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Previous
editions
In this edition:
MOBILE
OVERTAKES FIXED (www.itu.int/mobileovertakes)
1. Mobile:
The network of choice
2. Policy and
Regulatory objectives in a predominantly mobile world
3.
Case in point: Wireless Local Area Networks
4.
Related links about "Mobile overtakes
Fixed"
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In
2002, mobile subscribers worldwide outnumbered fixed-line subscribers - a cross-over which is
having a significant impact both on access
to basic telecommunication services,
and on information and communication
technologies (ICT).The impact is not only a technological one however, but can also be seen from
an economic and social development
perspective. In
response to the strong interest expressed by ITU Member States and Sector
Members in the topic of mobile overtakes fixed, and of the strong perceived
need for the telecommunication industry to adapt to this new market
environment, the ITU Strategy
and Policy Unit (SPU) has carried
out extensive research on the topic, which it is pleased to present
in this newsletter. The information contained herein also contributes
to information dissemination within ITU for increased intersectoral
awareness of new industry developments.
As
part of the resources developed by SPU for free access by all interested
parties, a background resources website has
been created on "Mobile
overtakes Fixed",
including, inter alia, a
background paper on "Mobile
Overtakes Fixed: Implications for Policy and Regulation " ,
as well as a host of other interesting
links and articles on the subject. The articles below present some of the highlights of recent research
activities on the topic. A list of useful links on specific related topics
is also provided at the end of this newsletter.
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1.Mobile:
The network of choice
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 1). The rise of mobile telephony to overtake fixed has
brought with it a huge number of 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. It is also noteworthy that the phenomenon
of the mobile cross-over has taken place across geographic criteria such as
countries, regions, and continents, across socio-demographic criteria such
as gender, income, or age, and across economic criteria such as price
premium for mobile (micro) or GDP per capita (macro).
| Figure
1: Mobile as the new global network |
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Mobile
and fixed telephone subscribers worldwide, 1983- 2003 and countries with more mobile than fixed
telephone subscribers, 2002 |
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 |
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Note: In the upper chart, 1983-2002 is based on real data; 2003 on projections. In
the lower chart, countries that are shaded had more mobile users than fixed lines, as at year-end 2002
Source: ITU World Telecommunication Development Report,
2002; ITU World Telecommunication Indicators Database and ITU
projections.
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It is also significant that the greatest impact of mobile communications
on access to telecommunication services—in other words, increasing the
number of people who are in reach of a telephone connection of any
kind—can be seen in developing countries. 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 development are clearly
different for each of them, depending on whether they are developed or
developing economies, and so are the implications.
Below
are excerpts from the SPU background paper on Mobile
Overtakes Fixed: Implications for Policy and Regulation. The
"Mobile overtakes Fixed" background resources website may be found
at www.itu.int/mobileovertakes.
Download
background paper on Mobile
Overtakes Fixed: Implications for Policy and Regulation 
2.
Policy and Regulatory objectives in a
predominantly mobile world
Policy and regulatory objectives
The formulation of policy and regulatory objectives is a precondition for
setting policies. In telecommunications, some of the widely accepted
objectives are to:[i]
-
promote universal access to basic telecommunication
services;
-
foster competitive markets to promote efficient supply of
telecommunication services, good quality of service, advanced services and
efficient pricing;
-
prevent abuses of market power such as excessive pricing and
anti-competitive behaviour by dominant firms;
-
create a favorable climate to promote investment to expand
telecommunication networks;
-
promote public confidence in the telecommunication market
through transparent regulatory and licensing processes;
-
protect consumer rights, including privacy rights;
-
promote increased telecommunications connectivity for all
users through efficient interconnection arrangements;
-
optimize use of scarce resources, such as the radio
spectrum, numbers, and rights of way.
The changing environment does not actually alter
these objectives per se, but it does entail changes in the means of
achieving them. In an era of convergence and interchangeable technologies,
some institutions, such as the European Commission for example, have
changed their approach to reach these objectives to a technology-neutral
regulatory approach.
It is notable that divergent opinions often do not
concern the objectives but the means to reach them. The view that
asymmetrical regulation as adopted for fixed-line telecommunications is
not appropriate for mobile is widely accepted. However, there are
differing opinions on the question of whether the mobile industry should
be regulated at all. Some argue that there is sufficient competition to
let market forces develop freely. Others argue that there is market
failure and a rationale for regulatory intervention in mobile markets, for
example at the wholesale level concerning fixed-to-mobile termination
rates.
Absolute
and relative relationship of fixed and mobile, and directions of growth
The fixed-mobile cross-over is a relative relationship. Absolute numbers
can look quite different, even when the relative numbers are very similar.
Two of the first countries where mobile overtook fixed, Cambodia (in 1993)
and Finland (in 1998), are a good example as they present a similar
relative ratio, but absolute teledensities that lie at opposite ends of
the spectrum. Based even on this much information, policy and regulatory
objectives will obviously have to be quite different for these countries,
in spite of the fact that the same phenomenon has taken place in
statistical terms.
Directions
of growth are equally essential for the assessment of policies and
regulations. In developing countries, the diffusion of cellular
infrastructure may be an inhibitor to growth in the wireline
infrastructure. This may not be desirable with regard to providing
Internet access. Some regulators place conditions on mobile licences, such
as the requirement that mobile operators build out fixed infrastructure as
part of the licence conditions (see Box 1).
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Box 1: Conditions for mobile
licences
Lessons from rollout
requirements
There are more and more examples where
licences for mobile services have inbuilt rollout requirements. In the
Philippines, mobile operators must provide fixed or semi-fixed wireless
lines; in South Africa, mobile operators must provide public payphones; in
Morocco, the second GSM licence included build-out requirements in rural
areas.[ii]
The specificities of such requirements can be central to the results that
are achieved. In the Philippines for example, the location for the
roll-out targets were not specified, with the result that operators
concentrated on areas and customers with high potential returns that may
have attracted other investors as well. Conversely though, overly
demanding fixed build-out obligations that are imposed on mobile operators
in this manner may be counter-productive, possibly leading to unused
capacity and inefficient use of spectrum.
Cellular operators are increasingly
expanding their services to include fixed when, for example, focusing on
the rollout of services to rural, remote, and low-income areas. Examples
of this development can be found in Ghana (Western Wireless), Uganda (MTN),
and Venezuela. When cellular operators get the option in their licences to
provide fixed-wireless services within their operating areas this may
allow them to serve rural areas at an incremental rather than at full
cost. It may become one strategic direction in order to address the gap in
urban and rural access in developing countries.[iii]
Among lessons learned from previous
regional concessions are: the benefits of packaging lucrative areas with
higher-cost areas in order to attract investors to balance network
expansion; technology neutrality of the services that are bundled under
one licence; and preferential access to scarce resources such as the
allocation of frequency spectrum free of charge in rural areas.[iv]
Source:
ITU Research.
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In developed countries, mobile growth rates have been slowing down, but
more interesting is a decrease in fixed lines in some countries.
Fixed-line installations are subject to cycles, typically increasing when
consumers request second lines, or when a lot of new businesses are
emerging. From the business customer point of view, this can change in
times of economic slowdown or recession. However, a steady increase in
mobile-only customers and a decrease in fixed-line customers will
certainly have to play a part in policy and regulatory considerations.
Maturity of telecommunication markets and the effects
on policy objectives
Experience has shown that emerging markets often develop best in a
competitive environment that is characterized by very little regulatory
intervention. Asymmetrical regulation can be applied in order to protect
immature markets and give them the opportunity to evolve.
The maturity of the market affects such factors as market definitions and
remedies for anti-competitive behaviour. In turn, market definitions
influence the assessed level of maturity. In an intermodal comparison,
mobile communication markets do not appear as mature when compared with
their wireline counterparts. From an intramodal perspective
however, 2G markets are highly mature compared to 3G markets.
For the remainder of this paper, implications the fixed-mobile cross-over
based on policy and regulatory objectives will be analysed from three
different perspectives: the relationship between governments and
operators—and implications for spectrum policies, numbering management,
as well as universal service policies; the relationship between operators
and their implications for competition policy; and the relationship
between operators and consumers and the implications for pricing and
billing, privacy, and consumer and data protection.
Download
background paper on Mobile
Overtakes Fixed: Implications for Policy and Regulation
[ii]
See Navas-Sabater, Juan/Dymond, Andrew/Juntunen, Niina (2002):
Telecommunications and information services for the poor. Toward a
Strategy for Universal Access: p.30.
[iii]
See Navas-Sabater, Juan/Dymond,
Andrew/Juntunen, Niina (2002): Telecommunications and information
services for the poor. Toward a Strategy for Universal Access: pp.38.
[iv]
See Navas-Sabater, Juan/Dymond,
Andrew/Juntunen, Niina (2002): Telecommunications and information
services for the poor. Toward a Strategy for Universal Access: p.33.
3.
Case
in point: Wireless Local Area Networks
Diffusion
of WLANs
Wireless local area networks (WLAN) are one way to provide wireless
connectivity. A differentiated set of Institute of Electrical and Electronic Engineers
(IEEE) standards has been developed in order to make use of unlicensed
spectrum, e.g. in the 2.4 GHz and the 5.8 GHz frequency bands. One trend is
clear: WLANs are spreading rapidly. They have developed from private WLAN on
university campuses and office buildings, to include public WLANs
(“hotspots”) in train stations, airport lounges, coffee shops and parks
and free community networks that share their bandwidth in their respective
neighbourhoods. WLAN Internet service providers can be any of the incumbent,
fixed-line ISPs, mobile operators, or new businesses that act as
intermediaries and aggregate WLAN connectivity. Even railway companies,
banks, and retail stores are entering the WLAN ISP market, for example in
Japan.
In
the Asia-Pacific region in particular, a daily increase is occuring in WLAN
hotspot announcements. In the United States, free community networks are
reaching out to the wider population and are posing a threat to the business
models of the providers, who calculate their charges for an individual
rather than for a community service. WLANs offer value to the user, and its
unlicensed status allows for bottom-up rather than top-down innovation (see
Box 2).
| Box 2: Wi-Fi in Bhutan
Wireless connectivity for developing countries
via WLANs
Wi-Fi, or Wireless Fidelity—local area
networks using radio technologies based on the IEEE 802.11b or 802.11a
standards—is generally thought of as a technology for mobile
Internet users in developed economies. Wi-Fi is commonly perceived as
wireless broadband for jet-setting business people, students and
trendy dot-comers and hotspots are located in busy, urban places such
as airports, college campuses and coffee shops. But Bhutan may prove
this elitist image of Wi-Fi wrong. It is almost as though the
predominant religion there, Bhuddism, extends even into
communications: where “Gross Domestic Happiness” is as important
as Gross Domestic Product: a source of delight for some, who
appreciate the aspects of Wi-Fi that run counter to commercial and
economic systems (Wi-Fi is often free, and typically operates in
unlicensed frequencies). They have been helping Bhutan test the
appropriateness of Wi-Fi technology in remote mountain villages.
Bhutan is probably one of the most
difficult nations in the world to ‘wire.’ It is predominantly
rural, with mostly mountainous terrain. Some 80 per cent of the
population lives in around 6’000 villages—many without telephone
service. The nation’s telecom operator, Bhutan Telecom (BT), has
been looking at alternative technologies for providing telephone
service. Wi-Fi meets a number of BT’s goals. It supports Internet
Protocol (IP) that can both meet voice telephony needs (using Voice
over Internet Protocol, VoIP), as well as data communications
requirements. As BT notes, delay in implementing telephone service in
rural areas “may have been a godsend as recent technological
developments may offer a much more cost-effective alternative for the
provision of rural access.[i]
Another motive for moving to new technology is that manufacturers are
discontinuing the Digital Radio Multiple Access Subscriber System (DRMASS)
that BT has been using for rural telecommunications, and equipment
will no longer be available.
A
project in Bhutan has been exploring the feasibility of Wi-Fi for
this mountain kingdom. There is ample spectrum available in the
kingdom. Results of a first pilot project were very promising. There
was scarce radio interference and power requirements using solar
power and batteries were sufficient due to the lower energy
requirements of the Wi-Fi equipment.[ii]
The pilot project has now been extended to 14 villages as part of
US$ 300'000 project. Depending on the evaluation, the technology may
be extended to more villages. [iii]
Source:
ITU Asia-Pacific Telecommunication Indicators, 2002.
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Most governments around the world have not voted for the
licensing of the unlicensed spectrum. On the contrary, regulatory
authorities in countries such as France and Great Britain, as well as the
Republic of Korea and Japan have announced their intention to free more
spectrum[iv].
In Hong Kong, China, the regulator OFTA announced the introduction of class
licenses for WLAN providers in November 2002.
4.
Related
Links about "Mobile Overtakes Fixed"
Interconnection
International
roaming
Pricing
and billing
Competition
in mobile markets
Licensing
and spectrum policy
Mobile
data communications
Consumer
protection and privacy
| For
further information on Policy and Strategy Trends, please
contact: ITU Strategy and Policy Unit, International
Telecommunication Union, Place des Nations, CH-1211 Geneva 20
(Switzerland). Fax: +41 22 730 6453. E-mail: spumail@itu.int
. Website: www.itu.int/spu/ |
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