ITU and its Activities Related to Internet Protocol (IP) Networks

The origins of the mobile communications industry date from the licensing of analogue cellular communications services in the early 1980s. As recently as 1990, there were only 11 million subscribers worldwide, but the introduction of digital services in the early 1990s, combined with competitive service provision and a shift to prepaid billing, spurred rapid growth in demand. At the end of 2003, there were over 1.35 billion mobile subscribers worldwide, compared with 1.2 billion fixed-line users (see Section 2.7).

The origins of the Internet go back to 1969, but it was in the early 1990s, with the development of the World Wide Web and graphical browsers, that the Internet really took off as a commercial undertaking. By the end of 2001, the Internet had passed the half billion user mark. Although the “dot.com” boom of the late 1990s proved to be short-lived, the Internet itself has continued to grow, adding more users and new applications.

As Figure 2.1 shows, the mobile and Internet industries have exhibited remarkably similar growth patterns since the start of the 1990s, but with a lag of about two years. The level of penetration of the Internet at the end of 2001 (8.2 users for every 100 inhabitants, worldwide) is almost identical to the penetration of mobile phones at the end of 1999. This two year lag might be explained by the fact that the formative moments in the growth of these industries occurred just under two years apart: digital cellphones were launched commercially on 1 July 1991 (by Radiolinja, in Finland), while graphical web browsers were launched commercially in April 1993.

2.2 Mobile: from 2G to 3G

Major stages in the technological development of mobile telecommunications are commonly described in terms of “generations”. “First-generation” (1G) mobile technology refers to the analogue cellular systems that first appeared in the late 1970s and early 1980s. This phase of development was characterized by a wide range of different systems, many of which became popular in one or two countries only. “Second generation” (2G) technology refers to today’s digital cellular systems (first deployed at the start of the 1990s), such as GSM (Global System for Mobile Communications), PDC (personal digital communications), TDMA (time division multiple access), and CDMA (code division multiple access).

While 2G networks were developed under a number of proprietary, regional and national standards, “third-generation systems (3G), were developed from the outset on the global stage, during the 1990s, under the leadership of the International Telecommunication Union (ITU) under the IMT-2000 (International Mobile Telecommunications) banner. Much effort has gone into the development of a single interoperable global standard for 3G systems, in order to avoid the market fragmentation that had very much characterized the 1G and 2G worlds.

2.3 3G Systems or IMT-2000

It was in the mid-1980s that ITU began its work on IMT-2000. ITU’s 1992 World Radio Conference (WRC) identified the 2 GHz band for the global deployment of IMT-2000. Eight years later, the 2000 WRC allocated additional spectrum for 3G services in three frequency bands: one below 1 GHz, another at 1.7 GHz (where many second-generation systems currently operate) and a third band in the 2.5 GHz range.

This effectively gave a green light to the mobile industry worldwide to start deploying IMT-2000 networks and services. Many economies, such as Australia, Hong Kong, China, and most European countries, have allocated spectrum for 3G, although, still in 2004, few services have been made commercially available. The countries that have begun deploying 3G services include Brazil, Canada, Japan, the Republic of Korea, the United States and the United Kingdom.

Despite concerted global efforts at standardization, there remain different approaches to 3G technology. The major industrialized economies were unable to agree on a single standard. The result was an IMT-2000 standard with a number of “flavours”, that is to say five possible radio interfaces based on three different access technologies (FDMA, TDMA and CDMA). Thus far, the vast majority of industry attention has been directed towards the CDMA technology, and in particular Wideband CDMA or W-CDMA (known in Europe as UMTS) and CDMA2000 (including CDMA2000 1x). Thus far, national licence allocation has been limited to these two radio technologies, although China is licensing a third technology, TDSCDMA.

2.4 The Internet in Transition

The Internet has also been under significant transformation, particularly since the early 1990s. Fifteen years ago, prior to the Web, the Internet was primarily focused on academic and research use, was primarily North American-based, not for profit, and used mostly for e-mail and file transfer. With the invention of the World Wide Web in Geneva at CERN^[1] in the early 1990’s, the Internet became accessible to a much wider range of users. During the early and mid-1990’s there was significant growth throughout OECD countries and increasing privatization of its backbone. The mid- to late-1990’s witnessed the rise and fall of “dot.com” mania and with it the belief that the Internet was a suitable platform to subsume all existing telecommunication networks and services.

Despite the boom and bust (which is surprisingly common with most new communication technologies),^[2] digital convergence will continue, albeit not as fast as many of us had imagined. For example, there is ongoing standardization to provide integration and interoperability of IP-based and PSTN network services and applications. The telephone network (both fixed and mobile) and the Internet are likely to converge into what some people refer to as “next generation networks” or “NGN”. The NGN is characterized by the following fundamental characteristics:^[3]

2.5 Mobile and Internet Demographic Trends

When ITU started publishing statistical indicator reports on the development of telecommunications in different regions of the world in 1993, Asia-Pacific accounted for just one-quarter of the world’s fixed telephone lines and around one-sixth of mobile users. In last few years, the region has emerged as the world’s largest telecommunication market (see Figure 2.2). It is also the only region to have increased its market share significantly, adding more than one new telephone user every second for the last decade.

The Asia-Pacific region now has the largest share of Internet and mobile users as well as leading in advanced Internet technologies such as broadband access and mobile data. The Republic of Korea and Hong Kong, China, are the top two economies in the world in terms of broadband Internet penetration. In mobile Internet technologies, Japan and the Republic of Korea were the first two nations to launch third-generation cellular networks commercially. These exploits combined with a large potential for growth based on population demographics corroborate the view that the global telecommunications epicentre has shifted from North America and Western Europe to the Asia-Pacific region.

2.6 Internet Connectivity Trends

Figure 2.2 also demonstrates that Africa still very much lags the rest of the world in both mobile and Internet penetration. Large disparities in access to the Internet exist, particularly for developing countries. One widely recognized reason for this is the high costs of international circuits for Internet connectivity between least developed countries and Internet backbone networks. A number of initiatives are under way to address this problem. These include consideration of new models for financial exchanges among operators as well as efforts to facilitate the creation of traffic aggregation within localities, countries or regions in developing countries in order to avoid the sending of this traffic over satellite or cable links used for intercontinental traffic—for example between Africa and Europe or North America. The latter would aim to maximise the retention of local and national traffic within these regions and thus reduce the dependence on international communications links. To give a sense of the scale of the problem, over 75 per cent of Internet traffic in Europe remains intra-regional compared with only 1 per cent in regions like Africa (see Figure 2.3). ITU’s Telecommunication Standardization Sector Study Group 3 (see Section 4.9) and ITU Telecommunication Development Sector (see Chapter Five) are particularly active in exploring solutions.

2.7 Mobile Overtakes Fixed

The year 2002 marked an historic turning point in the history of telephony, for it was the year when mobile subscribers overtook fixed-line subscribers worldwide (see Figure 2.4).^[4] The rise of mobile telephony to overtake fixed lines has brought with it many implications, but perhaps the most significant impact is on access, both to basic telecommunication services, and to information and communication technologies (ICT), as a tool for economic and social development. This is partly because cellular networks can be built faster than fixed-line networks and can cover geographically challenging areas. Mobile services have served to boost competition, and prepaid models have opened access to mobile cellular for those who would otherwise not qualify for telephone subscription plans.

In countries where mobile communications constitute the primary form of access, increased exchange of information on trade or health services is contributing to development goals; in countries where people commonly use both fixed-line and mobile communications, the personalized traits of the mobile phone are changing social interaction.

Increasingly, mobile is not only overtaking fixed, but also substituting for it: in such cases, users have a mobile phone only and have no fixed-line subscription. In developed countries, this may be through choice. In developing ones, it may be the only possibility for individuals to have their own phone. This has created a whole new set of paradigms for users, regulators and providers alike. It is important to note that while there may be a similar percentage of mobile-only users in countries as diverse as, for example, Finland and Uganda, the reasons for this are very different and so are the implications.

As most of the legislative foundations of today’s telecom regulatory frameworks were articulated and predicated on the concept of increasing basic fixed line telephony density and dealing with incumbent monopolies, the growth of mobile has significant impact on policy and regulation outlooks. Issues include of the areas of spectrum and numbering management, universal service policies, competition policy and interconnection for mobile communications, international roaming, pricing and billing models, privacy, and consumer and data protection.

2.8 Mobile Internet

It requires no great leap of the imagination to believe that the convergence of mobile communications and the Internet will produce something big, perhaps even the mythical “sum that is bigger than its parts”. If this view is accepted, the convergence of mobile communications and the Internet (as well as with RFID type technologies – see Section 2.9) is likely to produce major innovations.

The major Asian economies are the clear first movers, with Japan and Korea being the first to actually deploy mobile Internet services (see Figure 2.5). Although the experience of Japan and Korea would suggest the huge potential of the mobile Internet, the high hopes for 3G have been somewhat dampened by the slump of recent years in the telecommunication sector as a whole, as well as evidence that some mobile markets are reaching saturation. Many operators in countries that have yet to initiate 3G deployments are taking a more gradual or cautious approach, concentrating their efforts on new multimedia-type applications over existing 2G platforms. Many are choosing to upgrade their systems to support higher data transmission speeds needed for images. This approach may be a useful way to “test the waters” for 3G, or to exploit more fully the potential of 2.5G technologies without the need to invest heavily in new 3G networks.

2.9 Ubiquitous Networks

The next trend over the horizon beyond mobile Internet is called “ubiquitous networking” or “pervasive networks”. This involves the use of radio frequency identification (RFID) technologies and their integration with other information and communications technologies, which has dramatically accelerated in the last few years with rapid reductions in microchip size and cost. This portents the possibility of a new totally new class of computing and communications recognized in the national IT strategies of Japan and Korea; two clear conceptual leaders in the field.

This development, aided by rapid advances in antennae technologies, will enable tiny microchips to be implanted in physical objects and from these conditions in the real world to be perceived, including the ability to detect a diverse range of real world information such as, inter alia, the identity of a person, current location, temperature and humidity levels, when and by whom a product was made. Some suggest this is a new revolution, which might be called the “Internet of things”. While much activity, particularly in Europe and the United States, has concentrated on RFID technologies in the context of product management or a replacement for Universal Product Codes (the familiar bar codes),^[5] the Asia-Pacific vision of ubiquitous is very much broader. A glimpse of what a future ubiquitous networking environment might look like is the communications environment portrayed in the recent film “Minority Report” (albeit a somewhat negative one).

At the recent ITU TELECOM World 2003, Professor Ken Sakamura of Tokyo University, widely considered to be one of the “godfathers” of the concepts behind ubiquitous networking, said that while he was delighted to see the growing interest in the technology, there were a significant number of policy and regulatory issues that must be first addressed. He cited examples of companies with plans to insert RFID tags into millions of products that they distribute and manage. There has given rise to increasing concerns about the security, privacy and the societal aspects of this technology. As an example, at a recent workshop on RFID privacy issues at the Massachusetts Institute of Technology (MIT) in the United States,^[6] a large number of civic organizations jointly issued a statement^[7] of their deep concerns about the rapid application of RFID chip technology to consumer products, which they see as a potential invasion of privacy.

2.10 Fixed Wireless Technologies

In 2002, wireless LAN technology became a bright spot in the beleaguered telecommunication market. Wireless LANs can effectively be used to share Internet access from a broadband connection over 100 metres, although they are also being used increasingly as methods of providing broadband access over longer distances in rural areas. This is accomplished by increasing power levels of the equipment, using specialized antennae, and ensuring line-of-sight access. Of all WLAN technologies, the most popular and widely known is IEEE 802.11b, commonly referred to as “Wi-Fi”.

Several factors have contributed to what is becoming the phenomenal growth of wireless LANs: a steep drop in prices, the mobility benefits of wireless connectivity, off-the-shelf availability, and easy installation. The combination of inexpensive equipment and easy installation has also made wireless LANs particularly attractive for rural connectivity. Many projects around the world are looking for ways to use wireless LAN technology to bridge the last mile. The ITU Telecommunications Development Sector (see Chapter five), to cite just one example, is in the process of implementing three pilot projects to determine the performance of WLANs for provision of community access for rural areas of Bulgaria, Uganda and Yemen. Wireless LAN is also being rolled out in many rural areas of other developed economies.

One fast-growing use of WLANs is the provision of wireless hotspots in public areas such as airports, conference halls, and cafés, offering high-speed wireless Internet connections to users. Beyond the “hotspot” concept, several businesses are even looking into ambitious plans to develop a patchwork network of wireless LAN connections across entire countries. Zamora, a Spanish town with a population of 65 000, already boasts 75 per cent Wi-Fi coverage.

The IEEE also recently standardized 802.16, commonly known as WiMAX, as a new fixed-wireless standard that uses a point-to-multipoint architecture. The initial version (802.16) was developed to meet the requirements for broadband wireless access systems operating between 10 and 66 GHz. A recent amendment (802.16a) does the same for systems operating between 2 and 11 GHz. WiMAX equipment should be able to transmit between 32-56 km with maximum data rates close to 70 Mbit/s.

While other fixed wireless technologies have had great difficulty with interoperability, the WiMAX technical working group is seeking to replicate the success of Wi-Fi by following its development and certification processes. First, the WiMAX working group included leading companies in many industries whose clout in their individual markets would help promote a common standard.^[8] Second, the WiMAX Forum is similar to the very successful Wi-Fi forum which offers a “stamp of approval” that equipment will interoperate with other certified products, further helping to create a single common standard.^[9]

2.11 Birth of Broadband

Another technology is emerging that promises to provide a unifying platform for three converging industrial sectors: computing, communications and broadcasting. That technology is “broadband”. Because of the nature of broadband (you have to use it to understand the benefits it offers), market take-off typically requires a critical mass of users. Currently, around one in every ten Internet subscribers worldwide has a dedicated broadband connection (see Figure 2.6, top chart), though many more share the benefits of high-speed Internet access, for instance, through a local area network (LAN), at work or at school. The world leader for broadband is the Republic of Korea (Figure 2.6, lower chart), which is around three years ahead of the global average in terms of converting Internet users to broadband. There, a critical mass was attained as early as 2000, when prices fell below USD 25 per month; from which point onwards take-off was rapid (see Figure 2.6, bottom chart). Currently, over 93 per cent of Internet subscribers in Korea use broadband.

Around the world, there were around 63 million “broadband” subscribers at the start of 2003 compared with 1.13 billion fixed-line users and 1.16 billion mobile phone users. Broadband users enjoy a range of service speeds from 256 kbit/s up to 100 Mbit/s. The number of subscribers is growing rapidly, with a 72 per cent increase during 2002. Digital subscriber line (DSL) is currently the most commonly deployed platform, followed by cable modems, Ethernet local area networks (LAN), fixed-wireless access, wireless LANs (WLAN), satellite and other technologies. The overwhelming majority of today’s users are in the developed world. However, even among the 30 member countries of the Organisation for Economic Co-operation and Development (OECD), there remain large disparities, not only in service availability but also in terms of quality of access and price per Mbit/s. In developing countries, as broadband becomes cheaper, and wireless technologies evolve, broadband adoption may help countries to “leapfrog” traditional telephony technologies, as already has been proven in a number of development initiatives.

2.12 Telecommunication Sector Reform

A vast majority of countries worldwide have reformed, or are in the process of reforming, their telecommunication sectors through the review and adoption of new legislation to adapt to the rapidly changing communication environment. They have done so by opening some market segments, if not all, to competition, allowing private participation, and establishing a national regulatory authority. As of mid-2003, 123 countries worldwide recognized the importance of establishing a regulatory authority to foster competition in the information and communication (ICT) sectors in a fair and transparent fashion. As the development of ICTs is making the convergence of different types of network platforms and services a reality, more and more countries are responding either by merging their telecommunication and broadcasting regulatory authorities or improving coordination between various agencies involved in the ICT sector. Additional functions and tasks are required from regulators as a result of convergence, liberalization and market growth, including dispute resolution and consumer protection. At the same time, regional initiatives are taking place worldwide to harmonize national ICT legislative frameworks and work together toward the ultimate goal of providing universal access if not universal service to all citizens of the world.

This liberalization of telecommunication markets through the introduction of competition is also changing the way countries approach universal access and service policies. This is due, in part, to the fact that services are being provisioned at a more rapid pace, prices are falling and new and innovative services are being introduced.

Today a robust national telecommunication infrastructure has become much more important than a platform for voice: it is the fundamental underpinning layer of networked economies and information societies. As a result, the development of advanced ICT networks is now a key policy objective for most governments around the world. Not only are these networks seen as an important determinant of national competitiveness in an increasingly globalized knowledge economy, they are also seen as offering new opportunities in areas such as education, health and social advancement.

All policy-makers and regulators, both established and new, are struggling to address changes resulting from convergence of the information and communication (ICT) sectors. One result is a serious re‑examination of existing regulatory models and new approaches to convergence regulation. For example, the European Union’s new telecommunication regulatory framework, adopted in March 2002, represents an attempt to move away from technology-specific and service-specific legislation. It attempts to proactively address convergence regulation issues by focusing more on market definitions related to competition law rather than embedding technology-specific definitions in legislation. It will be an interesting model to watch evolve as it is implemented by EU member states and tested by real-world issues.

2.13 Where Are We Heading?

Those familiar with the history of telecommunications know that predicting the future is notoriously difficult: technologies take time to mature and business models take time to evolve. For example, Alexander Graham Bell originally thought the telephone would be used for broadcasting. The reality is that it took over thirty years to find the “killer application” for the telephone: person-to-person communications.

We also forget that history tends to repeat itself. The invention of the telegraph was perceived, in many ways, as far more of a revolution than the Internet was during the last 10-15 years. Although it is hard to believe now, it was a technology that gripped the imagination of the mid-19^th century. That’s because for the first time in history, a communication means was available that was divorced from physical transportation. Exchanging messages suddenly took minutes instead of months. It was an invention that was described in the same glowing terms as the Internet: it was the “annihilation of space and time”.^[10] And it had to be built from scratch. While the Internet was essentially built on top of the global telephone network infrastructure, the physical infrastructure for the telegraph was built from nothing. This required massive business investments and there were a great number of technical and business failures along the way. One example is demonstrated by the early days of submarine cables. According to one historian: “Of the 17 700 kilometers of cable laid by 1861, only 4 800 worked and the rest were lost”. However, eventually the problems were solved and 20 years later, about 150 000 kilometers of submarine telegraph cables were in place and working.

Mobile communications and the Internet were the two major demand drivers for telecommunication services in the last decade of the twentieth century. Combining the two—mobile Internet—and this may suggest the major demand driver of the first decades of the twenty-first century. It is easy to envision a migration of traditional PSTNs to combined mobile and IP-based networks, and the potential integration of telecommunications, broadcasting, publishing and other media functions into these networks. This view suggests a future in which past divisions between “vertical” network structures would progressively be transformed into “horizontal” divisions between different network layers; in which everything ultimately would be connected through mobile broadband ubiquitous networks.

^[1] http://www.cern.org

^[2] See “The history of communications and its implications for the Internet” by Andrew Odlyzko, University of Minnesota, at http://www.dtc.umn.edu/~odlyzko/doc/history.communications0.pdf.

^[3] http://www.itu.int/ITU-T/studygroups/com13/ngn2004/working_definition.html.

^[4] At the end of 2003, the ITU estimated that there were over 1.35 billion mobile subscribers worldwide, compared with only 1.2 billion fixed-line users. A recent workshop examined the social and human considerations relating to the rapid development of mobile technology. See http://www.itu.int/osg/spu/ni/futuremobile/index.html.

^[5] For example, see http://www.epcglobalinc.org/.

^[6] http://www.rfidprivacy.org/agenda.php.

^[7] http://www.privacyrights.org/ar/RFIDposition.htm .

^[8] The WiMAX forum has detailed information on 802.16 at: http://wimaxforum.org/tech/tech.asp.

^[9] The ITU recently approved Sector Membership for the IEEE in its Radiocommunication Sector (ITU-R) which means that the IEEE can be a direct contributor to standards and other documents developed by ITU‑R.

^[10] See 2.

Chapter Two: Understanding Telecommunication Network Trends

2.1 Mobile and Internet: Two Innovations