Reccomendation on Termination Rates 2008

The commission has published for public consultation before summer their last work on termination rates. The consultation last till mid of september. You can find here the relevant documents.

It is quite long time that the commision is triying to sell their position to european stakeholders: harmonisation of termination rates in all Europe is a must for an efficient communication market.

If we look at the broad impact of this reccomendation and the forthcomming challenges of convergence of network a proactive approach of the commission in this direction makes sense.

However, if the objective of the reccomendation is noble, we can hardly say the same for the tools used to achive it.

The commission obsession on using a LRIC bottom up model as a panacea is not supported by any empirical evidence of its effectiveness and superiority against a FAC or a LRIC top down. The IRG/ERG report on regulatory in practice have demostrated several times that there is not a direct correlation between harmonisation, lower interconnect rates and the use of a LRIC model.

For example: UK, currently the country with the lower fixed termination rates in Europe, uses a audited FAC and not the so loved bottom up LRIC. As my friend Gavin was used to say, if you use the right efficiency measures and audit properly the data received you will have comparable, if not in some cases superior results.

We can reconise that the commision knows about the weakness of a LRIC bottom up model in the final words of the draft reccomendation when is mentioned the reconciliation of the data with a top-down audited model.

There are more and more critics to the reccomenation I could do, however, I leave this exercise to the people that are going to answer to the reccomendation. What is imporant is that we discuss about it and may be a new course to the use of LRIC has been taken.

We have many years to prepare ourselves to the new rules, that we will have just to follow; someone out there will have to re-allocate costs to other services and others will have to check this allocations. So just follow the rules? No not really, you have time to send your comments to the draft reccomendation!

www.regulation.tk

Nothing Changes with Sunrise New Face and Strategy

Sunrise, the integrated Swiss alternative operator, recently changed its logo and strategy in an attempt to re position itself as the real and only alternative to Swisscom.

It's not the first time, in the last 8 years Sunrise had tried everything to increase its market share and become a real threat to Swisscom and Orange and a major player in the market.

With alternative successes and failures Sunrise has modified several times its prices, services and position in the market achieving only confusion and lack of trust from its customers.

First: Sunrise, do what you do best and don't confuse with different and conflicting messages your customers!

Sunrise's customers are unaware of the differences between the new and the old Sunrise.

Prices models changed, yes, but why?

At the end of the day nothing really changed!

The same basic price plans that diAx introduced 8 years ago, with some variations but - at the end of the day - the same. There is a lack of innovation.

Second: Decide! What is your business like?

Accessing your homepage a mobile phone welcome me. Almost immediately I realize that your strategy is focused only on the mobile market.

I do not see any information on your fixed and broadband businesses; and it takes some time, several clicks, to find them.

I understand that you are not doing lots of money with them, but if you want to be an alternative to Swisscom you should actively bundle, pack and supply your products as communication services. Not as separated products.

Are you shifting the attention of your customers to your core business?

Clever, business-school type strategy, however, in doing this you are now very similar to Orange. Why should customer choose you instead?

Third: Learn from your mistakes and take the best from other markets.

You have the unique opportunity of becoming the 'only' real alternative to Swisscom.

Don't miss it with 'cleaver' top-down strategies, instead try hard to be different, unique!

And actively communicate, every time, your uniqueness.
:-)

Net Neutrality: Who Pays for it?

In the last two days I had the pleasure to meet and discuss with Martin Cave, Director of the Centre for Management under Regulation, Warwick Business School, Coventry. He came to Switzerland to present his views on the economics of the ICT market at the annual Comdays. A must be event of the Swiss ICT industry.

Martin highlighted a contradiction of the Net Neutrality principle. Capacity doesn't come for free. Someone has to pay for extra capacity used for new services and the investments operators do for providing a good QOS.

I personally agree with the basic concept of any-to-any communication of the bit and net neutrality. I also respect the decision of some governments to block inappropriate content, such as porn and offensive material. I personally disagree that providers can decide what kind of services I - customer - can have (e.g. block my Skype or Zatoo packets).

As Martin said, someone has to pay for the 'neutrality'.

I agree with this principle, let's look together what the options are:

- operators, can recover investments from the monthly broadband subscription or from advertising: a mix of paid and advertised support model might be the solution.

- Operators, can charge a premium for valued content (efficient pricing) to recover these costs.

- Service providers (e.g. google) can support the extra costs with a revenue sharing model.

- Finally, governments, communities and philanthropic associations.

I know, it's not so easy to pick the best option. However, we should be aware that we will be confronted with this dilemma soon.

As already argued in this Blog there is another risk, the formation of new bottlenecks from network / content to distribution. The distributor of the 'information' (everything that can be digitized) might be the next real monopolist. See for example, the rights for sport events, such as Euro08!.

More Info:

6. Biel-Bienne Kommunikationstage, 25. / 26.10.2007, im Kongresshaus, Biel

ICT Industry strategic landscape

In the last years in the ICT industry many firms had a strategy focussed on implementing technology, rather than effectively managing resources.

I believe that the industry is now at a new, so-called, transformation point, where the environmental pressures to transform and adapt to the context are not sustainable.

In this case, to evolve and mature I would suggests to integrate all systems and successively manage the resources.

Convergence and Digitalisation

Convergence and digitalisation are part of a new and important phenomenon that influences strategy and business models. There is no surprise that it attracted so much attention from so many stakeholders. David Currie, OFCOM chairman, argued in December 2003 that convergence was slowly happening at network, device, industry and regulatory levels (4th ECTA Regulatory Conference, 10 December 2003). Now, almost four years later, convergence is reality with, as industry’s norm, Quad and Triple play offers (fixed, mobile, data and TV). In the EITO 2007 Report the European Commissioner for Information Society and Media, Viviane Reding, defines digital convergence as the ‘heart of new technology revolution’ (EITO, 2007 p. 12) and notes how the ICT sector is ‘adjusting to stronger competition and digital convergence’ (EITO, 2007 p. 14).
In the telecommunication industry convergence is based on the integration of IP systems and telephony. In ICT it can be described as the integration of fixed, mobile, data and telephony networks and IT systems (e.g. IMS). An example is the application of e-commerce systems to mobile networks.
Convergence has been enabled by the decreased cost of digitalisation of products, success of Internet and increase digital systems customisation opportunities. Digitalisation permits to deliver a wide range of push and pull products, mainly designed as voice, data and video services, in an innovative, intuitive and customisable fashion and over a sole electronic communication platform. An integrated IP-based network gives diverse firms the opportunity to invest and launch flexible and timely products for a considerable lower unit cost; in this perspective economy of scale and scope is expected to be maximised, competition at retail level enhanced and value-to-customers efficiently delivered. However, our understanding of convergence should not be limited to technological convergence. As phenomenon, it expands to business models (e.g. from e-commerce to m-commerce), markets (no boundaries), services (bundles) and organisation (horizontal organisations serving different markets). For example, e-Bay acquired Skype and Pay-Pal to address two basic needs of its customers: communicate about the products and pay. Telecom Italia merged with TIM to increase efficiency, offer a complete set of communications products and upgrade its business model.

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