|Topic:||Regulating for wireless innovation|
|Title:||Commissioner for Communications Regulation|
John Doherty is a Commissioner for Communications Regulation, Ireland. Mr Doherty held the rotating Chairpersonship from December 1st to November 30th of 2004. ComReg is the statutory body responsible for regulating the Electronic Communications and Postal Sectors in Ireland. Prior to his appointment, Commissioner Doherty held the position of Head of Market Operations. Before joining ComReg, Mr Doherty held a number of senior management positions in the Industrial Development Authority, including those of Head of New Business Development. Mr Doherty was also IDA’s Director of the Asia-Pacific Region and worked extensively with IDA in both Germany and the US. As IDA’s Director of the Midlands Region, Mr Doherty was responsible for the promotion and development of small, medium and large industry. Before joining IDA, Mr Doherty worked in a number of management positions in the chemical and engineering sectors, both in Ireland and internationally. Mr Doherty is an Economist by background with an MSc in Informatics and a graduate diploma in Business Administration.
GSM did not just happen, it required years of careful planning to develop open standards and harmonise the spectrum throughout Europe. Subsequently, though, GSM grew beyond the most optimistic predictions. Similarly, regulations for new wireless technologies, such as short-range devices, WiMax and UWB, will need careful planning and a regulatory structure that facilitates innovation to reach their full potential. Traditional approaches, particularly in rapidly developing areas such as radio spectrum usage and regulatory approval for new technologies, are not sustainable.
In late 2004, few commentators would disagree that the greatest innovation in the wireless domain in the last few decades has been the introduction of digital mobile cellular technology. In February 2004, the GSM world celebrated passing the 1 billionth subscriber mark and it continues to grow exponentially bringing the latest audited number of users to 1.16 billion worldwide. As a telecommunications technology, GSM accounts for 73 per cent of the world’s digital mobile market and 72 per cent of the world’s wireless market. Within five years of its introduction, the new digital standard had made all national proprietary systems then in use effectively obsolete. The utility of international roaming, low cost handsets due to the enormous economies of scale, text messaging services and guaranteed compatibility of handsets has raised the expected quality, cost and service standards to be achieved by any future innovative wireless technology. In Ireland, as shown in Figure 1, the mobile penetration rate continues to increase, now standing at 89 per cent, an increase of eight per cent in the last year. Figure 2 shows the enormous use of SMS text messaging in Ireland and in the run up to Christmas we expect to have reached the 1 billion mark when reviewing this quarter early in 2005. The success of GSM did not happen, though, without careful planning. Europe recognised that ubiquitous mobile communications was a priority and that the current systems had failed in two key areas. Firstly, the majority of systems in use were proprietary and each country was compelled to specify a different system in order to protect the local industry. Secondly, there was no common radio spectrum set aside across Europe. The European Conference of Postal and Telecommunications Administrations (CEPT Committee) solved the first problem. The committee worked long and hard for more than five years developing the GSM standard until, in 1987, an ‘open’ standard was agreed and accepted. For instance, ‘international roaming’, the ability to use one’s phone in another country–which users now expect as a basic servic– is a result of these defined standards. The second problem was solved by the European Commission, which set aside the 900 MHz band to be exclusively used for GSM. The subsequent adoption of the technology outstripped even the most optimistic predictions. Short-range devices, an innovation of the last five years, already have billions of users worldwide and make use of every range of the radio spectrum. These devices come in a number of disguises including car alarm controllers, asset-tagging devices, television remote control extenders and radio LAN devices that incorporate every variant of the IEEE 802.11 standard. Analysts forecast a US$5-20 billion European market for intelligent tags, just one form of short-range device, in the year 2005. Frost and Sullivan see a US$10 billion global market for Radio Frequency Identification Devices (RFID), yet another short-range device, in 2005. Philips, the largest supplier of RFID chips (one per tag), says global consumption for smart labels was around 1.9 billion units in 2004. Global research conducted by IDTechEx predicts that by 2013 the RFID market will be worth US$10 billion, 50 per cent of that being hardware (tags and readers) and the rest software, services and infrastructure. It is difficult to find accurate forecasts of current and future use of all short-range device usage due to the licence exempt nature of regulating these services. Nevertheless, based on manufacturing companies’ profits in this market, the current take up is enormous and growing fast. In Europe, any device that meets the official requirements of a short-range device can be adopted and used in the designated radio spectrum. This centralised, quick, flexible approach has reduced the barriers to market entry and assisted in the widespread adoption of the technology. The introduction of other new technologies, such as WiMax, ultra-wideband (UWB), cognitive radio or software-defined radio (SDR), can also provide real benefits for both the industry and consumers. However, they also raise significant challenges. UWB, for instance, which can deliver up to 100Mbits/s to 1Gbits/s, can provide wireless links between computers, digital cameras and DVD players, raises potentially serious issues of interference. The regulatory harmonisation of spectrum usage on an international/pan-European basis needs to be quickly agreed upon at an international/EU level as commercial deployment of UWB devices was authorised by the FCC in 2002. Work by CEPT is expected to make recommendations in March 2005. It is clear that innovation requires a regulatory structure that must both facilitate the early introduction of new technologies and services and protect existing users and consumers. It must also lower the barriers to market entry and champion the acceptance of the technology within Europe to gain economies of scale. This all goes towards increasing the choice and quality available to consumers. Regulators are also guardians, protecting existing users and services from interference and ensuring that the rights of licensees and the expectations of current consumers are protected. Innovation and its promotion are very important to Ireland and form a key tenet of public and private sector policies, initiatives and investment focus. In this context, it is in Ireland’s interests to be among the innovators and early adopters rather than the laggards of the innovation cycle. There is a challenge in identifying and encouraging areas where Ireland could take an international lead in niches that fit with the Irish economy and its characteristics (for example, availability of valuable radio spectrum). However, if innovation is going to have a long-term impact, then it must have scale and be able to penetrate other markets by providing solutions to their problems. One of the recent initiatives aimed at leveraging the opportunity that innovation can bring was the decision by Bell Labs, in conjunction with eight of Ireland’s universities and Science Foundation Ireland, to invest over US$100 million in its global headquarters for research into telecommunications and supply chain technologies. This centre will focus on the development of tools and technologies for next generation of wireless and fixed communication networks. We are not alone in recognising the importance of wireless innovation. In August 2004, Bell Canada announced the opening of its Wireless Innovation Centre at Bell Mobility’s Creek Bank campus in Mississauga, Ontario, which will focus on and accelerate development of biometrics, E-911 and mobile IP products. Scotland has opened a National Centre for Wireless & Mobile Communications. This is a Scottish enterprise initiative focused on the economic growth of Scottish companies developing and selling wireless products. Regulating for innovation requires treading a very fine line to ensure that, on one hand, innovation is not stifled from over-protectionism and, on the other hand, that existing spectrum users receive legitimate protection against interference. This fine line is somewhere between traditional ‘command and control’ and an ‘anything goes laissez-faire approach’. Striking this balance at a time when product cycle times are often short, investment requirements high and the window of opportunity is very challenging for regulators. This can be particularly so in areas such as wireless where often the frameworks within which regulators operate may not fully reflect the realities of today’s marketplace In Ireland, the Commission for Communications Regulation (ComReg) is the independent regulator responsible for the electronic communications and the postal sectors. Spectrum usage is very important in Ireland’s economy. The wireless sector employs, directly and indirectly, over 25,000. It represents, at just under US$2.6 billion, almost 1.5 per cent of the GDP. Ireland is also internationally recognised as having one of the most dynamic mobile markets in Western Europe. Ireland is involved on a broad range of initiatives for the harmonisation of spectrum use and the development of standards, including the ITU and, in a European Union context, the Radio Spectrum Policy Group (RSPG) and the Radio Spectrum Committee. Ireland is involved as a member of the European Conference of Postal and Telecommunications Administrations (CEPT) to agree on harmonisation of radio spectrum and on the adoption of standards. It also participates in the short-range development group that looks after the specific concerns of the short-range device industry. The challenge to establish a regulatory framework that supports innovation throughout the electronic communications sector is increasing. Continuing with the traditional approach, particularly in rapidly developing areas such as radio spectrum usage, is not sustainable. A recent report for the European Commission indicated that the current approach has contributed to the suppression of incentives for innovation. Currently, regulatory approval for new technologies, products and services can take years, so deep pockets are required by those seeking to introduce new services. In addition, there is a real risk that the regulators, either individually or collectively, could ‘back’ the wrong technology. ComReg has consistently sought to facilitate innovation. Ireland was the first country in Europe, for instance, to license wireless exempt broadband access in the 5.8 GHz band (5725-5875 MHz). Continuing with this approach of encouraging research and development, we have just approved a new test-licence regime. This regime, in essence, is intended to make the test-licensing regime more attractive to those involved in wireless research and development and to encourage developers to choose Ireland as their preferred location for trialling new technologies or services in Europe. In addition, ComReg is also introducing a new class of trial licence to cater for public trials of novel or innovative radio services. This will, we believe, enable new service concepts to be tested in a realistic and manageable environment at an early stage of development and ensure that subsequent commercial offerings are properly tailored to meet the needs of consumers. One of Ireland’s advantages in the context of promoting innovation in wireless is its comparative lack of spectrum congestion. Ireland’s geographical location, with only a single border, provides considerably greater freedom of spectrum use than other European locations where multilateral co-ordination is normally required. The introduction of this new regime was based on a public consultation that highlighted examples of emerging wireless technologies such as ‘WiMax’ and Ultra-wideband (UWB). Access to frequencies will be essential to support product development and innovation for these technologies and Ireland could play a leading role in supporting such activity. Underpinning this potential is Ireland’s academic and industrial research base, a thriving ICT sector and its educated and computer-literate work force. However, to capitalise fully on the benefits that innovation in wireless can offer also requires changes to existing practices. A recent report by Analysys concluded that existing spectrum management systems across Europe were inefficient, suppressed competition and innovation and had a disproportionate emphasis on preventing interference. To change this situation they recommend both the introduction of secondary trading in rights of use and the need for liberalisation/enhanced flexibility of use. ComReg is currently consulting on the introduction of these initiatives as part of its Spectrum Policy Review. In conclusion, it is a paradox that many of today’s most exciting and dynamic technologies are wireless-based, but their use is often strictly controlled by national conditions and regulations. This often results in inefficient spectrum utilisation and a scarcity of spectrum for new services or technologies. This can contribute to limiting innovation and the advantages such innovation brings to consumers. Ireland is aware that innovation in wireless offers significant opportunities. A range of initiatives is currently underway and these, coupled with our relative lack of spectrum congestion, provide real opportunities for innovation and deployment of wireless services. ComReg is committed to ensuring the success of this approach by regulating only where we need to and to the degree necessary.