 992411 1 2 178513149 2. Individuals 131210243917904 1523 follow the should act to principle of "the further their self- greatest good for
714678 the greatest 6 11 11 number" 890
Table 5: Ranking of Ethical principles 1 10 10 916 6. DISCUSSION 10, 11 6 9 2 In order to find out the surveyeess' preference of 938 ethical/moral principles, the number of responses to each 1 6 9 principle the author proposed was multiplied by their 962 respective ranks and the results summed. The rankings, in 10 4 descending order of preference, are presented in Table 6, 1192 together with those of Carroll and Das. The rule with the 1 5 lowest sum would be the most preferred while the one with 1234 the highest sum would be least preferred. Our preliminary 3 results shows that the overall most favored principle was the Means-Ends ethic. In other words a significant portion of 1337 the respondents indicated that they would follow an ends- 11 justifies-the-means paradigm to when they are faced with 1901 moral/ethical dilemmas in the course of their Internet usage 1 or service providing. The second most popular selection Table 6: Sum of Ranks was the Might-equals right ethic, or 'he who has the gold makes the rules'. These preferences are in stark contrast to the results of Carroll and Das, who found the Golden Rule 7. CONCLUSION AND FUTURE WORKS and the Disclosure Ethics to be most preferred among managers and business students. Nevertheless, the third As responses are trickling in everyday, the authors most preferred rule of thumb is the Intuition Ethic, which expect a final n of 300-400. The full analysis of the survey was also the third choice of the Managers in Carroll's will be performed in the final draft of the present paper. It studies. The two least preferred principles are the will include, among other items, an expanded and updated Utilitarian Principle and Categorical Imperative, which version of Table F, which will also include the preferences were favored moderately favored in Carroll's and Das' of the demographic categories of the two hypotheses, as studies. As Mr. Hans Zimmermann, United Nations Senior well as those of different genders and geographical Humanitarian Affairs Officer, and an expert in emergency locations. Furthermore, the two hypotheses will be telecommunications, pointed out, the surveyees may be statistically tested for their validity. confused as to the exact meanings of the "greatest good" in The preliminary results, however, cast a shadow of Utilitarian Principle and "principles of actions" in doubt upon the feasibility of Internet self-regulation, since Categorical Imperative, which may explain the low the top two preferences of principles may not be conducive preference of these two principles. to a healthy, thriving Internet community due to their rather It is important to note the preliminary nature of the brute nature. Future works may include the incorporation present data set. Over the next three months the authors are of these ethical/moral principles into a coherent set of expecting more responses to the survey, and the final set of decision-making procedures for users and service providers data may indicate a different preferential scale for the who face moral/ethical dilemma in the course of their eleven principles. Also, the authors do not feel that the Internet usage or service providing. present population size, n, of 154 is sufficiently large Fundamentally, the border-less nature of Internet makes it enough to test the two aforementioned hypotheses. difficult for a single government to regulate. Also, it may not be possible for the government to keep pace with the Carroll's Carroll's Das' Present Present technology while trying to police the Internet. Therefore, it Manager Students Students Study Study may be a good idea for the industry to take upon itself, the s (n=88) (n=34) (n=265) (n=174) sum regulation of Internet. Just as society has unwritten rules for 683 people to act and behave, industry and the users can come 3 3 3 7 out with a code of ethics that will govern the transactions on 781 the Internet. 5 5 5 8 There are three distinct types of players on Internet: 848 715 679
t. a) Industry directly related to Internet (e.g., ISPs, Web page 4. See, e.g., G. Borba, "The Internet and Disaster developers, Internet software developers, etc.); Response"; Australian Journal of Emergency b) Individuals and corporate that put up information on the Telecommunications, 10, 4, Summer 1995/96, 42; A. Internet; Boterell, "Network Technology in the Practice of c) Internet users. Emergency Management", Australian Journal of Emergency Telecommunications, 10, 4, Summer 1995/96, It is easy to regulate or develop ethical codes for the 43; E. Kudashev, "Aeropace Methods Usage for ecological Industry, as its members are few, easily identifiable, and Monitoring and Natural Hazards Forecasting", Addendum to likely to be affiliate to their respective 'Associations'. the Abstracts for the Pan Pacific Hazards '96 Conference However, other players can not be easily regulated (as they and trade Show, 1996, 7; H. Zimmermann, "Crisis can be anywhere in the world). Response Communications: Telecommunications for the The objective of this study is to find the preferences of such Service of Humanitarian Assistance", Proceedings of the people, so that a proper ethical model can be evolved. The International Emergency Management Society Conference, response is not quantitative enough to reach any conclusion. 1997, 329-334; [http://www.unog.ch/freq/freql.htm]; However, it may give some indication of the preference of [http://www.reliefweb.int]. the Internet users. We propose to continue with our research (after any such 5. See, e.g., J. Tiffin, "The Coming of the Virtual suggestions or modifications proposed by all of you). After College", Proceedings of 19th Annual Pacific achieving substantial and geographically diverse responses, Telecommunications Conference, January 1997, 389-391; we would have a good idea of the preferences of the G. Baruffi, "Moving Towards the 6th Generation of Internet users. The preferences of the Internet users would Distance Education", Proceedings of 19th Annual Pacific serve as a useful data while Telecommunications Conference, January 1997, 493-502; A. Gloster, "Reinventing Education Through Information Technology", Proceedings of 19th Annual Pacific Bibliography Telecommunications Conference, January 1997, 503-510.
1. See, e.g., A. Ahmad, "VSAT Applications 6. "Mars Rover To Be Sent On A Hike Uphill", Advance as Asia Liberalizes", Proceedings of 19th Annual Reuters News Service, 8 August, 1997. Pacific Telecommunications Conference, January 1997, 61- 63; S. Clark, "Regulatory Solutions for Global Systems", 7. See, e.g., A. Gilbert and M. Singh, "Understanding Proceedings of 19th Annual Pacific Telecommunications the Impact of Network-Based Currencies", Proceedings of Conference, January 1997, 82-86; H. Hudson, 19th Annual Pacific Telecommunications Conference, "Restructuring the Telecommunications Sector in Southeast January 1997, 29-36; S. Singh, "The Use of Information Asia: Policies and Pitfalls", Proceedings of 19th Annual and Communication Technologies In the Home: A Focuson Pacific Telecommunications Conference, January 1997, 87- Electronic Money", Proceedings of 19th Annual Pacific 98; M. Reede and P. Water, "The Internet and telephony: Telecommunications Conference, January 1997, 37-45. The Impact of Under Control or technology on Tradiutional Telephony Regulation", Proceedings of 19th Annual 8. Tages Anzeiger (Zurich), excerpted by Reuters Pacific Telecommunications Conference, January 1997, News Service, 4 August, 1997. 625-634; J. Zarco, "Regulatory Structure and Its Impact on the Telecommunications Sector and Economics", 9. See, e.g., J. Erbetta, "Telemedicine: Hopes, Reality Proceedings of 19th Annual Pacific Telecommunications and the Impact on Telecommunications", Proceedings of Conference, January 1997, 705-713. 19th Annual Pacific Telecommunications Conference, January 1997, 51-55; E. Parsons, "Interactive 2. See, e.g., N. Boudette, "German States Balk At Communications Policies and the Health Experience", Fees For Internet PCs", Reuters News Service, 5 August Proceedings of 19th Annual Pacific Telecommunications 1997; "Internet operators Will Not Be Taxed For Two Conference, January 1997, 56. Years", Financial Express (India), excerpted by Reuters News Service, 2 August 1997. 10. "Cancer Genome Web Site To Aid Research", Reuters News Service, 1 August 1997. 3. See, e.g., A. Poon, "Internet Services in Asia: the Rapid Emergence of Competition and Regulation", 11. A. Poon, "Internet Services in Asia: the Rapid Proceedings of 19th Annual Pacific Telecommunications Emergence of Competition and Regulation", Proceedings Conference, January 1997, 636-638. of 19th Annual Pacific Telecommunications Conference, January 1997, 636-638.
716 680 29. 12. Ibid. "U.S. Lied To Explain Away "Ufo Sightings"- CIA ", Reuters News Service, 4 August 1997. 13. "German Couple On Trial For Internet Torture Offer", Reuters News Service, 7 August 1997. 30. "Feature - South Africa's Secret Society Comes Out On The Web", Reuters News Service, 1 August 1997. 14. "Online Pub Lottery Faces Review", Financial Times (London), excerpted by Reuters News Service, 30 31. "Net Firm Faces Fraud Inquiry", The Guardian, August 1997. excerpted by Reuters News Service, 30 July 1997.
32. 15. Case No. 96-511, Supreme Court of the United "Japan's Sokaiya A Mixture Of Thugs And States, 1997. Accountants", Reuters News Service, 30 July 1997.
33. 16. "Clinton Backs Private Internet Efforts To Protect "Spain Paedophile Network Has Ties Abroad- Kids", Reuters News Service, 16 July 1997. Police ", Reuters News Service, 30 July 1997.
17. Ibid. 34. "Anti-Semitic "Franklin" Text Surfaces On Internet", Reuters News Service, 30 July 1997. 18. D. Lamberton, "Ethical Issues for Telecommunications: An Australian Perspective", Pacific 35. "At&T Sues California Internet Access Provider", Telecommunications Review, 18, 4, June 1997, 5-11, at 8. Reuters News Service, 29 July 1997.
19. A. Carroll, "Principles of Business Ethics: Their 36. "Swiss Unveil Bank List Of Possible Holocaust Role in Decision Making and an Initial Conensus", Victims", Reuters News Service, 23 July 1997. Management Science, 28, 8, 1990, 20-24. 37. "Model Elle Macpherson Denies Having "Boy 20. T. Das, "Ethical Preferences among Business Toy", Reuters News Service, 22 July 1997. Students: A Comparative Study of Fourteen Ethical Principles", Southern Management Association 38. The New York Times, excerpted by Reuters News Proceedings, 13-6, November 1985, 11-12. Service, 25 July 1997.
21. G. Steiner and J. Steiner, Business, Government 39. "East Timor War Of Words Spills Into and Society: A Managerial Perspective, Random House, Cyberspace", Reuters News Service, 17 July 1997. New York, 1980, 383-389. 40. Delo (Slovenia), excerpted by Reuters News 22. "French Critics Slam Pope Over Grave Visit Service, 28 July 1997 Plans", Reuters News Service, 8 August 1997. 41. "Website Disabled By Anti-ETA Computer 23. "LA Judge Recalls Magazine With Nude Brad Pitt Users", Reuters News Service, 19 July 1997. Pix", Reuters News Service, 8 August 1997. 42. "Insurer Norwich Union Pays Out For Internet 24. "Scottish University Sacks Pro-Paedophilia Libel", Reuters News Service, 17 July 1997. Lecturer", Reuters News Service, 8 August 1997. 43. "Spain Asks Cnn To Remove Website Link To 25. "German Couple On Trial For Internet Torture ETA", Reuters News Service, 16 July 1997. Offer", Reuters News Service, 7 August 1997. 44. "Girl Kills Self After Boyfriend Row With 26. "Venezuelan Beauty Queens Reach Out In Parents", Reuters News Service, 14 July 1997. Cyberspace", Reuters News Service, 6 August 1997. 45. "Parents Foil Missouri Girl's Runaway Bid", 27. Biznes & Baltiya (Estonia), excerpted by Reuters Reuters News Service, 15 July 1997. News Service, 6 August 1997.
28. Washington Post, excerpted by Reuters News Service, 5 August 1997.
681 717 APPENDIX I "The infamous "sokaiya" racketeers.. . One group even has "[R]ebel bishop Jacques Gail lot, ousted by the Vatican from its own Internet home page"' his diocese in 1995...runs a "virtual diocese" on the
Internet to spread his views."' "Spanish police...seized thousands of [Internet images]..
. in raids on a child pornography and prostitution ring"" "[P]hotographs of movie star Brad Pitt in the nude.. . appeared on the Internet [without his permission]."23 "An anti-Semitic text spuriously attributed to Benjamin Franklin has been posted on the Internet by computer-savvy "[A] controversial psychology lecturer who said there was neo-Nazis' nothing wrong with pedophilia if the child was intelligent
and willing...[made] the comment in an electronic "AT&T... filed suit against a[n. ]Internet access newsletter on the Internet."" provider ... alleging that the group defrauded AT&T of millions of dollars." "A German couple went on trial in a Bavarian court on Thursday accused of offering over the Internet to acquire "Swiss banks Tuesday unveiled a list of pre-1945 account children for torture."' holders who may have perished in the Holocaust. .. onthe Internet, breaking with a tradition of secrecy"' "Venezuelan beauty queens... will appear in skimpy
swimsuits on the Web"' "Model Elle MacPherson...about two men accused of blackmailing her and threatening to put stolen nude "Oleg 5, arrested by the Estonian police on suspicion of photographs of her on the Internet.' being the internet blackmailer Viktor,' "America Online backed off its plan to begin providing lists "WASHINGTON - A group of Internet users who are angry of its customers' telephone numbers to telemarketers."" about the mass posting of advertisements on electronic bulletin boards have blocked or destroyed thousands of "East Timor has a prominent place on the Internet. There is postings...28 an ever growing on-line free-for-all where anybody can have an opinion and their version of the facts on the vexed "Studies of Intelligence, a once-secret journal of questions surrounding the former Portuguese colony."
intelligence-related material...The latest issue is at http: / /www.odci.gov /csi /studies /97unclas/ on the Internet."' "Slovenia's largest bank Nova Ljubljanska Banka has stopped processing payments over the Internet with its "South Africa's most powerful secret society has come out Eurocards because of possible misuse."' of the closet and onto the Internet.' "An Internet site accused of sympathizing with ETA "Internet software group Display IT ... is now the subject guerrillas...has been "mailbombed" out of existence by an of an investigation by the Securities and Futures Authority avalanche of electronic mail"' and possibly the Department of Trade and Industry as well as the Serious Fraud Office."' "British insurance group Norwich Union Plc was ordered to pay 450,000 pounds ($754,000) in damages and costs on Thursday "A 14-year-old girl who ran away from her Missouri home was over a libelous electronic mail message in one of the first casespicked up by police in California as she was on her way to visit of its kind in Britain."' a boy she had met on the Internet"'
"The Spanish government has asked U.S. cable television network CNN to remove links between its its website and the site of the Basque guerrilla group ETA ... CNNrejected Spain's request, saying it was standard practice to link up to the website of an organization directly from a story about it."'
"A 16-year-old girl who was an outstanding student drowned herself after her parents told her to break up with a boyfriend she had met on the Internet' 718 682 WEB COMMERCE AND INFORMATION SOCIETIES
By George E. Darby, J.D., M.B.A darbylawateleport -asia. corn
Law Offices of George E. Darby President, Teleport Asia
Abstract
Civilizations are defined by the commercial systems that enable the creation of the physical and intellectual structures of a society. This paper contends that the creation of an "information society" depends upon ubiquitous electronic commerce, and that the lack of widespread, low transaction cost, electronic commerce has prevented the development of a true information society. The paper proposes that the advent of electronic commerce conducted over the World Wide Web, and particularly the adoption of such "Web Commerce" by businesses for procurement, marketing, telework, fee-based distance learning, and sales, is the missing catalyst in the development of an information society. The paper examines "smart community," "smart city," and "information economy" projects in the light of Web Commerce. The paper concludes with suggestions about how smart community projects might be better tailored to accelerate the development of an information economy and of its counterpart, the information society.
Service economies can be distinguished software, television programming, movies, from manufacturing, agricultural, and patents, books, research and analytic reports, information economies. A service economy and courseware. Hawaii is clearly a service derives the majority of its sales from selling economy, and its society is based on a service services. Post-industrial societies, such as that economy. Hawaii's former agricultural society of the U.S., rely critically on the information was based on its former agricultural economy. content of services and manufactured goods, How could Hawaii, or other geopolitical entity, but services and manufacturing sales are still become an information society? Simple, by more important economically than sales of having an information economy. More "pure" information products. The economy of broadly, civilizations are defined by the the U.S., nor of any other country, is not yet commercial systems that enable the creation of an information economy. The economy of the physical and intellectual structures of a Hawaii is a clear illustration of the distinction society. between a service economy and an information economy. In Hawaii, there is virtually no An information society by definition manufacturing. The majority of the gross state has an economy based primarily on the sales of product is from sales of services to (i) tourists information products. We don't yet know what and government agencies, and (ii) suppliers to the physical and intellectual structures of an businesses selling such services. Yet, Hawaii information society are, since an information creates very few information products, such as economy does not yet exist. Much planning
683 719 and many attempts have been expended trying information economy and of its sociocultural to create an information economy, however. result, an information society. These attempts to create information economies have been at the level of communities, cities, Web Commerce serves and improves and nation-states. All have failed. Why? all economies, not just an information economy. Web Commerce enables agricultural Most attempts to create information and manufactured goods to be marketed, sold, economies have basically been telework and delivered on a global basis and at lower programs, publicity wars between government cost. Web Commerce enables one-person ministries competing for jurisdictional turf, or corporations to have an international marketing hollow pronouncements of industrial policy presence and to become exporters. Web without regulatory liberalization. The Commerce enhances agricultural, remaining attempts generally lacked a supply of manufacturing, and service economies, but it is information products, demand for information indispensable to an information economy. The products, and/or an understanding of adoption of Web Commerce by businesses in infopreneurship. Supply and demand are the other economic sectors provides the first preconditions of an economy, and platform upon which an information economy infopreneurship is the genesis of an information can be built, much like manufacturing product. economies were built upon an agricultural base.
How does one catalyze supply and The members of an information demand for information products? Information economy are the buyers and sellers of products, by definition, can be transported over information products. Given the specialized information networks. Therefore, the answer nature of information products, many of the begins with setting the boundaries of the markets for information products are locally "transportation networks." The transportation small, but aggregate into significant global network is the Internet. The Internet is global. markets. For large or complex information The catalysis of supply and demand for products, e.g., for a license of a television information products must assume that the series or a biotechnology patent, only a few potential market is global. The next barrier is potential buyers (licensees) exist. Broadcasting transaction cost. How much does it cost the a television series is a service, whereas granting buyer to find out about an information product, a license of the television series is the sale of an to negotiate its purchase (or license), to pay the information product. A manufacturer's selling sales price, to receive the good, and to rescind goods that embody a patent is distinguished the transaction if necessary? The only possible from the manufacturer's obtaining a license of system that provides a low transaction cost on a the underlying patent. Access to niche global basis is Web Commerce, that is markets, on a global scale, reinforces the electronic commerce conducted over the World indispensable nature of Web Commerce to an Wide Web. "Web Commerce" is the use of information economy. But the very nature of World Wide Web servers and browsers to geographically (even globally) dispersed market, sell, and settle payments for goods and markets for information products reveals the services. Certain goods, such as a copy of contradiction inherent in planning a "smart" software licensed through a Web Commerce community, city, or nation-state with the transaction, and many types of services, such as expectation that it will be a self-contained distance learning, can be delivered directly over information economy. A smart community the Web. The lack of widespread, low may have a computer and Internet access in transaction cost, electronic commerce has every house, but not have a single information heretofore prevented the development of a true product generated in the community. The two most common missing ingredients in smart
720 684 communities to date are (i) a community features for their children. For community network (phone and CATV service are not a network K-12 content, there are three key community network) and (ii) distance learning sources: the local school board and/or focused on business skills and infopreneurship. department of education, the state and Infopreneurship is entrepreneurship for creating municipal government, and the community and selling information products and services. association.The local school board or A community network is a "community department often provides adult education Intranet" (restricted access Website) devoted to classes in addition to K-12 classes. Adult the community's institutions and its residents' education classes usually include computer and activities. Given the scarcity of community information literacy. networks and the complexity of infopreneurship, it is understandable that these Many other content types are two factors have been absent from the attempts important, but not as critical as K-12 features. at information economies to date, especially From municipal and state governments, the from those attempts orchestrated by community network can obtain, often in Web government agency personnel with no page (HTML) format, the various schedules for experience in starting and running a business, office buildings and parks, forms and other Website, or network. transaction documents, telephone directories, maps, legislative documents, ride-sharing, Having found previous attempts to laws, employment opportunities, etc. Many, if build an information economy deficient, how not most, smart communities are planned can the deficiencies be remedied? It is the communities. In a planned community, the author's practice, in consulting on information community association will publish its own set technology-based economic development of schedules for buildings and recreation projects (including information economy centers, forms and other transaction documents, projects), to focus not on the city or nation-state community group directories, maps, level, but on the community level. The community rules, group activities, etc. As each community level permits personalization of subdivision in a planned community is built, the community network design features with the land developer may even include a computer physical community in which the community and a community network account with each network and its users reside.The features of new house or apartment sold. The land the community network are the inducement for developer can, in fact, build and lease conduit residents to use the network. The features must to infrastructure operators and solicit be so compelling that non-computer users will competitive proposals for operation of the acquire a computer, modem, and the computer community network. The developer procures skills needed to use the network. Community the community network, including initial specific features are password protected for use content, and may convey the community only by residents. network (but not necessarily the conduit system) to the community association like other A community network is the first step "common area" assets. A portion of residents' in an information economy. A community community association dues then subsidizes the network creates a virtual community that operation of the community network until the overlies a physical community. The core network is self-supporting through advertising feature of a community network is the K-12 and Web Commerce commissions. school system. Parents will do for their children what parents would never do for The use of information technology to themselves, i.e., buy a home computer and teach about information technology, and about access a network. Some parents will move to a other subjects that rely heavily on information community just to gain access to the K-12 technology, seems to be a perfect fit of
685 (21 application and infrastructure. In the case of include desktop videoconferencing between geographically dispersed students (known as sites on the community network. The "distance learning" or "distance education"), a community network provides the workbench new information technology generally called upon which authors can create distance learning "collaborative computing" promises to bring a courseware, an information product. In the more universal access to education that ever future, Internet datarate reservation protocols before. "Collaborative computing" is the will permit high-quality desktop concurrent use of videoconferencing, videoconferencing or digital video playback at audioconferencing, World Wide Web MPEG-1 or better resolution between resources, email, and shared computer geographically dispersed videoconferees or applications over one or more digital between CCDL clients and Webservers. transmission paths and by persons at two or more locations. Course materials and A provider of distance learning can use presentations prepared for collaborative Web Commerce to globally market, sell, and computing-based distance learning ("CCDL") collect payment for providing distance learning have usually been adapted from traditional services. Web Commerce is particularly classroom materials, but increasingly such important in marketing, selling, and settling materials and presentations are being designed payments for CCDL, since World Wide Web and developed as original works for CCDL. resources are a central part of collaborative The philosophy and process of designing and computing-based distance learning. A recent developing original works for CCDL is a new breakthrough in Web Commerce technology, and vast topic in itself, a topic that is so new the Secure Electronic Transaction ("SET") that there are few, if any, formal courses or standard, provides a means of secure use of publications about it, but nevertheless a topic credit cards over the Web and for that is vital, if not indispensable, to the interconnection of such Web-based use of credit development of information economies. cards with the existing, global electronic funds transfer system used for physical credit card In CCDL, Web-based resources transactions. In the opinion of most experts, typically include hosting the course textbook, purchases made using SET-compliant services reference works, syllabus, class roster, and are safer for all parties than traditional administrative materials on a password- "physical" use of credit cards. For instance, protected Web server. Email between faculty using SET services, the seller does not learn the and students, and email among students, may buyer's credit card number, and the seller does be provided through a Web browser or through not ship the goods or services until payment is a standalone email application. Email is used received in the seller's account. for, among other things, homework submission, return of graded homework, Fee-based distance learning is the testing, reporting of grades, and notices. second piece of the information economy Collaborative computing-based distance puzzle. CCDL information products that learning requires datarates that today are higher require Ethernet-speed Internet connectivity can than V.34 modem access to the Internet. In be built and debugged within community smart communities, however, Ethernet-speed networks, and then licensed to other community Internet access is increasingly available, and networks. When general Internet datarates and can be made part of the information technology datarate reservation protocols enable Ethernet- infrastructure facilitated by the land developer. speed connectivity outside the domain of a The modern community network fiberoptic community network, the market for licenses of backbone operates at an OC-3 (155 Mbps) the information products will expand datarate and provides Ethernet-speed access accordingly. Fee-based CCDL products can lines to end-users, which permits CCDL to target all ages of students, from K-12 to
686 continuing professional education. Presently, information economy borrows heavily from the the most lucrative products on a per student orthodox "university spin-off" model proven in basis are continuing education programs for Silicon Valley, Route 128, Austin, and physicians, lawyers, accountants, engineers, Research Triangle Park. In place of the and architects. Fee-based CCDL can target the physical communities in Palo Alto, Cambridge, continuing professional education market with Austin, or Raleigh/Durham, there are virtual attention to niche markets never before universities serving student populations in possible, since geographically dispersed, highly linked community networks. Virtual specialized subMarkets can be aggregated and corporations and other information technology made profitable. start-up businesses will be spun-off from the virtual university. To use a biological model, Community networks can also be the the solitary smart community network is like a workbench for entertainment and procurement solitary Volvox, a single-celled alga or products that rely on Ethernet-speed Internet flagellate (biologists differ over whether Volvox connectivity. Web-based procurement products is a plant or an animal); linked community are rapidly replacing EDI procurement products networks are like a Volvox colony, in which that required specialized VANs. For those groups of contiguous cells actually become educational, entertainment, and procurement specialized organs of the larger colony. From products that do not require as much linked community networks come ever more configuration or customization to reflect the efficient production of information products as locality of use, Ethernet-speed information some smart communities develop specialties. products might justify linking large community The theory of competitive advantage would networks with high-datarate circuits. Initially, apply to linked smart communities just as it did such linkage might be by a dialup ISDN PRI, to nation-states using sailing ships. or by multiplexing multiple BRI ISDN circuits, if a full period circuit cannot be cost-justified This paper has distinguished an and datarate reservation protocols are not information economy from a service economy, available. Connecting community networks reviewed the ill-fated attempts to build with high-speed circuits also enables teams in information economies to date, and proposed different communities to use collaborative community networks as the sine quo non of an computing to develop information products. information economy. Community networks Moreover, the availability of advanced CCDL, enable the development, enhancement, and procurement, and entertainment products only licensing of collaborative computing-based within the perimeters of a community network distance learning, entertainment, and will attract businesses to relocate or start up procurement products. As virtual communities within a smart community. form around virtual universities that offer CCDL, infopreneurs will create spin-off CCDL courseware on infopreneurship businesses and additional information products. must be part of the content available on a To attract residents and businesses, the content community network. Infopreneurship spans a and network access of smart communities vast spectrum of subject matter, from should always offer better CCDL and higher programming languages to digital video, datarates than outside the smart community. multimedia licensing, venture capital, "MBA When sales from information products in a core courses," and managing software given physical community exceed sales from developers (aka herding cats). From among the services, manufacturing, or agriculture, the students in the virtual university who enroll in first true information economy will be born. infopreneurship courses will come the leaders of technology start-up businesses. In a sense, the author's approach to building an
687 A New Model of Internet Regulation: Promoted and Regulated Value-Added Service
Zixiang (Alex) Tan ([email protected]) 1ST, Syracuse University New York, USA
1. ABSTRACT
In most nations the Internet falls into the category of value-added services which are not heavily regulated under the global de-regulation trend. However, the growing significance of the Internet in our economic, social, and political life has allured some governments to step back by establishing new regulatory frames on the Internet. Taking China as an example, this paper examines how a new model, promoted and regulated value-added service, is designed and implemented by the Chinese government to nurture and regulate its Internet.
2. INTRODUCTION
As the Internet becomes more popular worldwide, political challenge. It is widely argued that China has also decided to embrace this new and governments, including the Chinese government, will powerful information medium. China's Internet have a tough time realizing their goals of controlling began its growth in 1994. By early 1997 the four content access. dominating national interconnecting networks, ChinaNET, ChinaGBN, CERNET, and CSTNet, had This paper first discusses the economic benefits and about 600 access networks and 80,000 users. political and social concerns brought by the expansion of China's Internet. It then explores While the Internet's economic benefits are obvious, Internet growth in China and examines China's the expansion of China's Internet does bring in regulations on Internet service provision and content political and social challenges, given the big access. difference between Chinese and Western nations' social and political systems. The global and open 3. INTERNET AS A SUPER COMMUNICATION nature of the Internet makes it possible and easy for MEDIUM Chinese users to access to Western materials on the Internet which are controlled and restricted by the The Internet has obtained its popularity around the central government. world in recent years and it emerges as the most powerful global medium the world has ever known Fortunately, China has not shut down its Internet to with three unique featuresthe combined functions avoid the inevitable social and political challenges. of traditional communications media, the non- Instead, China has decided to tighten its content existence of central control, and the broken national access and service operation regulations to minimize boundaries. the social and political drawbacks while continuing to expand its Internet. The Internet's economic The Internet combines elements of potential is certainly the driving force for this open telecommunications, broadcasting, and publishing approach. This policy has also demonstrated China's into a new medium for communications'. Powered by desire to maintain connection with the global current computing capabilities, the Internet has community. potential to provide full-range communications services including information services, on-line The Internet has evolved into the most powerful commerce, and entertainment services. E-mail and global medium the world has ever known. The emerging Internet phone and Internet video systems Internet is capable of functioning as a means to stand to supplement and to enhance the traditional publish, distribute, and broadcast information across communications functions provided by the PSTN. national boundaries. Controlling content access is not Web sites and FTP sites enable users to search and only a technical challenge, but also a legal and collect information for work and leisure purposes,
724 688 while providing a channel for owners to publish and China has been struggling to formulate its strategies distribute academic, administrative and commercial in order to sustain the high growth rates and to grow materials. Usenet, listerservers, and electronic into a super economy. China's past economic growth bulletin boards allow users to broadcast and receive mainly comes from the labor-intensive messages. manufacturing sectors. Recognizing the shift of global economy toward information intensive sectors Secondly, the Internet consists of numerous and the potential impacts of information sector on the independently administrated networks, which are growth of other economic sectors, promoting the interconnected according to TCP/IP network informatization of China's economy has been agreed protocols. The unprecedented open and decentralized upon as the future strategy. As argued by Youjing nature of the TCP/IP protocols leads the Internet to a Zheng, "Informatization is the foundation for China's position without any centralized control and economic modernization; information resources is ownership. Every participant is part of it and owns a one of the most basic and important inputs for fraction of it. This decentralizing feature ensures a modern economic development; information industry robust medium with unlimited expanding potential to should become the fundamental sector of China's include any computer network in the world. economy."'
Thirdly, TCP/IP network protocols have enabled the While the serious academic discussion on Internet to expand into a global network that informatization began in 1986, the idea was carried encompasses national and regional networks no into large-scale initiatives in early 1990s. In 1993, matter where they reside. The national boundaries, Chinese government launched its "Three Golden which are often obvious for other media such as Project" which is often regarded as China's NII telephone and television, have been blurred, if not (National Information Infrastructure) initiative. The totally broken'. The Internet therefore functions as a goal is to set up a state public economic information remarkable bridge across cultural and geographic network and to establish data networks for banking boundaries and emerges as a prominent media that and Customs services.' The "Three Golden Projects" facilitates communications amongst societies with were quickly expanded into the "Multiple Golden different socio-economic and political backgrounds. Projects" in the following years, aimed at setting up data networks for all the major industry sectors. As a new, revolutionary and powerful medium, Those networks have composed the major part of Internet brings opportunities to both developed and China's Internet while they often serve as developing nations, though some risks and government agencies' intranets. uncertainties come along with the new medium. Different nations may take their own path to embrace The implementation of informatization initiatives or to discard this new medium because of different calls for institutional support from China's central social, political, and economic environments. As government. China's State Council established its argued in the following sections, China has chosen to Joint Conference on Economic Informatization expand its Internet while trying to minimize its (JCEI) to coordinate the efforts on establishing drawbacks. information networks by ministries, agencies and large corporations in 1994. The interim JCEI was 4. WHY THE INTERNET IS PROMOTED IN promoted to the State Council's Leading Group for CHINA Economic Informatization in April 1996.
4.1 THE DRIVING FORCE - THE INFORMATIZATION OF NATIONAL ECONOMY 4.2. FROM "OPEN DOOR" TO "INTEGRATION" - THE NECESSARY INTERNATIONAL Since China designated economic development as its CONNECTION national top task in 1978, China's economy has been experiencing impressive growth rates. The Recognizing that an isolated economy could not lead continuing double digit growth rates in the early to substantial growth, one of the integral part of 1990s made the Chinese economy the fastest growing China's 1978 economic reform initiative is to open in the world. China's door to the Western world. The infamous
689 725 policy of "combining trade with technology import" be the perfect choices. EDI (Electronic Data led to tremendous information, as well as material, Interchange) has been promoted in order to allow exchanges with the rest of the world.' The Chinese firms to trade effectively and efficiently with "combining trade with technology import" policy is foreign partners. The pervasive Internet connection meant to import foreign technologies, know-how, with the global community is believed to further and management skills to help the development of China's efforts to integrate its economy into the China's indigenous industry, while giving up certain global economy. domestic market shares to foreigners. This is rooted in the ancient belief that China could develop an The global Internet connection certainly stands to advanced self-reliant economy by importing foreign bring in foreign information which might jeopardize technology and capitals but not joining the global China's political and social systems. However, the economic club. economic allurement is so high that China has chosen to live with the risks. In addition, measures have been In recent years, Chinese scholars have spoken of the proposed to minimize the social and political risks, difficulties of separating indigenous industry from such as formulating tight service provision the global industry.' These scholars accept the regulations and implementing content filtering and concept of economic globalization and argue that blocking. China should try to integrate its economy into the global economic system rather than insistently trying to promote indigenous industry. Whether or not the 4.3. INFORMATION INDUSTRY THE integration elements have been publicly incorporated PROMOTED AND LUCRATIVE SECTOR into China's formal policy, the steadily growing capital investment in China by foreigners and the In recent years, the information industry has growing import-export figures suggest the trend of experienced strong growth in many nations including China's integration with the global economic system. China. The total revenue of China's posts and telecommunications operator, the MPT, has been Those foreign links have to be established, enjoying a 40% to 50% annual growth since the late maintained, and expanded by constant 1980s, as shown in Table One. In addition, the communications across national borders. Telephone information industry has been chosen by the Chinese calls and faxes have functioned as the dominating government as one of the two key sectors to sustain media in the past years. The coming years need more China's economic development in the next century.' sophisticated systems to sustain the communications. This promising future attracts stake holders to The Internet and other information networks seem to support the Internet and other information industries.
Table One: Total Sales of China's Posts & Telecommunications Sector
Year 1988 1989 1990 1991 1992 1993 1994 1995 Total sales (billion Yuan) 5.40 6.48 8.17 20.44 29.09 46.27 68.82 98.88 Annual growth 20% 26% 150% 42% 59% 49% 44% Source: China annual statistic yearbooks.
At the national network level, China's Internet is The MPT views China's Internet as its another cash promoted by four information-related government cow. It is expected to make a profit both through its agencies, the Ministry of Posts & own Internet business, ChinaNET, and by providing Telecommunications (MPT), the Ministry of telecommunications facilities to other Internet Electronics Industry (MEI), the State Education operators and users. The MEI wants to share the Commission (SEC), and the Chinese Academy of promising profit through its own service provider, Sciences (CAS). They are the only four agencies who ChinaGBN. More importantly, the MEI's core are licensed to DIRECTLY connect their national business, microelectronics and computers, would networks to the global Internet. Each agency has its certainly gain a great deal from the Internet own gains from the expansion of Internet in China. expansion by providing hardware and software. The
726 690 State Education Commission and the Chinese barriers hindering the expansion of China's Internet. Academy for Science contend that the pervasive The central government's worry of losing Internet would enhance their ability to conduct information control is the most publicized threat. The research and education, while keeping their leading poor telecommunications infrastructure and high position of R&D in information technologies leasing prices, the low computer penetration rate and including Internet is one of their top agendas. limited English language knowledge among users, and the sky-high usage charges by ISPs because of At the ISP level, entrepreneurs, government units, their high operating costs are other significant and even foreign interests have taken the Internet as a barriers. great opportunity.for them to share the promising sweet pie of China's information sector. Internet 5. INTERNET GROWTH THE CHINESE PATH services are classified as value-added services in China, which allows any legitimate corporation to 5.1. DELAYED, BUT IMPRESSIVE, GROWTH apply for the operating license. Foreign firms are still RATE prohibited from operating Internet services, as with other telecommunications services. However, foreign China's Internet began its growth in 1994. While the capital has flowed into the service operation through user base is still relatively small, the annual growth indirect channels. While most ISPs only provide rate is impressive. There are no accurate statistics access services, some of them have created and about China's Internet subscribers because of the maintained their own contents in order to grow as on- lack of a tracking system and official statistics. In line service providers. The number of ISPs are addition, many accounts are shared by a group of growing exponentially, for example, there were about users, allowing them to avoid the high account 32 ISPs in Beijing by the middle of 1997.8 registration and installation charges. Table Two presents a conservative estimation based on several Besides the above three major driving forces, sources. The total users jumped to 80,000 in 1996 Chinese users are enthusiastic to adopt the Internet, from 1,600 in 1994. The annual growth rate is always as with many other new communication over a few hundred percent. technologies. There are, however, some serious
Table Two: Internet Subscribers in China.
Year 1994 1995 1996 1997 (projected) 2001 (projected) No. of Subscribers 1,600 6,400 80,000 250,000 2,700,000 An. Growth Rate 300% 1150% 212.5% Sources: ChinaNET ChinaGBN, CERNET, and others.
Another more systematic and accurate indicator is the registration under the top domain .cn, China's increased number of China's Internet hosts. Internet hosts have increased from 325 in July 1994 According to China Internet Network Information to 19,739 in January 1997. An over 400% increase Center (CNNIC), which runs the domain name occurred in early 1996, as shown in Table Three.
Table Three: Internet Hosts in China.
Date 7/94 1/95 7/95 1/96 7/96 1/97 Host Number 325 569 1,023 2,146 11,282 19,739 Semi-annual growth rate 75% 80% 110% 426% 75% Source: China Internet Network Information Center (CNNIC).
Compared with the United States and other impressive as what happened in those developed developed nations, China's Internet lags a few years countries. behind. However, China's growth rate is as
691 727 5.2. INTERNATIONAL LINKS - STEADY with two 64Kbps links in 1994, China successfully IMPROVEMENT managed to increase its total capacity to 576Kbps in 1995 and 8216Kbps in 1997. The links have reached China's international links to the global Internet has a wide variety of locations including the United shown another impressive increase which has States, Japan, HongKong, Singapore, and Germany. strongly demonstrated China's efforts to interconnect Figure One has documented the detailed evolution of its internal Internet to the global Internet. Starting those international links.
Figure One: China's International Links in 1994, 1995, and 1996
64Kbps (1994) (iHEP (Beijing) \ 11TJ(Japan) CSTNet 64Kbps (1994) CNC (Beijing) 1 Sprint (U.S.) 128Kbps (1995) Sprint (U.S.) 2Mbps (1996) TsingHua Univ.4 00 Global-One (U.S.) CERNET (Beijing) 64Kbps (1996) DFN (Germany) 4 64Kbps (1996) HongKong (BUCT (Beijing)4/ 64Kbps (1995) ITJ (Japan) Global Internet 256Kbps (1995) Sprint (U.S.) i -..4 IM + 2Mbps (1996) China Net 1 Global-One (U.S Beijing Gateway4 128Kbps (1996) KDD (Japan) 128Kbps (1996) .i4 Singapore (Shanghai Gate 2Mbps (1996) Sprint (U.S.)
'Beijing 256Kbps (1996) Sprint (U.S.) ChinaGBN Gateway
Sources: ChinaNET, ChinaGBN, CSTNet, CERNET.
The costs of international leased lines are relatively future capacity increase of China's international more expensive in China than in most developed links. nations. Taking a leased line between China and the United States as an example, the Chinese operator 5.3. DOMESTIC NETWORK pays 147,000 Yuan (about US$17,900) to China's INTERCONNECTION AND DOMAIN NAME MPT and 81,000 Yuan (about US$9,880) to the US REGISTRATION carrier per month for one 256Kbps leased line.9 This adds up to a US$27,780 per month charge. For a China's Internet is constructed of four previously 2Mbps leased line, the Chinese operator has to pay separated national networks. ChinaNET, ChinaGBN, about US$95,100 per month to the Chinese and the CERNET, and CSTNet all have their own national US carriers. This is a huge burden to Chinese backbones which were not interconnected initially. interconnecting network operators who transfer the An email from the ChinaNET to a receiver on the costs to ISPs and end users in most cases. The high CERNET, for example, was often sent to Japan or charges are also one of the major barriers to the United States. The email would be re-routed back to China via the international link to reach its final 728 692 destination. China's national Network Access Points All the ISPs who run Access Networks (ANs) (NAPs) are still in planning. However, previously should apply for operating license and gain isolated networks have been directly or indirectly international access from one of the four connected via domestic links. interconnecting network operators. All Internet users have to register with the local Meanwhile, China has finally assigned the Computer bureau of the Ministry of Public Security as Network and Information Center (CNIC) of the well as with their ISPs. Users will also fill out a Chinese Academy of Sciences to run China's domain network access responsibility agreement name registration. The authorization, signed by the pledging not to threaten state security or State Council's Leading Group for Informatization, disclose state secrets through the Internet. grants CAS's CNIC the operation right to run CNNIC(China Internet Network Information Center). The regulations have added many new rules on CNNIC is responsible for the domain name China's Internet, compared with other value-added registration under the top domain .cn. However, the services. Figure Two illustrates this regulatory frame CERNET has been granted the right to register in detail. domain names under the .edu.cn sub-domain. By doing this, China has formally taken over the domain 6.1. A NEW REGULATED FRAME - name registration rights of .cn from the Asia-Pacific COMPETITION UNDER MONITORING Network Information Center located in Japan. Under the old regulatory regime, the MPT was the 6. "REGULATED" VALUE-ADDED SERVICES official regulator which made the policy and handled the registrations on the provision of various value- According to China's telecommunications regulation, added services. State Council's interim regulations any legitimate domestic corporation could operate on China's Internet has created a new regulatory value-added services including the Internet by structure regarding Internet operation. registering to the MPT or to a MPT's local bureau when it is a local operation.' However, the concerns The State Council has chosen a new, higher level of safety, content control, and redundant and organization, the State Council's Leading Group on overlapping networks have pushed China's Internet Informatization, to be responsible for all the policy- into a REGULATED value-added service. making decisions. However, the leading Group will not handle license applications, nor will it actually On February 1, 1997, State Council issued its Order run the operations. The telecommunications regulator No. 195 to govern China's Internet. This Order, and operator, the MPT, has been assigned as a entitled "Interim Regulations on International Internet service operator and a registrar, together Interconnection of Computer Information Networks with other three government ministries and agencies, in the PRC", was slightly revised on June 3, 1997 and the MEI, the SEC, and the CAS. All the ISPs have to has laid down the following rules on China's apply for operating licenses from those four Internet." registrars. The State Council's Leading Group for Informatization is responsible for the This new regulatory regime presents a model which coordination and decision-making on the blends the competitive nature with centralized important issues of the Internet. controlling. Only four agencies, the MPT, the MEI, the A new regulator, the Leading Group, has been SEC, and the CAS, are authorized to establish created. The Leading Group is not involved in and operate Interconnecting Networks (INs) operation. This has fulfilled the goal of which run direct links to the global Internet separating regulation from service operation. through international leased circuits. The rights of top level operation have been All the direct links by the four government granted to four agencies, rather than one. This agencies to the global Internet must be has assured competition of China's Internet connected via MPT's international gateways. services. No one may establish or utilize other means to The ISPs are required to obtain licenses from gain access to global Internet. the four operators, which are government
693 729 agencies. The legacy of government control is partially kept under the new structure.
Figure Two: The Regulatory and Networking Frame of China's Internet
Centrally controlled international 1MPT's International Gateway Facilities gateways to global Internet
CERNET CSTNet1 rChinaNETiChinaGBN by the Chinese by the Ministry by the Ministry by the State Four Interconnecting networks Academy of of Posts and of Electronics Commission of operated by government agencies Education} Science Telecoms Industry A A A
ISPs ISPs IISPs IISPs Networks Networks MPT's local GBN's local Numerous ISPs (Access Networks) by by bureaus; bureaus; Ibut, under the licensing universities, research Commercial Commercial and monitoring of the schools institutions operators. operators. four government agencies
41 Commercial and non-commercial End Users users under MPS's monitoring and ISP's administration
Source: Compiled and copyrighted by Zixiang (Alex) Tan. GBN: Golden Bridge Network
6.2. NETWORK CONSTRUCTION UNDER GOVERNMENT CONTROL However, all of China's direct international links are required to go through MPT's international gateways. The network structure of China's Internet is shaped No one is officially authorized to set up international by the regulatory frame. All the four top-level links through other carriers or by other means. This is operators are permitted to construct their own partially a recognition of MPT's monopoly on national networks and to provide networking services international traffic. In addition, this arrangement to ISPs. More importantly, they are allowed to set up paves the way for implementing content control. direct international links to the global Internet.
694 ISPs could certainly set up their own local networks. Another important level of implementing content There are no specific rules which limit ISPs' efforts control is the creation of regulations regarding end to expand their regional or even national networks. users. These are implemented both by the ISPs and However, ISPs are not allowed to set up their own by theMinistry of Public Security (MPS). All direct connection to the global Internet. They are Internet users are required to register with the MPS required to get global access through one of the four bureau in their locality by filling out the Police File top-level operators. Lack of the direct global links Report 'Form. New users also need to sign a Net may put ISPs' expansion under control. Access Responsibility Agreement in which they pledge not to threaten state security, reveal state secretsortransmitobsceneorpornographic 6.3. CONTENT CONTROL A KEY ISSUE materials.
One of the key goals of theStateCouncil's The three levels of regulations were intended to keep regulations on the Internet is to control content. As the content access under Chinese government's argued in the previous section, the pervasive Internet control.The implementation of thethree-level allows Chinese users accesstoalltheon-line content control may be problematic in reality because materials inside and outside China. Many of those of the limited financial resources and the lack of materials are either deemed indecent by Chinese skilledengineers andlawyers. The socialand standards or are under control and restriction by the economic costs of the content control regulations central government. This scenario poses a serious need to be further tracked. threat to China's political and social system. 7. THE FUTURE AND CONCLUSION China has carefully structuredits content control measures through institution arrangement,network China's Internet has been evolved into a regulated control, and user regulations. At the international value-addedservice.The regulatoryframe has cross-road, all the direct links are required to go incorporated competitive mechanisms while keeping through MPT's gateways, which retain a physical somelegacy ofChina'straditional central point to set up a national firewall. Some experimental government controlling. This is a unique regulatory exercises have been conducted which aim to block model in the world. The big question is whether the Chinese users from accessing certain Western web regulationstructurewill promote or hinder the sites by adding filtering and blocking software at the expansion of China's Internet. gateways.' The data of the past two to three years indicate a At the service provisionlevel,four government positive growth curve for China's Internet. However, agencies have served as registrars to watch the ISPs. the Internet in China is still a service for elite users. Any ISP is in danger of losing its operating license if Only a small portion of businesses have started to use convicted of not cooperating in enforcing content the Internet in their operation. The impacts of this control. uniqueregulatorymodelremaintobeseen.
8. ENDNOTES
' Morris, M & Ogan, C. (1996). The Internet as Mass Medium. Journal of Communications. 46(1), pp39-50. 2 Johnson, D & Post, D. (1996). Law And Borders--The Rise of Law in Cyberspace. http://www.cli.org/X0025_LBFIN.htm I. Zheng, J. (1993). Informatization and China's economic development. In Li, JKomatsuzaki, S. Zheng, Y. & Russel, P. eds. Informatization and Economic Development, pp45-53. Beijing: SocialScience Literature Press, 1993 (in Chinese).
695 731 4 Mueller, M. and Tan, Z. (1997). China in the Information Age: Telecommunications and the Dilemmas of Reform. CSIS/Praeger, Washington D.C./Westport CT, 1997.pp52. op cit 4. 6 Wang, Z. (1994). Investing in China by Multinational Corporations. Beijing: China Foreign Trade Press. Lu, Q. (1997). Development Directions for Chiha's Informatization. Internet Forum (in Chinese), June 1997. Http://www.ihep.ac.cn/magzine/97/6/1q1.htm. Barme, G. & Ye, S. (1997). The Great Firewall of China. Wired, June 1997, pp138-150. 9 Lei, L. (1997). The focus: telecommunications charges. Internet Forum (in Chinese), May 1997. Http://china- window.com/97/5/Inw.htm. I° op cit 4, pp 77. 11 Tan, Z., Mueller, M. and Foster, W. (1997). China's New Internet Regulations: Two Steps Forward, One Step Back. Communications of The ACM, December 1997. Forthcoming. 12 Yurcik, W. & Tan, Z. (1996). The Great (Fire)Wall of China: Internet security and information policy issues in PRC, in the Proceedings of the 24th Telecommunications Policy Research Conference, Soloman, MD,October, 1996.
732 696 Killer Applications For Internet/Internet2 And Their Impact To The Telecommunication Industry
Ifay F. Chang, Ph.D. Polytechnic University Hawthorne, New York 10532
Abstract
Internet has been rapidly advancing with technological components and useful applications. In only a few years' time, it evolved from a principally academic research network to a commercial network poised as the network solution for information service and various electronic commerce. Recently, a major movement initiated mostly by the academic institutions is calling for the development of a high bandwidth (minimum of 155 Mb/s) national network called Internet2 to be completed by 2001. These Internet developments on the one hand are prompted by the fever of application growth visible on the current Internet and on the other hand are searching for the major killer applications which can justify the investments and the development efforts of the next generation Internet. This phenomenon should be quite familiar to the telecommunication industry; for example, when telephone companies and cable companies were making their investments in network speed and capacity they were looking for their major killer applications to bring back healthy returns for their investments. One recalls that the Video-on-Demand was touted as the killer application to warrant the investment of ATM network and switching but it soon became clear that video content creation would take time to produce and the consumers would take even longer time to accept the VOD as a major application by willing to pay a fair price for it. Why should Internet2 be different in finding its killer applications? Will Internet2 be financed with no return in mind? If the answer is yes, what will be its impact to telecommunication industry? If the answer is no, what are the killer applications for Internet2 then? What are these applications' impact to the telecommunication industry? This paper attempts to address the above questions via a historical review of the past events and an analytical deduction of current happenings. A number of potential real killer applications will be discussed in contrast to the VOD application in the light of justifying the investments that have to be made in order to enable the applications as well as in the light of analyzing their impacts to the telecommunication industry.
I. Introduction The rapid growth of Internet (5), its black-out (6) and the proposal of Internet2 (7) have Internet as a network of networks can be postedaclearwarningsignaltothe traced back to its embryo as ARPANET (1) telecommunication industry, at least for the commissionedin 1969 and laterits network operators, service providers and the academic origin as the NSFNET (2) with 56 equipment vendors. The present Internet Kb/s backbone created in1986. From the and the future Internet2 will have a great application point of view, it evolved from the impact to the telecommunication industry. initial networkfor supporting military The industry largely concerned with research into a network principally used for telephony business before is going through e-mail (invented in 1971 by Ray Tomlinson businesstransformationswhichinvolve (3),filetransfer and World Wide Web mergers and strategic changes. However, it information service (invented in 1992 by Tim isnotentirelyclear thatthedecisions Berners Lee.(4).Of course, thelatter . derived from a "telephony vision"isthe application category, consisting of numerous correct one since many new applications innovativeapplicationsin theareaof may still emerge. advertising,information search, electronic order, public service, etc., only mushroomed This paper intends to take an application- into a information boom in the past three driven view to examine whether there are years. certain critical applications emerging in the
697 -733 Internet and/or Internet2 which will have a At a meeting in Chicago in October, 1996 (7) very significant impact to the exact time and sequence of events are the telecommunicationindustry.Inthenext research topic for historians), section, we first review the history, goal, representativesofthirty-fouruniversities status and plans of Internet2 with which to agreed unanimously to endorse the goals of set the background for the discussion to theInternet2 project, committedtheir follow. In Section III, we probe the telephony institutions to finding the resources viewversussomeothervisions.We necessary to participate in the project, and introduce a number of applications which pledged initial funding to enable planning may be considered as Killer Applications efforts to proceed without delay. Support for potentially having very significant impact to the project from the academic community the telecommunication industry. We then has grownquickly. To date,over one analyze these applications and their network hundred universities have become members requirementsfromnetworkarchitecture, of Internet2. Each member university has traffic volume and operational procedure pledgedsubstantialstaffresources and points of view. This analysis and discussion financial support for the duration of the ispresented in Sections IVand V. project.Associate members andaffiliate Concluding remarks are given in Section VI members werelaterdefinedtoinvite followed with acknowledgment and broader academic and industry participation. references. Inmostrespects,thepartnershipand IL Status of Internet2 fundingarrangementsforInternet2will emulate the successful NSFnet example as A. History a joint academia and government collaboration effort. The federal government will participate in Internet2 through the Next Internet2 (7) is a proposal from academicians to build an advanced network GenerationInternetinitiative and related for academic and research use with the programs. Thus, Internet2 and NGI may be hope to advance the network technology viewed as one movement with the same and accelerate the development of several overallobjectivebutwithsomesub- key classes of applications. The concept of objectives to be interpreted and carried out an advanced Internet network infrastructure by different organizations and institutions. has also been promoted by Vice President Al Gore known as the Next Generation B. Status Internet (NGI) (8). On October 10th, 1996, President Clinton released a background In the Internet2 movement, another goal is paper withhisspeech announcingthe to join with corporate leaders to create the Clinton-GoreNGI which made aclear advanced network services necessary to definition for the goal of NGI: "demonstrate meettherequirementsofbroadband, newapplications*thatmeetimportant networked applications.Industry partners national goals and missions (with higher- are urged to work primarily with campus- speedandmoreadvancednetworks)" based and regionaluniversity teams to *(scientific research, national security, provide the service and products needed to distance education, environmental implement the applications defined and to monitoring and healthcare). Although they be developed bythe project. Major have similar objectives, but the approach corporationssuchasAmeritech,Cisco and momentum behind them are not the Systems,DigitalEquipment Corporation, same. The latter is a promotion calling the IBM, MCI, Sprint and Sun Microsystems nationtothink and advance aheadin have already pledgedtheirsupportfor Internet and the former is an academic Internet2.Additional support for Internet2 consortium committing some resources and will come from collaboration with non-profit inviting industry to support and participate organizationsworkingin researchand with NSF endorsement and backing. educational networking. Many affiliate organizationsalready committedtothe project. By promoting cooperation among
73 4 698 these organizations, government agencies Laboratory. The progress of the project is and private industry, Internet2 will effectively achieved and measured through technical leverage research funding, accelerate the working groups. developmentofcampusnetworks,and create new standards and technologies E. Internet2 Architecture urgently needed for advanced research, and
eventually, by all Internet users. Fig. 1 showsthearchitectureofthe Internet2. A minimum network speed of 155Mb/s is assumed. Internet2 is a network C. The Goals of Internet2 interconnecting a collectionof very high speed regional gigapop centers. The official goals of Internet2 (7) are stated as follows: Architecture o f Intemet2 First and most importantly, creating and sustaining a leading edge network capability for the national research community.
Second,directingnetworkdevelopment effortstoenable a new generationof 1°- IPv6 y. applications to fully exploit the capabilities of 15 gigapops broadband network, media integration, (1997) interactivity, real time collaboration to name a few. Erausers Third, integrating the work of Internet2 with lab lab classromn office ongoingeffortstoimproveproduction Internet services for all members of the Fig.1. Architecture of Internet2 academic community. A major goal of the project is to rapidly transfer new network services and applications to alllevels of The key new element in this architecture is educational use and to the broader Internet the gigapop (for "gigabit capacity point of community, both nationally and presence") high-capacity, state-of-the-art internationally. interconnection point where Internet2 participants may exchange advanced D. Project Plan services traffic with other Internet2 participants. Campusesina geographic The project will be conducted in phases over region will join together to acquire a variety the next three to five years, withinitial of Internet services at a regional "gigapop". participation expected from leading research Each campus will install a high speed circuit universities, a number of federal agencies, to its chosen gigapop through which it will and many of the leading computer and gain access to commodity Internet services telecommunications companies. In the initial as well as advanced Internet2 services. The projectphase,endtoendbroadband gigapops will then join together to acquire network services will be established among and manage connectivity among the participating universities. On a parallel themselves, inanorganizationwhose basis, teams of university faculty, structure andlegalform remainto be researchers, technicalstaff and industry determined. Potentially there could be a experts will begin designing applications.It wide range of services available at the is expected that within eighteen months, gigapop, limited only by the economics of "beta" versions of a number of applications the market and the absolute priority and will be in operation among the Internet2 insulation of Internet2 services. projectuniversities. The keyapplication examples of Internet2 are: Learningware, Digital Libraries, Tele-immersion, and Virtual
699 735 OIL Killer Applications of the Twenty First Interactivelearning.(9-12).PRIDE has Century taken a moreholisticviewofInternet Interactive Learningand developeda The global telecommunication industryis comprehensive system called I-CARE.I- basically a telephony industry. The computer CARE (12-14)is a system designed to industry has been concerned mainly with provide all necessary functions and tools for local area network communication up till the education administration, courseware emergenceoftheInternet.The cable preparation and teaching and learning. We industry was preoccupied with entertainment discuss here an application conceptof applications until the new telecommunication Global Collaborative Education (GCE) Act that opened up the telephony playing basedonInternetInteractiveLearning field and the rise of the Internet. The fever of utilizing a comprehensive system such as I- video-on-demand a couple of years ago did CARE. This application not only is a justified trigger some awareness of network academicapplication, but also isa requirements and some competitive analysis challenging application to Internet2 and the among the cable and telephone companies, telecommunicationindustrysinceitwill but cooled off due to the lack of content or utilize the full capability of Internet2 when slow development of content for VOD. The fully scaled up.Fig. 2 depicts a network telecommunication companies are infrastructureof GCE and asimplified positioning themselves to gain local access, system architecture of I-CARE. market share of subscribers and back-bone connectivity, but are they getting ready to Tokyo meet the demand of the twenty first century killer applications projected by Internet2? I-CARE based on Internet2 How would the Internet2 initiative (achieving 155Mb/s network) impact the telecommunication industry?. The answers to these questions ought to influence the planning and strategic alliance of telecommunication companies.
We present here a few applications which in our view may become dominant telecommunication applications for Internet for the next century. These applications do not have the content issue as in the VOD case. We feel thatitis important for the telecommunication industry to understand Fig. 2. GCE and I-CARE based on Internet2 these applications andtheirnetwork requirements. These applications already The concept of GCE is very simple, that is a exist on today's Internet, however, they will numberofeducationalinstitutionswill be enhanced and scaled up with the arrival collaborate and offer educational programs of Internet2. jointlytostudentsdistributedlocallyor globally. Each institution will set up a course A.Global Collaborative Internet Interactive catalog of its selection delivered by Internet Education Interactivelearningforthecollaborative program. The combined program catalog is InternetInteractiveLearninghasbeen offered to students globally. The students recognizedasanimportanteducation may earn a degree or certification from the methodologyofferingsupplementaland joint program or from an individual institution complimental advantages over the if the student's study fulfillsits academic traditional classroom teaching or learning requirement. At this moment, this concept is (including the high cost of distance learning being formulated between a number of in video classroom). Many universities have institutions.As thepolicy differences started experimental projects on Internet betweeninstitutionsandcountriesare 736 700 settled, this concept can evolve very quickly industry extend and mingle their activities to become a true global-scale education with professionals in various industries.It program involving thousands of institutions. has been recognized that the conference activities although valuable are very costly to Internet Interactive Learning today is mostly the academic institutions and R&D limited to asynchronous interaction involving organizations.Evenindustry which has text and images. However, that is principally traditionallyallocated morefundsfor due to the network bandwidth limitations of marketing has felt the cost pressure from the Internet today not because of any lack of conferences and exhibits. The author has audioandvideotechnologies. Inthe proposed the concept of Internet Real-Time Internet2 environment, these GCE Internet Conference (IRC) at the early days of Web Interactive Learning programs certainly can emergence (15). Today's network capability utilize the full range of multimedia and the islimitingitsfullrangeofapplications multicasting, narrow casting and/or involving multimedia and real-time broadcasting techniques for teaching and synchronoustechnologies.However,its learning. Hence,with full multimedia, benefits of cost-saving and more effective functions in a sealed up mode, GCE may information exchange for the mass become a major application of Internet2 and conference attendees have been the telecommunication industry. demonstrated.(thedinner andcocktail meetings of a few are still valid interactions, B. Internet Real-time Conference though they do not have to be conducted in the midst of conferences involving Academic researchers and educators thousands of people and many parallel participate in many technical conferences a activities). year. Their interactions with various fields of
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701
BEST COPY AVAILABLE network infrastructure and the video system Fig. 3 Concept and Operation of IRC requirements for telesurveillance.
Thefigureabovedepicts a network infrastructure and a schematic IRC conference system. Concept and Operation of IRC One can easily extrapolate this diagram to become a sizable conference distributed over many cities having thousands of people attending them inreal-time proceedings. Global Information and Software Society (GISS), is a pioneer in the application of IRC since 1995 (16). The movement of IRC (real-time proceedings) is still limited today Fig. 4. Telesurveillance via Internet largely due to a lack of awareness of its intrinsic value and a lack of publicity of its Since the operational procedure of exams actual working experience.The secondary and tests are conducted in real-time, a video reasonis due to the vested interestof surveillance scheme is necessary to provide present conference organizations which see reliable and secure proceedings. However, the threat of losing a significant business. this application puts large bandwidth Yes indeed, the prevalence of IRC will shift demand on the network.Itis obvious to the business from airline and hotel industries extend this application technology to other to the telecommunication and computer industrial surveillance, for instance industries. With Internet2, many innovative monitoring of hospital operation or and creative ways of using IRC will be manufacturing process in remote locations. possible. Its prevalence is inevitable and its If one replaces the exam rooms in Fig. 4 impact to the telecommunication industry will with manufacturingfacilities,the system be very significant as we will illustrate in the becomes a multi-point group surveillance next section. systemwith increasedredundancyfor reliability and security.This kind of C. Telesurveillance surveillance system can also be applied to the monitoring of environmental effects. In Strictly speaking, the telesurveillance such an application, the number of cameras application is notnecessarilyjustan can be a big number and its operation may academic application (e.g., tele-proctoring be 24 hours inreal-time. Therefore, the examination), certainly not from its impact to impact of thiskind of application to the telecommunication point of view. In 1995, telecommunication industry can be PRIDE has firstcreated alive camera enormous. As for the academic community, application on the Web (17).Its intention the Internet2 certainly provides an was more technology-driven than environment for perfecting and implementing application-driven. The live camera provided the tele-exam application. weather and traffic information of Route 9A in Hawthorne, and also some surveillance IV. The Impact of the Killer Applications value to PRIDE's premises. In our research to the Telecommunication Industry on education transformation andinthe We can make a simple analysis,from system development of I-CARE, one of the issues and network architecture,transmission surfaced was the need of having Internet volume and operational procedure points of Real-Time examinations administered over view for the above three applications to the Internet. The live camera surveillance show their impact to the telecommunication concept becomes a possible solution.Itis industry. especially cost effective for global collaborativeeducationprograms where A. Analysis For GCE Application travelingover long distancesfor taking exams is cost prohibitive. Fig. 4 depicts the
3 3 702 Let'sfirstmake theassumption,video broadcast will be used in GCE which is a B. Analysis for IRC Application reasonable assumption. Then we assume conservatively, GCE will evolve into a one Let's assume that IRC will gain popularity to thousand institutions participation (naturally 5000 conferences annually each with 3 days in groups employing a network architecture (50 conferences per day assuming. 300 similar to Fig. 2) with each institution having working days per year) of proceeding (20 one thousand students involvedin GCE papers each day,2.4hoursvideofor program each receiving one hour of video keynote and invited speakers). The average education per day in an Internet Interactive present day conference usually has 2000 Learning mode shown in Fig. 5. We can attendees which may be expanded 10 fold in then state the following: the IRC global mode. We can then state the following:
Ore Ion video produces 1.2.4 hour video broadcasting produces 60+60,31:01GMb*1/200 =5% compressed data 2.4 x 5Gb = 12 Gb Om tkusaid 2.Five thousand conferences with 20,000 ire tiedicats with cam thousand students will attendees will receive 5000 x 3x 20000 receive x 12Gb x 1/300 days = 12 MGb/day 5Gb *1000*101:0=5 MGb /day The global telephone. traffic for the 700M 3.Five thousand conferences with 20,000 lines am 101%1Gb May This traffic exceeds today's telephony traffic. Again, there is additional Web .i'University'1000- Global Collaborative Education (GCE) serving, chat and e-mail traffic associated with IRC. The Web serving of 20 papers 10Mb each for 1M people 1. One hour video produces 60x60x30x10 per dayisalso a significanttraffic, Mbx1/200 = 5Gb compressed data 2MGb/day. 2. One thousandinstitutionswithone thousand students will receive C. Analysis For Telesurveillance 5Gbx1000x1000 = 5 MGb/day Application
Today, the global telephone traffic for the This application is probably more significant 700M lines are 10 MGb/day. It is clear that if one considers its use in general industry. the GCE application potentially will put a Let's take Fig. 4 as the architecture for a greaterdemand on telecommunication four-site company surveillance, each site network than the total telephony will. In the having 10 cameras. We further assume that GCE operation, interaction involving the surveillance application will grow to one telephony, Web server, e-mail and other thousand companies. We can state the communication means will also add further following: demand on the network, although they are much smaller than the video demand as 1.24 hours surveillance produces 24 x shown in Table I. 5Gb = 120 Gb 2. 4 sites mutual coverage of 10 cameras Traffic V olumefor 1M Students at each site produce 4 x 3 x 10 x 120 Gb E-mail imxixxioo=iolly clay = 1.44 x 10 *13b/day 3.For one thousand companies 1000 x Phone imx15m=154012biday 1.44 x 10 *13b/day = 14.4 MGb/day Web(service) 1Mx150M =15x1013b /day Thistrafficvolumeisgreater than the Video 1mx5G=sx101soday telephone traffic volume today. The * 100E-mail/day, 1 Kb/rnail; 15Mb /day rer plore lire operational procedure for surveillanceis straight forward, i.e., 24 hours continuous (or at least 16 hours continuous) Table I: Traffic Volume for 1M Students
703 surveillance. For the academic applications although high bandwidth synchronous like examinations and tests, one may use communication such as video conference the GCE model to arrive at the following may bedesiredforsomeoccasions. analysis. Asynchronous digital communication offers an advantage over synchronous analog 1.8 hours surveillance produces 8 x 5Gb = communicationindata compression and 40Gb compressed data network load balance. The former is derived 2.For fourinstitutionsto conduct final from a trade-off between transmission cost examination for one thousand students and processing (coding and decoding) cost. 4 X 1000 X 40 Gb = .16 MGb/day (peak The latter is due to the flexibility of selecting load) optimal route and transmission time. These characteristics must be considered by the The traffic may be considered as the peak telecommunication industry in planning its load since exam schedule may be arranged capacity and capability to meet the demand differently. The 0.16 MGb/day is never the of the twenty first century. lessstilla significant traffic just for the academic application. Another concern that may be raised is the impact of Internet telephony (real-time digital V. Discussions communication with modified IP protocols) on the future of telecommunications.Itis very natural to incorporate I -phone (combine From the above analysis,itis clear that voice and data over IP) technology in the although telephony may still be a growing business globally in terms of subscribers, three application examples discussed above. Use of I -phone brings the application but the transmission traffic volume and the users more into a synchronous generated by it may not be the dominant communication mode. Hence, new protocols one in the future, The traffic generated by (e.g., H.323, T120), routers and Internet the three examples presented here alone potentially can be far greater than the telephony gateway products are required. This technology offers the advantages of traditional telephony traffic today. Hence, tradingcostbetweentransmissionand they may be calledKiller Applications to processing and obtaining the cheapest long signify their importance or potential impact distance route, although local phone lines to the telecommunication industry in network are still used. With the arrival of Internet2, capacity and switching or routing equipment. the current problem of voice quality and So from network capability planning point of latency will disappear. The view, these Killer Applications must be taken telecommunication industry is fully aware of into serious consideration. the emergence of this technology, however, it may not have analyzedI -phone in the The phone has been theprincipaltele context of the Killer Applications cited here. (remote)-communication means so far, and That is,it may not be just a competing it is conducted in a synchronous and mostly telephone product, rather it may accelerate analog mode. There are other competitive other applications such as Internet communication means emerging such as InteractivelearningorInternetreal-time FAX (asynchronousanalog)ande-mail conferenceintoa dominantapplication. (asynchronous digital). In telephony, people Some of the studies made on Video-on- already experience a number of unpleasant Demand may be used as a reference (18). andunproductive phenomenon such as busy line, put on hold, not able to reach the right party, endless phonetag, etc. VI. Conclusions Whereas, fax and e-mail do not have such problems. It is no surprise that their growth This paper discusses the impact of several in thetelecommunication sharehave critical applications of Internet which may become significant. become dominant telecommunication applications with the arrival of Internet2. The The above three applications use principally momentum of Internet2 is set. The three asynchronous digital communication, applications presented here, namely Global
40 704 Collaborative Education based on Internet interactive learning and Internet Real-Time 8. NCO, Background on Clinton-Gore Next Conference and Surveillance show clear Generation Internet Initiative, potentialindominating or upsetting the http://www.hpcc.gor/ngi/background.html telecommunication network capacity Oct. 10, 1996 depending on whether the telecommunication industry has prepared a 9.UI-Online, http://www.online.uillinois.edu/ right growth strategy or not to meet the demands of these killer applications of the 10. Red Deer College Communication Courses twenty first century.Itis hoped that the On-Line, analysis and discussion presented here will http://www.rdc.ab.ca/rdc/comm250/index. lead to more in-depth studiesof these htm applicationsandtheirrequirements in networkarchitectureandcapacityand 11. Ifay F. Chang, Cyberspace Assisted various software and hardware Responsive Education Implemented on the Open Platform- communication products. Internet,International Conference on EngineeringEducation: Progress Through Partnerships, ICEE VII. Acknowledgment Proceedings, Vol. 1, pp. 741-748, Aug. 13- 15, 1997 The author expresses his appreciation for theinterest and encouragement of he 12. IfayF. Chang, An Internet Cyberspace Industry Technology Research Institute and Assisted Responsive Education, Information Industry Institute in writing this PTC97, W.2.1.2, Hawaii, 1997, http://pride- paper. sun.poly.edu/icare
13. IfayF. VIII. References Chang, Network-Centric, Group- CentricandHuman-Centric Information Processing Systems, 11th International 1. Sean Tappendorf, ARPANET and Beyond, Conferenceon Information Networking, http://clavin.music.uiuc.edu/sean/Internet- Proc. I-COIN11, pp10, Jan. 27-29, 1997 history.htlm, July 30, 1995 2.MichaelHarben,HistoryofARPANET, 14. Ifay F. Chang, CyberspaceAssisted http://vvww.dei.isep.ipp.pt/docs/arpa.html. Responsive Education (CARE) - A Solution Charles Babbage Institute, 25th Anniversary of for Education, ARPANET,http://www.cbiumn.edu/darpa/arpa http://pride-i2.poly.edu/GISS, pp1-18, net.htm, Nov. 6, 1996 GISSIC95 Proceedings
2.S. Vassal lo, History of the Internet, 15. Ifay F. Chang,An InternetRealtime http://bones.wcupa.edu/-svassall/history.htm Conference: Design, Experience and Future ApplicationsInternationalOfficeofthe 3.B.M. Leiner, et al, A Brief History of the Future: DesignOptions andSolutions Internet, http://www.isoc.org/internet-history Strategies, Edited by Bernard Glasson, Doug Vogel, Peter Bots & Jay Nunamaker, 4. Chapman & Hall, ppg, 81-90, April 9-11, Interview With Tim Bernes-Lee 1996 http://www.newciv.org/worldtrans/BOV/BI/B1- 216.html, May 31, 1995 16. Global Information and Software Society International Conference 5.Internet Domain Survey, http://pride-i2.poly.edu/GISS http://www.nw.corn/zoneNVWW/report html 17. Live Camera, http://pride-i2.poly.edu 6. USA Today, AOL Blackout Could Raise Question Of Reliability, 18. Ifay F. Chang, PRIDE Report On Video-On- http://www.wst2.USAtoday.com/life/cyber/tec Demand and Multimedia Services, April 17, h/ct137.htm, Aug. 29, 1997 1996
7.Internet2, http://www.Intemet2.edu 741 705 Wednesday, January 14, 1997
NOTES:
f) ( Telecom in Shanghai: Growth and Development in China's Tiger Metropolis
By Eric Harwitl and Duncan Clarke
lAssistant Professor, Asian Studies, University of Hawaii Moore Hall 416, SHAPS 1890 East-West Road Honolulu, HI 96822 Tel: (808) 956-2681 Internet: [email protected]
2Director, BDAssociates Limited Beijing Representative Office 1 Binhe Road, Room 809, Hepingli P.O. Box 1408, Beijing 100013, China Shanghai Representative Office 301 Huashan Road, Room 308, Shanghai 200040, China Tel: (8610) 6837 3291/3292 or (8621) 6249 2828 Fax: (8610) 6837 2831 or (8621) 6249 6631. Internet: [email protected] Website: www.bdaco.com
Abstract
This paper examines key elements of growth in Shanghai's burgeoningtelecommunications industry. It begins with a brief discussion of the city's communicationprogress over the past decades, then looks at municipal government policies and statisticalmeasures of the industry's recent success. It traces the major contributions foreign companieshave made, and the problems they have faced. The paper's conclusion discusses therole the sector will play in the overall development of Shanghai.
Since the late 1980s, Shanghai has re-emerged Growth of Telecom in Shanghai as China's most dynamic urban center. The development of telecommunications in this city Shanghai was one of the first cities in China to of 17 million has closely followed Shanghai's develop telecommunications services. In 1869, rapid strides forward. This paper examines key the Cable & Wireless family of companies elements of the sector's growth in Shanghai, formed the China Submarine Telegraph and spots trends that will shape future progress Company to lay a 1,700 mile cable between in the municipality. Singapore and Hong Kong via Shanghai. Twelve years later, the Qing dynasty The essay begins with a brief discussion of government established the Great Northern Shanghai's growth over the past decades. It Telegraph Company, with 338 subscribers in then looks at the evolution of government the municipality, and in 1907 telephone service policy, and turns next to the role of foreign was introduced. The city was the first in China investors. The final section looks at trends that to introduce long-distance service in 1923. will shape the future of Shanghai's telecom sector.
709 743 World War II hampered the industry's growth, Telecom Policies but in 1949, when the communists took control, Shanghai had some 85,000 lines Unlike many industries in China that develop at installed for about 55,000 subscribers. Though mainly local initiative, telecom is a relatively the numbers were small, Shanghai had nearly hierarchical sector, and is shaped by the 30 percent of all telephone lines in the country. nationalMinistryofPosts and The city boasted Asia's largest manual Telecommunications (MPT). Its policies were exchange, with a capacity of 6000 lines. key to many of the advances Shanghai has made in the past decade. Communist policy emphasized growth in heavy industries, so telecommunications development One of the most important central strategies was was slow in the 1950s and 1960s. The central the "Three 90 Percents" policy of 1988. It government also feared economic dominance stated that 1) 90 percent of central government by large urban areas, and re-distributed loans for telecommunications did not have to be revenues away from developed cites like repaid; 2) provincial telecom authorities could Shanghai to inland areas. keep 90 percent of their taxable profits; and 3) the MPT could keep 90 percent of its foreign Shanghai, then, maintained a five-digit currency earnings from international traffic. numbering system until it took six digits in Though the policy was revoked in 1995, 1957, and kept manual switching into the early revenues directed toward the industry were vital 1960s. Long distance calls and even for equipment purchases throughout the nation. communication with suburbs required booking a call in advance with a city operator. Table 1 below indicates the effect these and other policies had on both Shanghai and China's Cultural Revolution turmoil of the late national spread of telephones. Note that the 1960s and early 1970s retarded industrial effect of the policies were not limited to the growth across the country, but in 1972 large city, as the country as a whole saw similar Shanghai was the site of the nation's first rapid strides in percentage growth of new satellite earth station. Following the death of subscriptions. The recent slower rates of radical leader Mao Zedong in 1976, and the rise growth reflect the maturation of the of Deng Xiaoping two years later, China's new telecommunications system. regime put modernization of industry as a top priority. Within Shanghai itself, some municipal policies also aided telecom development. In 1985, the In the early 1980s, Shanghai city authorities city created a special telecommunications realized domestic equipment could not meet the leading group, one which included the city needs of a growing economy. The first order mayor, a relevant vice mayor, the Shanghai for DSPC switches came in 1983, and were Post and Telecommunications chief, and other supplied by Belgium's BTM (now Alcatel) officials to coordinate development efforts. The corporation. That same year, the city signed group helped plan infrastructure installation for China's first telecom joint venture with the telecom development, and worked with the same Belgian company, and formed Shanghai Shanghai price office to set appropriate rates for Bell (discussed below) to manufacture local calls. switches. Though the head of the Shanghai P & T was By the end of the decade, economic and appointed by the MPT, recent leaders Xu political conditions in Shanghai and the rest of Zhichao and his successor, Cheng Xiyuan, the nation inspired accelerated development of seemed to have local support and useful the telecom sector. The following section expertise. Xu, for example, had some past examines key local and national policies that experience in market research and economic facilitated the rapid growth. forecasting.
710 Table 1: Number of Shanghai Telephone Subscribers, 1985-1997
Year No. of Subcribers % increase over previous year national % increase
1985 186,000 16% N.A. 1986 210,000 13% 14% 1987 240,000 14% 17% 1988 288,000 20% 24% 1989 361,000 25% 22% 1990 457,000 27% 22% 1991 566,000 24% 25% 1992 768,000 36% 37% 1993 1,080,000 41% 53% 1994 1,580,000 46% 60% 1995 2,230,000 41% 45% 1996 3,030,000 36% 35% 1997 3,600,000 (target) 20% N.A.
Sources: Today's Shanghai P &T [Publication of Shanghai Posts and Telecommunications office, 1994],p. 17; '97 Shanghai P&T [Publication of Shanghai Posts and Telecommunications office, 1997],p. 29; China Statistical Yearbook 1996 (Beijing: China Statistical Publishing House, 1996), p. 531.
Table 2: Telecom Achievements in Shanghai, 1992-1996
1992 1993 1994 1995 1996
density of main lines* 5.96 8.36 12.22 17.12 23.31 density of telephone sets* 8.97 11.92 16.22 21.33 30.16 density of residence telephones*9.16 13.6 24.19 35.64 49.68
business revenue (million yuan) 577 946 1,498 2,325 3,349
* Units per 100 people
Source: '97 Shanghai P&T [Publication of Shanghai Posts and Telecommunications office,1997], p. 29. Note: One yuan is approximately 12 US cents.
Table 2 above summarizes some of the Foreign Investment and Local achievements of Shanghai in the past 5years. Competition
Though local telecom leadership did contribute As noted above, Shanghai hosted the PRC's to the city's achievements, policies set by the first telecom equipment making joint venture. MPT set the pace for the sector's growth. In The company, Shanghai Bell, was created in addition to national policy, however, foreign 1983, with the current Alcatel holding 30 participation and local competition to the percent of the venture, the MPT's equipment previously monopoly P & T office alsowas an branch PTIC taking 60 percent, and Belgium's important part of the city's telecom Fund for Development Corporation holding 10 development, as the next section indicates. percent. The venture began production of large capacity digital ports in 1985, with fixed assets of 14 million yuan (about $4.5 million).
711 (4J The choice of the MPT branch as a partner was Unicorn's head start explains in large part its key to Shanghai Bell's early success, as the healthier subscriber numbers versus other company had a market nearly guaranteed by the Unicom branches. Shanghai Unicorn signed monopoly carrier. The company had no limit on up an estimated 20,000 subscribers before its production, though other factories in China Shanghai PTA launched its GSM service, while did have such caps. Production therefore cities such as Tianjin struggled to pass even the soared in the early 1990s, as table 3 below 10,000 mark. indicates. Nevertheless, like the rest of Unicorn, the As the table shows, competition in the late Shanghai company faced stiff competition and 1990s has begun to erode profit margins. Still, regulatory roadblocks from the MPT's the joint venture has reached about 70 percent Shanghai P & T office. The MPT matched and local Chinese content, and should be able to undercut Unicorn's GSM mobile handset prices keep close to its 33 percent national market and phone call rates, and made connection to share of switches into the foreseeable future. the fixed network a large hurdle. Shanghai Other notable telecom equipment joint ventures Unicorn currently charges 40 fen (about 5 US in Shanghai include cooperative enterprises cents) per minute of incoming or outgoing with Lucent Technologies, Nortel, and calls, and gives the MPT only about 8 percent Siemens, the latter located in Shanghai's new of this revenue; but the MPT keeps 92 percent industrial district of Pudong where its of Unicorn's long distance revenue, and 100 manufactures include equipment for GSM percent of international call fees. networks. Still, Shanghai Unicorn claims to have attracted On the operations side, China's second carrier, about 40,000 customers by mid-1997, and has China Unicom, is playing an important role in 55 base stations. It recently received permission cellular services, and has spurred the Post and to build a backbone line in the city, and plans to Telecommunications office to lower its prices connect an optical cable from southern China and improve its service. Shanghai Unicom was and even have its own satellite within two established in September 1994 and service was years. It has a cooperative agreement with introduced in July 1995. Unlike the three other McCaw to further develop wireless services, cities where Unicom launched its first GSM though press reports indicate the American service in that month, namely Beijing, Tianjin, side, slow to receive profits from the and Guangzhou (Canton), Shanghai was enterprise, may have a weak commitment to the unique in that Unicom managed to steal a march Chinese company. on the local MPT administration. Shanghai
Table 3: Shanghai Bell Output
YearMillions of Ports Sold Sales Revenue (US$ million)Revenue per port (US$)
1990 0.45 82 182 1991 0.7 126 180 1992 1.36 222 163 1993 2.84 488 172 1994 4.4 610 139 1995 4.4 546 124 1996 5.8 550 95
Source: Business China, Economist Intelligence Unit, September 30, 1996, p.
746 712 Unicorn has presented the only legal avenue to question frequently vary between 5 year and 20 date for foreign operators to take part in China; years. However, much of the speculation is foreigners form complicated semi-detached posed by those outside Shanghai. The city's joint ventures with the company, allowing a inhabitants themselves exhibit a more limited role in managing systems. AT&T, sophisticated understanding of the situation, however, seems poised to play a major role in recognising that Shanghai and Hong Kong's the newly developing Pudong region of the futures are closely intertwined. As a senior city city, and, with pending approval from the official recently put it, Shanghai and Hong central government, may become a key operator Kong are like jet engines on a 747. The aircraft for the district's high technology manufacturing needs both to stay aloft. and financial centers. With continued development of Shanghai, Shanghai's Telecommunications Future growth in installation of telecommunications equipment and services will continue. Both the Shanghai has long played a dominant role in central and local governments realize the China's transportation sector, both internally importance of the latest technology, and have with its strategic position at the mouth of the supported policies friendly to the sector's Yangtze River, and internationally with the expansion. Foreign equipment makers have multitude of shipping lines connecting the city's enjoyed opportunities for fruitful investment in deep water port with multiple ports throughout the city, though foreign operators to date have Asia and the world. This position has been nearly shut out of the market. Soon, contributed to Shanghai's unique characteristics however, the central government may realize it is by far mainland China's most the importance of foreign management know- cosmopolitan and modern city. As the business how for the continued vitality of the "new" of commerce becomes increasingly electronic, Shanghai, and the city will become a magnet Shanghai is seeking to build on its foundations for companies playing a role in the progress. as a major 'entrepot' to become a port of The prevailing atmosphere in the city can be finance and information. seen in the perhaps apocryphal conversation between former British Deputy Prime Minister Today Shanghai's stock exchange dominates Heseltine and Shanghai's city leader: "Mr China's domestic equity capital markets. This Mayor, I'm told that all the smart people come position is already reflected in the from Shanghai." "No, Mr Deputy Prime telecommunications sector by the high Minister, all the smart people come TO proportion of long distance and international Shanghai." traffic in Shanghai vs. other cities. Indeed, some estimates indicate that well over 50% of long-distance and international traffic in the city is related to the city's stock exchange, principally with sister bourse Shenzhen and big brother Hong Kong. The relocation of the city's stock exchange from a colonialera building to a glistening glass tower in the city's new Pudong district is a reflection of the importance the city places on its financial sector.
One question which appears to bea constant in discussions of Shanghai's overall economic future is as follows: How long before Shanghai catches up (oreven overtakes) Hong Kong as China's leading trade and financial service clearing house? Answersto the
713 747 Telecommunication Regulation In India
M K }CAUL Former Telecommunication Advisor, Ministry Of Indian Railways, New Delhi, India. Tel 91(11)6471313 Fax 91(11)6463473 Email mkkaul @usa.net
1. Abstract The paper looks critically at the structure and the Role of recently setup Telecommunication Regulatory Authority Of India (TRAI). The Authority needs widening of its role to make itmore contemporary and effective for promoting competition in the Telecommunications sector and enable thesector to attract more investments.
2. Introduction 4. Functions and Powers
The Government of India passed Telecommunication The functions and powers of TRAI' are listed Regulatory Authority of India Act,1997in the under section 11 of the Act and include to Parliament to constitute a Telecommunication Recommend: Regulatory Authority of India for the Regulation of The need and timing for introduction of new Telecommunications Sector. The bill received the service provider. assent of President of India on 28th March,1997. Terms and conditions of license to a service The Authority should have been in place in 1992 when provider. the Government of India decided to Privatize the Ensure technical compatibility and effective Value added services. The Privatization process for interconnection between different service Basic Services having taken off after initial hiccups, providers. the creation of TRAI will certainly hasten this Regulate arrangement amongst service providers process. However, lot needs to be done to fine tune the of sharing their revenue. TRAI to offer level playing field to the recently Ensure compliance of terms and conditions of introduced Private operators and thus leap frog license. India into next century. Recommend revocationof licensefor non compliance of its terms and conditions. 3. Structure Lay down and ensure time period for providing local and long distance circuits of The Authority consists of a chairman with telecommunication between differentservice six members. The Chairperson is a Judge providers. of the Supreme Court of India or a High Facilitate competition and promote efficiency in Court. A member is to have special the operation of telecommunication services knowledge and professional experience in so as to facilitate growth in such services. Telecommunications, Industry, Finance, Protect theinterest of the consumers of accountancy, law, management or consumer telecommunication service affairs. A Government servant can be considered Monitor the quality of service and conduct for the post of a member if he has held the post periodical survey of service provided by the of either a Secretary or an Additional service providers Secretary for a period of three years. He has to maintain Register of interconnect Agreements retire from the service before seeking such an and keep it open to any member of public for appointment. The tenure of the post is for inspection. Five years subject to an age limit of 65 years. An important power to TRAI includes the fixing One of the members is appointed as a Vice of rates for both National and International Chairperson. Disputes are resolved by a bench cervirp. constituted by Chairperson with two members. 5. Settlement of Disputes: An appeal against an order of the TRAI can be Settlement of disputes and Adjudication powers challenged in a High court. 'between service providers and consumers are
748 71 4 Broadcasting Services are getting Integrated exercised by the Regulatory body under section allowing new services to be provided over 14 of TRAI Act. existing Infrastructure demands the Integration These include: of various Acts governing different. Industry Technical compatibility and Interconnection sectors. It is believed that the impact of between Service providers. convergence on Regulation will be more than Revenue sharing arrangements the impact of Regulation on convergence. It is Quality of Telecommunication Services and the therefore necessary that the Indian Government interest of consumers. Ministries of Communication, Information, A bench of two members is constituted by the Broadcasting and Department of Electronics are Chairman for adjudication and in case they merged into a single Ministry and a single Act disagree, a third member decides the issue. drafted to enable Infrastructure to be shared Indian Government by forming the TRAI has more efficiently The lack of this approach is moved ahead by an important step towards glaringly visible in the drafting of Cable TV Privatization of Telecommunication services. Regulation Act drafted as recently as1995 However lot needs to be done to fine tune TRAI which Government may have to repeal. India to make it more effective. Some of the changes has 60 million T V sets,20million Cable T V required are discussed in the subsequent paras. Households and only 11 million Telephone lines. A more innovative and Integrated Act 6. Indian Telegraph Act could have contributed to the increased Telephone density at a minimal cost and a better The Indian Telegraph Act (IT Act) was Cable T V service to the public than exists conceived and drafted in1885.This century old today. Act needs to be upgraded technology wise and In fact the Convergence demands a Single made less hostile and more customer friendly. Regulatory body and not an additional TRAI Act finds almost half a dozen references Broadcasting Regulatory Authority which is to the I T Act: Important powers given to TRAI being envisaged. The TRAI membership needs under chapter III section 11 and chapter IV to include Broadcasting interests to offer a section 14 of TRAI Act1997have been single umbrella of Regulation rather than create considerably diluted by chapter VI section25(3) two separate bodies to Regulate under which "The decision of the central Telecommunications and Broadcasting. Government whether a question is one of Policy or not shall be final". I T Act under section5 8. Frequency Spectrum almost impinges on the personal freedom guaranteed by the constitution of India and gives Modern Telecommunication systems are powers to the Government (nee DOT) to tap or becoming more and more dependent on the use intercept the communications. This provision of Frequency Spectrum. Wireless in the local has mostly been used for political ends. The loop together with the inter city and intra city disputes between the customer and the DOTare Radio links for the Basic and Cellular services to be resolved under section 7 of the Act. The are coming up all over the country. CDMA in consumer has hardly any say in the dispute. the local loop has been accepted by Indian DOT There are other clauses in the I.T. Acte.g. being the most efficient and economical way of section 10 and25which are as dictatorial and solving last mile problem as also for quick anti customer as could have been drafted during deployment. Next few years will see the the. British regime. Several attempts to revise the emergence of LEO, MEO & more GEO Indian Telegraph Act have not been successful satellites for both Mobile and Fixed and it therefore continues to be a stumbling communications over the Indian subcontinent. block to the growth of Telecommunications in This rapid growth of Wireless systems has put the country. It is therefore essential to revise this extreme demands on the Frequency spectrum Act quickly, make it customer friendly rather which will form the most critical resource in than a strange bed fellow to the TRAI Act the years to come. Recent auction of spectrum by 1997. FCC has proved this point. WPC(wireless vereence, Planning & Co-ordination) unit of the DOT will the that Telephone, Televisionand
715 be under tremendous pressure for equitable frequency allotments specially when the technologies and offer level playing field to the various players competing with each other and Government itself is a Bulk user of thespectrum today which some of it must shed in favour of is in keeping with the structure of the most of the Regulatory bodies of the developed World. It the private operators. It will be thus difficultto is realised that the catalytic role of the TRAI for offer a level playing field to thenew operators with DOT as the Dominant player controlling encouraging competition will be diluted unless the Frequency allotments. WPC therefore needs Telecommunication Research center is to be restructured and representatives from reorganised. Broadcasting and other frequencyuser departments included in it. The body needs to 11. Universal Service Obligations function independently or attached to TRAI.. The TRAI has an obligation under the Act 9. Restructuring of Department of towards the Universal Service provision by Telecommunications. ensuring that all the Service providers install 10% of lines in the Rural areas which forms one The Government by creating the TRAI has of the license conditions. In fact DOT itself has simply complied with the minimum prerequisite failed in its target to fulfill the obligation of providing connectivity to more than half a for Privatisation process. However one of the important components of any Privatisation million villages by 1997 as laid in the National Telecommunication Policy announced in 1994. package is the separation of the Policy making DOT from the Dominant incumbent operator DOT if the Telecommunication reforms have to 12. Conclusion succeed and TRAI become effective. The various The setting up of TRAI through a legislation in committee reports generated by the Government from time to time viz Athreya, Gupta, Khan the Indian Parliament though an important step inintroducing competition in the Basic and suggesting various models for restructuring have not been implemented as yet. The broad Value added services as also for attracting investment, is only the first step. A number of consensus that emerged from these reports was issues have to be settled and the role of TRAI that Ministry of Communications should look widened to make it effective and contemporary. after only Policy formulation with a holding In addition the structure of TRAI itself needs to company for the various functional & be broadened to include expertise and Geographical companies of DOT the operator. professionals in the areas of Consumer affairs, However no firm decision about restructuring Economics and Finance etc. has been taken as yet.
10. Telecommunication Engineering Center
The main task of Telecommunication Engineering center is to prepare specification Network Engineering, Design and Approvals. The TRAI under Chapter III section 11 of the TRAI Act is authorised to inspect the equipment used in the Network and recommend the type of equipment to be used by the service provider It is also to render advice to the central Government in the matters relating to the development of telecommunication technology and any other matter related to telecommunication Industry in general. It is therefore necessary that the role of framing specifications and Approvals come under the purview of TRAI which will give clarity to the mandate. This will help the induction of new
750 71 6 Leveraging Global Resources to be Competitive in Your Own Back Yard
Philip M. Walker Vice President, Corporate Development and Regulatory Affairs Teleglobe International
From Hong Kong to Hanoi, developed and developing nations face growing pressure to liberalize national telecommunications markets in order to compete in an intricately linked electronic global marketplace. By and large, governments around the globe no longer debate the link between modem telecommunications infrastructure and economic development, and are taking measures to prepare for the inevitability of competition in their markets. Many are welcoming the advent of competition, which greatly accelerate the introduction of the new, advanced and lower-cost services required for global commerce.
The trend towards global telecommunications able to quickly adapt to shifting market conditions. liberalization was formalized this year with the This paper will examine how incumbent national precedent-setting World Trade Organization carriers, alternative wireless and value-added agreement on telecommunications services. For carriers, ISPs and other service providers within the the first time in history, 69 countries representing Pacific Rim can leverage the capacity and some 90% of the world's total telecommunications interconnection capabilities of intercontinental traffic committed to open their markets to varying carriers to quickly obtain competitive advantages in amounts of competition, and 54 of them agreed to a their home markets. set of common regulatory principles intended to create a level playing field for new competitors. Through examples in Asia Pacific, Europe, the United States and Latin America, we'll explore how The ability for carriers to enter new foreign, as well incumbent and emerging providers have "borrowed" as new domestic, markets is creating a growing capabilities of global network providers to package community of new telecommunications carriers. new services branded as their own. From global Where once there were some 200 national connectivity, to operator services, to adapting administrations, today there are literally thousands satellite capabilities in innovative applications,it is of carriers and unregulated service providers non-traditional solutions that give local providers the addressing various segments of the overall ability to compete on a global scale without having marketplace. Where once being a service provider to make world-class infrastructure investments. required owning network facilities or having "facilities-based" status, today providers of all sizes can resell the services of other carriers. A Changing Landscape: The WTO Telecommunications Agreement and its These include local exchange, domestic long- Implementation distance and international carriers, domestic cellular and wireless service providers, value-added data Two fundamental elements underpin the regulatory and other communications service providers and - and trade changes which are reshaping the global perhaps most significant in terms of overall global telecommunications industry: (1) the traffic - a huge range of Internet Service Providers, telecommunications services market opening or ISPs. commitments finalized at the World Trade Organization (WTO) in February 1997; and (2) the Within this changing environment, all measures that individual nations are taking to carriers/service providers - from the largest implement these commitments and market incumbents to the smallest new resellers - must be liberalization efforts taken on a unilateral basis.
717 The WTO Agreement telecommunications services. This is intended to safeguard emerging telecom carriers from the As is well-known by now, 69 countries, which negative effects of unchecked market power by the together represent 90% of the world's incumbent PTTs, significantly heightening the new telecommunications revenues, have adopted entrants' chances of commercial success. Key commitments under the auspices of the WTO to elements of these principles are the establishment open their markets to new telecom competition. of an independent regulator and measures to These commitments were made in the context of prevent dominant carriers from engaging in the General Agreement on Trade in Services anticompetitive conduct; the assurance of (GATS) which is the framework within which the 132 transparent interconnection opportunities by new WTO member states address liberalization of carriers with the networks of incumbent carriers at telecommunications, financial, and professional any technically feasible point; transparent licensing services markets. The telecommunications criteria and application thereof; and objective, elements of the GATS are set forth in a "Fourth timely, and transparent allocation of scarce Protocol" agreement adopted in February 1997, to resources (radio spectrum, PSTN numbering plan, which country-specific Schedules of Commitments etc.). are appended. New National Legislation While the commitments vary widely in their quality, scope and schedule for implementation, a number The same trends toward liberalization that lead to of countries are notable for providing in 1998 the WTO telecommunications agreement also have meaningful licensing, interconnection and lead to significant new telecommunications investment opportunities for both domestic- and legislation in a number of countries, generally foreign-owned competitors. For example, the intended to reshape the way in which telecom United States, much of the European Union, Japan, services are offered, to create opportunities for new Canada, Australia and Mexico have each committed players in the market, and to substitute private to the establishment of multi-carrier facilities-based enterprise for government ownership and control. and resale competition for local, domestic long- Some notable examples include: distance, and international voice telecommunications during 1998. Although United States of America: telecommunications services had already been The U.S. Telecommunications Act liberalized to some extent in each of these of 1996 (adopted almost a year before the countries, the WTO negotiating process had the WTO agreement) was intended to create catalytic effect of sharpening the focus on new opportunities in the world's largest competitive conditions, leveraging further telecommunications market and to lower commitments, and forcing a global re-examination entry barriers, particularly in the local of telecommunications policies and priorities. As exchange service sector. Although inhibited another example, some 22 countries worldwide somewhat by litigation, the legislation will have committed to permit competition in the create significant new players on the long- provision of international simple resale (ISR) distance and international scene as the services in 1998. Regional Bell Operating Companies (RBOCs) are permitted to offer in-region Even for the many WTO member countries which long distance and international services. As declined to enter into a schedule of commitments or the price for this entry, the RBOCs must whose commitments do not provide for multi-carrier open their monopolies in local markets to competitive entry, the negotiating process has, competition and must meet a 14-point hopefully, lead to a greater understanding of the competitive checklist with respect to benefits of a competitive marketplace which will licensing and interconnection, among other lead them to take market opening measures earlier things. So far, none has met this checklist, than they otherwise would have. but RBOC entry within the next two to three years is highly likely. In addition to the specific commitments, 54 WTO countries agreed to a set of common regulatory Japan: principles to provide a transparent and predictable Japan has adopted legislation to framework for trade and investment in reshape its domestic and international
7 5 2 718 telecommunications industries and has January 1994, there were just over 2 million Internet commenced the administrative processes to host computers worldwide. Earlier this year, there establish implementing rules by 1998. In were an estimated 20 million. Industry pundits have connection with this legislation, Japan has even predicted that within the next ten years traffic divided NTT into separate local and long on the global Internet will overtake traffic on the distance units and permitted KDD, the traditional Public Switched Telephone Network. international operator, into domestic businesses. The legislation also removes Internet growth has been accompanied by a large all foreign ownership restrictions on new new base of internet service providers. With over carrier entrants and permits multi-carrier 3,000 ISPs in the United States alone, there are facilities-based and resale competition for hundreds if not thousands of others in those nations all services, without limit on the number of where deregulation has occurred first within the so- licenses issued. called "value-added" services arena.
Within the Asia Pacific region, tremendous Internet Canada: demand increases the pressure on the region's Canada's implementation efforts are carriers to find new and innovative ways to on two tracks. First, the government has supplement already saturated fiber-optic cable proposed to amend the Teleglobe systems. The recently-announced agreement Reorganization Act to establish parity among 14 major telecommunications carriers to between Teleglobe and other Canadian jointly finance and construct a new cable system operators in respect of investment by linking China and the U.S. is welcome news to users foreign persons and carriers, as well as in the region, tempered only by the two-year wait for investment by Canadian-owned carriers, the system to be completed. and to establish a licensing regime for carriers and resellers. Additionally, the Global carriers continue to play an important role in Canadian Radio-television and extending the economic and educational benefits of Telecommunications Commission (CRTC) the global Internet to a growing community of has commenced a proceeding to establish a nations. For many nations, the first connection to market structure for facilities-based the global Internet happens when a country's international competition effective in national telecom administration, teaming with a October 1998, when the Teleglobe Canada global carrier, establishes a high-speed link to the mandate ends. Also under consideration is United States, where the vast majority of Internet the manner in which Canada will apply the hosts still are located. maximum use policy intended to promote the use of Canadian facilities for For ISPs outside of the United States, the best international traffic until December 31, global backbone services offer competitively priced 1999, when the routing policy ends. bandwidth and sophisticated routing to avoid notorious U.S. congestion as much as possible. Australia: Additionally, clever alternatives to straight fiber- Australian legislation adopted in optic or satellite IP connections are emerging. Let's 1997 has extended to facilities-based take a look at an Australian carrier that devised a operations the open-entry policies which way to maximize the use of multiple existing had for several years been in place for facilities to expand its international IP service resellers. The legislation ends the duopoly offering. of Telstra and Optus. Telstra Optimizes IP Bandwidth with Simplex Technology Internet Demand Driving Global Telecom Use Internet traffic the world over has always presented As the landscape changes in the way that traditional a costly dilemma for carriers outside of the United switched voice services are provisioned, the States. Such traffic is typically imbalanced, as a explosive growth of traffic on the global Internet has Web user's query or request to view a page is itself launched a revolution in the industry. In almost always much smaller than the return data stream from the Web site. However, carriers rl (' 0 0 719 traditionally have had to purchase a two-way, or enabled the carrier to develop one of Asia's largest duplex, submarine cable circuit to connect to the internet backbone networks - a 45 Mbit/s link U.S. (where most Internet hosts are located) that between Singapore and North America. The has the same bandwidth on both outbound and carriers have since jointly invested in additional inbound directions. Many carriers therefore incur bandwidth in Asia-Pacific cable systems to carry unnecessary cost in handling Internet traffic Internet traffic from Singapore to the United States. because half their fiber-optic circuit capacity is In the United States, Teleglobe provides access to underutilized. Internet sites for the Singapore traffic. Singtel, the largest ISP in Singapore, uses the high- Satellite links can provide a way around this speed backbone to provide enhanced internet problem, for they are available on a one-way, or services to customers in Singapore and region-wide. simplex, basis and two such links of different By choosing a global partner willing to invest in the bandwidth can provide an asymmetric duplex future of their business, Singtel was able to channel for Internet traffic. This can offer attractive economically purchase additional capacity and offer cost savings to the ISP. However, the half-second broadband-level connections. round-trip propagation delay via satellite, even with sophisticated router buffering techniques, is often Alternative ISP Uses Global Provider to Offer A visible to the user and may be objectionable for Market First: certain applications. London-based COLT Telecommunications, a major Australia's Telstra is developing an even more pan-European Internet service provider, earlier this unique solution that uses a high-bandwidth simplex year introduced a Europe-wide first for Internet satellite circuit combined with one or more lower- service provision by linking its own facilities with a bandwidth duplex submarine cable circuits to commercial transatlantic ATM provider. provide a hybrid asymmetric link to the United States for Internet access. This arrangement COLT launched a new "business class" Internet substantially reduces overall transmission costs and service, called COLTInternet, that includes a high- effectively leverages the availability of satellite speed, 45 Mbit/s transatlantic ATM backbone capacity, while cutting in half the delay associated network which also uses COLT's SDH access with an all-satellite-based connection. network. In addition to the transatlantic ATM backbone, COLT also gained for its customers The service, launched into a trial phase with -direct access to the extensive IP and global transit Teleglobe in a matter of weeks, is believed to be routing of a global carrier. The resulting service is the world's first 45 megabit per second asymmetric faster and more resilient than competing services. satellite/fiber-optic Internet link. Internet inquiries from Australia are sent via existing submarine cable Competition in Less Liberalized Sectors: connections to the U.S. Internet backbone. The Leveraging Operator Services, Calling Cards more data-intensive Internet files routed from the and Transit Services United States are returned back via the simplex satellite link. Not only does this reduce Telstra's In traditional switched voice service markets, where costs for Internet traffic, but also since satellite many countries have been slower to liberalize, bandwidth can be easily increased, Telstra also can competition has sprung up nonetheless. New quickly upgrade capacity according to market competitors -- including callback services, inbound demand. collect providers using "home country direct" lines, and voice-over-Internet providers -- first target the Incumbent Carrier Teams with Global Provider for fastest-growing and highest-margin part of the High-Speed IP Link business: international services. Incumbent carriers need to "sharpen their pencils" and find ways to In the Internet provisioning world, even standard reduce their costs and their tariff rates for outbound fiber-optic capacity purchases can be done more international calling, in order to effectively deal with effectively with a global partner. this challenge.
In the case of Singapore Telecom, a partnership At the same time, both incumbent and emerging with Teleglobe announced here in Honolulu at last carriers are looking for ways to creatively package years Pacific Telecommunications Conference,
720 754 existing network services, and to introduce new easily connect with the global carriers Spanish- services and service features, in order to increase speaking operators, who complete the call to the market share, stimulate new user demand and United States. improve their margins. The solution enables these carriers to reclaim Traditional international services are being looked at market share without having to make any major in a new light, and new services based on enhanced investments in operator resources, equipment or platforms are being developed. Seemingly software. mundane features such as directory assistance, operator services, and customized billing are being Calling Cards Provide Access to New Markets used in new ways to positively differentiate one Global calling cards, which caught fire in Europe provider from the next. and Asia in the 1980s and more recently have gained widespread popularity in the United States, In many cases, the cost and time-to-market for such offer intriguing possibilities for carriers, retailers and innovations can be reduced by teaming with a global others to offer complementary services and build carrier who has extensive network and platform brand recognition. capabilities in place to support the desired service features. And, importantly, global carriers can Take Ameritech, for example. Traditionally a local significantly reduce delivery costs for IMTS and service provider in the midwest region of the United other international services by providing various States, and one of the regional Bell Operating types of transit arrangements as an alternative to Companies spun off in the divestiture of AT&T in conventional bilateral interconnections on certain 1984, Ameritech is aggressively seeking to routes. Let us briefly examine a few examples. capitalize on the Telecommunications Act of 1996 to enter the long-distance market. Latin American Providers Team with Global Carrier to Build Inbound Collect Prohibited from offering long-distance services Base within its region until it can meet the FCC'c criteria for a competitive local environment in its own Incumbent and alternative carriers in Central market, Ameritech chose to offer its customers America, the Caribbean and Mexico have international services via calling cards. When away responded quickly to competitive pressures and won from home, Ameritech customers can take with back market share from callback operators and from them an Ameritech-branded card that gives them competitively-priced U.S. carriers offering services toll-free local access from some 60 countries. to expatriates from the region living in the United States. The cards not only increase Ameritech's international traffic revenues, but improve its Inbound (to the U.S.) collect services appeal to Latin competitive posture on the eve of competition in its American/Caribbean callers in their native countries local markets. Ameritech local customers using the and in the U.S. because they take advantage of service can have a trial run of Ameritech, the long- comparatively lower U.S. international calling rates distance provider. and the often-higher disposable incomes of U.S. - based relatives in a family situation. The service Beyond carriers offering card services, a growing enables them to use a local, toll-free number in the base of enterprising retailers, some uniquely originating country to call relatives in the U.S. and connected to ethnic markets with high international reverse the charges. The called party in the U.S. call volumes, are opting to sell global calling cards receives competitive rates, and the charges appear along with the other services they provide to their on his or her local telephone bill. ethnic community. From orientation services for recent immigrants to travel service firms, retailers in A growing number of carriers in the region are the larger coastal cities increasingly are offering pre- teaming with a global provider, leveraging the global or post-paid calling cards as a value-added service. carriers resources to rapidly implement such competitive collect calling services. Each Latin Creative Transit Least-Cost Routing and Transit American/Caribbean carrier markets the service Arrangements Reduce Carriers' Cost of Delivering under the carriers own brand name, and nationally International Traffic advertises a toll-free number that enables callers to
721 755- Traditionally, international carriers have operated in telecommunications is dawning, as the INTO a "bilateral" world in which each carrier had a agreement and other regulatory developments usher bilateral operating agreement with each of its in greater opportunities for new competitors in both foreign correspondent carriers, and exchanged domestic and international markets. Emerging traffic at mutually agreed accounting rates over carriers can tap global transit partners to extend mutually agreed direct interconnecting circuits or international calling services for subscribers on their intermediate transit carriers. Although the majority national wireless networks. Incumbent carriers can of all international traffic continues to be exchanged quickly meet competitive threats and solidify their over direct bilateral routes, increasingly both core consumer calling base by rapidly introducing emerging and incumbent carriers worldwide are world-class services and prices without incurring looking to global carriers for creative transit services development delays or costs. And both incumbent that provide global connectivity at the lowest and emerging carriers can minimize their possible costs. Several factors are driving this international traffic delivery costs through creative trend. use of global transit arrangements. In a global marketplace estimated in excess of USD $600 First, as growing numbers of new carriers enter the billion, the surest course for providers of all sizes is market, it becomes more difficult and less to gain competitive advantages through wise economical to maintain the traditional bilateral partnerships, leveraging the resources and interconnection model; the number of pairwise experience of a global carrier to offer world-class routes needed rises geometrically, and the traffic services. volume per route may be too low for efficient network utilization.
Global carriers, based in countries with high traffic volumes and possessing extensive route structures and relatively low accounting rates to many destinations, can offer both traditional and non- traditional "switched hubbing" transit services at a fraction of the smaller carrier's cost for direct routes to all these destinations. And, as smaller carriers give some of their traffic to global carriers for routing to third countries, this aggregation of traffic further improves the global carriers' economies of scale and thus the transit prices they can offer.In essence, a "snowball" effect occurs, with the larger global carriers becoming more efficient and bringing down the traffic delivery costs for smaller carriers worldwide.
The growing acceptance of international simple resale, or ISR, as discussed above, will accelerate this trend. For those carriers with enough traffic to establish ISR routes wherever permitted by law, ISR can be a powerful vehicle for driving down their delivery costs. The global carriers will be able to maximize the benefits of ISR, and pass along the savings to their transit carrier customers.
Strength in Numbers
Regardless of the size of the service provider, today's increasingly global telecommunications marketplace requires new strategies and new approaches for delivering services. A new world in 7 6 722 Advanced Very Low Bit-rate Video Coding Scheme with Synthetic SpatiofTemporal Optimal Information Control
Satoshi Miyaji and Shuichi Matsumoto Research and Development Laboratories, KDD Co., Ltd. Saitama, Japan
1. ABSTRACT
A new video coding scheme incorporated with a synthetic spatio/temporal optimal informationcontrol is proposed for a high-quality very low bit-rate coding at less than 64 kbps.In the control, the optimal bit allocation is based on the characteristics of each picture critically examined before actual encoding.By using the control scheme, much better picture quality can be obtained than in the conventional ITU standards of H.263.
2. INTORUDUCTION Considering these drawbacks, we made an extensive study on the improvement of H.263, and succeeded in High-quality very low bit-rate video coding at less than developing a new video coding scheme which is 64kbps, applicable to mobile picture communications suitable for low bit rates less than 64kbps.The or Internet TV broadcasting (Webcasting) on the ISDN features of the new coding scheme are summarized or cellular network, is a subject of great interest these as follows. days. Inthiscategory, ITU-T Recommendation As pre-processing before encoding, the H.263 (1) is well known and its practical hardware as characteristics of each picture to be coded are well as software systems are now becoming available. critically examined to determine the optimal coding Its picture quality, however, is sometimes too poor for parameters to be assigned for encoding each the above mentioned application. picture. Drawbacks of the present H.263 may be summarized At the same time, objects and backgrounds in as follows; moving pictures are effectively separated, and the The coding control depends only on a history of objects are mainly encoded. previously generatedbitamounts disregarding - Optimal encoding is carried out under triangular characteristics of the present picture to be coded. syntheticcodingcontrolbetweentemporality, As a simple example, in the case of a picture spatiality and gradation. consisting of flat and detailed textures coexisting in The bit reduction scheme is so-called MC-DCT the upper and the lower half, too many bits are integrated with an additional new coding scheme assigned to the flat region, so that the detail is mixing Intra and Inter modes and with an optimal significantly degraded. quantizer reflecting human visual perception. The picture size to be coded is normally so small By using these key technologies, much better picture such as QCIF that the macroblock size of (16x16) quality could be obtained than in the H.263 coding for QCIF is larger than for a standard 4:2:2 picture. scheme. In this paper, the details of the coding This means that coding control even for every schemearedescribedand then its coding macroblock is so rough that degradation of picture performance is discussed. quality frequently occurs. The intervalof the frame is determined after 3. DETAILS OF RATE CONTROL encoding the previous frame.Thus, a minimum frame rate and maximum transmission delay can 3.1 CONVENTIONAL RATE CONTROL not be guaranteed.The inconsistency of the frame interval between the transmitter and the A basic block diagram of rate control normally used in receiverbecomes on obstacletoreal-time conventional coding systems includingH.263is communication. shown in Fig. 1.In conventional coding control, a bit
723 757 stream of quantized data is stored in a real buffer optimum number of bits can be allocated to every memory in order to smooth generated bit streams so significant areaefficiently, whereaswiththe as toobtain a constant outputbitrate. The conventional method the efficiency of bit allocation quantization characteristics to be applied for each depends on the distribution of significant areas in the macro-block are determined by feedback control of frame. Furthermore, since control of the present the buffer memory occupancy.That is, a higher frame hardly depends on the results of the previous occupancy leads to rougher quantization frame in the proposed method, the encoding control is characteristics to reduce the generated bit amount. able to maintain stability even in cases where the After quantization of the entire frame, the total scene is drastically altered. generated bits determines the number of frames to be Details of the proposed method, which consists of skipped in order to complete transmission of the these three types of controls, are given below. generated bits during a skipped time interval.Thus, the conventional rate control is quite simple and any SPATIAL Sns TEMPORAL signal analysis is not implemented in actual encoding. 11 Background 2Frame Rate Separation Control
Quantizer )Feed back Vbmo FR
Virtual Buffer Bit-stream Sns Vbmo Output BC Vbmo Real Buffer) "0
Real Buffer Determine Act Frame Rate Activity Matrix H Act Akrn,n) 3 FIGURE 1:SIMPLIFIED BLOCK DIAGRAM OF Quantlzer H.263TMN5 (2) ENTROPY
3.2 SYNTHETIC SPATIO/TEMPORAL CONTROL FIGURE 2: BLOCK DIAGRAM OF THE PROPOSED METHOD The proposed rate control architecture is shown in Fig. 2. The following three factors constitute the synthetic 3.2.1 SPATIAL INFORMATION CONTROL coding control, combined with feedback of buffer memory occupancy. Spatialinformationcontrolmeansextractionof Spatial information control significant areas in each frame by the separation of - Temporal information control object and background with motion compensation. - Adaptive quantization control Non-significant areas where motion compensated The most attractive point of the proposed method is its error is negligible are automatically removed from abilitytocontroltheoptimumoperatingpoint actual encoding. adaptively according to framecharacteristics The decision of significant/non-significant area is analyzed in advance of encoding, and to the status of based on the calculation of the absolute difference the output buffer memory obtained just after encoding. between the current and the motion compensated With the proposed method, because the frame macroblock. It should be noted that the motion characteristics are analyzed before encoding, the compensated macroblock belongs to anoriginal
58 724 30000 picture without coding noise in order to achieve a high e The100 accurate motion detection as pre-processing. 25000 The macroblock is actually classified into static, non-
significant, or significant, according to the sum of 20000 absolute difference values SAD.When SAD is less .1 than a given threshold value TH, the macroblock is 15000 judged as non-significant. When such a non- significant macroblock has a zero motion vector, then 10000 i i e i ; the macroblock is judged as static, otherwise itis ..i 1 5000 -..i. *.- ;... .4-X641-e -.4 rr ° i .. % i i judgedassignificant. Theclassificationof -_,.... :
ii i macroblocks is shown in Table 1. 1 1 00...1Wg'-- 20 40 60 80 100 TABLE 1: CLASSIFICATION OF MACROBLOCK Number of Significant Macroblocks Class ID Condition Data Static 0SA, < T MV - 0 (Skipped) FIGURE 3: RELATIONSHIP BETWEEN SNS AND Nonsig. 10S,, because a noise-masking effect is hardly expected. The threshold value TH is determined considering the On the other hand, TH is set to high for a busy following: macroblock inordertosuppressunnecessary Estimated bit amount information whichis masked inconsideration of Human visual perception human visual perception. Occupancy of output buffer memory c. OCCUPANCY OF OUTPUT BUFFER MEMORY a. ESTIMATION OF THE NUMBER OF BITS When the occupancy of the output buffer memory is Spatial information control is performed not only for fairly low, TH is set to low in order to update the extracting the significant areas but also for estimating the number of bits in the frame to be generated. background area, which may not be encoded in the ordinary buffer memory status. Therefore, the threshold value TH is determined to maintain linearity between the number of significant 3.2.2 TEMPORAL INFORMATION CONTROL blocks and the number of bits used for the frame. The estimated number of bits in this process is used In the preprocessor, frame-rate is determined for for temporal information control and buffer memory temporalinformationcontrol. Thiscontrolis control. InFig. 3 we show computer simulation performed according to the number of significant resultsof therelationbetween the number of blocks and to the occupancy of the output buffer significant blocks (SNS) and the number of bits used memory.Consequently, the optimum bit allocation for the frame at the threshold value (TH = 1, 5).It is obvious that the linearity can be attained at the can be realized at a certain usable bit rate. As described in 3.2.1, the number of significant blocks appropriate threshold value TH. has a large influence on the number of bits that will be generated for the frame.Therefore, when the frame b. HUMAN VISUAL PERCEPTION interval is set proportional to the number of significant blocks, the quantization step size used for encoding is The threshold valueisalso controlledat every varied only to absorb the difference between the macroblock according to local activity which is closely estimated number of bits and the number of bits related to the noise-masking effect (3).For a flat actually generated, because the bit density allocated macroblock with small activity, TH is set to low to each significant block is the same. The operating
725 7 5 9 point of the quantizer is thus fixed step size.On the QP(m,n)=H(m,n)(aVb2. +bVb. +ca 2 other hand, when it makes the variation of frame +dVb.cr2 +e) (1) interval small, quantization control tends to depend on the feedback of output buffer memory as with the Where a through e are constants determined by the conventional method, because the number of bits bit rate, picture size and so on in order to keep the allocated to the frame is almost the same independent encoder working at the expected point. (3) (4) of the number of significant blocks. Thus the operating point of the quantizer is variable step size. The proposed method thereforehas the great 3.2.4 BUFFER MEMORY CONTROL advantage that the operating point of the encoder is The occupancy of the output buffer memory is adaptively varied between fixed step size and variable reflected in each of the three controls as the number step size, by analyzing the frame characteristics in of bits actually generated.With BS(t) as the number advance of encoding. The relation between the of bits used until now for the frame, the occupancy of frame interval and the operational point is shown in the output buffer memory 14,,,(t) is written as: Fig. 4. When the occupancy of the output buffer memory is libm,2(t)=Vbmo(0) low, the frame intervalis set proportional to the n number of significant blocks (at left in Fig. 4) in order BS(t)- FR IR- 30 SNs to keep the quantization step size constant and to give (2) priority to picture quality. F maxBR When the buffer memory contains a large 30
Adaptive control where FR denotes the frame rate determined in the Nsig*Fmt Nsig i k Fint preprocessor, BR the bitrate, n the number of significant macroblocks coded so far, and Fmax the maximum frame interval. Fixed Step Size Variable Step Size Since thisbuffercontrol method treats a non- significant block as a block that has no information Nsig: Number of Significant Macroblocks Fint: Frame Interval except motion vectors,significant blocks can be coded efficiently without influence from the small FIGURE 4: ADAPTIVE CONTROL ON THE number ofbits generated for the non-significant WORKING POINT blocks and the distribution of significant blocks. number of bits, the frame interval tends to be fixed to 3.3 SYSTEM CONFIGURATION the maximum frame skip number. The variation of quantization step size is consequently large, and the The configuration of the hardware system actually quantity of bits generated is suppressed. implemented by the proposed coding scheme is shown in Fig. 5.The encoder consists of a Pre- 3.2.3 ADAPTIVE QUANTIZATION CONTROL processor, Bit-reduction coder and Transmitter. In the Pre-processor, motion detection/compensation, Adaptive quantization control is performed in the bit- local activity detection, significant/non-significant area reduction coding.The quantization step size OP is decision and frame skip number decision are carried determined by takingaccountof human noise out. In theBit-reductioncoder,a motion sensitivity to the spatial frequency H(m, n),local compensated interframe DCT is employed with a new activitya2 asthenoise-maskingeffectand coding mode consistingof motion compensated occupancy of the output buffer memory Vtmo.The interframe coding for lower DCT coefficients and step size QP is given by intrafield coding for higher DCT coefficients.This new coding mode is confirmed to give a gain of about
fb 726 3dB compared to conventional adaptive coding from "SHEEP".Simulation results coded at 50.878kpbs our actual HDTV hardware codec developed in 1995 are shown in Figs. 6 and 7. (5). As the results show, the PSNR (peak signal-to-noise r ratio) is consistently higher with the proposed method. Preprocessor 42 Activity Detection
Video Significant/ Ircut Frame ME M C. Nonsignificant Memory Decision
Frame Skip Bitreduction Control
Coder M.C.
DCT Frame 4 Memory
DCT IMIX LPF VLC I Virtual Buffer IDCT Infra1 MIX I Real !Quanta 50 100 150 Buffer 200 250 300 Frame Number Quantize Transmitter FIGURE 6: PERFORMANCE OF THE PROPOSED
Bit - METHOD ON "RACE" O stream Output 42 Proposed FIGURE 5: BLOCK DIAGRAM OF THE ENCODER H.263TMN5 40 TABLE2: WORKING PARAMETERS OF THE CODEC 38
Format Y, C, Co Fus 36 Picture size QCIF (176x144) Source frame rate z 30 frames/sec. 0- 34 Spatial control threshold 1.0 s T,,s 32.0 Frame interval 2sF int s 10 32 Motion vector range [-16, 15.5]
Bit rate for video BR = 50.878kbps 30 Buffer capacity 23.7kbits
Transmission bit rate 64kbps 28 0 50 100 150 200 250 300 350 400 450 4 SIMULATION RESULTS Frame Number FIGURE 7: PERFORMANCE OF THE PROPOSED Simulationresultsbased onthe two methods METHOD ON "SHEEP" described below are compared.The firstis the proposedmethod, whichhas advancedcoding There are remarkable differences after frame 200 in controls. Thesecond is based on ITU-T "RACE" and after frame 350 in "SHEEP".In those recommendation H.263TMN5 (2). scenes, where the camera is tracking a moving object, The conditions of simulation are shown in Table 2. the number of bits generated for a frame is fairly large. The two pictures used for simulation are "RACE" and Since the proposed synthetic control by spatial,
727 761 temporal and adaptive quantization control assigns Weighted Progressive Image Transmission," the optimum number of bits to the significant areas, an IEEE Trans. Commun., Vol. COM-38, No. 7, improvementinperformancecanbeobtained. pp.1040-44 (1990) Furthermore, the blocking effect is subjectively less (5) S. Matsumoto, T. Hamada, K. Koga and H. noticeable, because the proposed method takes Murakami: "Development of high compression sufficient account of human visual sensitivity. HDTV Digital Codec" IEE Telecommunications Conference, No. 404, pp.100-104 (1995) 5 CONCLUSIONS
For very low bit-rate video coding, we proposed a new method that combines spatiotemporal coding control and adaptive quantization control. In the pre-processing, spatiotemporal coding control is performed in advance of encoding.By this "prior coding control," the significant areas are extracted, and then, the frame interval is determined according to the result of the number of significant blocks. Consequently, the optimum number of bits is allocated to each macroblock as well as each frame.In the bit-reduction coder, adaptive quantization control is performed taking account of human visual sensitivity and the output buffer memory status. Since the operating point of the system can be controlled adaptively by the synthetic control of these factors, picture quality is greatly improved.The hardware system has already been completed for real time encoding anditis now available forreal time webcasting.
ACKNOWLEDGEMENTS
The authors wouldliketoexpresstheir deep appreciation to Dr. H. Murakami, Managing director of KDD R&D Laboratories, for his encouragement and support in this study.
REFERENCES
(1) ITU-T Study Group 15: "ITU-T Recommendation H.263: Video codingforlow bit rate communication, " March 1995 (2) ITU-T Study Group 15: "VIDEO CODEC TEST MODEL, TMN5," January 1995 (3) S. Matsumoto, T. Hamada, M. Saito and H. Murakami: "45Mbps Multi-Channel Composite TV Coding System," IEICE Trans. Commun., Vol. E75-B, No.5, pp.791-801 (1992). (4) B. Chitprasert and K. R. Rao: "Human Visual
728 Interworking Unit Function for Real Time Delivery and Control of Multimedia Service between ATM and }Internet
Choongjae Im, Youngmee Shin, Jeonghun Choi, and Sehyeong Cho
Electronics and Telecommunications Research Institute Yusong P.O. Box 106, Taejon, Republic of Korea
Abstract We propose the middleMEN (middlemen for Multimedia ENvironment) platform for realizing the interworking between the ATM network and the Internet. The middleMEN consists of the .interworking unit and the service broker to provide seamless multimedia service between the ATM network and the Internet. This paper proposes the function of the interworking unit of the middleMEN for a real time delivery and control of multimedia service. For a real-time delivery of multimedia service between the ATM network and the Internet, the interworking unit of the middleMEN does the following functions: protocol conversion, and bandwidth adaptation (data format conversion, and bit-rate control). The interworking unit of the middleMEN converts the protocols of the ATM network to the Internet protocols for real-time delivery.Also, it does data format conversion, and bit-rate control to overcome bandwidth difference between the ATM network and the Internet.
In this paper, we propose the function of the interworking 1.Introduction unit between the ATM network and the Internet for a real Networked multimedia services are being developed over timedelivery and controlof multimediaservice.In existing public networks and high-speed communication particularly, we describe the differences and interworking networks. So various network technologies and services are requirements between the ATM network and the Internet. advanced, information transport capabilities and service And also we present the functions and architecture of the control schemes for each network are various. However, the middleMEN and the role of the interworking unit. And then design and engineering activities of all these services, we explain the functions of the interworking unit: protocol networks, and terminals are currently fragmented across conversion, data format conversion, and traffic monitoring many companies and organizations without any explicit and bit-rate control. regulatory mechanism that could ensure end-to-end service accessibility. 2.Background and motivation Inthemulti-carriernetwork,seamlessintegrationof In this section, we show an interworking architecture among terminals and services is essential in order to offer an end- heterogeneous networks based on the ATM, and motivate to-end and provider-independent service. The interworking the needs of interworking between the ATM network and and interoperability become the important requirements for the Internet. Also we explain some technical backgrounds integrating and interconnecting various local and remote of our interworking mechanism. multimedia service networks. 2.1 Interworking architecture based on the ATM technology has been maturing to become a dominant ATM network networking technology and the Internet has explosively As the ATM technology has been maturing to become a grown with their easy navigation functionality and the dominant networking technology, many studies on the abundance of information sources. In this situation, the interworking among heterogeneous networks based on the interworking between the ATM network and the Internet ATM network are done. Figure 1 shows an interworking has an important meaning. architecture among heterogeneous networks based on the
729 ATM. The interworking architecture is consists of an access network that is capable of transporting information over ATM channels, a core network based on ATM transport, different types of clients connected to the access node through the various network, service provider thatis directly connected to an ATM network, and interworking elements (IWF-element and service gateway element) (5).
&nice (Bed [Fig. 2]Architecture of the middleMEN platform The service broker is located in the core ATM network, and provideseasyaccesstoservices,offersvalue-added functions and supports communication capabilities to users in different service domain. The interworking unit is located between the ATM network and the Internet, and provides functions to overcome the differences of the characteristics of both networks. [Fig. 1]Interworking architecture among heterogeneous networks based on the ATM network 2.4Technical backgrounds 2.2 Necessity of interwoking between the In this section, we explain some technical backgrounds in ATM and the Internet considering in the middleMEN platform. ATM technology has been gaining tremendous industry 2.4.1 DAVIC support, and maturing to become a dominant networking The DAVIC is a non-profit association based in Geneva, technology that will support various services requiring Switzerland. The purpose of DAVIC (8) is to favor the different quality of service. And the Internet (especially the success of emerging digital audio-visual applications and World Wide Web service) has explosively grown with their services, by the timely availability of internationally agreed easynavigationfunctionalityandtheabundanceof specificationsof openinterfacesandprotocolsthat information sources. Recently, the Internet has placed the maximize interoperability across countries and applications/ issue of multi-party multimedia application. Thus the ATM services. The current DAVIC 1.0 version of specifications network and the Internet will be dominant networking allows the development of systems that support initial technology within a few years. It is important to establish applications such as TV distribution, near video on demand, interworking scheme between the ATM network and the and some basic forms of teleshopping. The general DAVIC Internet in order to keep a pace with these changes. system comprises five entities: the content provider system, 2.3 middleMEN the service provider system, the service consumer system, and two delivery systems. And, 5 information flows (from We propose the middleMEN as a platform for realizing the SI to S5) are defined among systems. Figure 3 shows interworking among the heterogeneous networks. At first, protocol stacks adopted by DAVIC 1.0 specification for the middleMEN selects the ATM network and the Internet information flows. as target network for interworking. The definition of the middleMEN derives from the concept of service gateway (a)Si flow (b) S2 flow (c) S3 flow (d) S4 flow and Level1 gateway. It conforms to the ATM protocol MPEG2-TS DSM-CC UU DSM-CC UN Q.2931 specifications for network aspects, and the DAVIC (Digital AAL5 OMG CDR/UNO TCP/IP Q.2130 Audio-Visual Council) for service aspects. The middleMEN ATM TCP/IP AAL5 0.2110 consists of the service broker (service gateway element of figure 1) and the interworking unit (IWF-element of figure low layer protocol AAL5 ATM AAL5 1) as shown in the figure 2 to provide seamless multimedia ATM low layer protocol ATM service between the ATM network and the Internet. In the low layer protocol low layer protocol real, the Internet covers many networks. But, we assumed the Internet as an Ethernet-based network. [Fig. 3]Protocol stacksadopted by DAVIC 1.0
7 6 4 730 2.4.2 DSM-CC multiple data deliverysessions, provide a means for choosing delivery channels such as UDP, TCP, IP Multicast, The DSM-CC (DigitalStorage Media Command and anddeliverymechanismsbasedonRTP.Control Control) specification is a set of protocols, which provides mechanisms such as session establishment and licensing the control functions and operations specific to managing issues are being addresses. MPEG streams (9). However, the concepts and protocols are considered to apply to more general use. A basic 3.Functions of the interworking unit principle of DSM-CC is that there is a finite supply of the resources needed to provide services and these resources The interworking unit of the middleMENislocated need to be managed. DSM-CC defines a logical entity between the ATM network and the Internet, and provides called the Session and Resource Manager (SRM) which functions to overcome the differences between the ATM providesacentralized management of the DSM-CC network and the Internet. sessions and resources. To extract the interworking functions between the ATM 2.4.3RTP and RTCP network and the Internet, we describe the differences of the ATM network and the Internet. RTP (Real-time Transport Protocol) (3) is application-level protocol that is designed to satisfy the needs of multi-party Protocoldifference: The ATM network and the multimedia application. The protocol consists of two parts: Internet use different protocol for real-time multimedia the data transfer protocol RTP and the control protocol service. Thus the interworking unit converts protocol RTCP.The RTCPprovidesmechanismsfordata between the ATM network and the Internet. distribution monitoring, cross media synchronization, and Bandwidth difference: Even though the ATM network sender identification.This control information is canprovidessufficientbandwidthforreal-time disseminated by periodically transmitting control packets to multimedia service, the Internet can provides smaller all participants in the session. The primary function of the bandwidth than the ATM network usually. Thus the RTCP is to provide feedback to the session on the quality of interworking unit mustovercomes bandwidth thedatadistribution.Thisinformationiscriticalin difference between two-telecommunication network. diagnosing failure and monitoring performance, and can be Moreover, the ATM network basically guarantees QoS used by applications to dynamically adapt to network (Quality of Service). But the Internet is best-effort congestion. Figure 4 shows the distribution monitoring network, thus dose not guarantees QoS. Thus the mechanism using RTP and RTCP. interworking unit must overcomes difference of QoS guarantee. As previously mentioned, we must overcome the difference of protocol and bandwidth for the real-time transfer of multimedia service between the ATM network and the El Internet. Thus the interworking unit of the middleMEN does Traffic monitoring and bit-rate control protocol conversion and bandwidth adaptation function.
I The interworking unit converts protocols of the ATM J network and the Internet to overcome protocol difference L between the ATM network and the Internet. And,We [Fig. 4]Distribution monitoring propose two methods toadapt bandwidthdifference between the ATM network and the Internet data format 2.4.4RTSP conversion, and bit-rate control. Data format conversion Theapplication-levelRTSP(RealTimeStreaming method overcomes the bandwidth difference by converting Protocol) aims to provide a robust protocol for streaming data format. And bit-rate control method adjusts data multimedia in one-to-many applications ver unicast and amounts by traffic status in the Internet. multicast, and to support interoperability among clients and Figure 5 depicts the functions of the interworking unit and servers from different vendors. RTSP is considered more of the their relationships. a framework than a protocol.Itis intended to control
731 765 interworking unit of the middleMEN converts MPEG-2 TS over AALS protocol to RTP over UDP/IP protocol to transfer multimedia stream of the ATM network to the Internet user. Figure 7 shows the protocol conversion stack for the transfer of real-time multimedia stream.
Client Interworking Unit Server RTSP a> USM-CC 1JI, g1/ OSM-CC UU WISP -CC LIU RTSP CORSA CORSA [Fig. 5]The functions and their relationships of the inter- TCP TCP TCP TCP IP IP IP IP working unit ATM ATM Ethernet Ethernet PHY PHY 4.Protocol Conversion Protocolconversion stack forstreamcontrol In this section, we introduce the protocols of the ATM [Fig. 6] network and the Internet on stream control, session control Client Interworking Unit Server and stream transfer for providing real-time multimedia MPEGI MPEG1 MPEGI service. And we explain protocol conversion method of the RTP & RTCP RTP 8 RTCP interworking unit of the middleMEN. MPEG-2 TS MPEG-2 TS UDP/TCP UDP/TCP 4.1 Stream and session control IP IP MU MU ATM ATM Ethernet Ethernet We deployed DSM-CC protocols to control real-time PHY PHY multimediaservicesonourheterogeneousnetwork environments. In DSM-CC model, the users of DSM-CC [Fig. 7]Protocol conversion stack for stream transfer network are the server and the client. But our network model is more complex. A MPEG stream is stored in the 5.Bandwidth adaptation server of the ATM network and delivered to the client of In this section, we explain the necessity and methods of the the Internet through the interworking unit. Furthermore, bandwidth adaptation. RTSP is used to control real-time multimedia stream in the Data Format Conversion Internet. In our DSM-CC model, User-to-User (U-U) and 5.1 User-to-Network (U-N) entity including session manager in Usually MPEG2-level video data are used multimedia the interworking unit serves as DSM-CC U-U and U-N service such as VOD (Video on Demand) service in the Client entity for managing DSM-CC signaling within the ATM network. MPEG2 data needs bandwidth of 3-10M. It ATM network. And the session manager in the interworking is usually impossible to transfer MPEG2 data in the Internet unit manages the internet-to-ATM network communication because of low bandwidth. The data format conversion sessions additionally. It is responsible for establishing and methods (2) provides a mechanism for matching the terminatingconnectionscooperatingapplicationsfor transmissionqualitytotheheterogeneousbandwidth providing requested multimedia services. constraints. Thus the interworking unit of the middleMEN The U-U entity in the interworking unit converts RTSP to is good point to apply data format conversion to adapt the bandwidth difference between the ATM network and the DSM-CC UU protocol to control multimedia stream of the ATM network to the Internet user. Figure 6 shows the Internet. protocol conversion stack for the control of real-time Researches on the media conversion (ex, MPEG1-to- multimedia stream. MPEG2, MPEG2-to-MEPG1, etc) are doing actively. But that field is not stable state yet and we don't have media 4.2Stream Transfer conversion technology. We apply following data format MPEG-2 TS (Moving Pictures Experts Group-2 Transport conversionmethodintheinterworkingunitof the Stream) over AAL5 (ATM Adaptation Layer 5) is used to middleMEN. Server stores MPEG Idata as MPEG2-TS transfer real-time multimedia stream in DAVIC format. As a request of the Internet user, MPEG1 data specification. Also, RTP over UDP/IP is used to transfer having MPEG2-TS format are delivered to interworking real-time multimedia stream in the Internet. Thus the unit of the middleMEN. Then theinterworking unit
766 732 converts MPEG1 data having MPEG2-TSformatto and the Internet. Those methods will be used to provide MPEG1 data having MPEG1-PS format. MPEG1data seamless multimedia service among the heterogeneous having MPEG I -PS format will be delivered to the Internet networksinthesituationof differentprotocoland user. bandwidth. interworking 5.2Bit-rate control Even though the middleMEN provides the between the ATM network and the Internet in the short term, only We cannot overcome the difference of bandwidth as themiddleMENwillprovidesframeworkforthe the data format conversion method. The reasonis that interworking among the heterogeneous networks in the long dose not because the Internet is best-effort network and term. guarantees QoS, real-time multimedia service iseffected by thetrafficof theInternet. By increasing thetraffic, References frequently service data can not be delivered correctly and [1]S., Park, et al, "A New MPEG-2 Rate Control Scheme timely. Real-time multimedia data is useless if those does Using Scene Change Detection," ETRI Journal, Vol. 18, not delivered timely. We also propose thebit-rate control No. 2, July 1996. method to overcome the bandwidth difference. If the traffic of [2] Elan Amir, Steven McCanne, "An Application Level of the Internet is increasing, it is better that the sender Video Gateway," In Proc. ACM Multimedia '95, San multimedia data reduces the amounts of multimedia data. francisco, CA, Nov. 1995. How to know that the traffic of the Internet isincreased? and And in that situation, what is best method to transferreal- [3]Schulzrinne,H.,Casner,S.,Frederick,R., Jacobson, V. "RTP : A transport Protocol for Real-time time multimedia data? Applications," Internet Engineering Task Force, Audio- We can know the traffic status of the Internet by using RTP. Video Trasport Working Group, Mar. 1995. data As shown the figure 4, the sender transfers multimedia [4] Busse, I., Definer, B., Schulzrinne, H., "Dynamic QoS by using RTP packets. Then the receiver periodically sends control of multimedia applications based on RIP," RTCP RR (Receive Report) packets that have information Computer Communications, Vol. 19, pp49-58, 1996. about the receiving RTP packets. Thus the sender can know the traffic status of the Internet. [5]S. W. Sohn, J. S. Jang, C. S. Oh, "Architecture of Multimedia Service Interworking for Heterogeneous If the traffic of the Internet is increasing, then the lost Multi-Carrier ATM Network," In Proc. IS&N '97, packets and untimely packets will be increased. Bit-rate Cernobbio, Italy, May. 1997. control (1,4) adjusts the bit-rate of data by the traffic of the [6] D. Hutchison, R. El-Marakby, L. Mathy, "A Critique of Internet.Thus we can minimizethedegradation of Modern Internet Protocols: The Issue of Support for communication quality. Multimedia," In Proc. ECMAST '97, Milan, Italy, May. The bit-rate control mechanism of MPEG1 video is like this. 1997. MPEG video consists of I-pictures, P-pictures, and B- [7]R. El-Marakby, D. Hutchison, "Delivery of real-time pictures. In normal state, all pictures are delivered to the continuous media over the internet," In Proc. ISCC '97, Internetclients. When thetrafficof theInternetis Egypt, June 1997. increasing, we transfer only I-pictures and P-pictures. Then [8] Digital Audio-Visual Council, DAVIC 1.0 we can down nearly 30% of traffic. If wetransfer only I- Specifications, Berlin, Dec. 1995. pictures, then we can cut down more than 50% of traffic. Even though the client can not receive the all pictures, the [9]ISO/IEC International Standard 13818-6 - MPEG-2 Digital Storage Media Command & Control, July 12, client can see more good quality of video in the real. 1996. 6.Conclusion In this paper, we present the function of the interworking unit of the middleMEN.for a real time delivery and control of multimedia. The interworking unit has functions of protocol conversion, and bandwidth adaptation (data format conversion and bit-rate control) between the ATM network
6 7 733 Ex Sight - Multimedia Information Retrieval System
M. Yamamuro, K. Kushima, H. Kimoto, H. Akama, S. Kon'ya, J. Nakagawa, K. Mfi, N. Taniguchi and K. Curtis NTT Information and Communication Systems Laboratories Yokosuka, Japan
ABSTRACT
This paper proposes a database centric approach to facilitate flexible image retrieval based on the indexing of component subimages (or simply objects) and impression words.The required techniques we proposed for the approach are described. Key points in this approach are (1) automatic image data analysis, especially automatic object extraction, on natural photographs (2) multiple reference object retrieval and (3) high performance data access mechanisms.As a prototype system which embodies these ideas, Ex Sight is presented with a simple evaluation result using this system.
1. Introduction the images.In similarity retrieval, which in most cases refers to content-based retrieval, images are represented by Recent advances in digital media technology have a set of feature vectors. A searchis performed by resultedina rapidly growing demand forfast and comparing the feature vectors of the reference and target convenient accesstoverylarge amounts of stored images to find the most similar. multimedia information.Therefore, itis necessary to develop a variety of large scale database systems for the 2.1 Object-based retrieval storage, manipulation and presentation of multimedia data. Among such systems, image database systems have proved As mentioned in [Gupta 97], in the case of image the most promising.Key requirements for the image data data, one of the most important types of content-based retrieval methods of these systems are speed, accuracy and similarity retrieval makes use of the component subimages, flexibility.In particular, content-based similarity retrieval or more simply objects, within the image. has been addressed as one of the most promising solutions One typical approach to object-based retrieval is 'on for such systems [Flickner 951[Gupta 97]. the fly' template matching [Vinod 96], where each image in This paper describes a database centric approach to the database is scanned repetitively in an attempt to find a image retrieval that is based on the application of content- matching part to the reference.However, such methods based retrieval to the component subimages of an image. face a significant time performance problem when applied Ex Sight, our image retrieval prototype system currently to very large databases. under development, allows for flexible image retrieval by Our approach, on the other hand, is a database-centric providing high speed indices for the subimage data and an approach, which includes a data preprocessing phase intelligent query mechanism. similar to the case of keyword retrieval. Object extraction In Section 2, we describe the basic principle behind and the calculation of associated feature vectors are carried our database centric approach with a brief analysis of the out in advance and the information obtained is stored in the related work.Section 3 details component techniques we database.Thisinformationislaterusedinquery invented and/or adopted in order to achieve our image processing. retrieval approach. The implementation of Ex Sightis Normally, object identification is extremely human presented in Section 4 and Section 5 contains a preliminary labor intensive in the same manner as assigning keywords evaluation of the system.Section 6 suggests possible to each image. The cost of this labor is prohibitive where applications where Ex Sight can be used and concludes the the database contains hundreds of thousands of images. paper. Although some research projects have attempted to solve this problem [Ashley 95],all proposed methods still 2. Our approach to image retrieval and related require some human interaction, or can only be applied to work simple images such as an image containing a single object against a monotone background. Broadly speaking there are two types of image search; An essential part of our approach is to be able to carry keywordretrievalandsimilarityretrieval.Keyword out the necessary preprocessing completely automatically, retrieval relies on the mostly human input of textual saving significant human effort. The main difficulty for annotations which can be stored in a database together with automatic object extraction has been that object recognition
763 734 preprocessing phase and feature vectors extracted from the ammiall=mo query reference specified by a user.More specifically, it Population is performed by looking for the k-nearest neighbors of the massamtml reference, based on a similarity distance defined in the high dimensional feature vector space.Manhattan distance or Euclidean distance is usually used for the distance measure. Importantly, even if the number of images in the database is small, the number of component objects with which we really need to compare the reference is large; a single image can be composed of hundreds of objects. Therefore a linear search of the vectors does not provide adequate performance and more efficient data access techniques are required to make our approach to image retrieval feasible. Several high dimensional indexing techniques have been studied [White 96].We achieved high performance data access for the similarity search by modifying such existing techniquesorinventingnewindexingmechanisms, Figure 1: Object-based Retrieval Process Flow including a parallel processing mechanism.
was not sufficiently advanced to be able toextract 2.4Combinationretrievalincludingkeyword meaningful objects from complex images such as everyday retrieval photographs. The first major element of our approach to object-base retrieval is to extract as many object segments When data for such image attributes as title, date, and aspossible from animage,includingallpotential author are available, keyword retrieval is, of course, a meaningful objects as well as many meaningless redundant powerful way to find images. Practically, combination of objects. All extracted objects are stored in the database. similarity retrieval and keyword retrieval is important The second element is the use of a multiple reference query. [Ogle 95]. Ex Sight supports the inclusion of keyword For example, although the object extraction may fail to retrieval. Users can give the system a query such as "Show extract a man in bluish clothes, if both bluish clothes and a me some elegant pictures by Adams which have a red human face are extracted as separate objects, we can apple around here like this reference." retrieve the man in bluish clothes by the combination of similar searches with bluish clothes as the first reference 3. Component functions and techniques and with a human face as the second reference. Figure 1 shows object-based retrieval process flow in our database- 3.1 Automatic analysis of image data centric approach. 3.1.1 Object extraction 2.2 Impression-based retrieval To extract objects from the raw image input data, we Impression-based retrieval is another type of content- propose a heuristic method for the segmentation and based similarity retrieval.Such retrievals make use of a merging of regions within the image. The outline of the dictionary of mappings from impression words(e.g. method is as follows: elegant, happy) to typical color patterns. Three or five (Step 1) Calculate the edge magnitude (256 levels) of each prominent colors are extracted from an image in the form pixel in the input image. of a feature vector during the preprocessing phase and (Step 2) Choose level one of the edge magnitudes as a stored in the database. The retrieval is performed as a threshold and identify regions with an edge magnitude less similaritysearchbetweenthisfeaturevectorand than this threshold as initial segments. corresponding color patterns for the impression words (Step3)Increasethethresholdlevel(relaxingthe chosen by the user.Again, the preprocessing and storage boundary) one by one merging segments. Take each of the of image data is vital to the success of the retrieval. segments that are merged into one segment as an object. Figure 2 shows the process of the method. 2.3 High performance data access for similarity Since the method takes each set of adjacent segments retrieval as an object if they are merged in the process of boundary relaxation, a lot of overlapping redundant objects are Content-based similarity retrievalis based on the extracted.These redundant objects may be useful to comparison between feature vectors extracted during the increase the possibility of matching a query reference, but many meaningless objects are included as well.In order
735 769 A Conventional Method Our Method Sample Image (After Edge Analysis) , ... = Edge magnitude levels 41 M2ila c3O0 , o2 I=1 3 c=i 4
Thresh Id: levell Thres old: level2 Threold: level3 Figure 3: Sample Result of Object Extraction
the circle. Start point normalization is included to ensure Z. output output output rotation free matching can be achieved. obj1c::::3 o j tlobj5 area size obj2 objir7 obj6 The number of pixels in the object - position in the parent image The normalized two-dimensional (x, y) coordinates of the Figure 2: Segmentation and Merge Method from position of the object centroid in its parent image. Edge Magnitude Threshold In addition to the above features, we extract 3 or 5 prominent colors as a feature vector for each parent image to reduce the number of redundant objects, very small for use in impression-based retrieval as described in 2.2. objects (e.g. less than 100 pixels in size) are ignored. All of these feature vectors are obtained automatically We also invented a method for excluding overlapping during the image data analysis preprocessing phase. redundant objects so as to take only one representative object for one particular spot within an image. For this cut- 3.2 Data model and retrieval off method, we have proposed an Object-Extraction tree(OE -tree)to keep track of the extractedobjects The main entity types in our data model are image throughout the segmentation and merge process. Applying (parent) and object (child)The model includes links to the following cut-off rules on the OE-tree, results in objects, represent the relation between each image and its children other than the representative one, being discarded from the objects. An object's attributes includes a set of feature tree. vectors.An image's attributes include title and author (to (Rule 1) Do not take the whole image itself as an object. be used in keyword retrieval), as well as the impression (Rule 2) Do not take a segment as an object if it shares a feature vector described in 3.2. bounding rectangle with the merged segment. The first step in object-based similarity retrieval, is to As shown in Figure 3, this method is able to extract obtain a set of similar objects for a given reference. This distinct objects from an image with homogeneous color result set is found in terms of overall similarity.The objects(right), where a conventional color clustering overall similarity of an object is determined as a function segmentation method failed (left). of its similarity distance on each feature. Typically this function is a linear combination of the individual feature 3.1.2 Feature vector extraction distances with each distance assigned a weight to reflect its importance in the overall distance calculation. Therefore We make use of the following feature vectors to tuning the set of weights (or so called weight vector) is represent an object. important in order to adequately reflect the query intention - color histograms for hue, saturation, intensity, red, green, of a user.Since it is very difficult for a general user to and blue planes specify his or her intention using the weight vector, 16 or 32-dimensional color histograms for each feature interactive adjustment of the weights will be required. The outershape algorithm for this function is still under development.In The most common method for shape representation is a the second step of theretrieval,parent images are combinationofheuristicshapefeatures(circularity, identified by tracing the links from the child object to its eccentricity, major axis orientation) and a set of algebraic parent image. moment invariants which together make up a 10 to 20 In the case of multiple reference object retrieval, the dimensional shape vector. As an alternative we propose a result sets containing parent images for each individual new method for representing objectshape called outershape. reference are merged into one final result set.In this case, The outershape feature is a vector derived from the graph a weight vector can be chosen for each reference. As an of the distance between the object's circumcircle and the example of multiple reference retrieval, figure 4 shows a outer edge of the object as it varies over the 360 degrees of search for 'a-man-in-bluish-clothes'.
736 GUI
SQL-base Preprocess Module Interface
Coordinator
High dimensional data access part Data Look-up part
4-- Feature Vector Spaces -- Other Data Database Engine
Figure 4: Multiple Reference Object Retrieval Figure 5: Ex Sight System Overview
take advantage of a coordination function to combine several search results into a coherent single set of results 33 High performance data access techniques ranked by overallsimilarityof thelinear weighted combination of similarity distances. The result set returned As mentioned in 2.3, high performance data access by each individual feature space will be different and the methods for high dimensional feature vector spaces are ranking of objects in the individual space is not the same as critical to our image retrieval approach. We have focused its ranking of overall similarity. It is obvious that simply on two different types of high dimensional index: retrieving and combining the top k ranked objects from (1) Tree type indexR-tree and C-tree individual spaces to obtain the top k of overall similarity is The R-tree is an extension of the well-known B-tree not enough. Let k' be a number of results to be returned indexing method to multidimensional space.Among the from a feature space to obtain the final top k. We want to many R-tree variants, the VAMSplit R-tree [White 96] choose k' such that it is larger than k, but as small as appears to be one of the most successful implementations. possible to achieve better performance. We addressed this Once an index tree has been constructed, a fast search problem, illustrated by experiment, in [Curtis 97].The algorithm to find the k-nearest neighbors is most important. coordination function also deals with the optimization of In most cases, tree index searches use the minimum queries that combine similarity and keyword searches. bounding hyper-rectangles (MBR) storedinthetree Ex Sight includes a data access engine which takes structuretoefficientlylocatethenearestneighbors. advantageofthesehighperformancedataaccess Therefore the size and shape of the MBRs are a dominant mechanisms. factor in performance. We developed a new tree index named C-tree which is constructed using a non-hierarchical 4. Prototype implementation clustering method. The new tree aims to make MBRs closer to a hypersphere to increase performance. In some Following the process flow of figure 1, we designed cases, the C-tree can outperform the VAMSplit R-tree by and implemented the image retrieval prototype system 10 to 20 percent, but further investigation named ExSight.Figure 5 shows the system overview. and evaluation are needed. ExSight has a client/ server architecture. The main (2) File type index - MIAS components are Preprocessing module, Database engine The Multiple Inverted Array Structure(MIAS) is a data which are in server part and GUI module in client part. structure which has one inverted array for each dimension of the feature vector.The advantage of this data structure 4.1 GUI module isthatitis completely independent of any kind of similarity measure. Thus we can select an appropriate GUI module consists of query composition part and measure for each feature space. Moreover since each viewer of the results. Users can specify their query by inverted array can be handled independently, it is suitable preparing reference object and typing in keywords. This for parallel processing. client part is implemented in Java for the use of WWW To achieve the flexible retrieval described in 3.2, we environment.
737 771 4.2 Preprocessing module Table 1: Result of Experiment
The Preprocessing module isresponsible for the automatic analysis of raw image data consisting of object Trial 1 2 3 4 extraction and feature vector extraction described in 3.1. Size of result set 3 6 24 74 4.3 Database engine # of correct images in 2 3 7 16 TheDatabaseengineembodiesthetechniques the set described in 3.4. It consists of three basic components. First, a set of high dimensional data indices that can be Recall(%) 13 19 44 100 used to achieve high performance searching in high dimensional feature vector spaces. Second, a data look-up part that can be used to store the images with their Precision(%) 67 50 29 22 associated attribute data.Third, a coordinator thatis responsible for executing searches on individual indices and optimizing the integration of individual index results to form one result set ranked by overall similarity. The details 6. Conclusion and possible application areas of Database engine are found in [Curtis 97]. A database centric approach to content-based image 5. Evaluation retrieval has been proposed and techniques required to achieve this have been described.An image retrieval To evaluate our approach, we selected a small set of prototype system ExSight, which embodies these ideas, has images,consisting of 227 photographs from several been presented.ExSight successfully extracts meaningful volumesof PhotoDisc' , objects from images during preprocessing and provides which includes Food Essentials, Retail, Shopping and indexing methods that can outperform existing indices. Small Business, European Landmarks and Travel, Far Although comprehensive evaluation remains to be done, a Eastern Business and Culture, Education, Government and simple evaluation with a small set of images has shown our Social Issues, Homes and Gardens, International Sports, content-basedretrievalapproachretrievesappropriate People, Lifestyles and Vacations. images in response to a query. During object extraction, on average about one The system can be applied to such areas as electronic hundred objects are found from each image.The number commerce, remote educationor multimedia contents of possibly meaningless objects is, on average, 11.6 times authoring in the WWW environment. the number of possibly meaningful objects. As an experiment of retrieval accuracy, we gave References ExSight the query "Give me images with people in some bluish clothes", using the multiple reference retrieval with [Ashley 95]J.Ashley etal,"Automatic and Semi- two reference objects of a human face and a blue shirt. Two automatic Methods for Image Annotation and Retrieval in referees subjectively selected the 16 images with people in QBIC," Proc. Storage and Retrieval for Image and Video bluish clothes out of the 227 images in the sample database Databases III, Vol.2420, SPIE (1995) beforehand, which were assumed to be the correct result. [Bombo 96] A.D.Bombo, P.Pala,S.Santini, "Image Table 1 shows the results of the experiment. The relation Retrieval by Elastic matching of Shapes and Image between the number of nearest neighbor searched for, Patterns," Proc. of IEEE Multimedia Systems '96, pp.215- recall (percentage of correct images in the returned set out 218, Hiroshima (1996.6) of the total correct images in the database), and precision [Curtis 97] K. Curtis, N. Taniguchi, J. Nakagawa, M. (percentage of correct images out of the returned set). Yamamuro, "A Comprehensive Image Similarity Retrieval Since our approach extracts manyredundant objects, the System that utilizes Multiple Feature Vectors in High precision values are not particularly high, whereas recall Dimensional Space,"Proc.of ICICS'97, pp.180-184, values are fairly high if we request a large number of result Singapore (1997.9) images. [ Flickner 95] M. Flickner et al, "Query by Image and To increase the precision, or to exclude incorrect Video Content: The QBIC System, " IEEE Computer, images from the resultset,thatisto reduce really Vol.28, No.9 (1995) redundant objects, are important items for further study. [Gupta97] A.Gupta,R.Jain,"VisualInformation Adjusting the search parameters, for example the weight Retrieval," Communications of the ACM Vol.40, No.5 vector, is another subject for further study. (1997.5)
2 738 [Ogle 95] V.E.Ogle, M. Stonebraker, "Chabot: Retrieval from a Relational Database of Images,"IEEE Computer, September (1995) [Vinod96]V.V.Vinod,H.Murase,C.Hashizume, "Focussed Color Intersection with Efficient Searching for the Object Detection and Image Retrieval," Proc. of IEEE Multimedia Systems '96, pp.229-233, Hiroshima (1996.6) [White 96] D. A. White and R.Jain, "Algorithms and Strategies for Similarity Retrieval," Technical Report VCL- 96-101,Visual Computing Laboratory,Universityof California (1996)
739 773 Telecommuting Bringing Real Bandwidth Needs to the Home
Yogi Pratomo W and Marina RisT1 - PT Telekomunikasi Indonesia Bandung, Indonesia
The paper explain Indonesia TELKOM perspective about Telecommuting which to be one of application will be developed under Nusantara-2 I, Indonesia national information infrastructure vision. The Public Telecommuting Access Center plan to be developed in several major cities to support multimedia society in Indonesia and give an unlimited opportunities for the people without considering the social-economic status and other differential elements in order to be able to take a benefit at the existence of multimedia network capability.
Indonesia Cities & Information Infrastructure based industries such as database, software, value-added network services and also other hi-tech industries.
The big cities in Indonesia these days possess the same Nusantara-21 characteristics as many others big cities problem in the world. The reject of this situation may result in stress, The condition of national information infrastructure frustration, and bring another problems to resident who relating with process of transformationcitiesurge live and work in there, beside the pressure of the works Indonesia information society, include TELKOM as itself. The Jakarta city is an example of this situation. domestictelecommunicationcarrierinIndonesia, They are various theory about the best method or effort to develop and promote telecommuting product solution. get cities growing better. One is what it cells "counter- Indonesian government has commenced the vision of magnet' or establishingsatellitecity which drive by National Information Infrastructure (NII) which is titled Indonesian government to solve economic and social "NUSANTARA-21". The vision to establish welfare and problem in several major cities in Indonesia. According to prosperity within the divers society which spread over Indonesia'sNationalDevelopmentPlanningBoard the country through telecommunication and information" (BAPPENAS) estimates that long before 2019, which technology utilization. That is vision behind the usage of marks the end of thecountry'ssecondlong term PALAPA domestic communication satellitein1976 development plan, the country will have 15 new urban whichalreadyprovedstrategicallyandeffectively areas with populations of more Than one million each. supporting the process of developing the whole life Four of these new Indonesian cities will have over five aspects of Indonesian people. million citizens each.It means too, up to 60% of Indonesian will live in cities. Now that government has The Indonesian national information infrastructure is not barred more heavy industry from central metropolitan to intended to wait until the information 'superhighway' nearby cities. The metropolitan it self is rapidly switching available butit's planned earlier to be an effective from industry to services cities. utilization of the available information infrastructure facilities to support the nation economic & human It is strongly suggest that transformation will increasingly development program. In line with this information rely ontelecommunications. With advances in infrastructure will also developed to form an appropriate telecommunicationstechnologyalargeof volume and effective electronic superhighway for day to day information, processing and transaction can be transferred operation of the economy. effectively without restricted by time or space. The contribution of telecommunications to the cities and total The establishmentofinformationinfrastructure, national economyhasincreasedwith economic basically rely on to the fact of Indonesian society's way development, as the use of telecommunications has been of life which is full of diversity and uniqueness, such as; increasingly applied to a wider range of economic sectors. Indonesia is an archipelago country, high population It includes telecommunication usage in new-information density and where the telephone density are relatively low. Also there is a disparity in the level of the social-
7 7 4 740 economic. Based on the uniqueness mentioned above, Telecommuting also referred as "flexiplace" applies to national information infrastructure will be established in everyone who occasionally works at remote area during thethree layers: Archipelagic SuperHighway, busy office work period to minimize interruptions, Multimedia cities and Multimedia Community Access increase productivity without physicological stress and Centre missed family care. However, telecommuting offers not Archipelagic Super Highway is the main backbone which only application to make people just working' but also will connect the Nusantara's 27 provinces. The bandwidth solution to maintain health, improve professionalism, will be in accordance with the real bandwidth needs. This manage finance and event to teach children. backboneisevolvingfrom'skeleton'configuration towards 'ring of rings' configuration with the broadband Trends of telecommuting is growing everywhere all over bandwidth that planned to increase gradually until the year the world since it has proved to be beneficial either to 2001. This Backbone will be the main infrastructure to employee or employer, also to society as well. Most of support broadband service in each multimedia city. the business company in Europe and America have been using this concept in any scales and have obtain several Multimedia cities are established in several big cities and benefits to either the employees, employer and also to will become Multimedia cities which have multimedia the community. community' access centers. These centers should be equipped with a reliable and sophisticated inner-city Telecommuting Classical Factors information infrastructure and various access link with Indonesia perspective on telecommuting is beyond all appropriate bandwith availability. So that, the society in thebenefitsmentionedabovebuttelecommuting those multimedia cities can do their productive activities development in Indonesia is not only drive by common through information processing and transaction. classical factors such as urbanisation, traffic congestion, dynamicofinformationtechnologytrend and The Multimedia Community Access Centre facilityis environmental concern. The latest one become seriously intendedtoreachtheentirelevelof society'by with the emergence of a large manufacturing sector and emphasizing on the 'accessibility' rather than the density. the recognition of the growing importance of tourism as This access point is the first and most important node to a major employer and foreign exchange generator. provide the society's access to the main multimedia infrastructure. This access node is built by omitting the Indonesia telecommuting development is one effort to social status and other disparity element, so that the people achieve the aspiration of creating the nation as an can take advantages from the existence of multimedia city information-basedsociety.Telecommuting approach running efficiently. should be seen from business, technology and social aspects, and for many strong reasons, the latest one is Telecommuting will be one application solution which not quite simple for manage, in fact it is complicated plan to be developed to support information society's, enough that sometimes has made telecommuting to be especially in the big cities with a high population & traffic rejected or failed in its field implementation. problem,likeJakarta,Surabaya and Bandung. The telecommuting publicaccesswillbe buildtogive Life Style & Business Culture unlimited opportunities for people without considering the Telecommuting strategy need to be identified as detail as social-economic status and other differential elements in possible to overcome critical factors. More varied, richer order to be able to take a benefit of the existence of set of work settings that truly supports the full range of multimedia network capability. workactivitieshavetobe inclearportionof telecommuting implementation.Itshould be widely Indonesia Telecommuting Perspective understood that the workplace is a complex system in which all elements must work in harmony, rather than Telecommuting terms refer as the ability of workers to simply change how space is assigned. work outside from their office, either from their homes, satellite office or mobile. Telecommuting will use basic BusinesspeopleinIndonesiais abestobject and advanced telecommunications technology to replace experimental of doing this, because business approach is or reduce traditional commuting to the workplace. always looking for good innovation to make their businessrunningeffeciently.Thetelecommuting
741 775 implementation issue probably the working method' or productivity of the workers. Together with this fact is 'business culture'. We consider that is a big thread for that not every workers have the opportunity to own telecommuting becausetheyallfirmlyrelatedwith luxury' communication tools. This is the time when Indonesia culture', where one's respect, authority, and management and strategy of telecommuting politely have been part of every day socializing patterns of implementation is tested. This is also the reason for all Indonesia people and characterized them for centuries. telecommuting project director to include phase and Therefore, a new way of working, electronical way, where training in his project. interactions that would previously have been carried out face-to-face will be mediated by computers, might seemed As costs of computing hardware decrease, and as notsuitabletobeadoptedbycertainworking employer acceptance of telecommuting increases, the environment. In the era of telecommuting, what is used to jobs available to telecommute will be broaden to include be a way of communicating totally different from the old positions at all pay and experience levels. However, ones. sets of employee arrangement have not touch the telecommuting still not an "exclusive job" which needed electronic communication ethic, so one should be on duty human exclusive IT capabilities. Indonesian to explore aspects of this new way of working. telecommutingwillurgesomejobtitleswith "minimum" IT intention. Jobs titlelike data entry, Communication forum in every level of the organisation is telemarketer, surveyorl consultant, book keeper, writer very' useful to gain the same perception and input to the or language translater are potential to be done by program. We should identify how things related to work telecommuting solution. The younger generation now is running in our environment Employees is used to take more familiar to technology devices compare to their action regarding their managers direction, and sometimes own parents, because technology has appear in every its a matter of politeness. Life style also has big part of single schools activities. Telecommuting will also bridge everyday workers activities where prestige and image thisgapwhileeducatingparentstousemore speaks. Those who don't commute to their office are technologies in supporting their work and promoting considered to be unemployees. Finally, telecommuting distance working concept. Constantly telecommuting will cause changing in organization and communications will improve 'IT based knowledge' of society and bring structure, ft changes also the nature of centralization and the global information closer to them, not only for those decentralization matters in solving problems and making who is taking hold of information technology access, but decision within an organization. is opened for everyone who is willing to and need to have it. Technology & Human Resources Information technology has an important role to play in Tele Accessibility vs Tele Density accomplishing regular tasks by telecommuting. Development of multimedia community access centre in Telephone, facsimile and voice mail were found to be multimedia cities under Nusantara-21 vision will plays important communication components in carrying out the as central economical activity which is potential inner- work effectively among the employees. While dynamic city information highway and perform a complete access change in computing technology is growing fast, ftis channel with its appropriate types and amount. So that realized that to be a success telecommuter requires a people in those multimedia cities can perform their highly skilled workforce in order to have maximum output productive activities through information transaction in a of the program. reliable and rapid manner. Telecommuting is a common task in those citiesas identification of information Further consideration about lack computing technology society and identification ofNUSANTARA-21 skills among employees has to be taken, meaning that, this supporting ability to the public. new telecommuting arrangement should not make a gap between 'technological employee' and one who doesn't. Development of NUSANTARA-21 will able to cover Industry has already took human role in many parts of the entire level of Nusantara society with 'accessibility' industry and business development, so telecommuting orientation.Within NUSANTARA-2icontext,the should not in any case make employee feels less worth concept of 'community accesscenters'which will than he was before. What also could happen for those who include 'info communication public access, 'broadband are not familiar with technology environment is declining businesscenters','networkede-library',multimedia of self confidence and the worst Thing will happen to the community kiosks,is developed to provide 'flexible
7 "/ 6 742 public accessibility". The concept has been applied in TELKOM telecommuting project encouraged from the place for several years, like WARTEL (communication vision of Nusantara 21 which has previously discussed kiosk), WARNET (interne access kiosk), and computer in this paper. The pilot project is implemented in RisTI, rental where people have found it helpful and making informationtechnologyresearchdivisionof PT communitytobemorefamiliarwithinformation TELKOM, taking form as an Satellite Office that technology.Thereforetomigratesthisformto support RisTI employee in a certain area having the telecommuting centers or satellite office form might not biggest RisTI employees population. so difficult without omitting their own characteristics. Telecommuting access centre will offer more value than The program is arranged to be simple, flexible and of others, where people who have no chance to handle their course, helpful, especially for those having trouble to work at home could use this place by relying on network commute to the office. There's no significant changes in availability and reliability to support their job functions. human resources regulation in drawing this program. Every workers willallowed toparticipateinthis There are so many areas where we can put telecommuting program and making use of the Satellite Office in concept effectively, like in concentrated population that performing their job, so that adaptation to this new way possessed by major big cities. Telecommuting centers can of working is naturally and spread evenly. Knowing be an opportunity offered by real estate developer, and better how telecommutingis work, will cause less indirectly will encourage people to make benefit of it adjustment to accept policy which is needed to avoid telecommuting application, like teleservices which can "troubleissues"suchasjealousybetweenwho also be utilized to improve access to information and telecommutes and who doesn't, feeling of isolation or government services in inner cities and rural areas by other social problems. Anticipating if everyone would providing information via telephone, establishing mobile want to telecommute, policy also needed to avoid losing service programs, or satellite office closer to aggregate control of employee's work force, overwhelmed of populations. To make this real, the word accessibility is training and equipment. now more important than word density. Telecommuting programisnot limited toSatellite TELKOM Telecommuting Project Office, it could be working at home or even mobile The telecommuting market represents attractive business computing, but we believe that Satellite Office approach opportunities for a number of communication services will be a good and effective way in transforming providers, including TELKOM. Thesuccessof working paradigm from 'the place you go" to the 'things telecommuting industry not depend solely on you do". It may facilitate employee who is suffer from telecommuters and their employers, but also relies on the commuting problems to the office and make them easier actionof telecommunicationserviceproviders.To to rearrange their time and cost. It is related to the vision entering and stimulating telecommuting market TELKOM of upgrading IT based knowledge of society in given has taken the following actions: accessible community center. Management support on analyze the unique characteristics of the Indonesian one sideand family support onanothersideis telecommutingmarket,whichcombinessome responsible to make this happen. characteristic of social, economy, infrastructure and culture in Indonesia. The specifictelecommutingapplicationswhichis analyze target cities and vertical industry that are explored in four categories: basic services, groupware, expected to be early adopters of telecommuting Internet/ Intranet and value added services will package solution in Telecommuting Solution Product, which ready to use Establishingaprojectthatwillconcernon by cities, companies or personal telecommuter who telecommutingimplementationplanning,trials, shown clear demand to deploy telecommuting concept. market survey and developing suitable applications. This solution willhave numerous elementin one Establishingalliancieswithotherhorizontal & comprehensive package which could be customized in vertical telecommuting industry, include services and application. communication service providers, hardware manufacture or supplier and software developer to Priority considerations of telecommuting objectives will provide the telecommuters with integrated product effect implementation options for Satellite Office design. and service offerings. This package willconcernabout information and
743 777 education oftelecommuters to getsuccessfully CO-AUTHOR BIOGRAPHY telecommuting programs up and running. with TELKOM contributions in telecommunications area, particularly in Marina, Ir providing network infrastructures, telecommuting centre Engineer at RisTI (Information Technology Research willbeprofessionallyorganized and maintainedto Division of PT TELKOM), specializing in Network and become a real productive work option for employees and Services, and member of Service Laboratory overcome region constraints. Business Address: Conclusion DIVRisTi - Information Technology Research Division - PT TELEKOMUNIKASI INDONESIA Telecommuting consider as one of the alternative work JI. Geger Kalong Hilir No.47 Bandung 40152 arrangements for alleviating major problems of a city or INDONESIA urban center. Telecommuting in Indonesia is still at the Telephone: +62 - 22 - 214551, ext. 331,332 preliminary stage of development. But, the advent of Facsimile: +82 - 22 214689 advancedinformationtechnologymightleadthe e-mail: marinaristi.telkom.co.id Indonesian company and society to consider for an alternate work arrangement to increase their productivity and competitivenessthatfinallywillincreaselevel standard of living in whole country.
Telecommuting initiative is only one of Nusantara-21 of milestones in bringing the Indonesian society to become the competitive citizen and have a big role in the global economic arenainfuture world economy inwhich microprocessor and networks enable fundamentally new kinds of institutional structures and relationship.
AUTHOR BIOGRAPHY
Yogi Pratomo Widhiarto, Ir Project Manager for RisTI TELKOM Telecommuting Product Solution.
Business Address: DIVRisTi - Information Technology Research Division - PT TELEKOMUNIKASI INDONESIA JI. Geger Ka long Hi lir No.47 Bandung 40152 - INDONESIA Telephone: +62 - 22 - 214551, ext. 310 Facsimile: +82-22 -214669 email: [email protected] [email protected]
770 744 Internet Security: Facilitator of Internet Virtual Private Networks (iVPNs) A Step Toward The Future Of Pacific Rim Commerce
Ted Ritter Information Resource Engineering Baltimore, United States
1. ABSTRACT
Today, many Pacific Rim organizations have private data networks and connections to the Internet. The next step is to shift more corporate networking onto the Internet to lower costs and increase flexibility. Implementation of such a shift is called an Internet Virtual Private Network (iVPN). The gating factor for successful implementation is security and this paper presents a strategy for building a secure iVPN.
2. INTRODUCTION been found in Australia and the United States "'.In reality what is happening is that organizations are What will the Internet look like in the future? Will adding Internet access for such activities. it still be a network composed of surfers, However, this access is still in addition to the browsers, hackers, and shoppers? Or, will corporate backbone network.. What if businesses and governments use the Internet as organizations could use the Internet as the the global backbone for commerce? The answer corporate backbone network? What if instead of is unknown - what is known is in Asia the needing a dedicated line between Tokyo and Internet is notoriously expensive, slow and Kuala Lumpur you could have local access in unreliable. In Japan, for example, the greatest Japan and local access in Malaysia and achieve a barriers to further use of the Internet are high network that offers the same performance, telecom. costs, high access charges, heavy reliability, and security at a much lower cost? traffic and slow response, low information This shift from having the Internet in addition to quality, and lack of securityi. These factors are the corporate backbone to using the Internet as not unique to Japan and are indicative of a the corporate backbone is called an Internet Pacific Rim -wide. problem. Another way to Virtual Private Network (iVPN). characterize these "problems" are issues of Why Internet Security? reliability, performance, cost and security.If these issues can be solved then business use of As listed above, there are four fundamental issues the Internet will expand. which must be addressed in terms of Internet expansion: cost, performance, reliability, and This paper is a discussion of a new concept of security. Of these four, security is the gating internetworking, the Internet Virtual Private factor since unless the security issues are solved Network (iVPN). Specifically, this paper is a it doesn't matter how inexpensive, fast and discussion of the iVPN with a focus on security reliable the Internet becomes, it will not be as the gating factor for business expansion of successful. The reason for this is with the other the Internet. factors the Internet can be utilized but not to its full potential. For example, one can use the Internet to send files between companies today - with 3. THE CURRENT STATE OF AFFAIRS limited performance and reliability at a relatively high cost (within the Pacific Rim). However, The majority of current Internet usage is for Email without proper security, no matter what level or and Web Browsing. A 1996 Japanese survey performance, cost or reliability, the information, indicates that nearly 70% of Internet use is for and the organization are open to attack. email and VVVVW Browsing ". Similar results have
, 7 745 The reason for this is that IS managers are used to a certain level of security with their current The Internet, for the most part, is priced networking infrastructure. This security is based upon access speed. This means that it generally based upon a closed network costs the same to send a packet of environment. Even if the network is based upon a information from New York to Boston as it public networking technology such as frame relay does from New York to Tokyo. This fact is or X.25 there is still a belief (maybe valid or not) one of the core drivers behind the economics that the network is secure. In contrast, the of iVPNs. Internet is the most open network in the world. Therefore, the IS managers understand that as In the United States the ISP market is soon as they open the corporate network to the extremely competitive. This competition is Internet they are opening-up serious security driving down Internet access charges quickly risks. An iVPN asks these managers to go one to near commodity rates. What this means step further and not just open up their network but for the consumer is an Internet that is to actually shift their corporate resources to the inexpensive to join but highly congested due Internet. to the flat rate prices. The ISPs are looking for ways to differentiate their service in the 4. THE CONCEPT OF VIRTUAL PRIVATE market and one of the keys to doing this is by NETWORK adding value added services such as iVPNs. The other business driver with regard to iVPNs is A Virtual Private Network is a concept that has flexibility. As the Global Economy becomes more been around for many years in the voice competitive and organizations depend more networking world. In the late-1980s large carriers heavily upon digital communications, the need to started to offer VPNs for voice services so that quickly and efficiently communicate with multiple companies could have the appearance of a partners is paramount to success. Corporations private voice network while sharing the resources are not only concerned with connecting their own of a much larger network. This concept is now operations together via the corporate network, but being applied to the data world, to the same are also concerned with connecting partners and effect. Essentially, a VPN for data is the building customers as extensions of their corporate of a data network that appears to be "private" network. This extending of the corporate network while utilizing the resources of the much larger is called anextranet. data network. The specific topic that this paper addresses is the use of the Internet to create a Today, companies are faced with extending their VPN. Another way to consider this is the building corporate networks to partners and customers via of a Corporate Intranet across the Internet. leased lines, frame relay, and or/X.25. All three of these technologies require long lead times for the What are the business drivers for the iVPN? carriers (particularly in second and third world From an intuitive standpoint it makes sense to nations) to provide access for the corporate utilize the scope and scale of the Internet for partners and customers. At the same time, corporate communications. However, why would however, the Internet is becoming the most a company want to take the risk of putting their accessible network in the world. There are many data across the Internet? Based upon experience times where dedicated lines cannot be provided in the United States, there are two fundamental but the Internet is available for access. This reasons for building an iVPN: cost and flexibility. results in increased flexibility and competitiveness First, cost is a critical driver between any for organizations building the iVPN. networking decision. There are some very interesting dynamics set today in the Internet These dynamics, particularly in the United States networking area. These are: leads to an incentive for the ISP to provide iVPN service and for the customer to ask for iVPN Most networking options are either distance services, resulting in a win-win situation. sensitive or usage sensitive. For example leased line networks are priced based upon line rate and line distance. 7,50 746 4.1 WHAT ABOUT THE DIFFERENCES Internet will never achieve it's potential of BETWEEN THE INTERNET IN THE becoming the commerce highway of the future. UNITED STATES AND THE PACIFIC RIM? There are different approaches to iVPN implementation with regard to security. This There are some general trends occurring which paper outlines a complete iVPN security offering indicate that dramatic changes are underway based upon the Internet Engineering Task Force which will yield an Internet market in the Pacific (IETF) IP-Security (IPSEC) specifications. Rim similar to that of the United States. These There are simpler means to build Internet trends include: security systems than that proposed in this paper. However, the assumption here is that the PTT deregulation - For example, the gradual Internet iVPN should offer the same level, or deregulation of NTT has spawned a host of even higher level, of security that the competitive New Common Carriers, many of organization is experiencing today and this calls which are planning ISP services. In addition, N11" for a very thorough implementation. itself has dramatically lowered the price of Internet through its OCN offerings. Expansion of Global Internet providers - The 5.1 PROTECTING IVPN DATA - expansion of such providers as BT/Concert, WHERE'S THE RISK? Global One, and WorldTel are resulting in higher availability, reliability and a lower cost of Internet Where will the attacks come from? Attacks can access. come both from within the iVPN as well as from outside the iVPN. For example, in an attack on a Support of multinational organizations - Fortune 500 customer the easiest attacks were Organizations such as OECD, ASEAN, and G7 not through the Firewall but rather through fax have all targeted the growth of Internet as critical servers and remote modems on users desktops for the future success of Global electronic where the default passwords had not been commerce. changed." Through these "backdoors" the hackers (a paid group organized by the company Assuming that these factors are true then the being attacked) were able to break into every Internet in the Pacific Rim will evolve from the major computer system in the corporation. high cost, low reliability Internet of today to a more cost-effective and reliable network in the future - a The first step in preparing for attack is to have a network that supports the development of iVPNs. security policy. Surprisingly, this simple step is overlooked by the majority of companies. In 5. INTERNET SECURITY Japan, for example, security is a fundamental As stated above, proper security implementation assumption of society and this belief system is facilitates the implementation of an iVPN. reflected in corporate security planning."In a However, the foundation of a good security Japanese survey nearly 35% of the users implementation is understanding the risks surveyed gave no consideration to data securi associated with the Internet. The Internet, by it's nature is an open environment. Based upon 6. THE DEFENSE - HOW TO MOVE technology and concepts from the 1970s the DATA ACROSS THE INTERNET Internet was originally developed to be a research network where the requirements for access and SECURELY availability far outweighed the requirements for To move data across the Internet securely privacy and authenticity. After all, the Internet (enabling an iVPN) there are four fundamental was developed by an elite group of researchers, questions that must be answered: for an elite group of researchers. Times have changed and now the Internet is being faced with 1. Is the information private? demands for security of the level achieved only in 2. Is the data sent the same as the data private networks up until this date. This is a received? critical point since without high-level security, the 3. Who is the source of the data?
747 781 4.Is the control system secure? 6.2 MEASURING THE RISK
If solutions are developed that answer these four How do you decide which algorithm to choose? questions then a secure iVPN is possible.If At the time of writing there is much focus on however, any of these questions is not fully DES encryption and its relative strength or answered then there will be a hole in the security weakness. This algorithm which is over 20 of the iVPN making it impossible to have a years old is still the most commonly used successful implementation. The steps outlined algorithm among banks in the United States. are summarized in Table 2.0. However, DES can be broken and the risk must be weighed when evaluating an iVPN. The key 6.1 IS THE INFORMATION PRIVATE? issues are the relative value of the data being encrypted and the "life" of the data. A matrix can The first step in securing an iVPN is encryption. be developed where data is mapped into a table There are many different algorithms for encryption consisting of these two factors. Table 1.0 and they all have different pros and cons. Within indicates some of the types of data that can be the Pacific Rim there any many "favorite" evaluated. algorithms in use today. These algorithms include FEAL, Misty, DES, RSA, MD5 and many others. Value/Life Short Long In general there are two aspects of an algorithm Low General Email Facilities Info which must be considered: key length and Inter-office Corp. Policies strength of the algorithm. Most people are aware High Price Quotes Plans of the key length and that is the only aspect of Finan. Trans. Personnel Info. strength that they focus on. However, key length alone is not necessarily a good indication of total Table 1.0 - Risk Matrix strength; one must also consider the algorithm. Once the table is created then the risk can be For iVPNs it is important to select an International evaluated versus the type of algorithm chosen. standard algorithm. There are three reasons for With increasing computing power and increasing this statement testing, interoperability, and criminal interest in the Internet the relative liability.First, standard algorithms go through strength of algorithms rapidly decline over time. extreme testing, known as vetting. These Today, DES-56 is fully adequate for most algorithms are developed by cryptography experts information on the Internet, however, over the from around the world and are the most tested next few years there will be a complete shift algorithms commercially available today. Second, away from DES-56 to stronger algorithms. the Internet, by its nature, demands high levels of interoperability. This interoperability is for 6.3 IS THE DATA SENT THE SAME AS communication between different countries, THE DATA RECEIVED? different companies, and different vendors products. Acceptance of an International Packets of information traveling across the standard is the best guarantee for interoperability Internet are susceptible to being "grabbed" and as the iVPN is extended beyond the borders of modified. The simplest modification is the one's country. Finally, what happens if the spoofing attack where the source address is encryption is broken? What is the liabilitiy? This modified. A more complex attack involves issue is of great importance and today there are changing the actual user data that is inside the no International liability standards for encryption. packet. The solution to protecting data is via In fact, in many countries including Japan there is message and packet authentication. no limitation of liability for implementation of an Surprisingly, these simple and common attacks encryption system. However, in the future, limited are difficult for most firewalls to protect against. liability will have to be addressed in terms of expansion of Internet services, particularly if the The Internet Engineering Task Force (IETF) has services are financial in nature. defined a standard means by which packets can be protected as they traverse the Internet. This
7 82 748 standard is the Encapsulated Security Payload (ESP) as defined in RFC 1827. The purpose of What is required for secure Internet and secure this standard is to protect against tampering of the iVPN is a system where there is always a random packet as it traverses the network. All ESPs are password (one-time password) and the not the same, however, some consist of a information is protected as it traverses the transform indicating the packet is encrypted. More Internet. Requirements include: sophisticated ESPs contain a (prevents "replay" attacks) and a Message Authentication Code The password is never sent across the (MAC). The MAC uses an encryption process to Internet "in the clear." create an authentication code which prevents a The password is based upon a random hacker from modifying any data in your packet number generation. including the source address field. A two-factor authentication which means the user has their own PIN number and some 6.4 WHO IS THE SOURCE OF THE other device. DATA? Authentication on a session-by-session basis. Proper User Authentication will establish a security relationship between the user and You may be assured that the transmission of the every server accessed. The user might be data was secure, the data was sent was not able to connect to one host securely and be modified, but how do you know the identity of the denied from connection to another host based sender? The process for this is called User upon centrally managed security parameters. Authentication. User Authentication (UA), like packet authentication and encryption can take The bottom-line is that this is a critical part of many forms. The simplest form of (UA) is the iVPN security and must not be overlooked. password. However, passwords are exceedingly easy to break and provide limited security. The type of UA that must be invoked for clear 6.5 IS THE CONTROL SYSTEM authentication is called a "two-factor" SECURE? authentication where there is something "the user has" and something the "user knows." An Control is critical to the success of the system. example of this would be the use of a PIN number Control refers to the implementation of security and a user token (smart card, random number management to operate the system. This is a generator, etc.). broad topic that encompasses many aspects of the system including: configuration management, There are a number of authentication systems on access management, key management, internal the market today. Some use a token in random control management, and firewall management. number generator that is in synchronization with a host process. Others, use a challenge/response The critical issue is that such management should system, and others use a simple password entry. have complete control over the security system. Most systems today are designed for non-Internet This complete control is particularly critical in the use. In other words these systems are designed area of revocation of privileges for users. If an for users who are connected via dial-up or employee leaves the organization their privileges dedicated connections. In these more traditional must be immediately revoked. This is a fairly applications the transmission of the data is easy task when the employee is stationed in a relatively secure given the closed nature of corporate location. However, when the employee today's PSTN and leased line networks. is a telecommuter that might be connecting into However, the Internet introduces much greater the organization through the Internet from risk for these systems. For example, someone anywhere in the world, at any time, this becomes can "sniff' the session with the authentication host a more complex task. and gain the password for the user. Even with tokens that change numbers frequently there is 6.5.1 KEY MANAGEMENT still the risk of someone "grabbing" the password number off the Internet and logging in to the host At the core of management is key management. while the password number is still valid. For this level of discussion it is important to 783 749 understand that key management, or more in Washington DC and has a large office in the importantly, how key management is implemented midwest of the United States. This company is is critical to the success of the system. For using the Internet for all data communications example, one could have the strongest encryption between its offices and between its remote available, and the best user and packet employees and the organization. The salient authentication, but with weak key management points for this iVPN example are: the whole system is compromised. Cost Savings - This iVPN results in significant There are two generic types of key management: cost savings since the cost of purchasing private (sometimes referred to as symmetric) and local Internet access is lower than the cost of public. Private key is typically what is dedicated lines. implemented by Banks and other organizations who want to have a closed user community with Central Security Management - This iVPN complete central control. The most implemented has a security management workstation form of private key management today is the where the customer performs all of their own United States ANSI (also ISO) standards for security management. This is a requirement private key management called X9.17.Public of their security policy which states that all key is based upon an open user community security management be performed in-house. where keys are negotiated in the public domain based upon a public key that is stored in a Central Firewall - The company has a policy certificate at a certificate authority. In the Pacific that all non-secure Internet access be done Rim, in particular this has much interest. There through the main firewall at the HQ. This are many Electronic Commerce (EC) projects that results in reduced firewall expenditures and are underway in the Pacific Rim that are based better firewall management. upon public key management. Public key management for the Internet (an evolving Security For Traveling Executives - The standard) as defined by the IETF is remote uses connect through the Internet so ISAKMP/Oakley. ISAKMP/Oakley will soon be wherever in the world they may be they only ratified and accepted and will be the key require local access. As stated above they management protocol for iVPNs based upon a are of course authenticated using a two-factor public key architecture. authentication (smart card and PIN number).
In summary, if all steps are not implemented, all Security and Flexibility For Temporary questions answered, and all risks assessed then Workers - Being a Government Contractor a secure iVPN is not possible. The standards for they have employees who need to be on-site each of these functions is outlined in Table 3.0. at Government locations for extended periods of time. This provides these employees the 7. EXAMPLES OF AN IVPN most efficient and cost effective means to connect back to the HQ site. Even LAN-to- LAN communications is possible through There are two examples of an iVPN discussed local ISP connections from the various below. Both of these are examples from the Government sites. United States. Unfortunately, iVPN is very new and there are few examples of iVPNs, particularly Pacific Rim based iVPNs. However, the concepts 7.2 AN AUTOMOBILE MANUFACTURER and applications that are discussed are just as relevant in the Pacific Rim as in the United States Figure 2.0 depicts an iVPN for a large United since the end-user requirements are shared States-based automobile manufacturer. This around the globe. example is indicative of any large manufacturer. The primary application of this network is to 7.1 A GOVERNMENT CONTRACTOR connect parts suppliers with the manufacturer.
Figure 1.0 depicts a large United States Before the iVPN the manufacturer was operating Government contractor. This company is based a very expensive world-wide secure network for 7 8 4 750 its suppliers, partners, and international offices. company communications, and two options for The transition to an iVPN is ongoing and will be security management. implemented in phases. The salient points of this implementation with regard to the iVPN are: 8. CONCLUSION
Cost - Again, cost was a major consideration This paper began with the question of the future in switching to the iVPN. The current secure of the Internet.There are some underlying X.25 network is extremely expensive. By assumptions that this paper is based upon switching to the Internet the manufacturer can include the belief that the Internet will continue to save significant amounts over the current evolve throughout the Pacific Rim and this infrastructure. The savings are so great that evolution will drive the Pacific Rim Internet to the pay back on the iVPN technology is less become more cost effective, more reliable, and than one year. more powerful. As stated above these factors are critical to the development of iVPNs. Increased Productivity - The Internet already However, not nearly as critical as security. offers higher performance in the United States than X.25 networks and this trend will continue around the world. This manufacturer 8.1 WHAT IF THE INTERNET DOES NOT is dependent upon moving large CAD/CAM EVOLVE IN THE PACIFIC RIM? files around the world and every improvement in performance results in increased worker This is a critical question since the development productivity. of iVPN adoption is directly proportional to Internet evolution.If the Internet continues to be Increased Flexibility - As a manufacturer slow, expensive and unreliable then iVPNs will competing in today's competitive economy have limited success. However, there will still flexibility is critical. Previously, to bring on a be cases where iVPNs will be justified. The new supplier or design partner would take most likely implementations of iVPNs will be extensive planning and time to extend the those which rely upon International connections. secure network onto the premise of the The reason for this is that the price differential intended partner. between International leased lines and using Internet is far greater than the price differential Today, with the iVPN all that is required is between domestic leased lines and Internet. that the partner receive a secure application Therefore, there is the most to be gained, (software and/or hardware) and gain local economically by switching to an International Internet access. The bottom-line is that the iVPN. In addition, the growth of Global Carriers Internet is becoming the most accessible such as BT/Concert and Global One will network in the world, even in the Pacific Rim. significantly impacting the performance and Certainly, the connections may not be the reliability of International Internet highest performance or highly reliable but for communications throughout the region. this manufacturer the ability to get a new supplier online quickly still offers great value, 8.2 THE IVPN AS CATALYST FOR despite poor performance and limited reliability. INTERNET GROWTH IN THE PACIFIC RIM Outsourcing of Security Management - This manufacturer, unlike the above example has Could the iVPN drive the development of a more decided to outsource the security cost effective, more reliable and more powerful management of the network to a carrier. Internet in the Pacific Rim? The answer to this question is yes! There exists a push-pull As indicated these examples are only a subset of relationship with regard to iVPNs, end-users, the possibilities of an iVPN. However, the and ISPs which contributes to the development examples highlight the use of security to facilitate of iVPNs and the conditions that best support LAN-to-LAN, remote-to-host, inter- and intra- iVPNs. On the push side there is the user
751 785 community that sees the potential value of business users. Together, these factors will iVPNs in terms of increased flexibility, drive the market for expansion of iVPNs. decreased cost, and increased productivity. The demand of users will push the ISP and 8.3 INTERNET SECURITY THE GATING communication vendor market to offer iVPN FACTOR service offerings and products. On the pull side there is a need for ISPs to attract more business users to their Internets and thus more revenue. Finally, as described in this paper Internet As stated at the beginning the current business security is the key to the development of iVPNs - use of the Internet in the Pacific Rim is largely the enabling technology. If the questions posed email and web browsing, no different than that of in this paper are answered a successful iVPN home users. As described in this paper an iVPN will be possible. This iVPN is the first step on is fundamentally a different application of the the road to the future of Pacific Rim commerce in Internet and as such allows the ISP to offer the next century. differentiated services at differentiated pricing for
REMOTE USERS Secure HQ Modem
Router Proxy i=remml Fireerall VPN BRANCH OFFICE Encryptor Security Center
Figure 1.0 - Government Contractor iVPN
Business Requirement - Technological Solution Keep communications private Industry standard and proven encryption
Data arrives from legitimate source Packet and Message authentication in real-time
User is who they "claim" to be Continuous user authentication through the use of tokens and one-time passwords
Management of the network, the users, and the Centralized security and key management based upon resources industry standards including ANSI X9.17 and IETF ISAKMP-Oakley
Table 2.0 - Steps For iVPN Implementation
7 6 6 752 e -th all
erver CAD LAN Encryptor
Users LAN Encryptor AN Encryptor ark Internet...L.:. Server CAE LAN Encryptor
Secure Modem Offshore Outsourced LAN Encryptor Manufacturing Plant Security entices ESL
Figure 2.0 - Automobile Manufacture iVPN
Security Service ANSI FIPS ISO IETF Encryption X3.92, X3.106 FIPS 46, 74, 81 8372, 10116 1829
Message Authenticaiton X9.9, X9.19 FIPS 113, 180-1 9797, 8731 1826, 1827, 1828, 1852 User Authenticaiton X9.26 FIPS JJJ (draft) 9798, 11131 1334
Secret Key ManagementX9.17, X9.24 FIPS 171 8732, 11568 - --
Public Key Management X9.42 (draft) - -- 9594-8, 11770-3 OAKLEY/SKIP/ ISAKMP Certificate Authority X9.57 -- 9594-8, X.509 X.509 (PKIX Format draft) Digital Signature - DSS X9.30 FIPS 185 9594-8
Digital Signature - RSA 9796
Internet Security -- -- RFC 1825 Architecture
Table 3.0 - Security Standards
' "Computer and Network Security in Japan," Japan Research Institute, Limited, page 9,1996. ibid, page 9. 111 Presentation by Gerard Walsh, Deputy Director ASIO (Retired), "Secure The Web" seminar, Sydney Australia, 1997. 1" Behar, Richard, "Who's reading your email," Fortune Magazine, 2/3/97. " Conversations with Japanese Executives at an Internet Security Seminar, Osaka, 1997. "I op. Cit. Japan Research Institute, page 12.
753 Secure Eliectronic Payment for Te lie-Shopping
Eun Kyoung Paik and Ju-Won Song Multimedia Laboratories, Korea Telecom Seoul, Korea
ABSTRACT
Shopping systems using telecommunication technology have been receiving more and more attention because it allows cost reduction for merchants and provides convenience for consumers. To make them practical to our life, however, there is a critical problem to be solved: secure payment over networks. In this paper, we describe the implementation of secure electronic payment protocols for tele-shopping: the SET(Secure Electronic Transaction) protocol for credit card payment and the SSNS(Separate Serial Number Server) protocol for electronic cash payment. Credit cards are used worldwide in the real world and their payment process is implemented into electronic payment systems easily, while the electronic cash is useful especially for low priced purchases or for purchases requiring anonymity.
1. INTRODUCTION The advantage of credit card payment system is the fact that users can use their current credit cardinthe As the capacity of telecommunication increases, the electronic world as well as in the real world. We adapted technology is evolving from a way of communication the SET(Secure Electronic Transaction) protocol[Master into a way of making human life convenient, expedient 97][Visa 97] to our credit card payment system. The SET and comfortable. It has been providing various services protocolistheenterprise standardforcredit card such as tele-medicine, distance education, tele-banking, payment systems. The second system, electronic cash tele-shopping, to mention just a few. Especially, the tele- payment system, is useful when users make low priced shopping service has been receiving more and more purchases or do not want to the information about attentionallover the world becauseitallows cost purchases to be known. We proposed and implemented reduction for merchants and provides convenience for the SSNS(Separate Serial Number Server) protocol for consumers. According to the report of the Yankee group, the electronic cash payment system. The SSNS protocol a research group in the United States, 35 percents of the separates the serial number management server from the American companies answered that the business they are electronic cash withdrawal server while the two functions interested most on the interne is the electronic commerce. are combined into one server in the other electronic cash protocols. This way, the SSNS protocol guarantees There are two main technical issues that should be complete anonymity to keep the payment information considered when we implement a tele-shopping system. private. One is how to find the goods that a consumer wants to purchase. A lot of research has been done in this area. The paper is organized as follows. Chapter 2 reviews Today's multimedia presentation and search technologies generalsecurityissuesof electronicpayment and provide an easy, accurate, and fast solution. The other is introduces some electronic payment models. In chapter 3, how to secure electronic payment. Electronic payment two electronic payment systems of our tele-shopping systems should be able to provide secure transmission of application are described. Chapter 4 concludes the paper financialinformation shielded from the dangers of with a brief discussion on some practical issues. criminals. 2. ELECTRONIC SECURITY AND ELECTRONIC In this paper, we describe the secure electronic payment PAYMENT protocols developed for our tele-shopping system. To meet various users' requirements, we have developed In electronic payment systems, itis very important to two kinds of payment systems: the encrypted credit card provide secureelectronictransactions.This chapter payment system and the electronic cash payment system. introduces the generalissues of electronic payment
17.88 754 systems. In section 2.1, we introduce the kinds of attacks main advantage is very high encryption/decryption speed. onsecurityandthecryptosystemsthatsafeguard Although recently decertified, it is still widely used and financial information from various attacks. In section 2.2, worthy of study. the requirements for electronic payment systems and some electronic payment models aredescribed. 2.1.2 THE RSA CRYPTOSYSTEM
2.1 ATTACKS AND CRYPTOSYSTEMS The RSA(Rivest, Shamir, Adleman)isone of the asymmetriccryptosystems[Rivest 78]. The RSA The malicious attacks on electronic commerce can be cryptosystemisbased on thebelief that modular divided into three categories: system attack, data attack, exponentiation with fixed exponent and modulus is a and business attack[Lim 97]. The system attack is made trap-door one-way function. Let p and q be two large by someone who destroys the information of the system distinct primes, n = pq and e be some integer relatively illegally.System administration and securitypolicy prime to (p1)(q - 1). Each such triple k = is should be made to prevent it. The data attack is made on a private key for the RSA cryptosystem. The pair < e, n> data within the system or in transmission over networks. is known as the public key, and it is easily computed The solutionisto maintain confidentiality and data fromtheprivatekey. It is integrity. The business attack is a kind of swindle. So, the difficult(presumably), however, to obtain the private key laws, regulations, electronic cryptosystems, and so on from the public key. The difficulty is proportional to the should be provided to prevent it. length of the key. The RSA cryptosystem is known as a very reliable cryptosystem so far, but the series of To prevent the attacks, cryptosystems play an important modular multiplications makes its processing speed slow. role. There are two kinds of cryptosystems: symmetric cryptosystemsandasymmetriccryptosystems.The Figure 1(a) shows the encryption and decryption process symmetric cryptosystems are conventional cryptosystems of the RSA. First, the user B once and for all makes which encrypt and decrypt a message using the same key his/her public key KB and makes it available in the users' symmetrically. They are also called one-way directory, whereas he/she keeps his/her private key Kg' cryptosystemsorprivate-keycryptosystems.The secret. This enables any other user to encipher messages asymmetriccryptosystemsencryptanddecrypta that only the user B can decipher. If the user A sends the message using a pair of different keys: one key is public user B the message enciphered using KB, the user B and the other private. They are also called two-way decipher it using Kg' which can not be computed from cryptosystems or public-key cryptosystems. KB.
In the private-key cryptosystems, the number of keys The RSA cryptosystem also implements thedigital increases exponentially as the number of network users signature which enables user authentication(Figure 1(b)). increases since such a private-key is owned only by the If the user A wants to send a signed message to the user two users in communication. In contrast, the public-key B, he/she enciphers the message using his/her private key cryptosystems have the advantage that they solve the KA-1 and enciphers it again using user B's public key KB. problem by making each user's encryption key public The user B makes sure that the message is signed by the and keeping the decryption key private to the owner only. user A after he/she deciphers it with his/her private key In the following subsections, we describe the two widely Kg' and user A's public key KA. used cryptosystems. [MESSAGEJKa ,USER 'USER 1:1[MESSAGE1KB KB' 2.1.1 THE DES CRYPTOSYSTEM (a) PUBLIC-KEY ENCRYPTION AND DECRYPTION. The DES(Data Encryption Standard)is one of the
symmetric cryptosystems[Diffie 76] [Ehrsam 78]. It was IIMESSAGE)KA-11 KB set forward in 1977 by the National Bureau of Standards USER A "USER 13fifmEssacEIKA-' J KB* KB -II * KA in the United States. In the DES system, both the sender and the receiver of communication must know the same (b) RSA BASED DIGITAL SIGNATURE. secret key, whichisused for both encryption and decryption. It enciphers 64-bit blocks of data using a 56- Figure 1. RSA CRYPTOSYSTEM. bit secret key(actually 64 bits including 8 parity bits). Its
755 89 2.2 ELECTRONIC PAYMENT MODELS commerce solution based on the SET protocol.
To design an electronic payment system that meets users' 2.2.2 THE ELECTRONIC CASH PAYMENT requirements well, some features are suggested to be SYSTEMS includedinthesystem. Neuman and Medvinsky proposed security,reliability,scalability,anonymity, Electronic cash provides users with the advantages of acceptability, customer base, flexibility, convertibility, cash: anonymity and micropayment. When we do not efficiency, ease of integration with applications, and ease want to be known what, how much or where we buy, we of use asthe requirementsfor electronic payment can buy goods with cash in the real world. The electronic systems[Neuman 95]. Panurach proposed security, speed, cash provides this anonymity in the electronic world. It is privacy, decentralization, and internationalization also very useful in the case of micropayment. When we [Panurach 96]. Some of these characteristics are more buy a low priced good in the real world, we pay in cash important in some communities, or for certain kind of rather than a credit card since the cost of the credit card transactions, than they are in other communities. payment transaction is too much in comparison to that of the good itself. Thus we pay in electronic cash for a low Various electronic payment systems called credit card priced good in the electronic world. paymentsystems,creditcashpaymentsystems, electroniccash payment systems,electroniccheck Ingeneral,electronic cashissupposed to provide payment systems, electronic wallet payment systems, and reliability, privacy, protecting double spending, so on have been developed. Each of them meets the transferability, and changeability[Park 96]. The reliability above requirements more or less than the others. Some is provided by protecting electronic cash from unwanted credit card payment systems and electronic cash payment copy or forgery. The privacy is guaranteed by making systems are developed commercially already and will be pay information untraceable. The double spending of popularpaymentsystems.Thissectiondescribes electronic cash can be prevented by managing electronic advantages and disadvantages of the two. cash with its serial number. Electronic cash should be able to be transferred from a person to another or be 2.2.1 THE CREDIT CARD PAYMENT SYSTEMS changeable into small ones, as cash is in the real world.
The credit card payment system has a large practicability There are two kinds of electronic cash payment systems. in the electronic world since credit cards are popular One system saves its value in IC cards or electronic payment media in the real world and the credit card wallets and pays off-line. This kind of electronic cash payment system accepts current credit card members. payment systems, for example Mondex Smart card in Users do not have to have extra software or accounts for England[Mondex 97], are wide spread in Europe. The the credit card payment system. However, privacy is not other supports electronic commerce over networks like guaranteed since the credit card information can be internetor PC networks.Electronic cash payment traced. Micropayment - the payment for a good which systems in the United States are usually adapts this way costs little - is not supported, neither. of processing. They are based on the PC with a wallet plug in. CyberCash is one of the examples[CyberCash Visa, Master, GTE, IBM, Microsoft, Netscape, SAIC, 97]: TerisaSystems,andVerisigndeveloped the SET protocol for credit card payment[Master 97][Visa 97]. InKorea,severalassociationsand companiesare The SET protocol is the enterprise standard. It employs planningtodevelopelectroniccashsystems.The thedigitalenvelope cryptosystem which takesthe CCPAK (Computer and Communications Promotion advantage of the speed of the DES cryptosystem and the Association of Korea) organizes working groups for reliability of the RSA cryptosystem. electronic cash and integrates the above two kinds of electroniccashpayment systemstoestablishthe Some companies in Korea have plans to build electronic electronic cash model of Korea. The Bank of Korea is commerce systems which support the SET protocol. A planning to develop the electronic cash payment system SET system planned to be built in Korea by Korea which saves value on a IC card. Korea Telecom proposed Telecom and Master. They will provide an internet the SSNS protocol for secure electronic cash payment. virtual shopping mall based on the SET security in 1998. This protocol will be described in the section 3.2. IBM Korea is also planning to provide an electronic
790 756 OF ELECTRONIC 1. ORDER 3. IMPLEMENTATION INFORMATION, PAYMENT SYSTEMS PAYMENT INSTRUCTION, 4. DELIVERY DELIVERY INFORMATION We have been developing a tele-shopping system called INFORMATION
TeIeSHOP[Paik 96] which supports two secure electronic MERCHANT payment systems: the credit card payment system based CONSUMER PAYMENT on the SET protocol and the electroniccash payment SERVER system based on the SSNS protocol. So the userof 2. VIRTUAL 3. CONFIDENCE OF TeIeSHOP can pay in either credit card or electronic cash PAYMENT VIRTUAL PAYMENT according to his/her preference. We describe the two (P1) payment systems in the following sections.
3.1 THE CREDIT CARD PAYMENT PROTOCOL
Our credit card payment protocol is based on the SET protocol specification. In this protocol, information is encrypted in the digital envelop which integrates the private-keycryptosystem DES andthepublic-key Figure 2. CREDIT CARD PAYMENT SYSTEM. cyptosystem RSA. The RSA cryptosystem is well known as a highly reliable cryptosystem so far, but thehigh 3.2 THE SSNS PROTOCOL encryption/decryption costisits weakness. The cost becomes higher as the length of the target message It is difficult to trace the flow of cash or to forge cash in becomes longer. So the the digital envelope enciphers the the real world. So cash provides complete anonymity and long message by the rapid DES cryptosystem and the protectsdoublespending.Existingelectroniccash short DES key by the RSA cryptosystem. It makes the systems protects double spending by managing electronic digitalenvelopeencrypt/decryptthelong message cash with its serial number, but they do not guarantee rapidly, while it achieves the reliability of the RSA complete anonymity since they withdraw cash and cryptosystem. manage its serial number at the same server. The server knows the user's financial information since it withdraws The credit card payment system is composed as shown in electronic cash from his/her account. It also distinguishes Figure 2. The payment server is an intermediate server. the serial numbers of electronic cash because it manages After the consumer decides to buy something, he/she them. So the server knows which electronic cash was sends OI(Order Information), PI(Payment Instruction) withdrawn by whom. It is also a problem that the serial and DI(Delivery Information) to the payment server. The number is given by the first user in the systems. It payment server acknowledges the OI and requests virtual violates the uniqueness of electronic cash. payment to the VAN server by sending the PI. The VAN server processes the virtual payment and sends virtual We separate the electronic cash withdrawal server of a payment confidence to the payment server. Finally, the bank from the serial number management server so that payment server sends the DI to the merchant so that the electronic cash payment protocol provides complete he/she delivers the ordered goods to the consumer. The anonymity. The bank do not know the serial number of actual payment is done on the prefixed date of the credit electronic cash and the serial number server do not know card payment. who requests the withdrawal of the electronic cash. The protocol is called the SSNS protocol. While the credit card payment isbeing processed, information is encrypted in a separate digital envelope so The SSNS system is composed of a user, a serial number that security is guaranteed. In the process 1 of Figure 2, server, and a bank. The user has an account in the bank the CH is encrypted using the public key of the payment and requests electronic cash withdrawal. After the user server, while the PI and the DI are encrypted using the withdraws electronic cash, he/she pays in it or deposits it public keys of the VAN server and the merchant in his/her account. The serial number server issues serial respectively. These digital envelopes prevent information numbers and manages them to protect double spending of falsification. electronic cash. The bank exchanges money in users' accounts for electronic cash.
7 9 I 757 The SSNS protocol has three phases: withdrawal phase, and gives the new serial number to the electronic cash in payment phase, and deposit phase. We will describe these order to protect double spending. Finally, the receiver three phases in the following subsections. receives the valid electronic cash.
3.2.1 THE WITHDRAWAL PHASE 1. PAYMENT IN ELECTRONIC CASH Figure 3 shows the electronic cash withdrawal phase. USER USER When the user requests electronic cash withdrawal, the (RECEIVER) (PAYER) serial number server creates a new serial number for new 2. REQUEST electronic cash. The serial number server encrypts the VALIDATION new serial number using its public key in order to ELECTRONIC provide anonymity and to protect double spending. Then ELECTRONIC 3. VALID WALLET WALLET ELECTRONIC the encrypted serial number is sent to the bank. The bank CASH withdraws new electronic cash from the user's account SERIAL '8, and gives the serial number to the electronic cash. After NUMBER that,the bank sendsthe acknowledgment of the SERVER withdrawal to the serial number server so that it saves the amount and the serial number of the electronic cash. These saved values are used later for checking validity SERIAL NUMBER DB and double spending.Finally,the bank sendsthe electronic cash to the user. The electronic cash provides Figure 4. ELECTRONIC CASH PAYMENT PHASE. complete anonymity since the bank does not know the serial number which is encrypted using the public key of 3.2.3 THE DEPOSIT PHASE the serial number server and the serial number server does not know the purchase of the electronic cash Electronic cash is expired when the user deposits it in corresponding to the serial number. his/her account. Figure 5 shows the electronic cash deposit phase. When theuser wantstoexchange 4. SERIAL electronic cash for physical cash, he/she requests the 1. REQUEST FOR NUMBER, ELECTRONIC CASH CASH bank to deposit the electronic cash in his/her account. WITHDRWAL AMOUNT Then the bank requests the serial number server to SERIAL validate the electronic cash. After the bank receives the USER SERIAL NUMBER NUMBER acknowledgment of validity from theserial number SERVER DB server,itdeposits the electronic cash in the user's account and sends the acknowledgment of the deposit to ELECTRONIC 2. NEW WALLET SERIAL the user. NUMBE 3. ACKNOWLEDGMENT 1. REQUEST FOR 5. ELECTRONIC ELECTRONIC CASH CASH DEPOSIT 4. DEPOSIT
5. DEPOSIT BANK ACKNOWLEDGMENT Bank USER DB BANK BANK DB
Figure 3. ELECTRONIC CASH WITHDRAWAL 2. REQUEST 3. VALIDITY FOR ACKNOWLEDGMENT PHASE. ELECTRONIC VALIDATION WALLET 3.2.2 THE PAYMENT PHASE htb Figure 4 shows the electronic cash payment phase. The SERIAL SERIAL payer encrypts electronic cash using the receiver's public NUMBER NUMBER key and sends it to the receiver. The receiver asks the SERVER DB serial number server whether the electronic cash is valid or not. The serial number server acknowledges validity Figure 5. ELECTRONIC CASH DEPOSIT PHASE.
792758 4. CONCLUSIONS [Diffie 76] Diffie, W. and Hellman, M., "New Direction in Cryptography," IEEE Trans. Info. Theory. Vol. As the services using telecommunication technologies IT-22, No. 6, pp. 644-654, November 1976. have developed, the demand for electronic security and electronic payment systems have increased. In response [Ehrsam 78] Ehrsam, W. F., Matyas, S. M., Meyer, C. H. to such needs, the electronic payment systemsproviding and Tuchman, W.L.,"A cryptographickey services such as credit card payment, electronic cash management scheme for implementing thedata payment are being developed and being applied for use encryption standard," IBM Syst. J. Vol. 17, No. 2, world wide. pp.106-125, 1978.
We havedevelopedtele-shoppingsystemcalled [Lim 97] Lim, S. Y. and Guen, D. K., "Electronic Te1eSHOP which supports the two secure electronic Commerce Security," Korea Infirmation Science payment options: the credit card payment system based Society Review, Vol. 15, No. 4, pp. 45-52, April on the SET protocol and the electronic cash payment 1997( In Korean ). system based on the SSNS protocol. The enterprise standard protocol SET encrypts/decrypts a message in the [Master97]MasterCardInternational,SET 1.0 digital envelope which provides reliability as well as Officially Launched, http://www.mastercard.com/set, rapidity. The SSNS, a protocol proposed by Korea May 1997. Telecom, provides complete anonymity by separating the serial number management server from the electronic [Mondex 97] Mondex, http://www.mondex.com/mondex. cash withdrawal server. By providing these two payment systems, users can choose the method of payment asthey [Neuman 95] Neuman, B.C. and Medvinsky, G., wish. The credit card payment system accepts current "Requirements forNetwork Payment: The credit card members, while the electronic cash payment NetChequeTM Perspective", Proceedings of IEEE system allows micropayment and anonymity. Compcon'95, San Francisco, March 1995.
Despitethedevelopmentofelectronicpayment [Paik 96] Paik, E. K., Lee, M. W. and Kim, Y. W., technologies, security is not yet fully guaranteed. To "TeIeSHOP: A Multimedia Communication make electronic security and payment systems practical, Shopping System," Multimedia Modeling 96, pp. 53- the laws and regulations related to electronic commerce 68, November 19eun'96. should be established in advance. In fact, such laws and regulations are being established in many countries. For [Panurach 96] Panurach,P., "Money inElectronic example, the United States is trying to establish the Commerce: Digital Cash, Electronic Fund Transfer, official guidelines covering nine broad issues: customer and Ecash," Communications of the ACM, Vol. 39, service,tax,electronic payment system,intellectual No. 6, pp. 45 - 50, June 1996. propertyright,privacy,securityandencryption, communicationinfra,inspection,andtechnology. [Park 96] Park, C. S. and Lee, T. K., "Electronic Money EC(European Community) is planning to announce the Changes the World," Journal of Korea Institute of legislation for electronic money and digital signature. Information Security and Cryptology, Vol. 6, No. 2, Other countries are attempting to establish their own laws pp. 53-70, June 1996( In Korean ). and regulations as well. [Rivest 78] Rivest, R. L, Shamir, A. and Adleman, L. M., In the future, the number of tele-shopping users will be "A method for obtainingdigitalsignatures and increased more and more. Forrester predicts that online public-key cryptosystems", Communications of the direct sales will grow to 4.8 billion dollars in 1998 as a ACM, Vol. 21, pp. 120-126, 1978. result of the dramatically increasing number of online consumers and sellers[Welz 95]. The prediction can [Visa 97] Visa, Electronic Commerce, become true only with highly secure electronic payment. http://www.visa.com/cgi-bin/vee/sf/standard.html, May 1997. REFERENCES [Welz 95] Welz, G., "New Deals," Internet World, pp. [CyberCash 97] CyberCash, http://www.cybercash.com. 36 - 42, June 1995.
759 '(.93 Trust and Electronic Money across Cultures'
Supriya Singh Centre for International Research on Communication and Information Technologies (CIRCIT) Melbourne, Australia ([email protected])
1.ABSTRACT
The new form of Internet money challenges conventional definitions of money, revealing that trust and cultureare central to the nature of money. This paper demonstrates that people are more likely to use a form of payment they trust, particularly in situations where the risk of mistrust is the greatest that is, in depositing money; the payment of largesums; in situations where non-payment is likely to result in loss or penalty; and the use of new forms of money. They perceiveopen networks to be less secure, that is, more prone to theft, fraud and invasion of privacy.
Trust in a particular form of money such as cash, cheques and credit cards is influenced by the historical development of the payments system and by distinctive ritual meanings of cash. The use of Internet money also shapes and is shaped by the boundaries of domestic money. In Anglo-Celtic Australian society, marriage marks the boundary of domestic money. In many Asian societies, it is the family or the household which bounds the domestic financial unit. Hence money is controlled differently and this impacts on the way new forms of money are used.
Factors that engender trust are broader than issues of security. "Hard trust" deals with issues of authenticity, encryption, and security of transactions. "Soft trust" clusters around control, comfort and caring Providers have concentrated on issues of security which have led to an exploration of technological and regulatory solutions. It is when providers focus on providing control, comfort and caring to the customer, that the use of Internet money increases and the customer moves to the center of a profitable business strategy.
These conclusions are primarily based on a qualitative study of 47 people from 23 households in urban and rural Victoria, Australia.
2. INTRODUCTION people for our research on electronic money at CIRCIT2 people continually distinguished between "real money" "What is REAL?" asked the Rabbit one day... such as cash and check and "plastic money" thatcomes "Real isn 't how you are made," said the Skin Horse. from the credit card or EFTPOS (Electronic Funds "It's a thing that happens to you. ...It doesn't happen all Transfer at Point of Sale). at once," said the Skin Horse. "You become. It takes a long time... " Plastic money, and now Internet money- are exciting new forms of money. Transmitting money over the Williams, Margery. (1995 [1922]). The Velveteen Rabbit. Internet is such a far-reaching change in theway we live New York: Fremont & Green Ltd. and communicate, that we are faced with the question: What ismoney? When money istransferred over When dealing with Internet money, like the Velveteen electronic networks, both open and closed, does the Rabbit in the American story, we may well ask, What nature of money change or is it only a transformation in makes money real? Is plastic money real money? Does the form of money? typing in a few numbers on the Internet make money real? What makes people trust money? The conventional definition of money in economics comprises a list of three basic monetary functions, that is These are questions that are central to the use of Internet money is a medium of exchange; it is a store of value and money and the implementation of electronic commerce, a unit of account. What Internet money shows us is that for payments is the last activity to go online. In CIRCIT money is sometimes only a transfer of information. This research on electronic money, When we interviewed information transaction is seen as money only when it
794 760 becomes part of a social network of trust. It is a person's symbols on them. In Malaysia, banks not only distribute the use and perception of money that distinguishes money. traditional red envelopes for the ang-pow but also ensure There is nothing inherent in the plastic card or electronic they have a supply of crisp new notes during Chinese New cash that makes it money. Money transmitted over the Year. In Japan, the preference for clean notes has also Internet only becomes money, when people use it and migrated to the electronic world where some ATMs see it as money. It is trust that makes money real. deodorise and clean the notes before delivering them (Hitachi Ltd. Develops, 1995). This paper is primarily based on qualitative data from 47 open-ended, one-two hour interviews with people in 23 In New Delhi, it is possible now to buy gift envelopes with middle-upper-income, mainly Anglo-Celtic households in a rupee coin stuck on the outside so that the shagan the urban and rural Victoria. The snowball sample was over- ritual presentation for weddings and birthscan be made in representative of people who had PCs and modems, and auspicious denominations, such as Rs. 11, 21, 51 or 101. those who used accounting software. The data were The notes are preferably withdrawn from an ATM, as the analysed using NUD IST (Non-Numerical Unstructured ATM dispenses new notes(Personal communication Data Indexing, Searching and Theorizing), a computer A.M.Chaturvedi,Director,Marketing & Development program for qualitative analysis. Research Associates, New Delhi, 22 September 1997).
3. THE CULTURAL MEANING OF MONEY Amongst the Simunul Bajaus of Sabah, Malaysia, cash is the most appropriate gift from most of the guests at a Trust is inherently bound up in the cultural meanings of wedding or funeral. Gifts of cash are taken into account money and the social context of use. These meanings are when planing the expenditure. This cash is most often also related to the historical developments of the payments presented in envelopes with the giver's name on the outside and banking system in different countries.Much of the for purposes of record. Sometimes, the cash is elaborately understanding of money, however, is based on Western transformed, as with the payment of bride-price. At one experience. As we enter an age where global markets are particularly ostentatious wedding in the late 1970s, the MR possible, and where some of the markets with the greatest 3,000 was arranged in the shape of the National Mosque. At growth potential are in Asia, it becomes imperative to study another wedding, the money was arranged in floral designs how people in different cultures use money. with the red of ten ringgit notes and the green of the fifty Trust is an important focal point, for it links the use of ringgit notes being carefully matched (Singh, 1984). money toa profitable customer relationshipforthe People also use cash, checks and direct debit differently in providers, and to cultural values and meaning for the users. various societies. The Australian middle and upper-income Some of the important questions that need to be addressed Anglo-Celtic respondents preferred cash and EFTPOS to in future cross-cultural study of money are: Do people use money in similar ways across culture?How do the credit cards and checks for grocery shopping. In Australia, the check was very much a residual way of paying for differences relate to historical developments of the banking groceries, used when the retailer did not have EFTPOS and and payments system? What lessons does the cross-cultural cash was difficult to obtain because of the lack of bank study of money have for providers of online services and branches and/or ATMs.It was the rural households who payments? reported regularly using checks to pay for groceries. Credit cards were not preferred because there is a strong Anglo- 3.1 Payments and culture Celtic cultural norm against buying food on credit. The cultural meanings of money are most evident in the way people in different cultures use cash. In Anglo-Celtic The use of the check for grocery payments is different in society in Australia, the United Kingdom and the United the United States where groceries are paid primarily by States, there is a deep rooted opposition between cash and check (37%), followed by debit cards (26%), cash (25%) gifts. Cash is seen as impersonal and tied to the market and and credit cards (12%) (Lipis and Hodgdon, 1996).The thereforeseen to be an unsuitable medium forthe greater use of the check is not confined to grocery payments expression of personal, spontaneous feelings. Cash is only alone. An average of 237 checks were written per head in acceptable, if it is transformed into money orders or gift the United States in 1994, compared to 55 checks per head certificates. in Australia (Mackrell, 1996).
In some Asian societies however, cash in a particular form This comfort with checks is not universal, for checks are is the only expected gift at a particular occasion. This is true acceptable only between known persons in countries such of the ang-pow gift at Chinese New Year for younger as Malaysia and India. In Malaysia, for instance, many of unmarried girls and boys, where crisp, new currency notes the recent payments initiatives have been geared towards gifted in red packets with appropriate characters and
761 making the check a more trustworthy instrument (Singh, In many Asian cultures, it is the family or household unit 1995). rather than marriage, which is the more pertinent boundary Australians' minimal use of direct debit is in strong contrast of domestic money. This is often related to the ideological to the European preference for GIRO payments. The GIRO dominance of the discourse of the family rather than system is a mandate for periodic direct debit payment. marriage. In India, the Hindu Undivided Family is a legal According to Chris de Smet (1996), President, AT&T construct which is officially recognised as a financial unit services, AT&T Europe, Africa and Middle East, Belgium, for tax purposes. This emphasis on the family is in Europe the GIRO system works within the context of a accompanied by the lack of clear and enforceable rights of banking system where there is a stable and long-standing the woman to marital property during marriage, divorce or relationship between customers and their bankers.The widowhood. It is important to recognise that the 'separate check account is central to this relationship.Typically, pot' system of money management is more common in the banks automatically offer two to three times the monthly world than the 'common purse'. This is especially true salary as an overdraft at rates indexed to prime lending where polygamy is prevalent and/or marriages are unstable rates, plus three percent, thus eliminating the need for (Blumberg, 1991: 122). revolving credit. The ideological emphasis on the family supported by a code InEurope,the GIRO paymentalsoyieldsgreater of filial care also encourages a flow of money from children information, in that a statement is issued to the customer to parents. Stivens (1987) describes how the flow of money after each GIRO payment. If there is a problem the money in Negri Sembilan in Malaysia is from single and married goes back to the customer without question.Thus, the children to parents. Parents and older kin reciprocate customer retains greater control over the information and through help with child care. This flow of money and care the transaction. Unlike Australia and the US, in many is supported by the moral code that kin should help each European countries electronic payment processing is the other and by the matrilineal ideology making for female norm.The problem forproviders is in harmonising solidarity. This notion of kin helping each other is also national GIRO systems with regional networks, rather than promoted by the state as being a virtue of the Asian family, seeking a behaviour change among their customers. while filling the gap left by a rudimentary welfare system.
3.2 Domestic Money and Culture Money in many cultures is also not necessarily private to a married couple. Ram's (1991) study of the Mukuvvar Some of the most distinctive cultural differences lie in the women in a fishing community in South India describes boundaries of domestic money (Singh,1997). These how information about loans and debts is shared among the cultural differences need to be taken into account when women's close relatives. This was because the network of assessing the use and impact of Internet money for they credit cemented kinship and neighbourhood ties. relate to the way money is managed and controlled in the 4. home. TRUST AND THE USE OF ELECTRONIC MONEY In middle-income Anglo-Celtic society, the marital unit is People are more likely to use a form of payment they trust. the primary domestic financial unit. Marriage money, that is Trust, however, does not ensure use. A person may trust money in marriage is the most important kind of domestic cash and checks but may not pay everything by cash or money. Its boundaries are marked most visibly by the checks. marital joint account andjoint marital home ownership. Roughly three-fourths of married couples in Australia have It takes a long time to engender trust in a new form of a joint account. There is little flow of money outside the money.Australians are known to adopt new technologies marital unit to grown up children or parents. This pattern easily. However, Reserve Bank of Australia data show that exists within the safety net of the old age pension, which in 1995 ensures a minimum survival income. Parents also take pride in their ability to manage on their own, without In 1995 payment by credit and debit cards comprised having to call on their children for financial help. only 0.2 percent of cashless transactions in value, and 25.8 percent by volume. ATM transactions are The boundaries of marriage money in middle-income not included as they are not payment transactions Anglo-Celtic Australia are also marked by an intense (Unpublished datafrom theReserve Bank of privacy about domestic money. There is little discussion of Australia, 1997). money between parents and adult children, and even less between siblings and friends. It is as if the privacy of money o Cash remains the most convenient and popular form draws a circle around the couple. of payment for everyday, low-value transactions and r99 762 could possibly account for as much as 90 percent of payments such as ATMs, EFTPOS and credit cards, is that thesetransactions(Australian Payments System previous electronic payments went over closed systems Council, 1995). rather than the open and public networks.3 People speak of the risk of theft or fraud as almost wholly to do with the risk The check is the most popular form of non-cash that hackers will access one's credit card numbers on open payment in Australia. In 1995, its volume (38 percent) networks. The Internet features more often than the phone exceeded that of credit cards (10 percent), EFTPOS (13 and the fax, as on the Internet "anybody" can have access to percent), ATM (17 percent), direct entry credit (18 data or money. percent) and direct entry debit (4 percent) (Mackrell 1996). It is important to stress that peopleinterviewed were talking about their perception of security rather than a Although high-value electronic funds transfer is now technical evaluation of security. Consumer trust in the for the first time higher in value (63 percent) than security ofa system is often built on ignorance of the checks (35 percent), checks continue to dominate over potential of fraud or level of actual fraud. The value of retail low valueelectronicfunds transfer which consumer ignorance is appreciated by financial institutions remained unchanged between 1991 and 1995 at 2 and credit card companies. These organisations bear the percent (Mackrell 1996). loss of credit card fraud in silence, preferring it to disclosure and the ensuing lack of trust in the system.This is not Australia ranked seventh in the number of inhabitants possible over the Internet, where the activities of hackers per ATM and EFTPOS outlet in 1995, amongthe 12 and cases of fraud are broadcast over the Net and soon major developed countries monitored by the Bank for make the news in other media. International Payments (Commonwealth of Australia, Concerns of security spill over into concerns for privacy. 1997).However,around 45 percent of Australian consumers havenever usedEFTPOS, and Privacy is spoken of in terms of harassment, surveillance, approximately 35 percent have never used an ATM tampering/destruction of data and fraud. The possibility of (Asher, 1997) . accessing credit card numbers is seen as an invasion of privacy and a breakdown in security. What is noticeable is that the privacy fears were expressed in response to direct 4. 1 Defining Trust questionsfromtheinterviewer,ratherthanraised Though trust is at the very center of the definition and use spontaneously. Consumers' concerns about privacy were of money, trust is difficult to define because it is nebulous prompted byaknowledge of thepossibilitiesof and all pervading. People speak of trust in terms of comfort, technologies yielding more transaction generated certainty, being more confident and in control, faith and information leading to companies and the government reliability. They also speak of trust in terms of security and putting together details about one's personal life. related aspects such as fraud, theft and privacy. Nobody talked of trusting or not trusting the traditional People speak of trust and money most clearly when they physical forms of money, such as cash or check over the are speaking of a lack of trust.They speak of trust in counter, other than to contrast them with electronic forms of relation to payments particularly in contexts where the risk money. Cash and checks are taken for granted and haVe a of loss is greatest and where the information is less easily measure of comfort and experience behind them in modem available, ie. in depositing rather than withdrawing; paying Anglo-Celtic society in Australia. large sums as against small sums; in situations where non- payment is going to result in loss or penalty; paying with 5. ENGENDERING TRUST new forms of electronic money; and payment over open rather than closed networks. An important question for providersis: How istrust Although many people in Australia trust the ATM enough engenderedinelectronicmoneyandtheonline to withdraw money, only one or two percent of deposits are environment?In answering this question, it is useful to made through ATMs. In the United States, even with the distinguish betweentrustand securityand between new generation ATMs, the figure is said to be five percent interpersonal trust and system trust. (Allard, 1996). Trust encompasses issues wider than security. The The risk of loss appears greater as payments move from discussion of the Aspen Forum on Electronic Commerce is traditional forms to new forms, and from closed networks to helpfulindistinguishing between security andtrust, open networks. The differencebetween electronic particularly inrelation to electronic commerce. David commerce over theInternet and previouselectronic Bollier reporting on the discussion, notes:
763 797 It may be conceptually useful to Electronic money does not offer the comfort of the physical distinguish between issues of "hard payments instrument and theface-to-facetransaction. Neither doe's it have as long a history of use and familiarity. trust," which involveauthenticity, Trust, however, may be built on specific qualities of the encryption, and security in environmentsuchas speed, instantaneous transactions,andissuesof "soft online information,and human communication,personalisationof trust," which involve As Samarajiva says, one of the psychology, brand loyalty, and user- tracking procedures. friendliness... It is important to see challenges of engendering trust in online money is to "make the proper links between interpersonal trust, that most that the problems of engendering trust are not simply technical in nature.... people can relate to easily... and system trust" (Personal Trust isalso a matter of making Communication, 14 March 1997). psychological, sociological, and institutional adjustments (1996, p 21). 5.1 Control
Interview data and the literature on trust show the criteria Information is the key factor for the use and control of that engender "soft trust" in physical and electronic forms money. As with trust, people speak most vividly of control of money, fall into three clusters, control, comfort, and when they experience a lack of control. Our data show the caring. The difference between control, comfort, and caring customer feels in control of money when there is: is conceptual. In practice, the distinctions between them are hazy.In all three clusters, the quality of information is o A physical payments instrument and/or record of central.Providersof services have seentransaction payment; information generated and stored by online systems as a valuable keytopredicting consumer behaviour and o A clear identification of the person at the other end determining marketing strategies. Users of electronic of the transaction; money are more interested in how they can use online systems to have greater control and comfort with the flow o An ability to track and substantiate a transaction; and management of their own money. Information to help manage and control the flow of In order to understand how trust is engendered in electronic money; and money, it is also important to note the difference between interpersonal trust and system trust. The difference between The option to determine his or her desired level of interpersonal trust and system trust is like the difference privacy. between trusting your spouse with money in marriage and having trust and confidence in the payments system. With There is a deep rooted sense of money as something interpersonal trust, there is trust in a person, whereas trust in tangible and physical. Cash remains the reference point for money in the market context istrust in a symbolic the way people talk about money. It is common for people representation of exchange value. to say they have no money when they mean they have no cash.The metaphor of money as something physical is System trust needs to be further distinguished as trust in repeated in phrases such as "heaps of money", "handling" physical systems and trust in online systems. With money, of "actual money in hand", not "touching" savings electronic money, we are dealing with interactive online (Singh, 1997). systems. However, much of the discussion in the literature around trust deals with building trust in a physical, Not only is physical money seen to be more "real" and interpersonal environment. As Samarajiva (in press) notes, tangible but the information about physical forms of money "Little is known about how to create a trust-conducive is more controlled by the customer. The paper receipt is environment based on interactive media systems" (p 11). proof of having paid, and this proof is with the customer rather than dependent on the reliability of computer records, In both interpersonal and system trust,at some level, trust or archived within a corporation's system. The lack of a means an absence of questions and a willingness to accept paper trail is seen as one of the greatest disadvantages of certain things on faith.Regulators of the payments and direct debit in Australia. banking systems aim to create a system that is stable and secure, so that there is no question as to whether or not The personal transaction involves immediate verification. people trust a bank or a currency. When questions arise Much of the comfort with personal transaction modes such about the safety of money in a bank or about the value of a as the branch, the post-office, lies in the customer being particular currency, trust has already been shaken. able to identify that a particular person or a representative
?-1 764 of an organisation, received the payment. The ATM is not of fmancial institutions and the monitoring of the payments trusted for depositing money because there is no immediate, system. Itisso well established that thereislittle personal verification of the transaction. discussion of it by consumers when talking of their payments choices. The popularity of the post office in paying for bills also has its root in the personal element of the over-the-counter At the providers' level, there are initiatives such as the transaction. Australia Post claims to be Australia's "biggest eTrust programme which attempt to set up a logo system of over-the-counter electronic bill paying and agency banking "Trustmarks"that would assureconsumersthatthe service, handling more than 150 million transactionseach providers are following acceptable privacy guidelines (The year" (Australian Payments System Council, 1996). eTrust story, 1996). Visa and Mastercard have established agreed standards for secure electronic transactions. The Comfort setting up of certification authorities to ensure cryptography 5.2 and digital signatures is also an essential part of the warranting exercise. Comfort and reassurance about future outcomes strengthens between trust and is at the center of the relationship The discussions around liability and dispute resolution fmd customers and providers. The consumerfeels comfortable a more immediate resonance in consumer concerns.In and about the future when there is routine, familiarity Australia, liability of credit cards over the Internet remains previous experience; reputation and predicability; trusted a grey area. and has not been tested in the courts asyet. facilitators; a capping of liability; and/or certificationand The issue is one which is being considered by various The qualitative data show that warranting structures. government bodies.It is interesting to note that the five residential customers feel comfortable with formsof money people in our sample who had paid by credit or debit card when some of the following conditions are fulfilled: on the Internet believed that theirliability was capped at $A50 in accordance with the Electronic Funds Transfer They have previously had a positive experience using a Code or their credit card guidelines. form of money; 5.3 Caring and Communication They know of the service provider and/or the person or firm receiving the payments; A constant threadintheliterature on trustisthat certification and technical expertise is often not enough to A new form of money has been introduced to themby ensure trustworthiness. Trust is strengthenedif the customer trusted facilitators in a safe environment; feels that the provider of goods and services not only cares for his or her business at the point of transaction, but The risk of loss is minimised, capped and known; continues to support the customer with care and service Warranting structures are in place to vouch for the after the sale. quality of the goods and services. The importance of benevolence, intimacy and communication in engendering trust was articulated by the It is because of these factors that the traditional forms of respondents, particularly when itwas marked by its check over the counter - money - that is paying by cash or absence, as with Australian banks. elicit so little mistrust.The older forms of electronic money, such as credit cards, the ATMsand EFTPOS also PROVIDERS' STRATEGY FOR TRUST have had one to two decades to establish familiarity and 6. comfort. There is no doubt about the importance of trust in business A bad experience with any form of money will jeopardise a relationships. Trustisthe non-contractual element of person's trust in its future use.The person may become contract. Itis an important component of exchange wary of or may totally avoid theparticular form of money. transactions.4 Trust reduces transaction costs (The eTrust story, 1996; Fukuyama 1995). Trust can take a long time to build and may need a variety of "warranting structures" to vouch for thereliability of Trust is at the center of relationship marketing, where the payments mechanisms.There was little in the interview emphasis is on establishing, relationships. maintaining and data about warranting structures, partly because there are enhancing relationships with customers so that the service presently few such mechanisms in place for electronic providers can achieve a profit and the customers receive presents money.Trust in the older payments instruments and value(Gronroos,1996). Reichheld (1993) transaction modes is closely linked to trust in the regulation convincing evidence that companies that are based on
765 loyalty increase their profits through customers' repeat o Have I given control of information and the transaction purchases and referrals, decreasing transaction costs and to the customer? costs of acquiring customers, and increased employee retention - which further increases customer loyalty and o Have I increased the customer's feeling of comfort decreases staff hiring and training costs. with the transaction?
Trust ininterpersonal and businessrelationsisalso o Have I shown the customer I care? strengthened by indications of commitment to the same goals. Handy (1995) who discusses trust in a virtual The weight placed on each question will change according organisation, argues that this kind of bonding is manifest in to the activities, kinds of transactions and the social and some companies' mission statements, campaigns for total cultural context. quality or excellence, and personal example by leaders. Employees can be thought of as members of a large family 6.2 A StrategyEmphasizingaProfitable business, each of whom has clear responsibilities and Customer Relationship expected outcomes but for whom thereis a sense of belonging and collective pride. An emphasis on trust means a larger cultural change for providers, for engendering trust goes beyond a check list of It is Fukuyama's (1995) thesis, that trust is important not solutions. As Reichheld (1993) says, "Building a highly only for individual business relationships, but trust is central loyal customer base cannot be done as an add-on. It must be to the creation of large commercial organisations countries integral to a company's basic business strategy" (p 64). where people have a high degree of trust in groups and The strategy places the customer at the center, aiming for a networks beyond their family. profitable customer relationship rather than concentrating solely on the cost of single transactions.It moves from 6.1 Providers have Focused on Security rather transaction marketing to relationship marketing (Gronroos, than Trust 1996). A customer focused strategy is particularly necessary for Providers of electronic money and commerce acknowledge providers of electronic commerce as the customer can the value of trust and consumer confidence.They have access increasingly customised goods and services from a however concentrated on issues of security rather than trust, multiplicity of suppliers across traditional market and on "hard trust" rather than "soft trust".5 This preoccupation cultural boundaries. This customer centered strategy is also withsecurityissueshasledtoanexplorationof essential because using only the providers' perspective has technological and regulatory solutions - the importance of failed to predict customers' use of forms of money. different encryption systems; the investigation of private and public keys; digital signatures; ways of combating The most glaring failure has been the prediction that fraud, counterfeit and money laundering; checking the electronic payments would become the dominant payments invasion of privacy; issues of international law and liability; mechanisms. Data from the United States show that in the and thecreationof authenticationandcertification past 20 years, check transaction volume has increased more structures. than all electronic services combined (Lipis, 1997). These data are in tandem with that presented by Daruvala and The emphasis on securityispartlyfuelled by the Stephenson (1996) who show that in 1995 electronic assumption that people would buy more goods and services payments -ie. credit and debit cards, direct entry and online if electronic payments were more secure. However EFTPOS - comprised only three percent of the number of many of thesecurity concerns are being driven by payments transactions and 23 percent in terms of value. providers' need for security. Adopting a customer centered strategy goes beyond adding A complementary emphasis on the broader issues of use another check list of questions to consider.It involves a and "soft trust" leads providers of electronic money and cultural change and learning a different language which commerce to also ask: focuses on the use rather than the provision of online services.Many of the metaphors used by providers of What can I do to increase access? electronic money and electronic commerce are from engineering and economics. Hence the talk of "tool kits", Does the payments transactionofferinformation "drivers", "applications" on the one hand and emphasis of appropriate to the activity and cultural meaning? "demand", "price", "determinants" and "take-up" on the other. Providers who are used to speaking in terms of the
()ex, u'u 0 766 "roll-out" of technologies,are telling a story where technology provides the solutions to modern problems. No. 42. Melbourne: Centre for International Research on Communication and Information Technologies; and Singh, Thelanguageused whenstartingfromtheusers' S. (1997). Marriage money: The social shaping of money in perspectiveisdrawn more fromanthropologyand marriage and banking. Sydney: Allen & Unwin. sociology. The discussions center on the process of "constructing meaning" the "mix and match" and the "fit" 3 'Open' or 'public' networks such as the public switched of technologies and applications to the way people conduct and mobile telephone networks, exhibit 'any-to any- a range of activities. connectivity. Parties utilising these networks for business (or private) purposes are generally not well identified, or These metaphors dictate business strategy and influence the known in advance to one another. Therefore trust, kind of data collected. As cash transactions are difficult to security and confidentiality are far less predictable or measure, most often these transactions are missing from controllable. `Closed' systems or networks, such as provider dominated descriptions of payments systems. ATMs and EFTPOS, have always been carried over Since purchase is easier to measure than access and usage, telecommunications systems which service only the the emphasis is on purchase. business parties involved (Vaughan, Sewards and Kelso, 1997). Rohan Samarajiva clarifies the distinction further With an emphasis on technology and measurement, comes saying that there is a distinct difference in perception. It a way of seeing the world where the relationship between must be noted however that technically, some portions of different factors is linear and is depicted by value chains, "closed systems" traverse open or public networks. These rather than by understanding a multidimensional process, technical separations can be pierced with consequent wherebycustomers mix and match new andold security implications (Personal communication, 14 March technologies tofit with their activities and social and 1997). cultural frameworks. 4 See Arrow 1975; Granovetter 1985, Semmes 1991; Sterling 1995; An important aspect of the change in metaphors is the 5 An Internet search for "security" and for "trust" and recognition of the interrelatedness of the economy, social relations and cultural values. Using different forms of itssynonyms "confidence","reliability","faith", "safety" in of money is not just a matter of cost and convenience.It is and "comfort" the broad areas "electronic commerce", "smart card", "e-cash" and ensuring that money with the appropriate cultural meanings "digital cash" on 20 February 1997 showed that the is used for various activities.Electronic forms of money emphasis on security far outweighed that on trust. For are not only changing the nature and cost of distribution instance, an Altavista search of electronic commerce networks, they are also changing the way people access, 80,000hits. manage and control money at home and at work. brought up Of these,5,000 had "electronic commerce near security" with only 162 coming up for "electronic commerce near trust". Of the 821 articles dealing with electronic commerce in the ABI Inform business catalogue, September 1995 to August 1996, 184 mentioned "security" and only eight mentioned "trust". NOTES
II would like to acknowledge the valuable help of Claudia Slegers of CIRCIT in helping with the coding REFERENCES and analysis of the qualitative data. She coauthored an Allard, T. (1996, 11 May). We're withdrawnon ATM earlier paper on Trust and Electronic Money on which deposits. The Sydney Morning Herald,p. 3. part of this paper is based. The earlier paper was greatly Arrow, K. (1974). The Limits of Organization. New York improved as a result of the comments of David Bollier, and London: W.W. Norton and Co. John Burke, Mari Davis, A. Lee Gilbert, Remi Guibert, Asher, A. (1997, 21 April). A more competitive national JohnC.BLeGates,EvelynRichardson,Rohan market? The ACCC view. Paper presentedat the Samarajiva and Peter White. conference Competing in local and international banking markets: The post-Wallis outlook, The 2See Singh, S. (1996). The use of electronic money in the Regent Hotel, Sydney. home. Policy Research Paper No. 41. Melbourne: Centre Australian Payments System Council.(1995). Annual forInternationalResearchonCommunicationand Report 1994/95. Sydney. Information Technologies;Singh, S and Slegers, C.. Australian Payments System Council. (1996, 16 February). (1997). Trust and electronic money. Policy Research Paper Giropost information paper. Paper tabled at the
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A local government IT masterplan sets out a viable strategic direction for the use ofinformation technology (I.T.) to support local government operations, align the use of I.T. to that of the nation,and build the organizational capacity necessary to take maximum advantage of the rapid emergenceof more advanced tools in the future. Its purpose is to guide the deployment of I.T. as a tool to transformlocal government operations, in three domains: 1. Within and among the various agencies of the local government 2. Among these agencies and organizations in the private sector 3. Among these agencies and members of the general public This paper, based on research conducted for a local government located in a geographically remote areain Southeast Asia, lays out a basic structure, process, and content for such a plan. It isintended to serve as a template for use by other jurisdictions in a similar context. Introduction Like any tool,a planning process must fitits and by the rapid diffusion of these technologies to context. This includes geographic, political, social the general public: andeconomicenvironment,theorganizational Figured: scale, scope, culture, policies, structure, and its Summing up Electronic Government core technology,and accessto IT and other resources. The scope for IT planning includes Technological ,Organizational selecting computing and communications hardware Performance Vision Performance. Vision and software, structuring and staffing IT service Reliability Service Linkages delivery, specifying IT-based applications and data Security Legal Framework resources serving the host agency, and the designof Speed Collaboration products or services based on information delivered Access Manpower via its IT infrastructure. Reliability: The information infrastructure, data, applications, and operational arrangements must be The case site is a state government in Malaysia. reliable and accurate. This specific context is uniquely interesting because Security: The government must be able to guarantee of its remoteness, relatively small population, strong that confidential data held in the system by internal interest in IT-based solutions among government and external users performing transactions is fully protected. leaders, and emerging national policies that will Speed- the network and hubs must be sufficiently support and enhance local efforts. powerful to support the required number of transactions, and links to other hubs must also be The Vision efficient. Access- Electronic government infrastructure must The plan is informed by its policy vision, to achieve provide connectivity that will support an "anytime, administrative renewal and bring the Government anywhere" service delivery model, with multiple itscitizens through a fully electronic ("anyhow") access modes to ensure that citizens on the closer to periphery have equal access to those nearer the centre. government by the year 2002. This"electronic Service Linkages- as many transactions and government" model expressed bylocalleaders interactions involve multiple parties, the system must revealsthedesiredfeaturesofradicallynew provide links to other services needed for direct processes, enabled by deploying new capabilities payment. For example, utility payments involve banks, which must be included for completeness. resultingfromthecontinuingconvergenceof Legal and Procedural Framework- local legislation, computing and telecommunicationstechnologies, administrative regulations, and procedures to align IT use with the realities of governance and service 769 603 delivery in a new technological context. The local economic structure. Migration from farm to factory framework must be harmonized with changes and immigration from abroad created a new labor emanating from national initiatives, and with the force to drive economic growth and position the US as international legal order emerging from the rapid a new world power. diffusion of electronic commerce. Collaboration: Electronic government is not viable in Similarly,the technological innovations outlined isolation. To succeed, the local agency must establish above will inevitably lead to: solid links with the MSC, Singapore, and technology suppliers. 1. Exponential growth in content as access to Manpower: Across local agencies and within the the medium expands private sector, specific skills will be required to design, 2. A new global and local industry structure, implement, and operate the infrastructure and as the business model evolves and weaker applications needed to realize the electronic players exit. government vision. Links to National Policy The Strategic Direction The Malaysian government embarked on a policy to bring its people into the ranks of the developed Strategic IT directionisexpressed through the pragmatic and concrete acquisition and deployment world by the year 2020, less than a quarter-century of resources that will support the vision expressed from now. Within this broad initiative, it recently by leaders. These decisions and actions emerge formulated plans for a Multimedia Super Corridor from an analysis of the vision in the context of an (MSC), to support the Prime Minister's vision of an intensive environmental scan (to identify external Information-Rich Society. This will demand not opportunities and threats resulting from changes in only development and effective use of IT, but an citizensto the environment) and a realistic internal scrutiny (to acculturationprocessthatenables identify potential strengths and weaknesses). participate meaningfully in this transformation to a knowledge-based society. Shifting Environmental Forces "Information-Rich Society: "one which thrives The environmental scan diagnoses the impact of and grows in all its activities through the ready structural forces on the future of the organization '. and dynamic utilization of information, brought For local government, the significant environmental about by its active appreciation, acquisition, assimilation, application, and transmission." forces stem from shifts in the global economy, Malaysian Prime Minister introductionofnewtechnologyandrapid Dr. Mahathir bin Mohamad development of the nation and of its people. Current technological trends include: The resource elements of the IT 2020 vision include 1.The adoption of cross-platform browsers and platform-independent languages as buildingthenationalcapacitytoproduce and common interfaces, manage ITresources, developing sufficient 2.The emergence of low cost digital manpower with the right skills and knowledge to appliances" for network access, which will put these resources to use, developing be widely used in homes. telecommunications and data services infrastructure 3.Rapid increases in bandwidth from heavy investments in networks, combined with and industries to provide connectivity at the national improved efficiency through data and international levels, continuing development of compression and other technological the local computer industry, and especially of the advances. small and medium scale support industries on which 4.Improved data management tools, such as data warehousing. the computer and telecommunications industries History shows that new technology leads to change depend. in other domains. The Multimedia Super Corridor (MSC) project Technology's Social and Industrial Impact involvesattractingandnurturingaclusterof After Alexander Graham Bell invented the telephone enterprisestopeninsularMalaysia,whichwill in 1876, factories could be linked to markets. Three develop several flagship applications which embody years later, Thomas Edison invented theelectric light, and factories could extend their hours. As the railroads its diverse thrusts, including: Telemedicine, Smart spread, these inventions soon altered the American Schools,Multimedia Funds Haven, Multimedia 770 804 Research and DevelopmentCluster,Electronic "Third Wave," model that, as the Tofflers suggest, Government, Worldwide Manufacturing Web, and departs from Industrial Age models. In their view, Border less Marketing Centre. customization is replacing standardization; While all these application areas are relevant, the complexity with its holistic view is replacing the MSC Electronic Government element is a strategic specialization practice of breaking down tasks into opportunity to link local government efforts to the componentparts; just-in-time production is larger and technically deeper MSC initiative.Its replacing synchronization; flat organization charts main thrusts are to: are replacing hierarchy; decentralization is replacingcentralization.IT is theenabling Offer,efficient, high-quality technology for all these strategic shifts. administrative services to citizens and businesses, Today's government institutions were designed to Streamline internal government support an industrialized society. The challenge processes to improve service quality today is the transition from an industrialized model and reduCe costs, of government centralized,hierarchical,and Strengthen data securitywhile operating in a physical economy -- to a new model protecting privacy,and of governance,adaptivetoavirtual,global, Strengthen democracy2. knowledge-based, digital economy, and to fundamental shifts in social structure. An MSC Implementation Task Force, guided by a "The government we see in the US today has a fully empowered Steering Committee, will oversee particular decomposition at the federal, agency and the fast-track development of four or five strategic department level that was based upon "mini-flagship"applications,suchas on-line understandings of what problems looked like one servicesfor citizens and businesses, EDI-based hundred years ago. Those structures were designed public procurement, and multipurpose smart-cards to absorb complexity and make things governable. tofacilitate access to government services. The They don't matter in the same ways that they did; success of this initiative is seen by its sponsors to andexplainwhythereissuchacallfor depend on strong and continuous leadership across reengineering.Theseolderstructuresarenot ministries,jointpublicandprivatefunding, working in the US or in a lot of other places we extensiveinvestmentsintrainingandchange explored. The world is very different now. 4" management, andawillingnesstore-engineer government processes where necessary 3. Strategic Analysis By the year 2000, the government expects specific The key policy objectives are to improve public ministries (including the Prime Minister's Office) to service levels and to create an environment that operate fully electronically, mainly through the use attracts investment, which would then create new of advanced Intranet technology.Thisrequires and better jobs for residents and generate wealth. formulating and enacting new legislation to protect The viability factors include [1] rapid introduction security and privacy, and establishing government- of relevant new technologies, [2] the availability of wide standardsenablingcross-ministryuseof specific skills and interests in using this technology, selected mission-critical infrastructure components [3] the recent emergence of a small but active local and databases. marketfortechnology(whichsupportslocal The Strategic Role of Culture vendors and attracts overseas technology sources), and [4] the potential availability of a vast amount of What governments do forms the context for what IT useful content. can do for government. Electronic government is not about being more efficient, or using exciting Strengths new technologies or even moving existing systems Over the near term, the primary strengths are [1] from a national to a local level. It's about defining leadership who strongly support the strategic goals government functions first and then building new ofadministrativerenewalandbringingthe systems around them to support a truly distributed government closer to its citizens; [2] access to the 771 UU3 necessary financial resources; and [3] key "islands "The Net changes the way we distribute information in a fundamental way that-makes it highly participatory. of competence" in various disciplines (such as One of the characteristics that's so important is that current knowledge of institutionalsystems and distribution costs fall almost to zero. For example, I recent local initiatives in electronic publishing) that put up the Center for Democracy. and Technology web site and for a very low cost was in communication with will be critical to successful deployment of the new potentially 40 million people out on the web. I didn't media. have to get a story in the Washington; Post about the new organization. I could go directly to that Weaknesses constituency." 5 These are:[1]an inadequate public and local Threats government telecommunications network Most threats to the proposed strategy are internal in infrastructure; [2] information technology nature, and are linked to the extent to which early architecture too weak to enable the necessary level systems producevisiblebenefits. of connectivity and data sharing; [3] a lack of data The primary hazardsincludealackofsoundtechnology administration,[4]scarcity of skilled manpower management, poor top management support leading resources, both technical and managerial, needed to build, operate, and manage a state-of-the-art IT to inadequate funding, poor security leading to low public confidence, and lapses in service quality infrastructure andtheelectronicallyenabled management. business processes that will enable direct delivery of government services, and [5] verylittle service quality management experience. Functional Strategies and Actions 1BALANCE technology, Strategic Opportunities organization, resources Sharing Data and knowledge 2.UTILIZE. Local government net Coordinated; agency efforts as basis for strategic linkages Motivated workforce 3. INVEST in IT manpower: Well-informed public technical & managerial Responsive, high-quality service. 4.LEVERAGE available Successful local firms resources, public & private Willing overseas investors .:.5.DEPLOY a broad range of IT- based solutions, adapt service Online Publishing & Broadcasting processes to maximize benefit Television,printandradiosharethebasic 6. STRUCTURE supply to meet characteristics of broadcast media. Messages are demand, create demandto,use one-way, distributedindiscriminatelytoa wide supply of IT resources audience. In contrast, the Internet is a two-way communication medium. And, the "audience" is an These six "BUILDS" strategies represent the major individual user either searching out sources directly initiatives for action. However, harmony follows for specific information orengaging with only when eachindividualaction programme communities of common interest.Whereas the conforms to all six initiatives. These are discussed broadcast media is highly regulatedwith below: gatekeepers, on the Internet, anyone can be a publisher or broadcaster. The broadcast media acts 1. BALANCE technology, organization, as a filter, choosing what material will be broadcast investments within regulatory boundaries. On the Internet, a legacy systems web site provides a direct two-way link toits new media particular constituency, whether it's stamp computing collecting or retail sales from a "mom and pop" communications boutique. content Thecurrentsituation is imbalanced:while computing resources are in place,thereisno X06 772 integrated network, nor adequate tools and policies will create large subcultures which work at the forinformationdissemination.Similarly,even creation of an advanced infrastructure with such though computing is managed on both a central and energy that their enthusiasm spreads to their fellow decentralizedbasis, its management is not citizens." (Wriston 1992) integrated. Most seriously, content is not managed as a public resource. 4. LEVERAGE available resources: While the "new media" is much in the news these public and private days,it simply does not have the capability to Internal perform manyofthe"back-room"functions Local Vendors necessary to operate an agency. Thus, boththe Overseas IT suppliers institutionalandnewmediaapproachesare National Telecoms Operators necessary. However, as the underlying economic Regional Universities & Schools and management models are highly divergent, the Service Industries question becomes how to integrate them. Around 1980, Singapore shifted to a skill-based economic strategy designed to attract investment 2. UTILIZE the network as the basis for from higher value-added industries. At this point strategic linkages: there were less than one thousand IT workers in the entire country, and this shortage received immediate Within local.agencies ofoverseas .Within the nation attentionthroughacombination education, local training, and immigration. Local Within ASEAN government must invest both in developingits The Multimedia Super Corridor (MSC) project young, and in retraining the current work force. involvesattractingandnurturingaclusterof enterprisestopeninsularMalaysia,which will 4. DEPLOY a broad range of IT-based develop severalflagshipapplications,including: solutions & adapt processes Telemedicine, Smart Schools, Multimedia Funds Integrating the new media is largely a function of Haven, Multimedia Research and Development architecture,andvirtuallyeveryinformation Cluster, Electronic Government, Worldwide technology has a potential role in the plan. Manufacturing Web, and BorderlessMarketing Point-of-Sale (POS) technology is an example of a Centre. These will be useful to local government. solution that may transfer from the private sector into local government operations. Retail operations 3. INVEST in IT manpower TECHNICAL & use intelligent cash registers equipped with simple MANAGERIAL bar-code readers to scan in products as they are Overseas education in emerging sold, and compare the product code to a price list to technologies '& IT management calculate the amount due, then send a message to Seminars to inform and motivate the inform headquarters of the total collections, which general public can be compared to bank deposits. The Treasury Workshops for management function in Government could adopt both the hard Training for empowered end-users technology and the"soft"management control Social intelligence originates not in tools, but in a systems from the private sector. community's abilitytosense and interpret the environment, learn quickly about opportunities and 5. STRUCTURE supply: demand threats, and use the knowledge to adapt and modify relationships over time itself and the environment. Intelligent communities must therefore be able to "maintain and improve ESTABLISH 4 Strategic Data Hubs standards in the learning of basic communication Financial Management and numerate skills by children,their business People corporations will be committed to the intellectual Enterprises development of their employees and, above all, they Natural Resources
773 Public sector data resources around four main hubs: Implementation Issues finance, people, enterprise, and natural resources. Given the current situation, the issue is how to Financial- Effective management of a government move forward withoutriskingfailure,wasting budget and cash flow requires an understanding of scarce resources, or losing valuable time waiting to interactions among various internal and external see how things turn out. The answer isto put factors, and to make adjustments in spending and systems in place in such a way as to achieve other plans in real time. An online financial model, harmony among the different elements and opposing linked to external databases and internal financial forces. For example, data sharing represents the and treasury systems, would serve such a purpose. harmonious use of resources. Sharing data results People- While itspeople are the heart of any not only in economy, but also in more accurate government; many critical interactions (especially data,as more people will be exposed tothe database, and each will bring a slightly different health, education, and public safety)liein the perspective. Similarly, coordinating the efforts of domain of theFederal government.Forlocal agencies not only improves efficiency, but service government, manpower development is the focus. quality. Enterprises- If business is the vehicle to carry the Government economy forward,then enterprises The six strategies listed above represent the major (and especially those that are now small to medium initiatives for action. As harmony can follow only size) represent its engine. Government could use IT when each individual action programme conforms to nurture local enterprise, help them establish links to all six initiatives, each of the action programs with overseas suppliers and clients, and as a source listed below should be interpreted in the context of the entire set of six "BUILDS" initiatives. of specialized services and skills. Natural Resource- Local government's geographic diversityis an obvious example of a strategic The "BUILDS" Action Plan resource, and the Government has a long history of The vision is to achieve administrative renewal and bring the Government closer to its citizens through attemptingto improveitsprocess management a fully electronic government by the year 2002. through the use of geographic information. Fueled "BUILDS" can be deployed in four discrete stages, bycheaper,fasterhardware,improvedand increasingly cheaper GIS software, and a broad eachof which provideimmediatevalueand prepares the way for the next. range of potential applications, network-based GIS offers large benefits at low marginal costs once initial geocoding is in place. Figure 1: Stages in "BUILDS" Deployment STAGE I STAGE II STAGE III STAGE IV Folly Eiectcronic Government
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As thefigureaboveindicates,each stage the strategic vision, and toward managing the requires advances, both in the completeness of complexity of its underlying technology. 774 0 8 The initiationstage builds oncurrent policy. In placing government job opportunities infrastructure and capability. This stage should online, the strategy creates a more efficient labor be accelerated as much as possible, and focus on market and supports the Industrial Masterplan. providing the highly visible value of During this stage, the Government must take its connectivity and access to public information, initial steps toward the strategic applications that meanwhileacquiringtheexperienceand will lead the way toward Electronic establishing the technical standards necessary to Government. For example, a sustainable tourism move ontoStageII.From anexternal prototypeisan opportunitytoattracthigh- perspective, the Local government net raises incomeecotourists,whilegeneratingglobal public awareness, and builds support for the interest in the local economy. An electronic project. Email and facsimile access to services communities pilot will use Local government.net enhances the public image of IT-based services to weave a rich social fabric to bind the citizens at relatively low cost. A complete catalogue of of Local government more closely together. The public information defines the inventory that electronic tendering prototype, easily rolled out will eventually be provided to the public over on a trial basis to local IT vendors, is a move the network, and enables policy makers to toward electronic commerce. formulate information dissemination policies. Extending governmentwide email links to all The acquisition and integration of a third-party offices is an incremental step toward the long- search engine to deliver available public data is term goal, while development and testing of a a highly visible step toward fulfilling the early distance training prototype for IT workers helps promise of an electronic government. build the skills necessary to implement the plan, From an administrative renewal perspective, meanwhile providing experience in managing simply providing governmentwide email links distanceeducation. A governmentwidedata among offices can improve internal workflows, administration initiative is a critical step toward while radio paging and voicemail will improve managingitsgrowingdataresourcesasa coordination among field workers and their corporate asset, and isalso a prerequisite to administrative bases, and the responsiveness of providingthe online extractsofpublic public services. During this stage,it will be information neededforeffectivetransaction necessary todefine standardsforelectronic processing in later stages. Underlying each of distribution of reports, forms, procedures, and the above activities and tasks is the development otherinternaldocuments,aswellasthe of governmentwide network management standards forelectronic publishingincluding capabilities, and the design of an information procedures and guidelines for managing access andnetworkarchitecturetoprovidehigh toallpublicinformation through electronic connectivity and reliability at an affordable cost. media. This stage builds up the organizational During this stage, the Government can exploit andtechnologicalcapacitiesnecessaryto the results of the initiatives from earlier stages, overcomepresent barriers to electronic forexample byrollingouttheadvanced government. These are: [1] an inadequate public multimedia facsimile technology to add value to and Government telecommunications network the fax-on-demand services to the more remote infrastructure; [2] weak information technology communities. Service quality management will architecture to enable the necessary level of be an important activity during this stage 6. One connectivity and data sharing; [3] a lack of data useful approach to this problem is to identify administration, and [4] scarcity of the skilled gaps between the expectations of citizens and the manpowerresources, bothtechnicaland actual performance of the agencies'.However, managerial,neededtobuild,operate,and most current approaches focus on the gap only at manage government-of-the-art IT infrastructure. the interface between the citizen and the service, By enabling public access to GIS information, an approach which does not clearly identify the this stage of the "BUILDS" visibly reinforces contribution of infrastructure,which will be the promise of an open information access necessary to evaluate the success of the plan. 775 805 By this time, the Government will be ready to the government should provide Internet access to deploy its lifelong learning field trials, which thegeneralpopulationthroughthepublic will complement the digital library prototype. libraries, and foster a strong sense of community But the primary focus will be internal. By by: providing multimedia links among key offices, o Creating online environments to foster the free datawarehousingforallshareddata, a exchange of ideas and knowledge about work, government-wide voice and data network, GPS play, and other communities of interest, such tracking of mobile resources, and developing an as gardening, sailing, computer games, or the environment. informationresource managementpolicy,the Government will be preparing for Stage IV, Creating online environments that support communities of relationship, for example in which will be led by a newly appointed Chief childbirth, aging and other life experiences that Information Officer. are often far less difficult if experiences can be The strategic "BUILDS" initiatives are large- shared with others. scale, distributed applications of high social and Creating channels for feedback from citizens to economicimpactthatcontain an extensive their government. information-processing element and that can Crisis and Emergency Management: large- scale, time-critical, resource-limited problems greatlybybuildinganunderlying benefit such as managing natural and man-made information infrastructure. disasters are another vital initiative. Effective action involves command, control, Digital Libraries communications, and intelligence systems to A digital library provides access to a knowledge support decision-makers in anticipating center without walls, open 24 hours a day, threats, formulating plans, and executing these accessible over a network. The Government plans through coordinated response. must support basic and strategic digital libraries and the acquisition and demonstration of digital Lifelong Learning publishing technologies, which can later be used The Government mustpositioninformation in other "BUILDS" applications: technologiesasaresourcetoenrichand Technologies for automatically capturing data accelerateeducation,training,andlearning in all formats (text, images, speech, sound, systems for people of all ages and abilities. The etc.), generating descriptive information about "BUILDS"approachesthischallengefrom such data (eventually including translation several directions: into other languages), and categorizing and Distance learning will provide access to organizing electronic information in a variety specialized resources in a timely manner for of formats. geographically widespread students. Advanced algorithms and intelligent Teacher training leverages the resources interactive Internet-based tools for creating available to adult education programs. and managing distributed multimedia Students will have more equal access to databases and for browsing, navigating, information and data resources now only searching, filtering, retrieving, combining, available at research and library centers. integrating, displaying, visualizing, and o Lifelong learning provides educational analyzing very large amounts of information opportunities to populations regardless of age in inherently different formats. These or location. databases are frequently stored on different o Digital libraries will make information media that are distributed among available throughout the networkboth for heterogeneous systems across the Government professionals as well as students at all levels. and around the world. The strategy must provide network access and Electronic Communities conduct pilot projects to demonstrate information technologies for improving learning and training A small and extraordinarily diverse citizenry and that can be scaledto Governmentwide populates a large land area. To avoid their coverage. isolation from today's age of global information, 0 776 Conclusion (even if somewhat delayed by the current fiscal The plan will take full advantage of the national crisis),andlocalagenciesanditsallies. Multimedia Super Corridor project, which will Teamwork among these organizations will be integratecommunications, data management, critical factors in the success of such a plan. and security services to enable the automatic REFERENCES AND NOTES exchangeofbusinessinformationamong different organizations. Communications 1 Hax, A and Majluf, Strategic Management: an servicestransfertheinformation from the integrated perspective, Prentice-Hall, 1984. originator to the recipient. Data management 2 Han Chun Kwong, "Malaysian Information-Rich servicesdefineinterchangeformatsforthe Society in 2020," seminar for Government, 1996. information. Security services authenticate the 3 op. cit. 4 source; verify the integrity of the information Thorson, S; as cited in Caldow 1996. 5 Berman, J, as cited in Caldow 1996. received; prevent disclosure by unauthorized 6 Donnelly, M et al; "Measuring service quality in users; and verify that the intended recipient local government - the SERVQUAL approach," received the information. Electronic commerce International Journal of Public Sector applies and integrates these services to support Management, Vol 8 (7), 1995, p. 15-20. business and commercial applications such as 7 Ziethaml, V, et al, Delivering Quality Service, Free electronic bidding, ordering and payments, and Press, New York, 1990. exchange of digital product specifications and 8See http: // obelisk .nmi.net.sg /gitis.index.html design data. This will require a common underlying trusted third-party infrastructure to deliver authentication,authorization,accounting and banking services, usage metering, and fee- for- access within networks and distributed systems. This can be obtainedeitherviathe MSC platform or from a large-scale private sector effort (e.g., Visa's SET solution). Government can collaborate with industry to develop and applytechnologiesthatenableelectronic commerce in general, with an initial emphasis on those industries that are strategic forits industrial development 8. Service quality will play a key role, and State government should begin now to establish a baseline understanding of the expectations that citizenshold(or can be expectedtohold following deployment), and put service quality management processes in" place to meet those expectations. While service quality management tools such as SERVQUAL are useful, they must be adapted to the problem of assessing services delivered over the infrastructure, a new used that will require research and validation. Insummary,infrastructureisanessential element. The basic telecommunications infrastructure plays a key role, supported by value-added networks, the national MSC project
777 When the Detour Becomes the Highway: The Future of Alternative Routing
C. Holland Taylor CEO, USA Global Link Fairfield, IA USA
ABSTRACT
Alternative telecommunications carriers have undermined the traditional bilateral operating agreements/accounting rates regime by offering consumers less expensive options. The resulting liberalization of telecommunications was inevitable. Although long-established large players are now adopting alternative calling procedures themselves, small, independent alternative firms will continue to be able to compete because business success in current telecommunications depends on factors that have little to do with sheer size. Governments that recognize the continuing ad- vantages of liberalization and deregulation will deliver maximum benefits to their citizens and economies. One area that can benefit especially is the establishment of investment capital markets in emerging economies.
During the Middle Ages, Flemish merchants wanting to relationships, the monopolists faced no competitive buy or sell goods in Milan had to traverse a narrow pressures forcing them to reduce overhead and other pathway along the northern shore of Lake Geneva. costs or to improve service. When one possesses the They paid a tidy sum for this privilege however, thanks primary route between Flanders and Milan, one fmds totheChateau de Chi llon,ashoresidefiefdom oneself thinking of good reasons for charging higher controlled by the Duke of Savoy. If a goods-laden tolls, just as one fmds little incentive to repair potholes. caravan tried to brush past the Chateau's toll collector, a troop of armed riders would pursueitand quite Various forces could undo such a monopoly, but the effectively exact the toll. most obvious would be the development of less expensive alternate routes. If merchants could fly their Comparing this to the traditional telecommunications goods to Milan or ship them by truck, boat, or railroad, system may exaggeratematters,but not beyond then any Chateau that exacted a high toll on passers-by recognition. Traditional PTTs and PTOs can be said to would soon have no passers-by. have carved up the telecommunications realm like feudal lords dividing up territories. In the absence of Here the analogy becomes more obvious. For over a alternative routes they could levy maximum tolls, and century, the old bilateral operating agree- generally have. ment/accounting rate regime offered the only route available for termination of international traffic. But Admittedly, one could argue that the motivations of the what telecommunications "ships" is information; and medieval fiefdoms were overtly mercenary, while those information is, increasingly, packaged in such a way of the PTTs involved the more complex ideas of the that it resists attempts to contain its transmission. It is natural monopoly, cross-subsidization and universal becoming ever easier to find clever ways around PTT service. For now, let us simply mention the well-known control of bottleneck facilities. When strategies such as tendency of monopolies to overcharge and underserve callback, refile and bypass came along, it was inevitable their customers, and add that both tendencies have been that someone would noticethat theyoffered an amply present in telecommunications regimes. On the inexpensive alternate route to the old monopolistic old highway of halfcircuitsandcorrespondent highway, and it was inevitable that consumers would 012 778 climb aboard. In 1993, for example, the first Japanese disappear. And so,the Journal assumed, would consumers of callback were faced with the choice of callback firms. paying incumbent operators ¥200+ a minute to place a By 1996, however, The Wall Street Journal began to call to the U.S. versus paying callback operators ¥75 for realizethatwhilecallbackitself may disappear, the same call. This was not a difficult choice to make. callback firms themselves would outlast the technology responsible for their birth. Let us consider several The majorityof monopolistic regimes andtheir reasons why. One factor, necessary but not sufficient, is regulatory accomplices have only recently begun to the continuing emergence of new technological tricks respond to the forces of market liberalization and from up the independents' sleeves. Alternative carriers technological revolution. PTTs have, after all, enjoyed a have, for example, gone into refile and by-pass. Today, monopoly for over a century. A recent study by Frost if acallfrom Southeast Asia tothe UK costs and Sullivan estimated that AT&T alone could lose US$.005/minute less when routed through the U.S. on $350 million a year worth of international revenue to an ISR route than it does when placed directly at Internet telephony by 2001, and updates to this study settlement rates, then the traffic is more likely to flow are increasing that figure across the industry. But most through the U.S. than to take the direct route. agree that the trend cannot be stopped, any more than contemporary travel from Bruges to Milan could be The reason this is not sufficient to keep alternative restricted to a narrow pathway traversing the gates of firms competitiveis,of course, that the arbitrage the Chateau de Chillon. While significant opposition to advantage represented by refile will again disappear. liberalization remains, it is increasingly acknowledged An estimated 50% of the world's telcos are refiling that this amounts to futile rear-guard action. In the traffic. Moreover, in some markets, over 20% of artificially inflated market of international long-distance customers are using callback. AT&T itself now offers telecommunication,alternativecarrierswerean callback. And Internet telephony will follow the same inevitability, and so was their success. pattern. The detours, in short, have now become the highway. Couldn't the independents, again, be hoisted Skeptics have wondered just how long that success will by their own competitive petards? last. Don't the large, established players have the resources to trounce the upstarts at their own game? For several reasons, I don't believe so. For one thing, as This question arose with the advent of callback. Low- The Wall Street Journal noted in 1996, callback offers a cost digital switching, plus competition in liberalized strategy by which alternativecarriers can enter a markets (notably the U.S. and UK), had led inevitably previously monopolistic market, build a sales force, to the export of low-cost dialtone. Callback was, in develop a customer base, gain brand recognition, and essence,theexportingofcompetitiontonon- formstrategicalliances.Withtheseadvantages, competitive markets. It was bound to succeed for the successful callback companies can migrate to private- simple reason that it gave consumers and businesses line resale and full, facilities-based competition. extraordinarypriceadvantages.Theresultwas, inevitably, a downward pressure on the incumbents' More basically, technological advances have changed collection rates. For example, in Kenya, the cost of a what constitutes key competitive advantages in our call to the USA fell from the 1993 rate of US$6 per business.To understandthis,considerfirstthat minutewith athree-minute minimum lengthto advances in fiber-optic technology have dramatically today's rate of $3/minute. The cost of sending a one- decreased the cost of transmission. William Carter of page fax to the U.S. fell from $18 to $3attributable, Submarine Systems, Inc., one of the leading researchers primarily, to the competitive pressures introduced by in fiber-optic technology, has said that his R&D callback. engineers see "no end in sight" to the increasing bandwidth and transmission capacity of each new Why Alternative Carriers Are Here to Stay generation of submarine fiber-optic cable. Another factorreducingthelimitationsof bandwidthis But could this change the roster of major players for asynchronous transmission. Between these two tech- more than a brief moment? Until the spring of 1996, nologies, supply of bandwidth is no longer a limiting The Wall Street Journal assumed that it would not. factor. Once collection rates were adjusted downward,it What this means is that technology is reversing the reasoned, the arbitrage advantage of callback would traditional cost structure of the industry: the cost of
779 transmission is now becoming lower even than the cost Global InterNetworksm system, which will provide voice of switching. In a competitive environment, transmis- telephonyservicesthat work from telephoneto sion becomes virtually free. Under the old monopoly- telephone but are carried via the Internet. The Japanese based paradigm, telecommunications services were media was enthusiastic about the idea, but Japan's treated like platinuman expensive, rare commodity. Ministry of Post and Telecommunications (MPT) was Underthenew paradigmofalternativecalling not: it informed Global Link that Internet telephony was procedures, telecom services become as abundant as illegal in Japan. water. The new generation of telcos, with access to cost-based transmission, are increasingly passing these However, the MPT thought further about the implica- benefits along to customers in the form of low-price, tions of the new technology, and as a result, reversed its high-quality service. initial ruling. In July of 1997, the MPT announced that as of August 1st, Internet telephony would be fully With transmission a minor cost of doing business, legal in Japan. What was perhaps most interesting about telcos will now be competing on bases that have little to itsannouncement was thatsimultaneous withits do with sheer size. They will compete on the basis of sanctioning of Internet telephony, the MPT announced their sales ability, their customer service, and their that Japan would open the door to international simple efficiencytheir ability to keep general and adminis- resale. Like Internet telephony, ISR allows traffic to trative expenses at a minimum. Those who can attain flow between countries while stayingoutsidethe the lowest overhead without sacrificing quality will traditional accounting rate system, so that the only costs succeed. involved are the costs of transmission and the cost of ingress and egress from the PSTN at either end. These And here is where a hidden advantage of the alternative costs are generally minimal. carriers lies. Surprisingly, it is often the small, indepen- dent telcos that can maintain the most favorable ratio of In short, the MPT realized that both these technologies employees to volume of traffic. Without a tradition of represent a de facto convergence of voice and data, with bureaucracy, the independents have from the start been all the implications this entails for the pricing of voice oriented toward maximal leanness and meanness. telephony services. Whether we likeit or not, the However much the majors try to downsize, some will convergence of voice and data is unstoppable. We can never be able to surpass the independents in these choose to position ourselves behind the power curve or efficiencies. ahead of it. The Ministry of Post and Telecommunica- tions in Japan made a wise choice. The situation For all these reasons, then, the competitive landscape of illustrates an observation from the report of the ITU's international telecommunications has been permanently Sixth Regulatory Colloquium on the Changing Role of altered. The example of Sprint and MCI is relevant: Government in an Era of Telecom Deregulation: "It is when the U.S. market was liberalized, these fi rms were apparent that the impact of convergence upon regula- unknown, but today they are major forces. Moreover, tion will be greater than the impact of regulation upon now that telecommunications is becoming affordable to convergence." so many people, the sheer size of the telecommunica- tion market is becoming so huge that capturing even a In contrast to Japan's enlightened decision, current small slice of it is enough to make an independent attempts to plug the crumbling dike of monopolistic company very healthy. restrictions are failing; the water is indeed coming in over the top. The most forward-thinking PTTs and Ahead of the Power Curve PTOs realize this, and are learning to surf the new wave. For these and other reasons, trying to prevent the transition from a monopolistic to competitive paradigm Convergence and Emerging Markets is like jamming one's finger in the dike when water is already pouring over the top. The more far-seeing Surfing these waves has many benefits to offer to the regulatory authorities already understand this. A case countries the PTTs. serve.I have written elsewhere study illustrates the direction they are taking. In April about ways in which the new paradigm of telecommu- of 1997, USA Global Link President Larry Chroman nications offers economic benefits to emerging societies visited Japan and announced the introduction of its around the world. I would like to point out one other
14 780 such benefit. When telecommunications and transpor- opportunities inherent in a time of rapid change. Thus, tation infrastructures are undeveloped, businesses must not only is the detour becoming the highway; those who be in close proximity if they want to communicate with blazed the detour trails are among the new highway's each other. This is the origin of crowded commercial chief engineers. centers such as Wall Street, the Ginza, or downtown Bombay. But with the development of the global The story of Chateau de Chillon contains the seed of one information economy, people will be able tolive more relevant principle. The companies that will thrive anywhere and still work together. They will be able to in the coming era will not be those that try to shore up commute instantaneously. They will be able to know their defenses and restrict access, but rather those whose anything known anywhere to anyone else instantane- innovation and efficiency enable them to contribute ously, at virtually no cost. The implications for global maximum value to their customers and shareholders. As commerce and global financial services are obvious, future technologies unfold greater and more powerful and this holds special promise for emerging nations possibilities, much will change, but I am certain that seeking investment capital, export markets, and relief success will remain contingent on an aggressive pursuit from the overcrowding of capital cities. Convergence, of innovative solutions and increased efficiency in their therefore, not only involves data, fax, voice, video and deployment.This principle will determine the fate of multimedia services, but alsothe convergence of individual corporations as well as nations in the next telecommunicationswithinformationtechnology, millenium. finance and commerce.
All of this is going to come to exist on the world's new fiber highways. How can the Asia Pacific region maximize its access to this highway? The region is characterized by national economies that range from thosethatarevery advanced economically and technologicallye.g., Japan,Singapore, and South Koreato those at the other end of the spectrum, e.g., Myanmar and Mongolia. The highly developed are in a position to enjoy the benefits of the new free-market paradigm immediately, since they already have a telecommunications infrastructure to take advantage of this change. All that needs to be done is to open it up to competition. The less-developed economies are simi- larly in a position to open their doors to competition in the form of new market entrants eager to deploy the latesttechnology.Thiswillallowless-developed countries to leapfrog to the latest technology rather than continuingtorelyoninefficient monopoliesfor improvement that may never come. Thus, whether a country is poor or wealthy from a telecommunications perspective, the main factor inhibiting its leap into the 21st century, is antiquated regulations and restrictions on competition; and the main gateway totaking maximumadvantageofthetelecommunications revolution now underway is removing these same restrictions to competition.
That gateway is opening, either as it is being pried open effectively from without or advisedly from within. Indeed, traditional PTTs and PTOs are actually entering into alliances with aggressive independents like USA Global Link,totake advantage of the numerous
781 615 The Amateuradio Service National Resource for Disaster Communications and 110 uman Resource Development
Keigo Komuro Mitsubishi Electric Corp. / IARU Region 3 Tokyo, Japan
1. Abstract Today, the Amateur Radio Services continue to play an important role in disaster communications and development of technical skills in many countries. This is true because of a number of factors: (a) Amateur Radio operators are widely spreaded in populated and remote areas, (b) they can communicate at both short and long distances using a wide range of frequencies, (c) their links or nets can be reconfigured dynamically, (d) amateur stations have systems, including electrical power, independent of commercial or government networks, and (d) operators can adapt themselves to different situations through self-training and innovation. This paper concludes with some suggested actions countries can take full advantage of the resources of Amateur Radio.
2. Introduction systems. Amateurs tend to be self-reliant and The International Telecommunication Union resourceful as a result of building and repairing (ITU) Radio Regulations define these services as their own radio stations. These skills are follows: extremely useful in development of telecommunications stations and networks, Amateur Service: A radiocommunication troubleshooting problems, and in disaster service for the purpose of self-training, communications. intercommunication and technical investigations carried out by amateurs, that is, 3. Disaster Communications by duly authorized persons interested in radio The above definitions do not seem to include technique solely with a personal aim and disaster communications. Instead, that role is without pecuniary interest. (RR S1.56) emphasized elsewhere in the Radio Regulations. Resolution No. 640, adopted at the 1979 World Amateur-Satellite Service: Administrative Radio Conference (WARC-79), A radiocommunication service using space formally recognized the value of this resource, stations on earth satellites for the same stating in part, purposes as those of the amateur service. (RR "the stations of the Amateur Service, S.1.57) because of their widespread distribution and their demonstrated capacity in such First mentioned in the above purposes is self- cases, can assist in meeting essential training. This is carried out by experienced communications needs:" and " in the amateurs acting as mentors for those learning the event of a natural disaster, direct required skills. Such training can be provided one- communication between amateur stations on-one or in classrooms as the situation requires. and other stations might enable vital Many countries have taken advantage of operators communications to be carried out until and technicians trained in the Amateur Services in normal communications are restored." staffing their national telecommunications
8113 782 In the Foreword printed in the ITU fascicle, 1. that administrations encourage the Excerpts of ITU radiocommunication texts development of amateur and amateur- concerning the amateur service and amateur- satellite service networks capable of s] atellite service, ITU, 1995, providing communications in the event Radiocommunication Bureau Director Robert W. of natural disasters; Jones stated: 2. that such networks be robust, flexible Amateur radio continues to play an and independent of other important role in disaster communication. telecommunications services and capable It has a unique ability to provide of operating from emergency power; radio communications independent of the telephone network or other radio services 3. that amateur organizations be allowed particularly in the first few days before to exercise their networks periodically relief agencies are at the scene and have during normal non-disaster periods. set up disaster telecommunication services. 5. Amateur Radio Activities A couple of recent examples of Amateur Radio 4. Amateur Radio and UNDHA disaster communication in the Asia-Pacific region The following is a view of the amateur services of the are reported by the member Societies of IARU United Nations Department of Humanitarian Affairs Region 3. (UNDHA) on The Role of Amateur Radio in Disaster Relief 5.1. Japan The Japan Amateur Radio League (JARL) has In the age of satellite telephones and information reported that; highways one important network is sometimes the Hanshin-Awaji Great Earthquake which overlooked: That of more than 2.6 million Amateur Radio Stations world-wide. In many cases such struck early in the morning of January 17th, 1995, stations have provided first information about a dealt a severe blow to the central part of Kobe disaster and served as the only link to the outside city, Awaji Island and other vicinity areas. world. The Amateur Radio Service has two distinct More than 5,300 were killed and about 100,000 advantages: Many of its stations are independent of houses were destroyed. The telephone network in any infrastructure - they can work on own power Kobe city and other disaster stricken area was cut resources such as batteries or generators, and they into pieces. About 361,000 circuits were cut off are operated by dedicated and skilled enthusiasts, and this was a big obstacle for the initial many of which are masters in the art of movement of rescue activities. improvisation. Amateur radio equipment therefore To help alleviate the situation, many amateur has a better chance to survive the impact of a radio operators in surrounding areas which were disaster, and trained radio amateurs are best qualified to establish and maintain communications free from calamity, volunteered to play an active under the most demanding conditions, be it at their part in the transmission of information. own stations or as volunteers who operate the JARL took various measures to support equipment of rescue services and relief agencies. communications in this emergency, conferring with the Ministry of Posts and Recommendation ITU-R M.1042, Disaster Telecommunications, in view of the large scale of Communications in the Amateur and Amateur- calamity caused by the earthquake and extremely Satellite Services, recommends: limited availability of communication media for restoration. First of all, JARL reopened a repeater station on
783 Mt.Ikoma. Furthermore, a repeater station in functioning. This is the body which prepares the Kyoto was relocated to Kobe city. amateur fraternity for service to the community in civil emergencies. With cooperation of the Japan Amateur Radio The role of WICEN is to provide communications Industries Association (JAIA), JARL distributed for support agencies such as Red Cross, Salvation 260 portable radio units to secure communications Army and welfare organizations which do not for refuge shelters in disaster- have their own communications. stricken areas. JAR acquired 332 licenses for The chief advantage of the WICEN is their these units prior to the distribution. flexibility and mobility. It differs from all other This Amateur Radio disaster relief services in that all WICEN members are communication was lasting about 3 months and volunteers who provide their own equipment and finished on April 15th, 1995. transport, whose only benefit from their activities is the satisfaction of being able to help others in a 5.2. Bangladesh time of need. Report of the Bangladesh Amateur Radio League (BARL) says that; Within each state, WICEN is organized into a strong cyclone with speeds reaching up to 250 Regions. Each Region holds exercises and km/h hit Bangladesh coastal belt on May 19th, training sessions. Much training is carried out as 1997. The havoc caused by the cyclone disrupted community service supplying communications to the normal telecommunication links with the the organizations to the organizers of events such disaster areas. as charity walks and fun runs, horse or car trials, BARL members in association with Red Crescent bicycle rides or canoe marathon. and other NGO's set up emergency radio communication links between the capital Dhaka Examples of recent WICEN activities include the and disaster areas. The amateurs came forward bush fires near Sydney in 1994, the Newcastle with their hands of co-operation immediately after earthquake and floods in northern Victoria. Most the announcement was made that the cyclone with Disaster Management agencies agree that the devastating force would hit Bangladesh. capability, versatility, mobility and availability of the WICEN volunteers are vital to the efficient Five or more amateur stations moved to the management of a Disaster and are likely to remain disaster area and set up HF and VHF stations both so despite technological advances. Several small fix and mobile. The control station was located in emergencies have already shown that though Dhaka. For the next 72 hours, round the clock allocated frequencies become jammed, mobile disaster communication channels were kept open phones cease to work, telephone lines become by amateur radio operators. overloaded and electricity supplies may be cut off, Invoking the Resolution 640 of ITU, Red crescent the amateurs can still continue to pass messages. and Radio Amateurs used all bands and frequencies that were available to them to pass 5.4. Asia-Pacific in 1997 disaster traffic. In 1997 alone, numerous natural disasters In appreciation of their efforts, national dailies occurred in the Asia-Pacific region. Here is a published back-page story titled, "BARL plays partial list of major disasters in the region: laudable role during cyclone". Afghanistan: Floods May 1997 5.3. Australia Bangladesh: Cyclone May 1997 In Australia, the Wireless Institute Civil Bangladesh: Flood Aug. 1997 Emergency Network (WICEN) is formed and China: Earthquake Apr. 1997
618 784 China: Floods May 1997 Conclusion India: Earthquake May 1997 India: Floods Jul.1997 This paper urges that appropriate actions be taken Papua NewGuinea: by each country: Cyclone Mar. 1997 1) to review and/or develop a National Emergency and Disaster Communications Amateur Radio played a part in some, but not all, Plan; of these natural disasters. Those where they did 2) to encourage, support, and incorporate were supported by an active Amateur Service Amateur Radio into the Plan; within the country, an administration that 3) to promote training of Amateur Radio; and encourages Amateur Radio, and disaster 4) to allow the free movement of Amateur communications planning. Radio equipment with free or low duty in view of national interests.
785 Emergency Services - Speaking With One Voice
Mr Ray Dundon and Ms Kathy Byrnes Information Technology Services Department of Administrative and Information Services Adelaide, South Australia
ABSTRACT
Over the past three years the South Australian Government has undertaken a program of standardisation, consolidation and rationalisation of the IT&T infrastructure. This has placed the State in a unique position to take a corporate view of the State Government and to undertake Public Sector transformation programs that will ensure we reap the benefits of this initial infrastructure investment.
The subject of this paper is the planned transformation of the Emergency Services sector in the State, initially by the introduction of a common Government mobile network (GRNC) and a common emergency services dispatch system.
The planned convergence of the Government's telecommunications mobile services will generate many benefits for the State, not the least of which is the provision of high functionality mobile telecommunications to rural/regional areas.
Many Police Forces in the world are currently evaluating replacing options for aging voice radio systems and mobile data will be increasing important in ability of police to serve the community.
Another imperative to the consolidation of emergency service centres is that the only reserved spectrum Australia is 64 paired channels in the 400Mhz band. These channels are only 25KHz wide giving our Police only a portion of the bandwidth available in many other parts of the world. Given the provision of mobile data infrastructure to Police will further drive demand for spectrum, this will increasingly become a limiting factor to Emergency Services capability in Australia.
DRIVERS FOR THE TRANSFORMATION Information Technology is a key driver for innovation and reform. The return on investment in The key drivers for the transformation of the infrastructure will be increasingly evident through operations of the emergency services sector are the benefits achieved in using the technology to reengineer existing Government business the following: processes. infrastructurethe need to improve communications in both metropolitan and rural The aim is for better coordination and areas, particularly to support rural Police and management of the activities of the variety of emergency services; agencies within the emergency services sector - economicthe need to reduce financial stress the South Australian Police (SAPOL), the SA due to multiple systems in Government Ambulance (SAAS), the Metropolitan Fire Services standardisation of infrastructure for (MFS), the Country Fire Services (CFS) and the consolidation of support centres State Emergency Service (SES). introduction of world leading technologies and This undertaking will result in an improved and far high functionality ability to enable both voice and data reaching wireless infrastructure in the State Government, particularly for the 75% of users that communications are within the Emergency Services sector which o incorporation of new technologies such as broadband and multimedia and satellite may include volunteer emergency service workers. o the need for high reliability More importantly, it will pave the way for significant o increased leverage by economies of scale. changes to the way in which the emergency o0 786 services sector conducts its operations, leading to THE GOVERNMENT RADIO NETWORK improved response time and coordination of the CONTRACT (GRNC) PROJECT emergency services and a better service to the public of South Australia. The Government Radio Network Contract (GRNC) represents the most exciting wireless telecommunications initiative in Australia today. The selection of a Service Provider to design, build THE TRANSFORMATION PROGRAMS and manage the telecommunications infrastructure called the Government Radio Service (GRS) for The transformation of the Emergency Services South Australian Government agencies over a sector will be managed across four transformation seven year contract period is a significant step in programs which are underway in the State the Governments plans to transform this sector. Government to facilitate the change that is required in the public sector. There is an increasing urgency in progressing the
GRNC,factors including These programs are as follows: Government philosophy (whole of Government 1. Service Delivery Transformation approach); VHF Band Plan requirements of the Australian This program focuses upon the deployment of Communications Authority (ACA); technology to support one stop/non-stop service to changing work practises; business and the community, and the promotion of the need to replace aging technologies. technology to support an improved customer interface. The GRNC will bring together into one network, 17 agencies using radiocommunications on 28 2. Administrative Processes Transformation separate mobile radio networks currently across State Government agencies. This program focuses on the deployment of technology to support improved administrative COMPONENTS OF THE MOBILE SERVICE processes in the public sector, including the use of technology to reduce cycle time, reduce The Service provider will be required to manage paperwork, improve the efficiency of current the provision of a range of radiocommunications processes, and support improved inter-agency services and associated management services to collaboration. participating agencies.
3. Resource management transformation The Government Radio Service can be broken into 3 separate services purpose-built to meet The focus of this program is the use of technology agency requirements to support the best practise management of Government resources. This will be supported by Voice servicessupport for mobile and portable improved information about Government assets radio terminals; and human and financial resources. Data Services - support for mobile and portable data terminals; The business process transformation can only be Paging Services - support for alpha, numeric and enabled by best practise information technology tone paging. and communications. Consequently, the aim of the fourth transformation program (which underpins To complement these services are associated the others) is maintaining the Information management services to support the afore Communication Services functional infrastructure. mentioned services.
821. 787 It is worth noting that the initial metrics are that the MOBILE DATA SERVICES GRNC will impact upon 17 agencies using two- way radios, 12,000 portable and mobile radios, Mobile data services are becoming increasing 8000 pagers and some 45,000 users of terminal important as the emergency services sector equipment. Many of the current networks and becomes reliant on remote access to its terminals have exceeded their operational life. supporting computer systems. Mobile data will in particular play an increasing role in the ability of Agencies not currently using the GRNC will be the Police to serve the community. able to use it to meet its operational and functional requirements. Data services will also provide for:
COVERAGE OF THE GRNC dispatch function; Automatic Vehicle Location; and The coverage of the GRNC is expected to include Support for Computer Aided Dispatch (CAD) all settled areas of South Australia- an area of project. 226,000 square kms. The Government is seeking a data networkover The Government is currently developing a rollout the greater metropolitan area of Adelaide thatwill plan over 2 and half years and 5 separate also provide a foundation for the Computer Aided business regions. Each of the Government Dispatch Project. agencies involved is currently assessing opportunities for Business Process Reengineering The South Australian Police is currently planning (BPR) in conjunction with the rollout of services. to use the new technology to lead the country in the use of ICS to transform their day to day police Planning for the transformation will continue operations. In particular, a smart policecar as a throughout the infrastructure build stage. The mobile office is now a reality. process will involve a move to the new services and decommissioning existing services. Ultimately, a mobile data capability in the Police cars will ensure that the State Police have access Ways to ensure continuity of services for remote to the electronic mapping capabilities, their legacy users are currently being considered, and it is systems and the internet. likely that satellites will play a key role. The SA Police are keen to puta community focus MOBILE VOICE and PAGING SERVICES back into policing and they are developing prototypes of the mobile police stations- this will The infrastructure for the voice services support the concept of the police in the community associated with the GRNC will be a Motorola Astro - data will be able to be moved directly between Smart Zone Omni link mixed analogue and digital laptops in the cars and the police headquarters. trunked UHF radio network. The preliminary The Police are currently tendering fora cradle that design will utilise approximately 130 radio sites will fit into a patrol car and holda conventional throughout the State linked to 4 Zone Controllers, laptop. providing approximately 700 traffic channels (employing variable density trunking concepts). Other applications, such as the ability to transmit The Smart Zone will also support data functionality video of accidents etc directly from the Policecar up to 3000 bps. to Headquarters are also being considered.
Paging services will have the same coverage of Opportunities for BPR also include the possibility voice services. The service provider is to design, of transmitting one report for Police and Insurance build and manage the infrastructure to support the purposes. paging service. Pager initiation will occur via operator, telephone, computer/dedicated consoles and alarms.
622788 Centre and one SAPOL Communications Centre at EMERGENCY SERVICES DISPATCH SYSTEM the current SAPOL site. This will mean rationalising the current number of communication centres. The GRNC will support other initiatives in South Australia such as the standardisation of the existing It is proposed to install a new CAD system which South Australian Metropolitan Fire and Ambulance will be common to both sites and each site will Services computerised dispatch systems which are mirror and back up the other. In the event of total or both over nine years old, have limited functionality partial failure of one site the other site will take over and no longer meet their needs.
These critical systems are now subject to failure Future additional benefits will be realised by and need to be replaced. The South Australian police was at the leading edge of CAD when the flexible staffing -staff numbers reconciled with Tiburon system was introduced. This included the expected workload use of Mobile Data Terminals to assist front-line interfacing with other systems - such as officers. The community of South Australia has Ambulance Billing been guaranteed a high level of safety by this opportunities for work practise reengineering system. The Police CAD system, however, lacks common call taking - call takers taking the call the advantages of integration with other Emergency from the community for several ESOs at once Services applications. The proposed CAD system plus the ability to switch calls from one centre to will enhance the police capability in this area. the other in the event of an excess of calls or The State Emergency Service (SES) and Country shut down Fire Service (CFS) both use manual despatching as the frequency of their despatches to date has not It is likely there will be significant amendments to justified separate computerised dispatch systems. Australian Telecommunications Act in the near future which will impact on the national emergency ICS SUPPORTING DISASTER MANAGEMENT call taking (000) service. This may mean that direct call for emergencies will be devolved from Telstra to Computer Aided Dispatch Systems are essential emergency services operations centres - adding tools for the efficient resolution of emergency calls, considerable weigh to the call for rationalisation of recommending the most appropriate resources and emergency support operations centres. dispatching that resource. This is an application where poor response time, or mishandled INTEGRATION WITH OTHER STATE coordination of resources, can lead to loss of lives. GOVERNMENT ACTIVITIES
Similarly, the GRNC will play an important role in Phase 1 of the CAD initiatives may include a emergency management in South Australia. The mapping capability with assess to a map service ability of police, ambulance and fire services to supplied by the Spatial Information Program. (This coordinate and work together in emergency is another initiative of the State Government which situations will be enhanced by the common mobile aims to ensure integration of State wide spatial network. databases).
This is particular relevant in the South Australian Key elements of the CAD project are the provision environment where periodic disasters, such as the of a Mobile Data facility to SAMFS and SAAS Ash Wednesday bushfires which in 1983 led to the similar to that currently used by SAPOL, together loss of many lives, require maximum coordination with a basic mapping capability and the trialing of and optimum deployment of emergency services automatic vehicle location (AVL) for SAAS. resources. IMPACT ON THE COMMUNITY OF SOUTH PLANS FOR COMBINED CAD and SUPPORT AUSTRALIA CENTRES FOR EMERGENCY SERVICES IN SOUTH AUSTRALIA The main beneficiaries of the proposed common CAD system and the GRNC will be the community It is currently anticipated there will be a need for one of South Australia. The public will benefit from combined Emergency Services Communications
789 323 faster and integrated response to calls to Police, Fire, Ambulance and SES; better coordination and management which in turns leads to a safer community; better information so that response is geared better to community needs; better utilisation of resources, in particular CFS and SES volunteers; agencies able to improve performance without increase in staff; better knowledge of location of resources leading to better asset management.
CONCLUSION
A modem CAD system that caters for Police and all Emergency Services and that interfaces with other whole-of-Government IT projects (to provide "seamless" access to information and communications), is in keeping with the State's leading edge information technology image.
The CAD System can only be builtupon a platform of uniform Whole of Government wireless telecommunications. As the GRNC is progressively implemented across the public sectorwe will see the transformation of the Emergency Services operations. When the Emergency Services sector in South Australia is truly speaking with one voice, the Government will see the return on its investment in the infrastructure and the community of South Australia will reap the rewards.
624 790 Development of Voice Mail Service for Disaster Response "Disaster Recovery Dengon Dial Service (DRS)"
Naoki Takeda, Hideo Yamauchi, Tomohiko Shitamichi, Hiroyuki Ide NIPPON TELEGRAPH AND TELEPHONE CORPORATION Network Services Department Service Marketing and Support Headquarters Network Services Department Tokyo Opera City Tower 41F, 20-2 Nishi-shinjuku 3-chome Shinjuku -ku, Tokyo, Japan
Shunji Kurihara NTT COMMUNICATIONWARE CORPORATION Voice Application Software Development Project Network Node Systems Division NTT Makuhari Bldg. 21F, 1-6 Nakase Mihama-ku Chiba-Shi, Chiba, Japan
1. Abstract
NTT has developed a new voice mail service for use at such times as natural disasters when the telecommunications infrastructure is typically swamped by congestion and related problems. This paper describes the new system, called Disaster Recovery Dengon Dial Service (DRS), and the circumstances it is designed to meet.
2. Introduction calls to the Kobe area from throughout the nation reached some 50 times normal peak congestion on January 17. The 2. (.Background to Development extraordinary congestion of lines even influenced to emergency calls for the stricken area, including those A major earthquake struck Hyogo Prefecture in Japan made for police or ambulance services. Some telecom early inthe morning on January17,1995. Extreme facilities stopped functioning because of the earthquake, damage occurred in the Hanshin and Awaji regions in the with about285,000 or more subscribers temporally west-central part of the main island of Honshu and its suffering interrupted communications. environs. The quake's magnitude was 7.2 and, because it Thisdestructionoffacilitiescontributedtomore struck nearly directly under the city of Kobe at a depth of congestion as follows:1) calls could not get through only 20 kilometers, loss of life and property was immense. because of the destruction, 2) subscribers re-called several This was the worst natural disaster to hit Japan since the times in order to somehow get their calls through, 3) Great Kanto Earthquake of more than 70 years earlier, switches which were functioning also stopped working with 5,500 deaths and more than 100,000 residences because they could not handle many re-calls. It was still destroyed just in the Kobe area. The telecommunications 20 times normal peaks on the next day. NTT received infrastructure of the area also did not escape the effects of criticism from around the country because of the large this major quake. number of calls that could not go through. Normally, such The earthquake struck at dawn, so the only information congestion would disperse quickly, but in this case new available at first was "there was an earthquake in Kobe". disaster information was broadcast hour by hour, with the Damage was broadcasted on TV gradually, so many calls reported scale of damage rising daily. Thus it was not until were made from all over Japan to confirm the safety of January 22 that extraordinary congestion between Kobe blood relations, friends and businesses in the midst of an and the rest of country disappeared (see Figure 1 and 2). unclear, evolving situation. After the Kobe earthquake We found clearly from this major earthquake that the telephone traffic congestion occurred to a degree never current network cannot handle large volumes of calls and before experienced in Japan. The number of incoming become congested with numerous calls placed at one time
825 791 Amount of traffic 50 times-normal peaks 20 time normal peaks 20. times normal traffic 7 times normal traffic ; 6 times normal traffic.; . of the day. of the day Of .the'day
January 17 January-18 January. 19
fig-.1- Calls to the-Kobe
fig.2 50 times normal peak congestion toward the Kobe area
toward a particular area. In cases like this, NTT must We also found that mass media can also contribute to regulate calls to a particular area to protect the entire networkcongestion.IntheKobeearthquake,the network, because congestion from calls to a particular area congestion did not occur right after the strike. However, may spread to prevent calls to other areas. people saw the damage on the TV, and the impact of this
626 792 visual evidence added to viewer unease. Then millions. of communications while alsoensuringreliablemeans people made calls at the same time after these broadcasts, during a disaster. causing network congestion large enough to influence Inthisservice, voice storage devices are dispersed calls to other areas. During a few days after this disaster, a throughout the nation to help in reducing congestion. The large portion of calls toward Kyoto and Osaka, areas system features automatic call distribution, giving priority peripheral to Kobe, could not get through (see Figure 3). to calls from a stricken area, enabling even rotary phones
Safety confirmation calls toward the stricken area from
around the country
)Sendai
okyo
fig.3 Influence to peripheral areas to Kobe (Kyoto and Osaka)
2.2.NTT's Approach to Meeting the Challenge to be used to ensure universal. The voice storage system has a total capacity of 8 million messages, which is equal Because of our experience in the Kobe earthquake, and tothe number of suffering families assumed when the fact that it has been widely predicted that it is only a metropolitan area is stricken. It is also capable of parallel matter of time before a strong earthquake rocks the operation in the event two disasters occur simultaneously. southern Kanto district which is also highly urbanized, The system has two operations and maintenance centers, NTT setupaMassiveDisasterCountermeasures ensuring control to function even when one center is Committee within the company, drawing upon expertise stricken. over a wide range of technologies and systems. In addition to a wide range of a seismic and related countermeasures, 3. Service Overview the committee took a close look at the difficult problem of traffic congestion. Close study lead to a proposal of a new The "Disaster Recovery Dengon Dial Service" is a non- voice mail service which we have labeled Disaster contracttype,voicestorageservice which enables Recovery Dengon DialService,or DRS forshort. communication between victims, or victims and a person "Dengon" in Japanese stands for message. Preparations outside a stricken area, when disaster occurs. One user are now ongoing for launch of this service in March 1998. accesses a voice storage center via telephone and leaves a This system canrecord/playtheinformation about message.Afterthat,theotheruseraccessesand victims in a disaster area, including whether they are safe hears/leaves messages. Users access the system via the or not. This system aims at sizably reducing congestion following procedure. caused by calls toward a stricken area, and secures 1). Dial "171 (service number)"
793 BEST COPY AVAILALE 327 2).Following the guidance, Dial "1(for leaving a NTT's new service, safety confirmation calls toward a message)", "2 (for hearing a message)", "3 (for leaving a disaster area are automatically distributed and connected message with password)"or "4 (for hearing a message to voice storage centers located in non-stricken areas. with password)" For example, Mr. A in a stricken area dials "171 (service 3). Dial a 4-digits password, as needed number)" + "1 (operation number for leaving a message)" 4). Dial a "mailbox number (9 to 10 digits)". The mailbox + "03-1234-5678 (mailbox number; the mail box number number will usually be the telephone number of a victim will equal to Mr. A's home phone number), to leave a 5). Afterwards, a user connected to a voice storage center message regarding his status. The Ground Center (GC) and is able to leave/hear messages. switch transmits all the dialed numbers to a Network Service access Point (NSP). The NSP decides which voice 4.Major Service Functions storage center to be connected to from the last 3 digits of the dialed mailbox numbers. The NSP then indicates the 4.1.Distributed connection system center for connection to the GC (i.e, in this case, the mailbox number (home phone number) in the dialing When a disaster occurs, telecommunications in a stricken procedure is "03-1234-5678", with the last 3 digits of area are subject to confusion because facilities may be "678". Therefore, the NSP indicates to the GC to connect destroyed, and telephone lines from the rest of the country to the voice storage center in Nagano prefecture which has toward a stricken area become congested with large been allocated by the service plan as the recipient of all numbers of calls confirming a person or organization's calls whose last three 3 digits are "600-699".). Then the status. On the other hand, telephone lines from stricken GC connects the call to the indicated center, and Mr. A area toward whole country, or from whole country toward leaves a message concerning his safety at that center (see non-stricken areas, are comparatively vacant. With figure 4).
VSE(Nagano) Ms B in Hokkaido last 3 digit 600-699
VSE(Hiroshima) t last 3 digit 500-599
NSP VSE(Fukuoka) last 3 digit 400-499
Table to
500;59 @. - Hiroehiina;
600 f699'rt N
ex) I Stricken areas Mr. A in Tokyo leaves a message regarding his safety with mailbox number' 03-1234-5678" VSE(Tokyo) Mi. B in Hokkaido makes a safety confirmation call and hear the message of Mr. A with mailbox number "03-1234-5678". fig.4Connection abstract Mr. A in Tokyo 828 794 Alternatively, Ms. B who wants to confinn Mr. A's safety, from other areas. To ensure the capacity of voice storage dials "171 (the service number)" + "2(the operation systems is not taken up by messages from non-stricken number for hearing a message)" and Mr. A's home phone areas, the system functions to secure voice storage system number. GC transmits all the dialed numbers to the NSP. capacity for messages from a stricken area by according to The NSP decides on the voice storage center to be a set ratio of the entire system capacity. connected from the last 3 digits of the dialed mailbox In addition to those described above, the service also has numbers and indicates the center for connection to the GC. functions for the convenience of users, to ensure that Then the GC connects the call to the indicated center, and many subscribers can use this service without hesitation. Ms. B can hear the message from Mr. A. The mailbox number for this system is the same as a In this way, calls originally made toward a stricken area victim's home phone number, so that users don't have to are distributed to voice storage systems located throughout carry out any prior registration or other arrangement. Even the country via the distributed connection function of this rotary phones can access the system, so ensuring universal service (see Figure 5). As a result, safety confirmation system access across the network. As during emergencies calls can surely get through to voice storage systems in password use is sometimes inconvenient. Users can thus non-strickenareas.Moreover,congestiontowarda choose whether to employ password use. The network stricken area will be reduced as safety confirmation calls provides guidance instructions, step by step, as the user are distributed, and emergency calls for police, ambulance dials, because the dialing procedure described before is and other emergency services can get through smoothly. different from that for ordinary calls,. With this guidance, users can make calls easily.
50 voice storage devices across the nation
fig.5Distribution of calls
4.2.Other Functions 5.Service Operations
The DRS has some functions to ensure smooth provision 5.1.Duplication of Control Center of service, and that the operations center can set up and control according to disaster scale. When disaster occurs, No one can reliably predict when and where a disaster will information from a stricken area is needed and thus should occur. None the less, rapid response is needed once a be given first priority. So the system functions to give this disaster does occur. If a system is operated via only one priority to calls from a stricken area, and regulates calls control center. service cannot continue smoothly when the
795 629 control center area is stricken. Thus a redundantly duplex, 7.Toward the Future two-control-center is taken with this system. During operation of this service, the control center can The Kobe earthquake clarified that one weak point in the 1). handle all 50 voice storage devices across the nation present telephone network is it becomes congested when a 2). give priority to calls and secure capacity for messages large number of calls are placed at one time toward a from a particular area particular area during a major disaster. Disaster Recovery 3). supervise network traffic for the whole country, which Dengon Dial Service aims at reducing congestion and is necessary for smooth operations as described above. securing communications even during such disasters. To achieve this aim, NTT has developed certain functions 5.2.Service Operation Details (such as a distributed connection system for large numbers of calls, and a new way of connection giving priority to When a disaster occurs, the control center takes care of the calls from stricken areas). following details in keeping the system running smoothly. For the smooth functioning of this service, publicity is a 1). Based on disaster scale, set up areas where the system key factor. Not only NTT but working groups consisting will be available. of specialists and experts from related organizations and 2). Establish a limit to the number of messages, how long companies,includingthenationalgovernment(the messages will be retained, and how long in duration each NationalLandAgency),localgovernment(Tokyo message can be. All these parameters can be set at each metropolitan government), and mass media voice storage device. (television/radiobroadcastingcompanies)arenow 3). Regulate calls by area (stricken or non-stricken) and by studying the best way to carry out such publicity. purpose (leaving messages or hearing messages). At NTT we are confident this system will play a large role 4). Establish and monitor call distribution so that the load inreducingcongestionandsecuringmeansof at each voice storage devices is approximately equal. communication during disasters. Needless to say, we also All these details can be changed online, even while the hope such a disaster never occurs again and that are new service is running , except for 3). In addition, the control system will remain unproven. center can regulate the leaving of messages when service is going to be stopped.
6.When a Disaster Doesn't Occur
When disastersdon'taffectthecountry, NTT is considering providing voice storage system access to its subscribers as a gratis (other than normal call charge), non-contracted type voice mail service.
X30 796 Partial Scramble Method for Distributing Digital Audio Data across Networks
Yuichi Nishihara, Hiroshi Fujii, Kazuhiko Kushima NTT Information and Communication Systems Laboratories Yokosuka, Japan
1.ABSTRACT
The remarkable advances made in audio compression technology has made it possible for a phone line to offer near-CD quality audio without download delay. The network will become the major distribution channel of audio data. However, digital data can be duplicated exactly, so it is strongly desirable to develop a system that prevents unauthorized copying and protects the copyright holder. However, itis also essential that the prospective purchasers be permitted to evaluate the data (music) before purchasing it. This paper introduces the "partial scramble method" to both prevent illegal copying of the original music file and make it possible to check the contents by scrambling the digitized music file to a controlled extent.
2.INTRODUCTION impossible.
The door has been opened to an era in which most To solve this problem, we have developed the "partial audiodata will be distributed across networks. The scramble method". Using this method, audio data is remarkableadvances made in audio compression scrambled using cryptography to a controlled extent technology has made itpossible for an ISDN(1) such that data quality is low enough to prevent its subscriber line to offer near-CDquality audio without exploitation but high enough to permit the buyer's download delay. Furthermore,PIAFS(2) technology evaluation. The customer can listen to the scrambled has made it possible to enjoy music-on-demand with audiobeforepurchasingit.A digitalkeythat desirable quality outdoors (Figure 1). Digital audio data unscrambles the data would be sent from the provider will become a significant network service. to the user after payment is received. With the key in the local machine, the customer is able to listen to the Music service station unscrambled, high quality music.
In this paper, audio compression is explained. Then, applications made possible by distributing compressed audio data are described, and the problem of piracy is discussed. After that, the "partial scramble method" is La32kpbs PHS described and it is shown how the method assists in
PHS Base Station the safe distribution of digital audio data. adapter DISTRIBUTING MUSIC ACROSS NETWORKS Figure 1. 3. DISTRIBUTING AUDIO DATA ACROSS NETWORKS There is, however, a profound problem to overcome. Digital data can be duplicated with no loss of quality, and can be re-distributedeasily. Therefore,itis 3.1 AUDIO COMPRESSION METHOD strongly desirable to develop a system that prevents unauthorized copying andprotectsthe copyright Presently, the most popular method used to store holder. audio data is the PCM(3) method, which is simply sampling sound waves and quantizing them. This Preventing unauthorized duplication seems to require "uncompressed" method is used in CDs and is also the use of cryptography. However, this triggers another supported by AU, AIFF, and WAV(4) formats. It has the problem. The users of the service must be permitted to following features: evaluate the data before purchasing it.If the data is completely encrypted, such evaluations would be Number of channels : 2
831 797 co Quantizing bit number : 16 Due to its high quality at low bit rate and high degree of tolerance to encoding errors, the TwinVQ format is set Sampling rate : 44100Hz to become the standard audio compression method.
This means that a bandwidth of 1.4Mbps is needed to 3.2 DISTRIBUTING AUDIO DATA ACROSS carry bare CD-quality audio. NETWORKS
On the other hand, the highest throughput we can get Now that it is possible to transmit high quality audio now from an analog phone line and a modem is through phone lines, the system of distributing audio 56kbps. Even if we use an ISDN subscriber line, we may gradually change.Already, concerts are cannot hope to transmit more than 128kbps which is "broadcast live" using the Internet, and there are many far too narrow to deliver CD-quality sound(Figure 2). services that let registered members to listen to high quality audio.
However, the music market is much larger than what is phone lines currently being served through the network. ,= sBEtWaat,..,*e Technically, the network can be the major distribution ISDN 128kbps channel of audio data. The distribution of audio data is Analog 56kbps CD: PCM 2-channel, possible not only through phone line but also through 16bit, 44100Hz data compression leased lines, vacant radio bands, and by satellites. Figure 2. COMPRESSING AUDIO DATA There would be no need to go to record shops to buy This leads to the compression of audio data. Recent CDs; simply download andlistentothemusic developments in compression technology have made it whenever desired.It would be possible to access possible to transmit near-CD quality audio through music-on-demand servers using PHS, and it would be phone lines and replay it without download delay. possible to listen to any music we want, anywhere and anytime. It would also be possible to buy the music of For example, the RealAudio format claims to offer the foreign countries whose CDs or tapes might be following characteristics(5). otherwise very difficult to find.
AM radio quality at 14.4kbps This new channel of distributing audio data would be profitable for those who make music. Not just the Stereo quality at 28.8kbps listener.
Near-CD quality over ISDN class connections Artists who are not so famous or do not have enough money to publish CDs would be able to sell their own For transmitting data, it uses its own protocol which music through the Internet. minimizes the impact of packet loss(6). However,thereisa profoundprobleminthis Another format, TwinVQ [Iwakami 95, Moriya 96] distribution of digital audio data. Digital data are easily (Transform domain Weighted InterleaveVector duplicated without any reduction in quality and without Quantization) format has the following features: any cost. If people started to duplicate audio data and passed them to other people, it would be impossible to Variable bit rate and sound quality from AM radio make money in the music market. quality (8kbps) to near-CD quality (96kbps possible over ISDN connection) This is a very urgent issue. Before people really start distributing audio data through the network, there is a One of the candidates of MPEG-4/AUDIO(7) need to develop a way to protect copyrights and prevent unauthorized copying. High degree of tolerance to encoding errors 3.3PREVENTING UNAUTHORIZED COPYING Compact decoding processing: can be decoded in real time with software To preventunauthorizedcopying,theuseof
EST COPY AVAIIIABLE 32 798 cryptographyisessential. Only the encrypted file to achieve on-the-fly replay. would be open to the public, and those who had paid the money required or who had contracted to pay the 4.PARTIAL SCRAMBLE METHOD money would receive the key to decrypt the file and enjoy the contents. By splitting the contents into 4.1 PARTIAL SCRAMBLE METHOD encrypted contents and keys to decrypt them, content distribution and charging would be made safer and In order to achieve the requirements shown in the easier. previous section, there are two ways to control the scrambling of data (Figure 3). However, when we think about the real business of selling and buying contents across the network, simple Alter sound quality in temporal sequence scrambling would not be the best answer. How could the customers decide if the encrypted contents were Reduce the quality of different sound features what they really wanted to buy? They would need a means to evaluate the contents before making the The actual operation done depends on the audio payment. format adopted, and I would like to describe this in more detail. The "partial scramble method" was developed to meet the needs of both the contents provider and the (1) Alter sound quality in temporal sequence customer[Abe 97]. The content is encrypted to a Quality controlled extent so that it has no commercial value, high but is sufficient to understand what would the contents are like. low temporal sequence It is also possible to make separate promotion files for the purpose of prepurchase evaluation. However, the (2) Reduce quality of different sound features is "partialscramble method" better than making Quality separate promotion files in the following reasons. high scramble The contents provider can save time and money because there is no need to make separate promotion files. low pitch Both contents provider and the customer would melody not have to handle both the promotion file and the timbre(bass) features contents itself. timbre(treble) To evaluate the audio data in depth, the customer can listen to any portion of the data or the whole Figure 3. TWO WAYS OF CONTROLLING THE LEVEL OF part. SCRAMBLING
Since the audio can be listened without download 4.2ALTER SOUND QUALITY IN TEMPORAL delay, there is no need to download useless data. SEQUENCE
Features required for this "partial scramble" are as Temporal sequencing plays an important role in audio follows. data. By either destroying, reducing, or changing the quality of some portion of sound with regard to time, The quality of the sound must be reduced so that "partial scrambling" can be achieved. There is no need it will not have commercial value. to reduce the sound quality of the complete music piece to take away its commercial value. For instance, The features of theoriginalaudio must be the sound quality of the music could be reduced for recognized by listening to the "partial scrambled" half a second every ten seconds. As another example, audio. the sound quality could be left original for the first 30 seconds, and thereafter,gradually reduced.Itis The descrambling algorithm must be fast enough important to leave some portion of the music in its
799 833. original quality or else the customer would not be able to perceive the original quality. (File structure of TwinVQ format) one frame corresponding to 2048 samples of PCM(1120seconds) Usually in most of audio formats, data is arranged as a temporal sequence. As long as sound quality can be controlled in some form, it is possible to alter sound quality in a temporal sequence. MDCT(Residual MDCT coefficient) Gain(Power component coded) Fw.Env.(Bark-scale spectrum envelope coded) In the TwinVQ format, the sound quality can be Pitch(Pitch component coded) LSP(Unear predictive parameter coded) controlled in time units of 1/20 th second, which is the
period of one TwinVQ compression frame. This unit is (Algorithm to extract features short enough to achieve partial scrambling for any kind Bark-Scale Spectrum Auditory Psychological of music. Analysis
Input Wweighted MDCT 4.3 REDUCE QUALITY OF DIFFERENT Interleave VG FEATURES OF SOUND Linear Pitch Power Prediction Analysis Analysis Music consists of several features, for example, timbre, melody, and pitch. If these features can be controlled coded coded coded coded coded separately, it is possible to retain some features while LSP Pitch Fw.Env. Gain MDCT destroying the others. For example, itis possible to understand the melody of the original music, while the Figure 4. TwinVQ AUDIO COMPRESSION sound quality is distorted. As more sub-coefficients are scrambled, the strength For example, in the PCM method itis possible to of scrambling is increased. When we change the bit scrambled, qualityof isslightly scramble sound by swapping blocks of data in different the scrambling temporal sequences. If the blocks are comparatively changed. short, timbre is destroyed while if the block is long, The scrambling is done in the following steps. melody is destroyed.
In many audio compression methods itis likely that First, each bit to be scrambled is chosen. distinctive features are extracted and coded separately. These type of formats make it easier to control the Using a scrambling key, a random bit stream is extent of scrambling. For example, in the TwinVQ created. format, each of the five coefficients of LSP(8), Pitch, Fw.Env.(9), Gain, and MDCT(1 0), represent a different Exclusive-or against the bit to be scrambled and feature ofmusic. The extent of scrambling each the random bit stream is performed. coefficient can be controlled, and by combining the Unscrambling uses the same procedure. scrambling,itis possible to customize the result of scrambling so that it will fit the requirements. To create the random bit stream, a cryptographic 4.4 THE SCRAMBLING ALGORITHM algorithm would beused. The strengthofthis scrambling method depends on the strength of this The TwinVQ format is used as an example of a cryptographic algorithm. scrambling algorithm (Figure 4). The feature of using the exclusive-or operation is its high speed. Thisisimportant because we must Each of the five TwinVQ coefficients consists of sub- achieve real time TwinVQ decoding and unscrambling. coefficients. 4.5 EVALUATION OF The extent of scrambling is controlled by designating THE PARTIAL SCRAMBLE METHOD How many sub-coefficients are scrambled Using the algorithm described previously, we have Which bits of the coefficients are scrambled developed a system to "partial scramble" audio data in TwinVQ format, and applied the method to actual
8 3 4 800 music. The result of scrambling each coefficient is described below. Q1) 02) LSP: The sound is strongly blurred. Evaluation 1 2 3 1 2 3 4 5 LSP 18 2 0 11 8 1 0 0
Fw.Env.: The sound ispartially blurred. Lower Pitch 17 3 0 1 7 10 2 0 sounds are especially thinned. Fw.Env. 13 6 1 0 4 10 6 0 0 12 5 3 0 MDCT: Th'e sharpness in sound is lost, and non- Gain 16 4 0 pitched sound is added. MDCT 16 4 0 2 11 6 1 0 Table 1.RESULTS OF THE EVALUATION Pitch: A somewhat metallic sound is added. The following conclusions were reached from these Gain: The volume of the sound wavers results.
We have evaluated the effectiveness of the Partial When each coefficient was scrambled separately, Scramble Method using a subjective evaluation. The for Pitch, Fw.Env., Gain, and MDCT, 80 percent of goals of this Partial Scramble Method were designated people said that the difference between the as: original sound was obvious.
The scrambled music must be recognized as 80 percent of people thought the scrambling was having worse quality than the original music. not too unpleasant or not completely pleasant.
The scrambled music should not be extremely Scrambling the LSP coefficient changes the unpleasant. sound too much.
The evaluation was done by having people listen to the This means that partial scrambling with the required original music and the scrambled music and compare features can be achieved by scrambling the Pitch, the quality. The two questions below were asked in Fw.Env., Gain, or MDCT coefficients,. each comparison. We have already made some samples of scrambled Q1) Choose the difference of the music from the music by combining different coefficients and have following 3 levels. confirmed that a satisfactory level of partial scrambling can be achieved for different kinds of music. 1: The difference is obvious 5. CONCLUSION 2:The difference is difficult to recognize This paper has proposed the Partial Scramble Method 3:No difference could be recognized and applieditto the TwinVQ audio compression method. The system has the following features. Q2) Choose the unpleasantness of the scrambled music from the following 5 levels. It is possible to limit the feature of the music to be scrambled. Therefore, the original music can be 1: Unlistenable discerned from the scrambled music.
2:Somewhat unpleasant Scrambling can be controlled for each frame. This flexibility makes it possible to create a file that has, 3:Not unpleasant but weird for example, a portion of music left unscrambled that allows the user to determine the quality of the 4:Not significantly unpleasant original sound.
5: Pleasant The scrambling and unscrambling operation is done directly against the bit stream of the TwinVQ Table 1is the result of an evaluation done by 20 format, and the speed is very quick. Therefore, people. TwinVQ decoding and unscrambling can be done
801 335 in real time, and the unscrambled TwinVQ file may never need to be storedinsidetheuser's (8)LSP: Abbreviation of Line Spectrum Pair. LSP computer. parameters are used to quantize linear predictive coding parameters efficiently. We have evaluated the system by having people compare the original music to the scrambled version (9)Fw. Env.: Short for Forward Envelope parameter. and have verified that: Here it stands for parameters calculated from the spectrum envelopeafterthe LSPand Pitch The "partially scrambled" music has worse quality components are removed from the original data. than the original music. (10)MDCT:ShortforModifiedDiscreteCosine The"partiallyscrambled"musicwas not Transform. A form of frequency transformation. Here it extremely unpleasant. stands for vector quantized MDCT coefficient after the LSP,Pitch,Fw.Env., and Gain components are removed. Notes References (1)ISDN: Abbreviation of Integrated Services Digital Network, an international communications standard for [Abe 97]T.Abe,H,Fujii,and K.Kushima: "Image sending voice, video, and data over digital telephone Distribution Method with Embedded Identifier Scheme lines. for Copyright Protection",Proc. ACISP'97, Lecture Notes in Computer Science 1270, pp.325-336 (2)PIAFS: Short for "PHS Internet Access Forum Standard". It makes 32kbps data communication [lwakami 95] N.lwakami, T.Moriya and S.Miki: "High- possible via PHS. PHS is a short for Personal Handy quality Audio Coding at less than 64 kbit/s by Using phone System, and is a digital cordless phone system TwinVQ", Proc. ICASSP'95, pp.937-940, 1995. operating at 1.9GHz. PHS provides a very low cost service that can be used in residential, public, and [Moriya 96] T.Moriya, Niwakami, K.Ikeda and S.Miki, office PBX settings. "Extension and Complexity Reduction of TwinVQ Audio Coder", Proc. ICASSP'96, pp.1029-1032, 1996. (3)PCM: Short for Pulse Code Modulation, a sampling technique for digitizing analog signals, especially audio signals.
(4)AU, AIFF, and WAV: Standard audio format for UNIX, Macintosh, and Windows95, respectively. AU is a short for AUdio, AIFF is a short for Audio Interchange File Format, and WAV is a short for WAVeform audio
(5)nttp://www.jp.real.com/datasheets/client/index.html (in Japanese). In the English site, http://www.real.com/products/player/choice.html it only says that it offers 'The Best Quality Audio and Video at 28.8".
(6) nttp://www.byte.com/art/9602/sec8/art1.htm
(7)MPEG is a short for Moving Picture Experts Group, a working group of ISO. It also refers to a family of international standards used for coding audio-visual information in a digital compressed format. MPEG-4 is a next generation standard aimed on multimedia applications. Its audio part would support natural audio coding at bit rates ranging from 2kbit/s up to 64kbit/s.
63G 802 PLANNING OPTIONS AVAILABLE TO P-TELCOS. IN INDIA FOR SETTING UP TELECOM. NETWORKS Y.L.AGARWAL EXECUTIVE DIRECTOR, HFCL GROUP NEW DELHI INDIA
4.0 Existing Network:The Department of AspertheNationalTelecomPolicy Telecom'sexistingnetwork announced by the Indian Govt. in May, historically consists of a hierarchical network with a 1994,competition was plannedtobe large number of stand alone switches from introducedinBasic Telecom.Services. 128/256 lines in rural areas to 40,000 lines Now, after a delay of more than 3 years exchanges in metropolitan towns . The during which the process of liberalisation entirenetworkofabout17.0million was almost derailed, due to some what installed line capacity has been provided inflexible attitude of the Dept. of Telecom with about 22,200 telephone exchanges . (DOT),several private telecom. operators The backbone network have already paidthe licence fees and connecting metropolitantowns,statecapitalsand several are in the process of paying up. The primaryswitchingcentres hasbeen planning process of telecom. networks to be provided with media diversity consisting of set-up by private operators which, so far , microwave routes for 100,000 kms. and was only on paper has been brought to some what practical shape and plans are being optical fibre network for 50,000 kms. using PDH hierarchies. There is also an ageing finalisedandcontractsawardedfor 30,000 route kms. of coaxial cable network execution of the projects. deploying extensively 12 MHz, 2700 Chl.
analogue systems . A dedicated Indian 2.0 The key issues which a private operator, Satellite network using multipurpose setting up a new network in competition satellites for domestic communication and with a well entrenched operator with vast having more than 110 earth stations has resources has to consider are, also been set up . The satellite network in additiontotelecom:services , also i. Fast roll out and rapid deployable network facilitates TV signal diffusion through out ii. Initial capital Investment the country andprovidesmeterological iii. Network flexibility to forecasting errors. information for weather forecasting.For iv. Coverage and quality of service International communication, VSNL is the v. Future expansion. sole monopoly carrier having gateway earth stations in all the four metro-politan towns, 3.0 As per the tender conditions,the as well as a dozen under installation in private telecom. operators are expected to large towns . The subscriber access network deploy in the network, state of the art isentirely withmetallic cableutilising technologies for switches, long distance and primary, secondary and distribution cables the subscriber access networks. Further,a as shown in figure 1. private telecom. operator is permitted to use metallic cable in the subscribers loop for the The pairage of different type of cables in the last500 metersonly.Duetothese subscriber access network is generally conditions a private telecom. operator will within the following limits, have to provide advance digital switches, set --- Primary cable 1000 up high band width back bone network and to 2400 pairs. for the subscribers access network, will have Secondary Cable totakethe fibreclosetosubscribers 200 to 800 pairs. premises i.e. fibre to the curb (I. 1-1C) or --- Distribution cable fibre to the office (1-1-10) and the last 500 100 to 10 pairs. meters of thesubscribersloopwill be provided with metallic cable . For initial The Primary cableisgenerallypulled deployment and rapid rollout,Wireless In through ducts laid in sand and secondary / Local Loop (WILL) technologies will have to be used. 837 803 D.P
Premise
Cabinet
Tdephone Exchange Drop Wire
Distribution Primary Cable Cable Secondary Cable
(Ducted)
SUBSCRIBER ACCESS NETWORK
FIGURE -1
NETWORK LINE DIAGRAM BAMORE rft MALANPUR FOR THE STATE OF M.P OWALIOR SATNA
SHIVPUR1 REWA MANDSAUR MAIHAR
GUNA JAORA KATNI
SAGAR BIAO VIDISHAID DAMOH SHAHDOL
UJJAIN BADNAW SHAHPUR
SEHORE DIP DEWAS NAR MANDLA DHAR ORE MHO BORIA IILASPUR BANRBERI PITAMPUR HOSHANGABAD
WAH MANDLESEW
DURG RAIPUR 1 KHANDWA KHARGON RAJ NANDOAON
STM- 1 O STM- 1 REGENERATOR O STM-4 CD STM-4 REGENERATOR MAIN EXCHANGES FIG. 2 ci3 804 distribution cables which are armoured are say every few kilometre distance based on the network planning there will be a RLU directly buried. In the subscriber network, at times, two flexibility points are provided by or DLC connected to the main exchange through V.5.1/5,2 and E1 interfaces. Within a cabinet and a pillar. In large townswith concentration only one 500 m radius of RLU and DLC wireline largesubscriber connectivity is provided as shown in the flexibility point i.e. cabinet is provided. schematic figure 4.Within 2 km radius of the ADM node on the fibre ring, DECT 5. P-Telcos. philosophy : /PHS systems will be provided and for The planning of the network of a private longer distances and for a few and scattered telecom. operator will have to be based on subscribers CDMA/TDMA technology based connectivity is being planned. For anentirelydifferentphilosophyasis existing in the Dept. of Telecom. A private other towns in the cluster which may be telecom. operator can neither afford to have farther off the reach of WLL system, either a large number of exchanges all overthe a RLU or a DLC system parented to the main exchange through a fibre or a short franchise area ( as will be seen the average capacity of a DOT exchange is less than haul radio link will be set up. From the 800 lines) nor would he like to have a large RLU/DLC node subscribers premises will be reached through conventional wireline numberofstaffforoperation and maintenance of network . (DOT even now system. engages a staff of 550,000 for 15 million 6.0 Subscribers Access or Local loop. working lines i.e. per person about 27 direct lines ). This'figure has exchange Though the local loop forms a minor link in considerably improved from aprevious the overall network, but this accounts for figure of a staff for just 10 lines. ) almost half theinitialinvestmentina The private telecom. operator will set up telecom. network and a major portion of the maintenance and operating costs. In most of onlyafewlargecapacityelectronic the developing countries. this was exchanges in the franchise area which will considered a low technology job and did correspond to a geographical state in India. notgettheattention itdeservedand Forfinalisingcitylocationofthese consequently tends to be the weakest link in exchanges , generally astatehas been the network which is also at .times called the divided into several smaller areas, each area "last mile problem". A large workforce is to cover a cluster of towns. The largest of the towns in each cluster will have a large employed to keep the subscribers network in capacity main electronic exchange . Figs. 2 faultfreecondition whichisattimes counter productive and results in subscriber & 3 give tentative location of exchanges in two states as are being planned by the harrasement complaints. private telecom. operators.This exchange The private telecom. operators will have to will be connected to other large capacity use technologies given in figure 4 in order capacity backbone exchanges with high to meet the tender conditions as well as fibre links capable of carrying telephony, makethesubscriberloopcapableof . Initially STM-4 data and video signals receiving broad band signals as and when systems will be installed for back bone route required and also to have a fast rollout. A and the fibrecablesof 12/24/48fibre meticulous combination of wireline capacities will be deployed . These fibre including fibre cable and wireless links will be closed subsequently into a ring technologies is therefore being planned by form with digital cross connects and several the new operators. such rings willconstitute the backbone network. 6.1 Wire Line : The wireline access is for
. Depending upon the The subscribers access network will have to the last 500 meters cover the entire population of the larger of capacity of RLU or DLC a flexible or a the towns in which the main exchange has been installed as well as other towns in the cluster. For the largest town in the cluster to provide subscriber access fibre ring will have to be installed and on this fibre ring, at 839 805 GANG ANAGAR LUNKARASANAR ,STATE OF RAJASTHAN JAS WANT SAR BHIWADI SURATGARH BIKANE AGGA ALWAR IKAR THANAGAZ
NAGA BHARATPUR DAUSA AJMER TONK JODHP DEVLI HILWARA PALI FTG. 3 BUNDI UDAIPUR SIRO KOTA KHAJURIA LEGEND:
ABURO
NETWORK DIAGRAM
1 WS
WIRELINE V5.1
V5.2 ANOTHER TOWN
RLU
LONG DISTANCE NETWORK CDMA/TDMA e El MAIN EXCHANGE
SCHEMATIC OF SUBSCRIBER ACCESS NETWORK NETWORK ARCHITECTURE (INDICATING WIRELINE & WIRELESS ACCESS) FIGURE 4 8864 0 fixedcoppercablenetworkisbeing needs careful study and good planning. provided. If the capacity of RLU is within Some of the issues that need consideration 250 lines; the copper cables of 50/100 pairs in the choice of technologies or systems are, get terminated on the MDF and on the subscriber side on DPs having 10,20 or 50 The WLL system must provide PSTN pair capacities . From DPs drop wires are voicequalityfacsimileanddata provided in single span to the- subscriber's capability with scope for introduction of premisesterminatinginthewindow ISDN. terminal .From window terminal internal Initial investment & operating costs wiring is carried out to the subscribers willhaveto becomparableto house which gets terminated in a telephone traditional networks. This is instrument . In large capacity RLUs having particularlyrelevantforsubscribers subscribersterminationofmorethan terminals in case of radio networks. several hundred lines a flexibilitypoint Suitable and dependable arrangement may be provided by installing cabinets for power supply at subscriber terminal having 200/400 pair terminations.From is required. these cabinets 100 pair or lower pair cables System should provide the flexibility are drawn whichgetterminatednear and scope for expansion. subscriber's premises in 10/20 pair outdoor Availability of frequency spectrum.
DPs . From DPstheconnectivityto subscriber's premises is provided through The basicphilosophy behind providing Drop wird. (Figs. 5 and 6). wireless access systemsisnot onlyto provideasimpletelephoneconnection 6.2 Wireless Technology or WLL . .without wires to a subscriber but to provide all wireline services with the same high The advantages and benefits of wireless in quality and that too without wires. The new local loop over the traditional wired systems operator will target high revenue generating are too obvious for a new telecom . operator subscribersbyprovidinghighbitrate and have spurred a number of services because it is competing against the manufacturers to come out with innovative established telecom. network operator and solutions. Wireless applications can be two mobile operators in each area. He can implemented to more closely match the nottherefore ignorethesedemands growth profile of new subscriber particularly in urban areas. The schematic subscriptions. Initially a minimum number of a layout of the wireless local loop concept of large coverage cells (say for a distance of is given in fig.7. 20 km) can be deployed to encompass the serving area and as the subscriber growth Based on the above several WLL systems exceeds the capacity of theinitialcell. are being considered . A brief description of further cell additions can be done to match each type is given below. the capacity demands. For areas with a low population density where the subscribers are 6.2.1 DECT Digital Enhanced Cordless dispersed extensively, digital radio Telephone: concentrator systems will provide economical solution. However, for WLL A fast rollout using DECT system can be systems the practicalapplicability,the implethented through a cluster of Base economics,the technology aspects,the Stations at a central location providing a operational and maintenance issues are yet typical coverage of 5 kin line of site for to be fully sorted out . The WLL systems fixed - telephony application . Each cluster whicharecommerciallyavailableare cansupportbetween500 to 3000 mostly derivatives of the cellular mobile or subscribers depending on, whether a single cordless telephone systems. There is little cell or a sectored cell approach (6 sectors) is doubt that wireless technologies will be deployed. A network configured around dominant duringtheinitialyearsbut suchclusterscansupportsubscriber choosing a solution or several solutions
8O7341 A DROP WIRE T
DROP / DROP
DLC/RLU T 100 Pair 200 Pair (directly buried)
FIGURE 5
WIRELINE CONNECTIVITYBY P-TELCO WITHIN 500 M OFRLU/DLC HAVING < 250 LINE CAPACITY A T > 500 Lines CABINET
RLU
DUCTED PRIMARY (directly CABLE buried)
FIGURE 6
WIRELINE CONNECTIVITYBY P-TELCO WITHIN 500 M OFRLU/DLC HAVING > 500 LINE CAPACITY 808 342 Az A, WIRELESS LOCAL LOOP CONCEPT
LOCAL SWITCH OFFICE
LEGEND BS- BASE STATION DIU - DIGITAL INTERFACE UNITS. WS WORK STATION (SUBSCRIBER STATION)
WS
CORE SWITCH
WIRELESS CONNECTIVITY USING DECT/PHS SYSTEM FIGURE 8 809 (-)43 densities from low say 1.5/sq. km to higher administration has standardised GSM for subscriber densities upto 10,000 / sq. km by mobile applications and has indicated PHS evolving intoa micro/picocellular canbeconsideredforfixedwireless architecture to* provide coverage. A well applications. configured DECT system can therefore not only provide a rapid roll out but also a system that can grow with the subscriber 6.2.3. CDMA : Code Division Multiple base. Access:
DECT provides 32 Kbps AD PCM voice This technology has been used in military coding providing toll quality voice directly satellitecommunicationsfordecades . connectable to telephone , FAX, EPABX Seeing its potential for wireless applications just like a wireline telephone line. It can Qualcomm has refined the technology to a also provide ISDN, Internet and will superior,costeffectiveandsubscriber integrate seamlessly with PCS whenever oriented wireless system. It is also known as required.Itisbased on open system IS-95. concepts such as the International Standards V5.1 and V5.2. Typical The CDMA uses spread spectnun schethatic of a DECT system is given in technology to break up speech into small fig.8. digitized segments and encode them to identify each packet. This packet generated 6.2.2.PHS : PersonalHandyphone by the handset is recognised by the receiver System . CDMA also uses a wideband signal (at 1.25mhz) and the receiver cell scans the PHS has been the most successful WLL bandwidth, ignoring all other noise until it technologyinJapan . A number of finds a signal with the identifier code it is Japanese companies are manufacturing this looking for. The CDMA link consists of equipment and providing their low cost Base Trans Receiver sub system (BTS) and answer to mobile systems and fixed wireless Base Station Controller (BSC) which is systems.developed inEuropeanand connected to the PSTN network through V American countries. PHS System operates 5.1(fig9) . The systemarchitecture in 1895 to 1906.1 MHz sub-divided into 77 simplifies network growth without service radio frequency carriers, each 300 KHz interruptions. The appropriate sub. systems wide and uses TDMA/TDD structure with 4 can be expanded without reconfiguring the receive and 4 transmit time slots per radio entire system. The architecture also permits frequency carrier. The PHS like the DECT rapid implementation of new services and system also provides wireline voice quality new technological advances in the public with 32 Kbps ADPCM supporting POTS, networks. Fax & modem services. There is dynamic channelallocationandautomaticand An innovative version of CDMA technology flexibleuseoffrequencies avoiding is B-CDMA, especially developed for radio frequency reuse planning . Every user has in local loop.This system supports long access to all channels (77x4) at all times on range radio links as well as large number of overlapping base station. The systemis subscribers per cell for urban areas and capable of taking high traffic density from provides necessary bandwidth to offer a 0.05 to 0.15 Erlang and ideal for urban and wide variety of services. sub-urban areas. It has a compact out door radio port with remote power feeding. It is a 6.2.4 TDMA: Time DivisionMultiple flexible system which supports a wide range Access: of advance features & future services.A typical layout of the system is the same as This technology also known as IS-136 being forDECT system . Regardingthe extensively used for WLL networksin introduction of this technologyin India Europe and the driving force behind this Depaftment of Telecom., like the Japanese technology is Universal Wireless
88Q1 4 CDMA/TDMA SYSTEM CONFIGURATION
Operation System. The OS performs all operations, administrations and maintenance functions required to operate the system.
OS Low Speed Data
FibreliDSL l' -5.t BTS BSC
Base Station Transreceiver Base Station Controller. The BSC Sub-system interface the is typically located with the local subscriber access network. exchange and concentrates the traffic towards the BTS.
FIGURE - 9
DECT PHS CDMA
1. Frequency 1.9 GHz 1.9 GHz 800 MHz 2. Voice codec 32 KBPs 32 KBPs 9.6 to 10 KBPs 3. Duplex method TDMATIDD TDMAITDD CDMA 4. Frequency planning Dynamic channelDynamic ChannelNo.frequency planning allocation Allocation. is required 5. Cell site radius 2-3 km 1-2 km 10+1cm 6. Mobility Walking speed/seamlessWalking speed/Mobile/ Seamless hands off interruption upto 1.5hands off sec. in hands off. 7. Hand set weight 100 gm 200 gms 200 gins. 8. Manufacturers A.no.of manufacturersNEC/Fujitsu Qualcomm
Siemens, Alcatel,LME, Motorola Nokia, Philips etc., 9. DATA transmission Supports telecom protocalsdata transmissionFax and data like 15 DN , X-25, X-400capability of 32transmission are being & GSM. KBPs but unable totried out. communicate over common data standards. Table 1
811 645 Communications (UWC) . The System STM Synchronous Transport Mode concept is basically the same as in other P-Telcos. Private Telecom. Operators WLL systems exceptthemodulation RLU Remote Line Unit. A small techniques . The proponents of TDMA see capacity exchange parented it as natural migration for operators using to a main exchange . AMPS now.However,the number of DLC Digital Line Concentrator subscribers which can be provided in the DECT DigitalEnhancedCordless fixed band width is higher in CDMA as Teleconununications. compared to TDMA. CDMA Code Division Multiple Access. 7. A brief comparison of the three wireless TDMA Time Division Multiple systems being field trialin India in the Access subscribers loop is given in Table 1. MDF Main Distribution Frame DPs Distribution Points. 8. Conclusion: PSTN Public Switched Telephone Network. The private telecom. operators Will have to ISDN Integratedservicesdigital providedigital switcheswithISDN Network. capabilities and for long distance high FAX Facsimile capacity fibrelinks.For the subscriber EPABX Electronic Private Automatic access networks, for a fast initial rollout of- Branch Exchange. the network and having capability close to ADPCM Adaptive Delta. Pulse Code wireline and in order to draw out business Modulation. and high payingsubscribers,from the PCS Personal Communication existing operator the P-telco. will have to Service. utilise DECT/ PHS technologies. However, TDD Time Division Duplex. for remote and semi-urban areas where POTS Plain Old Telephone Service. provision of plain telephone service is the DIU Digital Interface Unit priority the Digital concentration systems or BS Base Station the CDMA technology will have to be WS WorkStation.(Subscriber utilised.The wireline access for the last Station). 500 meters willbe provided either on HFC Hybrid fibre coaxial copper or on Hybrid fibre coaxial cables AMPS Advanced Mobile Phone (HFC) wherever RLU and DLC have been Services. used.As the network matures and fibre ringsin urban areas arelaid,wireline access with copper wires or HFC will be provided and WLL systems shifted to other virgin areas.
ACRONYMS
DOT Department of Telecommunications - Govt. department operating telecom. services in India. FTTC Fibre to the curb FTTO Fibre to the Office WLL Wireless in Local Loop PDH Plesciochronous Digital Hierarchy VSNL Videsh Sanchar Nigam Ltd.. Govt. Company for operating overseas communication services in India. 646 812 Cable Telephone Services in Japan
Byun, Jae-Ho Electronics and Telecommunications Research Institute(ETRI) E-mail : [email protected] Tel : +82-42-860-5265, Fax : +82-42-860-6504 Address : 161 Kajong-Dong, Yusung-Gu, Taejon, 305-350, KOREA
1. Abstract
Following the UK, cable telephone services in Japan were started in June 1997. This article will present an overview of the existing state of cable TV industry and cable telephone services in Japan. In particular, this article will focus on cable TV operator strategies to get into the telecommunications market and telecommunications operator reaction. Other countries can learn from Japan's experience to reduce the uncertainties and costs resulting from the convergence policies of cable TV and telecommunications networks.
2.Introduction
Japan's cable TV Industry has suffered huge deficit the fiber-optic cables, or improve the reliability of over the last decade. The main reason for this is their networks. poor subscription growth rate, due to the various programs of the existing terrestrial TV channels, This article will present an overview of the existing which have well satisfied audience needs. regulation policies governing the cable industry, and the existing state of the cable TV industry and cable To resolve the accumulated deficits at an early telephone services in Japan. In particular, this article stage and to facilitate the spread of cable TV will focus on cable TV operator strategies to get into services, Japan's cable TV operators are trying to the telecommunications market and break into the telecommunications market. In telecommunications operator reaction. Other particular, they plan to offer telephone services and countries can learn from Japan's experience to Internet access services via their existing cable TV reduce the uncertainties and costs resulting from the networks. Japan's cable TV operators were convergence policies of the cable TV and influenced by the success of the UK cable operators telecommunications networks. in cable telephone service provision.
On the other hand, the Ministry of Posts and 3.Current situations of the cable TV Telecommunications(MPT) has adopted various political measures to support the cable TV industry industry in Japan and to utilize cable TV networks as an information infrastructure. The MPT permitted cable TV Japan's first cable TV system was installed in the operators to offer telecommunications services and mountainous hot spring area of Ikaho- Onsen, to interconnect with telecommunications networks in Gunma Prefecture, in 1955. The early cable TV 1993. Moreover, The MPT is providing financial systems were developed to cover areas which had support, including low-interest-rate loans and tax problems in receiving the main terrestrial television reductions, to cable TV operators when they install services.
813 X47 After 1983, urban-type multi-channel cable TV However, only 61 of these operators made a net systems started up services in major urban areas. profit and the other 99 operators registered a total According to the MPT definition, a cable TV system deficit of 12.1 billion Yen(see Table 2). with more than 10,000 outlets, with interactive network capacity and providing more than five To liquidate the accumulated deficit at an early channels(except retransmission channels) is styled stage and to facilitate the spread of cable TV urban-type cable TV(hereinafter urban cable TV). services, Japan's urban cable TV operators are trying to break into the telecommunications market. Cable TV systems with more than 500 outlets are In particular, they plan to offer telephone services regulated by the MPT. A construction permit is and Internet access services via their existing cable required to establish such a system. Systems with TV networks. Experts anticipate that urban cable TV between 50 and 500 outlets needs only to register operators could eliminate their accumulated deficits with the MPT, and no regulations govern systems on around 2005. However, If cable Telephone with fewer than 50 outlets. As of fiscal year 1995(the services and Internet access services prosper, they Japanese fiscal year starts in April), there are 1,738 could liquidate the accumulated deficits at an earlier cable systems with permits(including 160 urban date. cable TV systems), and more than 63,000 cable systems with registered or non-regulated facilities(see Table 1). 4. Deregulation Policies of MPT The number of cable TV subscribers has increased steadily, albeit very slowly. As of fiscal year 1995, The MPT, which now regulates telecommunications cable TV subscribers numbered about 11 million or and broadcasting services, strictly regulated the about 31.1% of all television households in Japan. cable TV industry until December, 1993. Until that The average number of subscribers per system is time, the MPT had imposed local ownership only 172 subscribers. This means that Japan's principle, and prohibited Multiple System cable TV industry is extremely fragmented, operators(MSO) and telecommunications services comprised of more than 60 thousand systems. On from being provided over cable TV networks. the other hand, as of fiscal year 1995, the urban cable TV subscribers numbered about 3 million or However, in December, 1993, the MPT declared about 8.6% of all television households. The 160 deregulation policies to promote Japan's cable TV urban cable systems each have about 18,800 industry which was lagging behind the other subscribers, on average(see Figurel ). developed countries. The following is a summary of the deregulation policies which have been Most of the urban cable TV operators in Japan have announced by the MPT since December, 1993. suffered huge deficits over the last decade. As of fiscal year 1995, total revenue of the 160 urban cable operators accounted to 105.5 billion yen.
Table 1. Cable systems in Japan, 1990-1995 type of system 1990 1991 1992 1993 1994 1995 total 50,448 53,603 56,437 58,950 61,606 63,963 permit required 1,091 1,261 1,371 1,491 1,623 1,738
registration required27,869 29,173 30,400 31,599 32,747 33,782
neither permit nor 21,488 23,169 24,666 25,860 27,236 28,443 registration required
81464 8 in thousands
12000 {Durban Cable TV Total
10000
8000
6000
4000
2000
0 Mit= ..M11=1- 1990 1991 1992 1993 1994 1995
Figure 1. Cable TV subscribers in Japan, 1990-1995
Table 2. Present business situation with respect to the urban cable TV periods of business number of operators total A B.. C*** shorter than 3 years 21 2 2 25 longer than 3years 37 17 1 55 longer than 5years 40 22 6 68 longer than 10years 1 4 7 12 total 99 45 16 160 *A : operators who registered deficits in fiscal year 1995 and have been suffering from accumulated deficits. ** B : operators who made net profits in fiscal year 1995, but are still suffering from accumulated deficits. *** C : operators who made net profits in fiscal year 1995, and have no accumulated deficits.
domestic companies, such as SUMITOMO, Cable TV promotion policies(? December IITOCHU and TOSHIBA, and foreign companies, 1993) such as TCI and Time Warner entered the cable TV industry, and created MSOs to provide nationwide The MPT permitted the creation of MSO, and urban cable TV services. abolished the local ownership principles. Furthermore, the MPT relaxed foreign ownership Permission for Type I telecommunication regulations lifting the ceiling from 20% to 33%. services (29 July 1994) Following these deregulation policies, large
815 649 The MPT permitted urban cable TV operators to also preparing to enter the telecommunications provide Type I telecommunications services over markets. cable TV networks(There are two types of carrier in Japan. Type I carriers have telecommunications Cable telephone services providers in infrastructures of their own, whereas Type II carriers Japan are forbidden their own infrastructures). As of 7 July 1997, 25 cable TV operators qualified as Type I At present, there are two MS0s(TITUS telecommunications carriers. Communications and Jupiter Telecom) providing cable telephone services(see Table 4). The main Financial support for urban cable TV shareholders of TITUS Communications are operators(1995) ITOCHU, TOSHIBA, Time Warner and US West. TITUS Communications started telephone services To establish nationwide fiber optic cable networks at over cable TV networks in Kashiwa City, Chiba-Ken, an early stage, the MPT announced a financial in June, 1997. Jupiter Telecom, a company jointly support system for the urban cable TV operators. owned by SUMITOMO and ICI, also started According to this system, the urban cable TV telephone services in Tokyo, July, 1997. operators can access government-provided interest- free loans when they want to lay fiber optic cables The main benefit of cable telephone services is as cable TV networks; and can access similar low- much lower prices compared with existing telephone interest loans when they want to upgrade their old services, since telephone services are provided facilities. Moreover, the MPT grants 20% tax through already established cable networks. reduction benefits to the urban cable TV operators. TITUS Communications hopes to capture more than 20% of NTT's subscribers. TITUS announced, just Announcement of abolition of regulations one month after the start-up of the services, that governing foreign ownership(January about 3% of the subscribers of its cable TV services 1997) had left NTT to subscribe to its cable telephone services. The MPT has announced that the foreign ownership regulations governing urban cable TV operators with Cable telephone services expansion Type I carrier qualifications will be abolished until strategies the end of 1997. One of the most important factors in providing telephone services is service area. However, cable TV operators are limited to providing services in 5. Current status of cable telephone their local franchise area. Therefore, the urban cable services TV operators have been trying to interconnect with NTT networks since 1995; and for the first time, According to the deregulation policies of the MPT, TITUS came to an interconnection agreement with and to liquidate the accumulated deficits at an early NTT in December, 1996(see Table 3). date, the urban cable TV operators in Japan are trying to break into the telecommunications market. To expand their service areas, in addition to In particular, the urban cable TV operators in Japan interconnecting with NTT, the urban cable TV were influenced by the success of the UK cable operators are trying to create MSO's and to tie up operators in 'cable telephone service' provision. with neighboring operators. There are two Those UK cable TV operators providing cable MSO's(TITUS and Jupiter) in Japan(see Table 4). telephone services earned more than half of their As mentioned above, MSO's in Japan were initiated total revenues from their cable telephone services in by the USA's cable TV operators after December, 1995. 1993, when the MPT permitted the creation of MSO's and abolished the principle of local Two of the 25 urban cable operators with Type I ownership. On the other hand, independent telecommunications qualifications have already operators not possessing the capacity to create started telephone services; and another two have MSO's are tying up with neighboring operators. For started Internet access services. The others are instance, 6 urban cable TV operators in Tokyo have
8168 5 0 entered into an agreement for mutual cooperation, 40% cheaper. which includes the establishment of joint maintenance center, and sharing of service areas Internet access services and telecommunications services know-how. Cable TV operators are providing Internet access Above all, the most attractive aspect for users is services via cable TV networks. As of July 1997, service charges. The principal benefit provided by there were two cable TV operators providing Internet cable telephone services is much lower prices access services, and about 14 operators preparing compared with the existing telephone services, to provide Internet access services. For the first time since telephone services are provided through in Japan, `KINTETSU CABLENET' started Internet already established cable networks. In the case of access service in April, 1996, and secured 1,100 TITUS, it set up a lower tariff scheme than that of subscribers just three month after starting of service. NTT, averaging about 20%. In particular, the cable The service access charges are 5,000 Yen for telephone service installation fee charged by TITUS registration and a monthly fixed charge of 10,000 is no more than one tenth that of NTT(see table 5). Yen. The operating speed for both services, down On the other hand, Jupiter has also set up lower stream and upstream, is 10Mbps. tariff rates than NTT, a minimum 5% and maximum
Table 3. Access charges between NTT and TITUS Communications type of services charge per line charge per second
Inter -prefecture local inter-prefecture 1.27 yen 0.082 yen service
long distance inter 3.01 yen 0.1429 yen prefecture service
intra -prefecture 60m 3.80 yen 0.1589 yen
160km 3.91 yen 0.1819 yen
longer than 160km 4.27 yen 0.3017 yen
Table 4. MSO's in Japan
company date of major shareholders investment affiliated founded plans(1995) operators
TITUS January, ITOCHU, TOSHIBA, 40 billion yen 26 Communications 1995 Time Warner, US over next five operators West years
Jupiter Telecom January, SUMITOMO(40 %)TCI50 billion yen 19 1995 (40%) over next five operators years
851
817 Table 5. Cable telephone service tariffs. type of service TITUS NTT local between cable 2 Yen(per minute) 10 Yen(every 3 minute) calls telephone subscribers with NTT subscribers 1 Yen(every 20 seconds) long-distance calls 80 Yen(every 3 minute) 140 Yen (every 3 minute) (longer than 160km, peak-time) installation fee 5,800 Yen 72,000 Yen monthly basic rate 1,600 Yen 1,750 Yen
6. Reactions of the existing 26 cable TV operators; and plans to provide nationwide telephone services without using NTT telecommunications operators local networks.
As the entrance of new long distance carriers has brought about charge reduction competition in the long distance telephone market, the entrance of 7.Conclusion urban cable TV operators into local telephone market raises the possibility of similar charge reduction competition in the local telephone market. Following the WTO basic telecommunications Therefore, NTT, which is facing new competitors in negotiations, the telecommunications policies in the local call market, is watching developments. most countries of the Asia-Pacific region are However, because cable telephone operators can becoming more competition-oriented. In be big users for NTT's telecommunications international, long distance and mobile telephone networks, NTT is taking a positive attitude to service markets, competition is already intense, with interconnection requests from cable telephone new operators entering these markets. However, operators. Moreover, NTT plans to induce cable local telephone services are still operating under telephone operators to use NTT's FTTH networks monopoly systems or de facto monopoly situations, for their cable TV services and cable telephone in most countries. The monopoly system governing services. NTT has announced that it will provide an local telephone service markets is usually justified FTTH network to 'Town TV YOKOHAMA', an urban by some quoted reasons, such as the economies of cable TV operator. Town TV YOKOHAMA plans to scale in this market, worries about investment provide telephone services and cable TV services overlaps, and worries about deterioration of through this network. universal services. However, as can be seen in the cases of the UK and Japan, these worries can be On the other hand, the New Common resolved when we utilize cable TV networks as a Carriers(NCCs) in the long distance market plan to local loop. Since the use of cable TV networks use the cable TV networks as subscriber access allows not only provision of traditional lines. Among these, Japan Telecom(JT), a long telecommunications services, including voice distance carrier,has adopted the most positive telephony, but also offer of new multimedia services, attitude towards using cable TV networks. JT has we can introduce competition into the local already come to an agreement with ITJ, an telephone market without investment overlap international telephone operator, to merge in anxieties, and can help in removing bottlenecks October, 1997. If JT secures subscriber network, it from local loops at an early stage. can complete entire networks, from local to international. Therefore, JT has already invested in The regulatory regimes governing
0<-02 ; 818 telecommunications policies in most countries(except for some developed countries, such as the USA and Japan) of the Asia-Pacific region have regarded cable TV networks simply as infrastructures for cable TV services, and have not examined the possibility of using cable TV networks for telecommunications services. However, the convergence of communications technologies, and in particular, the integration of cable TV and telecommunications infrastructures, is at the very heart of the future information society. The establishment of an appropriate regulatory framework for the Asia-Pacific region which takes account of this phenomenon is urgently required.
References
1. Minoru Sugaya, "Cable Television and government policy in Japan", Telecommunications Policy, Vol.19, No.3, 1995. 2. Byun, Jae-Ho, "Regulatory Issues on CAN and Telecommunications Convergence in Korea", PTC '97 proceedings, 1997. 3. Joho Tsushin Handbook 97, Info Com Research, Tokyo, 1996. 4. CATV Promotion Policies, Ministry of Posts and Telecommunications, Tokyo, 1994. 5. Business Strategies of Domestic CATV Operators, Info Com Research, Tokyo, 1997.
3 GIBN Multimedia Network Experiments - ATM SatelliteCommunicationExperimentsbetween Japan and Canada -
Takahiro KOMINE*, Gen HAMADA*/**, Ryutaro SUZUKI*, Eric TSANG * * *, Fumito KUBOTA*
*: Communications Research Laboratory, Tokyo, Japan **: CSK Corporation, Tokyo, Japan ***: Communications Research Centre, Ottawa, Canada
1. ABSTRACT
This paper presents the intercontinental ATM networks experiment using the satellite and terrestrial links that is being conducted by Communications Research Laboratory (CRL) in Japan and Communications Research Centre (CRC)in Canada. We used the HDTV video conference system by using MPEG-2 CODECs. We consider that the network clock synchronization is one of the most important subjects on the worldwide ATM networks which may be difficult to guarantee the end-to-end clock synchronization. We propose the network clock synchronization system at the both end-points by using GPS. We verify the effect of our proposed system on this intercontinental ATM networks experiment.
2.INTRODUCTION high quality communication system.
This experiment is part of the Global The high quality communication system that we Interoperability for Broadband Networks (GIBN) developed is an HDTV video conference system project. The GIBN project promotes the that used MPEG-2 CODECs which can compress establishment of international network links and HDTV signals into CBR data. We can select the provides an opportunity to experiment on AAL types at the CLAD equipment, which interconnectivityand interoperability. This project exchanges CBR data for ATM cells. also promotes the rapid development of global standards and encourages the development of The experimental network is set up between CRL new applications for broadband networks. and CRC via an ATM commercial network in Japan, an INTELSAT circuit of 45 Mbps, and the In the past experiment (see section 4.1), there Canadian Network for the Advancement of were some freeze-frames in MPEG video Research, Industry and Education (CANARIE). transmission that is attributed primary to the occasional off-synccondition. We consider that the 3.EXPERIMENTAL SYSTEM network clock synchronization is one of the most important subjects on the worldwide ATM 3.1 NETWORK CONFIGURATION networks which is difficult to have the end-to-end clock synchronization. The ATM network between Japan and Canada can be described as having three segments : the The aims of the present experiment are : satellite link, the Japan side, and the Canada (a)to explore how best to incorporate satellite side. Figure 1 shows the ATM network links with optical fiber links to form the worldwide configuration diagram. The satellite link, ATM networks. We propose the network clock constructed using the INTELSAT, operated at synchronization system at the both end-points by DS-3. On the Japan side, the ATM link over NTT's using GPS. optical fiber network operated at STM-1, which is (b)to measure the performance degradation of a almost OC-3. On the Canada side, the ATM link high quality communication system on the over the CANARIE National Test Network experimental networks. This experiment is the operated at OC-3. first of the GIBN experiments to evaluate the performance gap between AAL-1 and AAL-5 in a 3.1.1SATELLITE LINK CONFIGURATION
820 .6 5 The experiment used the INTELSAT 513 at the longitude of 183 deg.E for the relay between Japan 3.1.2 JAPAN SIDE CONFIGURATION and Canada. The INTELSAT satellite operated using C-band towards Ibaraki, Japan and Lake Figure 2 shows the ATM network configurationin Cowichan, Canada. Japan. The end-point of the ATM network in Japan was CRL in Koganei, Tokyo. The video INTELSAT conference system and the ATM switch at the CRL were connected at OC-3. CRL wasconnected to Kokusai Denshin Denwa Corporation (KDD) in Tokyo via Nippon Telegraph and Telephone 3, Corporation (NTT) optical fiber network at ttcal Fibe STM-1. KDD in Tokyo was connected to KDD Netwbrk earth station in Ibaraki at DS-3. KDD used the Teleglobe exclusive DS-3 modem for the ATM links, which (Lake Cowichan) - supports the bit interleaving to reduce cell loss.
Figure 1. ATM network configuration diagram 3.1.3 CANADA SIDE CONFIGURATION on Japan-Canada experiment Figure 3 shows the ATM network configurationin CRL (Tokyo) Canada. The end-point of the ATM network in Video Conference Canada was the CRC in Ottawa. The video System conference system and the ATM switch at the CRC were connected at OC-3. CRC wasconnected to the Teleglobe earth station in Lake Cowichan via the STM-1 OCRINet, the CANARIE National Test Network, TT's Optical Fiber Networ the BCTeL and the Rogers at OC-3. The Teleglobe uses the KDD's DS-3 modem. STM-1 - 14 3.2 HDTV VIDEO CONFERENCE SYSTEM DS-3 Satellite system Rau The HDTV CODEC system supplied by KDD KDD Earth Station (Tokyo) (Ibaraki) Mitsubishi Electric Corporation is a proprietary piece of equipment implementing an MPEG-2 Figure 2. ATM Network configuration in Japan algorithm format. Analog video signal from the HDTV video camera is used. Analog audio signal CRC r input is used, with four audio channels in the Video Conference MPEG-1 audio mode. The output data rate System generated by the encoder is 22.5 Mbps as CBR. TM-LA Two other output data rates can be selected : 60 C-1 Mbps and 120 Mbps. The compressed data is transmitted and received using ATM cells. This CODEC supports two kinds of AAL, AAL-1 and AAL-5, to interface to the ATM network. Tables 1 and 2 show the specifications of the HDTV video CBCTeL conference system equipment. 1 Vancouver C-3 r Lake Cowichan atellite system YelEgIO6eEitiiSiLliOn
Figure 3. ATM Network configuration in Canada 855. 821 Table 1. Specification of HDTV CODEC system 3.3NTSC VIDEO CONFERENCE SYSTEM Transport 22.5 Mbps Stream rate The NTSC CODEC system supplied by Mitsubishi Video encode MPEG-2 Main_Profile@High_Level Electric Corporation is a proprietary piece of Chroma format4:2:2 equipment implementing an MPEG-2 algorithm format (see Table 3). Analog video signal from the Horizontal size 1920 pixels NTSC video camera is used. Analog audio signal Vertical size 1080 lines input is used, with two audio channels in the Frame rate 60 frame/s MPEG-1 audio mode. The output data rate Audio encode MPEG-1 Audio_Layer2 generated by the encoder is 12.03 Mbps as CBR. Audio rate 768 Kbps (4 channel) Several kinds of output data rates can be selected, ATM interface AAL-1, AAL-5 ranging from 5.184 Mbps to 31.104 Mbps. The compressed data is transmitted and received using ATM cells. This CODEC supports AAL-5 to Table 2. Specification of HDTV video camera interface to the ATM network. Japan Canada Title Sony HDC-750Victor KH-100 4.TECHNICAL ISSUES EXPERIMENTED BY Device configuration2/3-inch 2/3-inch PAST EXPERIMENTS FIT CCD x3 ITCCD x3 Picture elements 1920(H) 960(H) The ATM satellite communication experiments 1035(V) 1035(V) between Japan and Canada (Japan-Canada Horizontal resolution1000 TV lines 750 TV lines experiment) are part of the ATM satellite experiments with the HDTV CODECs. CRL has S/N ratio 54 dB 52 dB already completed two experiments in 1997. The Aspect ratio 16:9 results of these experiments show that some Scanning system 2:1 interlaced, 1125 lines, technical issues need to be improved. The 60 field/s Japan-Canada experiment was designed taking Zoom lens Cannon FUJINON these results into account. A summary of these HJ18x7.8B AS-15x8BW experiments follows.
Table 3. Specification of NTSC CODEC system 4.1TRANSPACIFIC HIGH DEFINITION Transport 12.03 Mbps VIDEO SATELLITE COMMUNICATIONS Stream rate EXPERIMENT (JAPAN-U.S. EXPERIMENT) Video encode MPEG-2 Main_Profile@Main_Level This experiment(1) is one of the activities arising Chroma format4:2:0 from the Japan-U.S. Cooperation in Space Project Horizontal size720 pixels (JUSTSAP) and is the first in the transpacific Vertical size 480 lines series.of GIBN experiments. Figure 4 shows the Frame rate 29.97 frame/s ATM network configuration of this experiment. Audio encode MPEG-1 Audio_Layer2 This experiment tested the ability of satellites to Audio rate 384 Kbps (2 channel) carry HDTV signals between Sony studios in Tokyo and Los Angeles in March,1997. Japan was ATM interfaceAAL-5 linked to Hawaii via the INTELSAT satellite, and Hawaii to California via NASA's Advanced Communications Technology Satellite (ACTS). The HDTV CODEC system is almost equivalent to the Mitsubishi Electric MPEG-2 CODEC system shown in Table 1, except that it only supports AAL-5.
036
822 INTELSAT NASA ACTS Figure 5 shows the ATM network configurationof 4.* the domestic experiment. this experimental 4.... network was linked between CRL and NSTAR Ku -band:de..C-bandKa -band.*..Ka-band ..S.. satellite owned by NTT via the CRL Kashima .*. Space Research Center. The Kashima Space Research Center used the OC-3 modem for ATM JPL alifomia) links, which supports the bit interleaving to Optical Fiber reduce cell loss. Cable Hawaii T OC-3> ISONY(Tokyo)I I SONY(California) I Japan U.S.A Figure 4. ATM network configuration diagram on Japan-U.S. experiment
The experimental results are as follows. (a)End to end ATM performance 1 11s Optical When it rained or when there was a thick cloud Fiber Network over Honolulu, the ACTS satellitelink was CRL (Tokyo) CRL Kasima Space Research Center observed to have many error bursts. At times (Ibaraki) asymmetric performance was observed in the ACTS satellite links to/from Honolulu. The optical Figure 5. ATM network configuration on domestic experiment fiber network did not contribute to the error statistics significantly. These results are Table 4. Performance in the irregular state consistent with the characteristics of satellite AAL AAL-1 AAL-5 frequencies such as Ka-band. Bandwidth 26.19 Mbps 25.37 Mbps (b)Analysis of HDTV performance of ATM cells When the ACTS satellite link was observed to Bit error rate 1.0E-7 (*) 7.7E-8 (*) have many errorbursts, the HDTV CODEC failed at just before start to extract frame synchronization information, Bit error rate 7.7E-8 (*) 6.8E-8 (*) which resulted in many freeze-frames. When the at just after finish ACTS satellite link was good, the output video Count of freeze-frame 19 122 from HDTV CODEC had no visible compression 6.77 s artifacts. The only observable effect of the CODEC Duration time 2.54 s of freeze-frame (average) (average) system and network was the occasional freeze- 67.6 % frame. This effect was attributed primarily to the Ratio of freeze-frame 4.0 % small buffer size and the occasional off-sync (*) It was very hard to fix the bit error rate in the condition. It is considered that the network clock satellite link, which is measured from the line BIP synchronization is one of the most important error ratio on SDH frames, because the transmitting subjects on the networks whichis difficult to power control is very sensitive and the line BIP error have the end-to-end clock synchronization. ratio is not stable for a long time.
4.2 ATM SATELLITE COMMUNICATION The experimental results are as follows. EXPERIMENTS IN JAPAN (DOMESTIC (a)End to end ATM performance EXPERIMENT) The NSTAR satellite operated using Ka-band towards the Kashima Space Research Center. The domestic experiment, the first to use the Then there is a possibility that the satellite link is HDTV CODEC system supporting AAL-1, is a observed to have many errorbursts when it rained comparative experiment for the Japan-Canada or when there was a thick cloud. The ATM experiment. The domestic experiment, conducted monitoringsystem detected no cellloss in the ATM in July and December of 1997, tested the HDTV network during the domestic experiment. video conference system shown in section 3.2. (b)Performance of video conference system
823 857 We evaluated the performance gap between Table 5. End to end ATM performance AAL-5 and AAL-1 in the HDTV video conference MeasuredLoop back Cell Delay Cell Delay system. There was no performance gap between point point Time Variation AAL-5 and AAL-1 in the regular state. The (average) (average) irregular state, produced by controlling the CRL CRC 623 ms 21.2 us transmitting power towards the NSTAR satellite at the Kashima Space Research Center, was used CRC CRL 609 ms 84.8 us to evaluate the performance gap between AAL-5 and AAL-1. Table 4 shows the performance in the 5.2NETWORK CLOCK SYNCHRONIZATION irregular state. The results show that the PERFORMANCE bandwidth is larger when AAL-1 is used than when AAL-5 is used, but the reliability of AAL-1 is The HDTV CODE C system supplied by higher than that of AAL-5. Mitsubishi Electric Corporation was originally designed for use with ATM optical fiber networks. 5. ATM SATELLITE COMMUNICATION Several freeze-frames were detected every hour in EXPERIMENTS BETWEEN JAPAN AND the Japan-U.S. experiment. The Japan-U.S. CANADA (JAPAN-CANADA EXPERIMENT) experiment was constructed from two ATM optical fiber networks and two ATM satellite networks, The aims of the Japan-Canada experiment are : which did not have the same clock synchronization. (a)to explore how best to incorporate satellite We suspect that these freeze-frames can be links with optical fiber links to form the worldwide attributed to the end-to-end clock synchronization ATM networks. We propose the network clock and the CODE C buffer pool size. We will develop synchronization system at the both end-points by the network clock synchronization system by using using GPS. GPS which can establish clock synchronization (b)to measure the performance degradation of a between CRL and CRC. We will use this system to high quality communication system on the verify whether these freeze-frames are due to the experimental networks. This experiment is the end-to-end clock synchronization. Figure 7 shows first of the GIBN experiments to evaluate the the network clock synchronization system by using performance gap between AAL-1 and AAL-5 in a GPS. We will verifythe effect of this system on the high quality communication system. Japan-Canada experiment. This system will be reasonable system because of the use of the GPS The practical experiments present as follows. system, if this experiment succeed.
5.1 END TO END ATM PERFORMANCE GPS satellites
The end to end ATM performance will be measured using ATM analyzers, Hewlett Packard IGPS Receiver I I GPS Receiver Broadband Series Test System. An ATM analyzer .10 MHz 1+ reference clock 41 will be installed at each end-point (CRL and CRC). 'Signal Generator I 'Signal Generator I 155.52 MHz Figure 6 shows the end to end ATM performance 14 reference clock 41 monitoring configuration. Table 5 shows the end I ATM Analyzer ATM Analyzer I 155.52 MHz to end ATM performance of the Japan-Canada <0C-3>i I network clock FOC-3> experiment. ATM-SW AATM -SW andar standar clock clock ATM .155.52 MHz Analyzer <°C-3>I network clock I FOC-3> Video end-to-end clock Video Video Video Conference4Synchronization Conference Conference Conference System System System System CRL(Tokyo) CRC(Ottawa < Loop back point > Figure 7. Network clock synchronization system by using GPS Figure 6. End to end ATM performance monitoring configuration
824 Ej 5.3 PERFORMANCE OF VIDEO CONFERENCE SYSTEM
We will inspect what is important as high quality communication with much presence. We will execute a questionnaire survey with key words such as video quality, voice quality, screen size, for all users used the video conference system.
6.FUTURE WORK
HDTV application experiments are going on. Followed after HDTV video conferenceexperiment, we will verify the Video-on-Demand system by using HDTV images, which based on DAVIC (Digital Audio Visual Council) specifications. As further applications experiments, we will open the long distance lectures and the international workshop at both CRL and CRC sites.
ACKNOWLEDGMENT The research described in this paper is carried out jointly by the Communications Research Laboratory under a contract with the Telecommunications Advancement Organization of Japan and Ministry of Posts and Telecommunications of Japan, and the Communications Research Centre under a contract with the Industry Canada.
The authors appreciate the tremendous effort and support of all participants in this experiment: the Communications Research Laboratory, the Telecommunications Advancement Organization of Japan, the Ministry of Posts and Telecommunications of Japan, the Nippon Telegraph and Telephone Co., the Kokusai Denshin Denwa Co., the Mitsubishi Electric Co., the Communications Research Centre, the Industry Canada, the Canadian Network for the Advancement of Research, Industry and Education Inc., the Teleglobe, the OCRINet, the BCTeL and the Rogers.
REFERENCE
(1)E. Hsu, C. Wang, N. Kadowaki and T. Takahashi, "Distributed HDV Post-Production over Trans-Pacific ATM Satellites", Proceedings of Third Ka Band Utilization Conference, September, 1997.
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