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The venerated BBC World Service recently commissioned a polled involving more than 27,000 people across 26 countries. The findings are unremarkable: some 87% of Internet users believe that Internet access should be a basic right, and more than 70% of non-users believe that they should have access to it. 

Depending on your country, the Internet has been available for ten years or more, and for individuals – at least in the developed world – it has since become ingrained in psyches as an essential commodity, akin to access to fixed-line telephony, electricity and potable water. For a growing number, the Internet is essential for work, for a greater number it is the first port of call for problem solving and information (Wiki and online Yellow pages come to mind) or getting things done (banking, finding out timetables for travel, etc). Most governments, too, now take the Internet as a key component of infrastructure, crucial to a nation’s future socio-economic potential. 

What governments may do with the Internet is another matter. A decade’s experience and use of the service has enabled a growing number of governments to manhandle the potential dangers of hacking, fraud and privacy as a means to tighten the screws on their own control of access, and of their nationals’ use of it. This is rightly opposed by the users themselves, over half of whom surveyed for the BBC believing that no government should be empowered to regulate the Internet. 

In Europe, the ‘three strikes rule’ threatens to become more fashionable, following measures first proposed in France: there, the Création et Internet Bill failed in 2009 when France’s Conseil Constitutionnel ruled that it leaned too much to ‘guilty until proven innocent’ and that it threatened major sanctions (Internet disconnection and a national blacklist on access) without judicial oversight. Nevertheless, the government shoehorned the Bill a second time, which this month came before the National Assembly for debate. 

The Bill proposes that the scheme be administered by a newly formed group called HADOPI. ISPs notified about alleged file-sharing would be required to send an e-mail to the customer involved, a registered letter at the second alleged offence and, for a third offence, terminate access for up to a year. A database managed by HADOPI could presumably prevent blocked users from switching ISPs. 

Italy looks like adopting a similar approach. Having in 2009 sued the Swedish The Pirate Bay site and attempted to force ISPs to block access to its content, the more recent charging of Google executives with criminal charges resulting from YouTube content denotes a government leaning towards authoritarianism regarding the Internet. The Italian three-strikes proposal would be complemented by a requirement that all blogs register with the government. 

In the UK, meanwhile, the government is pushing through its controversial Digital Economy Bill, which proposes empowering regulators to disconnect or slow down Internet connections of persistent illegal file-sharers. Amendments to the Bill passed this month at the report stage at the House of Lords before its third and final reading in the House of Commons, could in theory force sites such as YouTube which host copyright-infringing material to be blocked or forced offline. The UK’s three-strikes rule is similar in its essentials to those of France and the UK, with disconnection following two warnings. 

At the European Union level, the European Parliament was initially critical of the three-strikes schemes, largely due to the absence of judicial review. However, this month the Anti-Counterfeiting Trade Agreement (ACTA) was put forward for debate between the US, the EC, Japan, Switzerland, Australia, New Zealand, South Korea, Canada and Mexico. Aimed at preventing online counterfeiting, it threatens to punish ISPs for content delivered. 

Polls show the sincerity of popular regard for a free Internet, and suggest that to tackle piracy other solutions than blocking ISPs and throwing citizens offline should be considered. Until they are considered, citizens should, as always, be vigilant about what their governments are legislating, lest they find themselves with a thoroughly policed Internet far removed from what they now know it to be. 

For more information on the Internet markets in Europe, see:

• Germany – Broadband Market – Overview, Statistics & Forecasts;
• United Kingdom – Broadband – Fixed Network Overview, Statistics & Forecasts;
• Italy – Broadband Market – Overview, Statistics & Forecasts;
• Europe – Broadband Market – Overview & Statistics;
• Europe – Regulatory Environment.

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Mobile data and broadband technologies are increasingly being used as a substitute for poor or non-existent fixed-line infrastructure in Africa. In vast parts of the continent, the mobile network operators are the only providers of any kind of telecommunication service apart from satellite services. As subscriber growth peaks, many of them have established themselves as Internet Service Providers (ISPs) and are playing an increasing role in the broadband sector, competing directly with fixed broadband services such as DSL – a welcome new revenue stream in an environment of shrinking average revenue per user (ARPU) in the voice market. 

Third generation (3G) mobile technologies, coupled with improvements in international fibre and national backbone network infrastructure are now capable of delivering broadband Internet access to a wider part of the continent’s close to one billion population. However, the price of end user devices will be a key factor. The prepaid mass market will only adopt advanced services on a broad scale once prices for 3G handsets and modems as well as personal computers have reached affordable levels. 

Like elsewhere in the world, Short Message Service (SMS) still accounts for the bulk of Africa’s mobile data traffic and revenue, but in recent years there has also been an increasing interest in Multimedia Messaging Service (MMS) and other forms of mobile messaging and social media, downloads of ring tones, logos, music and games, as well as SMS-based information and lifestyle services. Premium rate and bulk SMS services are generating millions in revenues. Third parties are continuously developing new value-added services and applications. 

Mobile TV services have been launched in at least ten African countries. A boost for these services is expected from the FIFA World Cup to be hosted in South Africa in 2010. 

M-payments and mobile banking is another key growth area that is revolutionising Africa’s financial sector, where only a small percentage of the population has access to traditional banking system. In the continent’s most advanced markets, m-commerce, mobile content, applications and media have reached a level of development that is beginning to foster an associated advertising and marketing industry. 

Market highlights of new BuddeComm Report:

• 3G mobile networks have been launched in more than 20 African countries, with rollouts in progress in many others;
• Most operators have included High-Speed Packet Access (HSPA) mobile broadband in their service offerings;
• There are more 3G mobile broadband users than ADSL subscribers in key African markets;
• The first 20Mb/s mobile broadband service is expected in Africa in 2010;
• African mobile operators make up to 13% of their revenues with mobile data services;
• Non-messaging mobile data revenue grew by 70% in South Africa in 2009 while overall mobile data revenue increased by 30%;
• Mobile data services have helped to reverse declining average revenue per user (ARPU) in some markets;
• The UMTS Forum forecasts that revenues of African 3G operators will exceed US$7 billion in 2010;
• The 2010 FIFA World Cup in South Africa is expected to deliver a boost to Mobile TV services which have been launched in at least ten African countries;
• Some African banks have more customers using mobile banking than online banking;
• More than 10% of Kenya’s GDP pass through the M-Pesa mobile payment and banking service, which has more users than there are bank account holders in the country. 

For more information see: African Mobile Broadband, Data and Mobile Media Market

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The National Broadband Plan that the FCC will present on 17 March will set the USA on a completely different telecoms path. This plan will hopefully show Congress that it is worthwhile making the legislative changes that will deliver the social and economic benefits of a national broadband infrastructure.

Groundwork for a new direction in telecoms

Shortly before Barack Obama won the election in 2008 I started to work with what became the Obama Transition Team on some of the US telecoms policies. Obama and his small team of technological experts were aware of the developments in Australia – particularly in relation to the need for trans-sector policy on broadband infrastructure.

Together with a team of national (US) and international experts we prepared half a dozen ‘BigThink’ strategy reports for the Obama Team in the White House.

We also established a good relationship with the FCC (Blair Levin’s team) and NTIA (Larry Strickling).

ALL parties publicly agreed to a trans-sector approach and many of our suggestions are clearly reflected in the stimulus package (open networks) of the FCC national purpose strategy. And our suggestions also appear in the upcoming National Broadband Plan – in the trans-sector approach to the public safety sector and the proposed mobile broadband infrastructure for this sector.

Visionary plan now needs legislative action

However, if we’re talking about ‘national purpose’ a transformation of the telecoms industry is crucial, and the FCC has been specifically forbidden by Congress to address this topic.

The National Broadband Plan will most certainly highlight the benefits attached to a ‘national purpose’ policy but it is up to the Congress to make it happen. The plan will provide a new, visionary direction for telecoms in America but unfortunately in its current state it is a toothless tiger. It will be up to Congress to take action through legislation – without that it will be impossible to implement the plan in any timely fashion.

As matters stand at the moment the plan is the best the FCC can do. They should be applauded for the work they have done so far – they have laid the foundation for a totally new telecoms direction in the USA.

All of these trans-sector/national purpose policy proposals require very significant changes to the way the telecoms industry works and if – as has been stipulated by Congress – this can’t and therefore will not be addressed in the Plan.

Affordable access to broadband infrastructure

Another key to telco transformation is the creation of a level of ‘affordability’ both for the end-users and for the sectors that could use the infrastructure, you won’t get this without tough legislation.

To just get very fast broadband to American homes in isolation from this trans-sector approach is fairly useless. While you might get such a service to all homes the reality is that without a utilities-based trans-sector approach towards the underlying broadband infrastructure it will be impossible to make that an affordable service. We only have to look at the charges that currently apply to such (fiber-based) broadband services to realize that probably only about 25% of Americans can afford this.

While not defined as such in the USA, broadband is simply infrastructure. (Access to that infrastructure is now declared a national right in several European countries.) A problem in the US legislation is that the previous Administration gave broadband the unusual classification of ‘an information service’ and not an access service.

National purpose good for the nation and for lowering the consumer bill

If the trans-sector approach is applied other sectors (healthcare, education, energy, public safety) can be directed by the government to start using this network – thus paying their share towards the cost of the broadband infrastructure – for the delivery of their services, eg, the monitoring of aged people from their homes to reduce the need for hospitalization.

This has to be a government-driven approach as the social and economic trans-sector benefits fall outside the balance sheets of the telco providers. These benefits need to be carefully monetized and used as input by the government in developing government policies in these areas. The OECD has indicated that the savings made by using the broadband network for healthcare, education and transport alone could pay for the deployment of a national broadband network.

Unfortunately the economic benefits are very hard to calculate. But was it possible to predict the benefits of the electricity network when it was built? The naysayers in those days said that it was outrageous to pay for infrastructure that would simply replace candles.

Structural changes to the industry are needed

In order for those sectors to be able to deliver these services the broadband infrastructure needs to be made available to them on a utilities basis. This can’t be done within the vertically-integrated structure of the telecoms industry. An open network policy is required, and that is clearly not on the table in the United States – at least not for 90% of the infrastructure that will be involved in its National Broadband Plan.

So, yes, even without legislative changes the new broadband plan might indeed deliver broadband to most people in the USA – but at what cost to the average American citizen? For the moment at least, the incumbents can’t believe their luck at the honey pot the government is placing in front of them. They are in a prime position to deliver these networks and they will not be required to do this at an affordable price. The government will pay the going rack rate which will include a very fat premium to the carriers on top of costs.

This situation cries out for structural changes to the industry, but it doesn’t look as though change will take place in the foreseeable future.

The end result is that access to broadband will remain significantly more expensive to Americans than to people in countries that opt for an open network and utility approach towards basic infrastructure.

Regional and Rural America will be second rated

Another result will be that regional and rural users will get a second-rate service (lower speed). There is no way that those premium prices charged by the incumbent telcos can be afforded to build an equivalent broadband network in regional America. This is a very dangerous development as it will undermine the delivery of the trans-sector services to those communities. Healthcare, energy and public safety services require Qos,  security, reliability, privacy protection, etc. A second-rate network will certainly compromise some of that and might even render it unacceptable for the usage of such service.

As mentioned above, the incumbents are jumping up and down with joy and – in relation to voluntary cooperation to give some spectrum back – the broadcasters are arrogantly saying ‘over my dead body’. But in reality, and based on decades of anti-competitive behavior, who among these players will voluntarily give up their monopolistic rents as requested by what is, in that respect, a rather powerless FCC.

The ball is now in the court of Congress

Congress should take a very hard look at itself and answer some these questions before propping up an outmoded telecommunications structure. This money can only be spent once and at present it appears that without structural changes to the industry the new National Broadband Plan will not provide the right foundation for those national interest investments. It would be impossible to successfully implement these policies without simultaneously addressing the structural issues in the industry.

We have top-class people involved in the development of the National Broadband Plan – the ones mentioned above, as well as the excellent team of extremely hardworking people that Blair Levin has built up.

So that’s not the issue. The issue is the failure of the American political system.

For the first time in its history a different approach is being taken towards telecoms in America – we now accept such notions as open networks, network neutrality and trans-sector/national. Let us hope that Congress now takes the baton from the FCC and supplies the legislative follow-up that is required to implement this very important first step.

The plan, as it will be presented on 17 March, has gone as far as the FCC can take it. It is now up to the legislators to be visionary – to make sure that the National Broadband Plan is followed up with legislation that will enable the telecoms industry to deliver the enormous social and economic national benefits highlighted in the plan.

Paul Budde

See also:

• USA – Analysis of broadband policy developments in early 2010
• USA – Telco Transformation starts with Public Safety
• USA – Analysis of broadband developments – late 2009
• USA – Benchmarking broadband in the USA
• USA – Broadband Market – Fibre to the Home (FttH) Overview, Statistics & Forecasts
• USA – Telecommunications – Key Statistics
• Global Next Generation Telecoms – FttH and Trans-Sector Strategies
• Global Recovery will depend on Trans-Sector Vision
• Global – Infrastructure – National Broadband Networks (NBN)
• Global – Infrastructure – National Broadband Rollouts Design and Deployment Strategies
• Global – Infrastructure – Next Generation Telecoms
• Global – Internet – Net Neutrality Analysis
• Global – National Broadband & Trans-sector developments in Australia & New Zealand

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