Dramatic Growth in Data and Services Create New ICT Regulatory Challenges
The ITU is highlighting the increasingly global nature of information and communication technology (ICT) regulation and the crucial link between effective regulation of the ICT sector and the range, quality and affordability of ICT services available to consumers and business users alike.
Focusing on 'Transnational Aspects of Regulation in a Networked Society', their latest report reveals an increasingly complex and interlinked legal and regulatory environment in which decisions taken in one market can have a major impact on neighbouring countries and even markets far away.
The report confirms continued rapid expansion of tech markets worldwide. Rapid growth of broadband has seen global IP traffic skyrocket from around one petabyte 20 years ago to an estimated 44,000 petabytes (44 exabytes) at end 2012. As an indicator of the sheer volume this represents, that amount of data would take 1,100 years to download over a 10Mbps broadband link - or more than 200,000 years over a dial-up connection. In 2013 alone, IP traffic is expected to grow by around 14 exabytes per month - the monthly equivalent of twice total cumulative global traffic for the whole decade from 1994 - 2003.
Traffic volumes are being driven by the ever-growing number of connected people and connectable devices, the trend toward multiple device ownership, an abundance of highly diversified and mostly free online content, and increasingly widespread consumer access to fixed and mobile broadband networks capable of supporting high-bandwidth services like streaming video. The total number of people connected to the Internet is expected to surpass 2.7 billion in 2013, while the total number of applications downloaded over all types of devices will exceed 50 billion.
Data continues to generate of 90% of all consumer traffic, with the largest volumes associated with file sharing, video streaming, video calls and online gaming. New mobile devices providing a higher quality user experience are driving faster uptake of gaming and video calling, both of which are expected to continue to notch up over 40% year-on-year growth between 2010-2015.
For regulators striving to create a level playing field and ensure non-discriminatory practices and transparency of market information, this period of transition to a truly transnational market for ICT services is creating a need for stronger cross-border, regional and international cooperation.
"These are interesting times for regulators, with the full impact of the long-term trend towards globalization of services now beginning to be felt," said Dr Hamadoun I. Touré, Secretary-General of ITU. "The challenge every regulator faces is to create the right environment for service development and competition that ensures the best quality services and best-value offerings succeed, and that consumers ultimately reap the benefits."
Snapshot of a fast-changing market
The report into the current state of regulatory frameworks and technological developments worldwide, this year's Trends in Telecommunication Reform opens with a concise overview of the 'megatrends' reshaping the ICT landscape.
The report notes that the net neutrality debate continues to be muddied by the fact that there is no agreed definition of the term among regulators themselves. The report goes on to make recommendations about what types of traffic management are acceptable, and what types could be considered uncompetitive.
In the area of spectrum policy, the constant pressure on spectrum availability caused by the mobile boom shows no sign of abating, with analysts predicting an 18-fold growth in mobile traffic between 2011-2015, driven by machine-to-machine communications, 'over-the-top' (OTT) services like VoIP, and new types of cloud service.
Current spectrum management best practice favours re-farming, re-use, and liberalization of current management frameworks. To ensure that frequencies are put to their most efficient and highest-value use, spectrum licensing is increasing moving towards market-based policies such as auctions, in-band migration, spectrum sharing and spectrum trading, to supplement or even supplant older, slower bureaucratic processes.
Mobile roaming charges were a key issue during the renegotiation of the recent International Telecommunication Regulations (ITRs) in Dubai last December. Trends in Telecommunication Reform 2013 notes that studies around the world confirm that at present, retail prices for international mobile roaming remain high, have no linkage to domestic mobile prices, and do not reflect the actual cost of delivering the service. High retail prices are often linked to underlying wholesale prices in visited countries, but, as competition is relatively weak in the international roaming market, market forces alone may not be sufficient to rectify the situation, the report notes. Empowering consumers through greater pricing transparency is one suggested remedy.
Finally, the fast-growing field of cloud computing is giving rise to a number of new regulatory challenges, such as ensuring privacy and affirming clear ownership of personal and corporate data, dealing with unauthorized third party use of stored data, determining legal jurisdictions (if data is stored on servers in different locations), and avoiding anti-competitive lock-in of users of different types of cloud services. Cloud-based traffic continues to grow strongly, and is expected to represent at least two thirds of all network traffic flows by 2016.
Shifting revenue streams
Growth in number of users, applications and high-bandwidth traffic is pushing revenues in the ICT sector ever-higher, but traditional operators look set to continue to lose ground to new players, with up to 6.9 per cent of cumulative voice revenues (representing USD 479 billion) forecast to move to OTT VoIP services by 2020, and total OTT revenues estimated to grow from around USD 8 billion last year to as much as USD 32 billion by 2017.
At the same time, however, the position of OTT players is itself being challenged; a recent case of one OTT player compensating a traditional telco for traffic generated over its network is an example. Such developments could create a significant precedent for other operators around the world, the report says.
New services and devices are creating new usage patterns and revenue models. Multiple players are now operating in the same markets, but under different regimes - for example, traditional voice providers in competition not just with players in adjacent markets, such as ISPs and cable operators, but also with content and application providers, such as OTTs. Competition- and market-based approaches to the regulation of broadband are being balanced by 'universal service' concerns, as broadband access is increasingly viewed as a right, rather than a luxury.
Independent regulators have now been created in 160 countries; the next trend seems likely to be towards converged regulators that straddle the traditional telecoms, data services and broadcasting domains. The report also encourages ICT regulators to extend their remit into new policy areas, such as data protection and privacy, climate change and e-waste, where they could play a valuable role in ensuring national and regional coordination and formulation of appropriate strategies and rules.
"The issues involved in the regulation of the networked society are becoming increasingly complex. As more networks are deployed and connect to each other, the character of the services carried over those networks is becoming more and more transnational. And as broadband applications and services become further deeply entwined in a wider range of social, economic and governmental functions, the need for a consistent regulatory approach, at all levels, to common issues such as data protection and privacy in a cloud environment will become more critical," said Brahima Sanou, Director of ITU's Telecommunication Development Bureau, which produces the annual Trends in Telecommunication Reform report as a key output of the Global Symposium for Regulators conference (GSR) it organizes each year.
"Regulators will need to ensure they are flexible enough to adapt to this fast-changing market, and equipped with the expertise to help them navigate uncharted terrain as the complexity of infrastructure ownership and multi-play service offerings increases. This is one area where ITU's GSR can play a very important role, giving regulators from around the world the change to share experience with their peers, to learn from the successes of others and create a pool of globally accessible best practice from which all can draw, and benefit."