Harnessing Advanced Communications in an Era of Convergence

October 29, 2009

Today I went to a lecture at Michigan State University for their inaugural Distinguished Lecture Series for the 2009/10 academic year.  The lecture was by Dr. Johannes Bauer, Professor of Telecommunication, Information Studies and Media at the Quello Center for Telecommunication Management and Law, Michigan State University.  The title of his talk was Harnessing Advanced Communications in an Era of Convergence.

I was particularly interested in this topic as I assisted in the production of a Convergence Review, a report tabled in Parliament in 2000, during my first position in the National Office for the Information Economy (RIP).

One of Dr Bauer’s research interests is international comparison research.  Different generations of mobile technologies have had different leaders – the first gen was led by the US, second gen was Europe, and third gen was Asia.  It is uncertain who will lead the charge for the next gen of mobile technology.

Historically, government monopolies had run telecommunications.  But since the 1980’s, countries have been looking to remove state ownership and encourage more market forces and the efficiencies and innovation that come from liberalization.  But there are weaknesses with this approach and we are now at a crossroads.  There is a growing sense that the models used in the past do not scale well into the future.  There is now a search for a new balance between the roles of government and of markets/business.  This will involve experimentation with new and innovative approaches, often at a local level with community involvement.

East Asia and Europe have been able to surpass the number of voice access paths of the US after commencing well behind – it’s a success story for them, and not necessarily a disaster for the US.

China now has 55 access paths per 100 inhabitants and India only about 15 – even though back in 1990, both had a similar negligible number of voice access paths.  In 1990, you would have thought that India would have been more successful due to its western style economy.  Yet China’s growth, despite it being state-owned, raises the question whether the forces of government can be used in western countries to improve technology deployment?

He displayed a nice graph from the World Bank (their Information and Communication for Development report 2009) showing that broadband connections provides higher returns to economy than the Internet, then mobile, then fixed lines.  The benefits are even higher in developing economies than developed economies as there are more efficiencies to be gained.  There are social benefits of broadband penetration as well like education, health care, e-government, environmental benefits, public safety and emergency services, community engagement and social networking.

There is a now different paradigm of thinking about the use ICT for economic development.  It’s not just technology centric that sees ICT as critical for economic development based on modernization theory, but one (ICT4D) that is more about the importance of complementary factors like digital literacy, social capital, access to financing – a human-centric and systemic view.

As communities move to adopt even more advanced applications and services, there is a demand for higher speed transmission (including over mobiles) and for this to be more symmetrical (eg for videoconferencing) – and also the need for high quality (eg low latency) such as for video gaming.

There are major challenges in the creation of sustainable business models where organizations try to gain revenue sufficiency, particularly as many business models have high start-up costs.  Another challenge is the need to minimize risks to society like information security and privacy as well as overcoming digital divides.  Because of the Internet’s open infrastructure, we will need to restructure it in order to deal with the threats of malware.

Dr Bauer described the environment as akin to an ICT ecosystem that has three possible areas of state intervention.  These are focused on horizontal regulation (unbundling, access, interoperability), vertical regulation (network neutrality, openness, structural separation, etc) and public policies (tax credits, subsidies, public investment, industrial policy).  Different countries have adopted a mix of approaches:

  • US – favour a laissez faire approach with minimal vertical and horizontal regulation
  • EU – favours a synergistic approach of comprehensive horizontal regulation and  measured vertical regulation
  • Asia – a more interventionist approach with comprehensive and proactive horizontal regulation and measured and proactive vertical regulation

Key points include that any regulatory model needs to be tied to specific national and local conditions.  There is no best policy mix; each has its unique advantages and disadvantages.  But most importantly, the policy choices need to be consistent (not internally conflicting) but with sufficient institutional diversity since no single approach can solve all investment issues. Finally, infrastructure investment needs to be complemented with other measures.

He rightly points out that this regulatory environment is a complex system and we don’t fully understand all the implications of the regulations that are implemented.  Therefore, this makes it critical to monitor and evaluate the policy implementations and to adjust or terminate policies quite quickly.  For example, if a regulator determines to unbundle the network, then there are later issues as to who will invest in new infrastructure resulting in unintended consequences.