in the context of M2M, where there is continued demand for telephone numbering resources for vending machines, smart meters, and in vehicle communications modules.3.5.4 Competition IoT technologies likely will have a range of impacts on the competitiveness of different markets. In the short term, firms adopting IoT systems will have better information on their business processes, enabling an increase in efficiency and more flexible responses to supply, processing and demand shocks. This could strengthen the market position of larger firms that have greater access to capital (to build their own IoT infrastructures) or brand loyalty. Some products will have network effects – i.e., the purchase of a product will increase its value to all other purchasers. A good example of this is telephone service, where a new customer can call and be called by all existing customers. With network effects, greater sales volumes can increase the likelihood of consumers being locked in to existing suppliers – especially if the supplier uses non-standard interfaces and sells complementary services93.94 Over time, if IoT technology is adopted in ways that require high capital spending, increase firms’ pricing power, or strengthen network effects, then early adopters can drive out competitors. Market structure will also be affected if large companies can build their own IoT systems but smaller companies have to subscribe to them or connect to networks operated by larger firms. If a “core” of large businesses adopts IoT, this could increase competition between them while reducing competition between core and peripheral firms. This could benefit consumers by turning quality-based competition into price competition. But if firms feel they have to adopt IoT simply because competitors have, this could lead to over-investment by incumbent firms and reduced market entry by firms not willing to make this investment94. The terms on which IoT service providers can access customers through the public Internet will have a significant impact on their ability to enter new markets. Baseline access could be protected by “network neutrality” rules that have been implemented by communications regulators in the United States, the EU, and elsewhere. IoT users with very high bandwidth or reliability requirements may be affected by neutrality rules that limit the ability of telecommunication companies to discriminate between Internet data from different sources. Such rules usually still allow telecommunication providers to offer such customers “specialized services” with specific speed or reliability guarantees95. The terms attached to such services, however, will be a key area of review for competition regulators96.In the longer term, an important factor affecting competitiveness of IoT systems is the extent to which end users can gain access to the raw data gathered and stored by components. Systems usually process sensor data extensively to make it more useful to users. While this makes systems more user-friendly, it reduces the users’ ability to transfer data to different providers if a better service is offered (or to understand what inferences could be drawn about them from the data)97. It also makes it more difficult for end-users to combine systems from different providers. This could become a competition issue if a provider becomes dominant in one area and tries to extend that dominance into other areas by blocking interoperability with competitors’ systems.One example of regulatory activity to promote competition is in Rep. of Korea, where the government’s Telecommunications Strategy Council has the responsibility to adapt existing laws and regulations to ensure a liberal and competitive industrial environment for IoT. Where the Council finds regulations that hinder ICT convergence, it can request related ministries to improve these regulations. For new products and services, attention will be given to prompt processing and interim licensing98. At this relatively early stage of IoT market development, it is not clear whether it will support “more than a relatively small number of very large players,” as is the case with existing Internet markets such as search and advertising. Competition regulators will need to monitor whether ex post investigations of market abuse will be sufficient to foster a competitive market and rapid innovation, including the ability of start-ups and individual entrepreneurs to create new products and services99. 88 Trends in Telecommunication Reform 2016