Home Latin America I 2000 Convergence and Broadband Services: Implications and Perspectives

Convergence and Broadband Services: Implications and Perspectives

by david.nunes
Jorge NicolinIssue:Latin America I 2000
Article no.:6
Topic:Convergence and Broadband Services: Implications and Perspectives
Author:Jorge Nicolin
Organisation:Federal Telecommunications Commission of Mexico
PDF size:20KB

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Article abstract

When analyzing the future impact of the introduction of broadband technology and services in economic, social and political life of developing countries, it is important, first, to make an inventory of the current deployment of infrastructure, examine the enforced regulatory framework, assess the technological development, consumer patterns, services penetration and market structure. The aim of such an assessment will be to judge, where are we standing now and to estimate what is to be done in order for new technologies and applications to become a reality. A second step would be to discuss the impact of convergence and broadband services today.

Full Article

We should ask to what extent convergence is actually happening at the industry and markets levels. We need to know if the effects of broadband services are already being felt in businesses as well as in our everyday lives and, of course, in what way. When answering these questions we need to remember that in developing countries there is still much more to be done before broadband services can influence businesses and people in general. For instance, in many developing countries the opening of competition and the introduction of narrow band services is not yet consolidated. In many of our countries, the introduction of new regulatory schemes – including a new legislation and the existence of an independent regulator – is only a few years old. Furthermore, some countries such as Mexico are still struggling to eliminate the dominant power of the incumbent carrier and to foster an interconnection scheme based on an open architecture. Today broadband services are not widespread nor do they greatly affect the businesses and people of developing countries; in the short run, however, they will. Moreover, regulators must ensure that this happens and embrace the fact that the adoption of broadband services is inescapable. The efforts to liberalize the sector have been of real value. They constitute a solid foundation for the implementation of any technology – known or unknown – in this dynamic sector. Vigorous competition is certainly a prerequisite for the introduction of broadband services. Different industries in this sector are converging. A common platform that integrates telecommunications, broadcasting, electronics and information technology is being created by digital convergence. Physically, this convergence is made possible by broadband services. Broadband is the use of increased bandwidth so that data can move at much faster speeds allowing different services to be transmitted, in a virtually instantaneous and simultaneous manner through a single channel. Broadband transmission is made possible by advanced digital telecommunications infrastructure. It will give people access to a wide range of services, such as high-capacity voice, data, and integrated multimedia services. Today, most networks are single service networks devoted to specific narrow band services. There is a network for telephone services, a network for cable TV, a network for open television, and so forth. With Broadband, multiple services – cable TV, telephony, high-speed data, video conferencing, etc – will run over a single network. These new broadband services will run over a single network but, often, the network will be a new one. The relevant issue here is to choose which of the existing networks will serve as a backbone for the transmission of these integrated services. The existing networks have advantages and disadvantages. Let us consider some of the characteristics of the actual telephone infrastructure: the fibre optic backbones can transport digital – hence electronically routable – data; the basic infrastructure is switched allowing dialled interconnection to any telephone number needed in the world; it is a two-way communication network; and current legislation allows for interconnection. The infrastructure has many advantages, however, it does not provide enough bandwidth for many applications. Cable TV infrastructure has excellent bandwidth. Nevertheless, at the moment it is not switched and it is only a one way communication network. The broadband connection will have to fulfill the requirement of being a switched, point to point connection. On the other hand, wireless technologies may also be considered to build this broadband network. It is important to make available frequencies to enable services such as LMDS and MMDS that are used for wireless broadband. The characteristics of the existing networks suggest that once a given network is chosen as a backbone, all the stakeholders in this sector will need to invest in order to configure the new broadband network. An essential attribute needed for the success of this new network is that it should have a low access cost. This would only be possible if multiple service providers are sharing the cost of infrastructure. A switched system, giving a large number of service providers access to a high capacity broadband network, would provide the scale for low cost service. In any case, whatever network is chosen, the way companies deliver their services today will change considerably. The current process of convergence, the opening up of the telecommunications sector to full competition and the rapid growth of the Internet is leading to the creation of new market structures and new roles for market players. Market players in the supply side – led by this shift towards convergence – will have to consider extending their activities beyond their core business. Companies participating in this sector need to transform themselves, according to new trends, with a view towards participating in the development of the Information Society. They should be able to provide integrated telecommunication services. Following this reasoning, given the rapid changes in technology and competition, today it is very risky for carriers and other service providers to bet on a single service. As an example lets consider the Internet. The Internet provides alternative means to offer core telecommunications services through the delivery of Internet telephony. Current legislation in many countries did not consider this possibility. Regulators around the world are still analyzing how to regulate this alternative service. This would argue for broadband, multiple service, platforms and enabling legislation that can support not only todays services but, also, future as yet unknown services. An essential issue that should be addressed in this analysis is defining the role of the regulator in fostering the introduction of broadband services. The fact that current regulatory rules are designed primarily for narrow band services – such as basic telephony, fax and slow speed Internet access – supports the argument that the convergence phenomenon requires adaptation of existing approaches dealing with issues like licensing, access to networks and pricing. It appears, therefore, that some sort of intervention will be needed. However, it is important to ensure that any regulatory action does not and will not discourage the development of new broadband services. The future regulatory environment will be of crucial importance. Regulation should follow the current guidelines. It should not be seen as an end in itself, instead it should be seen as a tool, that together with market forces, assists in achieving the introduction of new services in a healthy competitive environment in an ubiquitous and non-discriminatory fashion. For instance, when considering regulating operators of new services such as the Internet, the authorities should make sure that access is available to all Internet Service Providers (ISP) in a competitive market. Given the speed, dynamism and power of innovation of the sectors impacted by convergence, authorities must avoid approaches which lead to over-regulation, or which simply seek to extend existing rules in the telecommunications sector to areas and activities which are unregulated today. All new regulation should be aimed only at promoting competition. A fundamental priority of any regulator is to seek to meet the needs of consumers in terms of offering them more choice; improving the quality of service; lowering prices; and guaranteeing consumer rights and the general public interest. Also, considering the convergence phenomenon, regulators should make administrative procedures clear and simple to promote the existence of operators providing broadband services. There will, of course, be uncertainty concerning new regulation. Stakehol-ders will try to impose views favouring their own interests. In this regard, authorities will need to take into account the full range of interests in the various sectors affected by convergence. But, above all these interests, the public interest should prevail. The Internet can be regarded as the prime driver of convergence. The Internet has developed differently from traditional telecommunications services. It has flourished without the need to promote or regulate it. This great network of networks has been driven by private investment. We can state that this private nature of the Internet has been an important reason for its success. It is a good example of the desired converging environment. . Conclusion Convergence is not just about technology. It is about services and about new ways of doing business and of interacting with society. The promising new broadband services have the potential to substantially improve the quality of life of the population, integrate isolated regions into the economic activity, and to make business more effective and competitive in global and national markets. If developing countries, such as Mexico, can embrace these changes by creating an environment which supports the process of change, they will create a strong platform for job creation, growth and increased consumer choice. Governments and policy makers have a key role in ensuring that an appropriate environment is in place. Finally, I would like to emphasize that if these services are not available to all the population they will not succeed. Access to information is no longer a service it is a right that every government should enforce.

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