|Issue:||Europe I 2007|
|Topic:||Fixed-mobile convergence in Spain: setting the pace for the future|
|Title:||Secretary of State|
|Organisation:||Telecommunications and the Information Society|
Mr Francisco Ros is Spain’s Secretary of State for Telecommunications and the Information Society. Prior to accepting his current post, Mr Ros was, before joining Qualcom, the co-founder, Chairman of the Board and CEO of BroadBand Optical Access, and had served as the President and CEO of Unisource. At the Telefónica Group, Mr Ros was Managing Director, a member of the Executive Management Board, and responsible for the International Communications area. Among others, he has been a member of the Board of AT&T Micro-electronics, WorldPartners and Infonet in the US, Mannesmann Arcor in Germany, Siris in France and CTC in Chile. Francisco Ros holds two PhDs, one from the Massachusetts Institute of Technology (Electrical Engineering and Computer Science) and another from the Technical Engineering University of Madrid (Telecommunications). He also holds an Advanced Management Program degree (PADE) from the IESE Business School in Madrid.
Spain’s government is actively fostering fully converged fixed and mobile services, considered fundamental drivers of economic and social development. It has even allocated spectrum free of charge to groups willing to invest heavily – some 834 million euros – in their networks. As a result, Spain is now the fourth country in the world in terms of mobile phone lines per inhabitant, with mobile service reaching 99 per cent of the population and covering 98 per cent of its territory.
The Information and Communications Technologies (ICT) sector is deeply immersed nowadays in a radical change process. The pace at which telecommunications, as we know them, are evolving is breathtaking. Mobile communications, in particular, offer us many new possibilities that constantly go beyond the boundaries of our imagination and show themselves as the clearest exponent of so-called technological convergence. We can still remember how, in the mid 1980s, being a mobile phone user meant belonging to a social elite and being physically capable, as well, of holding a chunky, more-than-one-kilo-heavy gadget. On the contrary, today we enjoy the use of devices so small they literally get lost in our pockets. Today, we use these tiny devices to connect to the Internet, shoot photographs, hold videoconferences, watch TV, participate in polls and surveys, order bank transfers, keep our personal agenda and – if we have the time, now and then – talk on the phone, even if it is over IP. In fact, the pace of technological evolution is so frantic that it’s shortening the life cycle of new services and products, the window of opportunity for pioneering technologies gets narrower every day. Mobile communications are, indeed, a fundamental driver for the economic and social development of nations. In the year 2000, some one billion fixed telephones existed in the world. This grew to more than 1.5 billion by mid-2006 but, during the same period, mobile phones have surged from 700 million to more than 1.6 billion, with an annual growth rate far exceeding 28 per cent. It is really difficult to think of any other economic sector showing such a rate of growth. What was considered a science-fiction scenario back at the beginning of the 1990s – that one day telephone numbers would be directly associated with individuals instead of physical places – is now a common reality. At this point we could ask ourselves whether this is the end of the road. Since, of course, it is not, then what will the very near future bring us? Needless to say, we have barely begun to obtain even a minimal part of the benefits that technological convergence may offer to us and, in that sense, many are the challenges we still have to face. It is impossible to imagine all the new R&D achievements that will surprise us in the next few years to come, be it regarding advanced terminals, new sorts of content or new types of access technologies. Nevertheless, we can ask ourselves who or what is going to set the pace of future evolution? Will the standard personal device be an evolved form of the PDA, personal digital assistant, or an advanced version of today’s mobile phone? As for technology, will it be an evolved form of 3G, third generation mobile technology, or will WiFi or WiMAX become the predominant mobile technology? Shall we witness a final convergence among technologies, standards and services? All stakeholders, from operators and public authorities to R&D institutions, and we should stress at this point the critical role of universities in this process, will have something to say about the way this future – that we can only barely foresee – will develop. Spain is already one of the European Union countries with full-scale mobile telephony coverage; coverage in Spain now reaches 99 per cent of the population and covers 98 per cent of the territory. These figures are yet more impressive if we take into account Spain’s geographical complexity. The growth in Spain’s mobile communications sector was outstanding during 2005. Despite starting from an already huge customer base of 38.6 million users, the number of mobile phone lines surged to 42 million by year-end, in a country with a population of 44 million. Significantly, almost 15 million subscribers now use 3G services. This dramatic growth has turned Spain into the fourth country in the world in terms of mobile phone lines per inhabitant, right behind Italy, the United Kingdom and Taiwan. Overall, Spain’s telecom sector is growing at a strong and steady pace, reaching 40.8 million euros in 2005 (see graph). Of that amount, mobile telephony in Spain generated 13.6 billion euros in 2005, with an annual growth rate of 15 per cent. That positive trend is also reinforced by the solid recovery of telecom sector investment last year (see graph 2). The importance of mobile telephony is emphasised by the fact that investment in mobile networks and services has increased from 23 per cent of the total telecom sector investment in 2002, to more than 37 per cent in 2005. In 2005, more than 20 million new mobile phones were sold, up by more than15 per cent from 2004, and 50 per cent up from 2003. One in three new mobile phones had built-in photo cameras. In addition, Spain is fourth in Europe in terms of traffic in premium mobile services (SMS, MMS, GPRS, WAP, i-mode, UMTS). SMS traffic – plain vanilla and premium together – currently generates around 12 per cent of total mobile operator income. Last but not least, 2005 saw full, large-scale commercial deployment of UMTS, which now accounts for more than 1.5 million of Spain’s mobile customers. In addition to these positive indicators, Spain continues to be a pioneer in Europe regarding the manufacturing, R&D+i initiatives and economic turnover for mobile telephony value-added services and content. The biggest international contenders are fostering the creation of international clusters for R&D+i in mobile telephony, in full cooperation with Spain’s universities and institutes of technology. From a corporate perspective, the acquisition of Amena by Orange, the France Telecom group, has brought all the biggest international players fully into the Spanish market – clearly an indication of the market’s dynamic and innovative characteristics. Another milestone is the advent of new contenders in the mobile arena, the mobile virtual network operators, MVNO, – following a common trend in Europe. In the Spanish case, Carrefour – in alliance with Orange – is the first group to offer MVNO services. We expect new competitors to join them shortly. Despite these positive developments and figures, we still need to adapt continually and improve the sector’s dynamics in order to offer the user a greater variety of better services. To pursue this goal, the Spanish government is currently conducting a series of initiatives to reinforce our leadership in the international fixed-mobile convergence scenario. First of all, we have put more spectrum at the mobile operators’ disposal. The additional spectrum has been allocated to the groups most dedicated to investing in and improving their infrastructure; they have not been asked for additional payments of any kind. For this plan alone, the mobile operators agreed to invest in excess of 834 million euros in their networks between 2005 and 2007. This plan will improve the availability and quality of mobile services throughout our country, especially its rural zones, major terrestrial communication pathways, and specific strategic areas such as energy plants. We are paying a great deal of attention, as well, to regulatory and executive measures regarding users’ rights protection. We have created the Telecommunications Users’ Protection Office, and are developing new initiatives to improve pricing transparency. Within this context, we have signed an agreement with all mobile operators to establish a per-second charging system for all their services. This has led to greater transparency in terms of service tariff calculation, better consumer information and greater user satisfaction. In the end, initiatives such as these encourage users to upgrade the services they consume, and provide commercial returns for the great advances of technological evolution. Last but not least, another main priority is our evaluation of mobile services of quality. To enhance the quality of service, the Spanish Government approved specific regulations governing the assurance of service quality. The main goal of these regulations is to offer an incentive to operators to publicize their own quality evaluations. In that way, users will have a way to evaluate the quality of service offered by each service provider objectively and, ultimately, improve the quality and the dynamics of the mobile communications sector. Probing deeper into this area, the Ministry of Industry issued a public study last year assessing the service quality for all three mobile operators at that time. The study reported quite positive and uniform results regarding the quality of service of the three companies. Given the favourable social repercussion of this study, this will be repeated in the future and include all the service providers present in the Spanish market. Finally, to limit eventual abuses that could generate mistrust among users, and hinder the sector’s development, the Spanish Government is elaborating regulations for value-added mobile services and the applicable tariff schemes. In the end, all these measures demonstrate the government’s determination to improve growth and promote innovation in our fixed and mobile telephony sectors. These public initiatives are intended both to ease and foster a trend that is already underway in our telecom sector. During the past two years, Spain has seen the development of commercial demand for triple-play and quadruple-play mobile services. Service providers from fixed and mobile telecom companies, to Internet service providers, to mass media broadcasters are all taking steps to raise consumer awareness of their updated service portfolios. Fixed and mobile operators alike are bundling pay-TV, flat-fee Internet access and voice telephony and offering them to subscribers as unified service packages. As a result, the percentage of homes that make intensive use of ICT – homes contracting at least four telecommunications services: fixed telephony, mobile telephony, pay-TV and Internet access – surged from 8.8 per cent to 10.3 per cent during the first quarter of 2006 alone. This outstanding growth rate points to a promising future for triple-play and quadruple-play in the Spanish market and the benefits associated with it from a socially related, customer-benefit, point of view. Coordinated initiatives by both public and private sectors to accelerate service and technological convergence have been extremely helpful in bringing a fully converged future a little bit closer to reality in Spain. The results will certainly justify the sector’s great, combined effort.