Competing networks, competing rationales: the case of wireless communication emergence
Pierre Rossel1, Matthias Finger2
1MIR-CdM, Ecole polytechnique federale of Lausanne, Bat. Odyssea, Station, EPFL, 1015 Lausanne, Switzerland,
2MIR-CdM, Ecole polytechnique federale of Lausanne, Bat. Odyssea, Station, EPFL, 1015 Lausanne, Switzerland,
Abstract. This paper explores the issues related to the emergence of wireless communication technologies when it comes to competing network infrastructures. Various technological options, reflecting uneven stages of maturity, are still dominated by fixed, copper-cable technology. This system, traditionally under control of one historical operator per country, is rapidly evolvingunder the pressure of 1) liberalisation-minded legal initiatives and 2) new technological proposals (optic cable to the home, powerline systems and wireless technologies, in particular). How each one of these possibilities will influence the overall ICT industry and more broadly the setup of the Information society, remains to be defined, encompassing both technological and governance implications (innovators’ efforts combined withusers influence and thesupervision of sensible yet fair regulation schemes). In this uncertain evolution, two main rationales oppose: on one side, the will of the historical operator to maintain the game as closed as possible, on the other side, the quest of the other players for an open, diversified and modifiable configuration.
1Introduction
The expansion of wireless computing as it stands in 2005 is characterized by aspects which are at the same time confusing and stimulating the information and communication technology industry, namely: diversity (of technological options), unevenness (of technological maturity of such options) and indetermination (upon which one of them is most likely to constitute the driver of tomorrow’s market)[1]. In this quite open situation, the question is in particular raised of who can do and even should do what, so as to push or at least steer this configuration towards more clarity and hopefully more benefits, for his own sake if not for society as a whole. In this paper we will first attempt at defining more in detail the intricacies of the current battlefield, with considerations at what might come up next (in the five coming years). We will secondly make the inventory of the main players as true stakeholders of a common set of opportunities and thirdly examine the role and prospects, as they stand, for a few key stakeholders, in particular those of the historical operators, innovative users and regulatory bodies. We will finally present hypotheses on what might be the rationales possibly supporting the core industry competitive and decision-making processes.
2Wireless, a catchword for a series of options within a wider game
Technologically speaking, the wireless expansion of Information and Communication Technologies (ICTs) seems already well underway and full of promises in terms of performance, services and network building potential. WiFi standard IEEE 802.11, first with its version “b”, then “g” (and others like “a” for instance) initiated a dream of not only delivering local high bandwidth, but also independent infrastructure offerings, outdoor but also indoor (in this case, also endorsed by the ETSI Hiperlan 2 standard). To make it a little bit more complex, the WiMax standard (IEEE 802.16), even more recent and incompletely validated in real operations, pushes this prospect even further in performance, passing from 11 to 75 a maximum ofMbps and from a 150 meter to a 50 kilometer range, but not without possible interference problems to deal with[2]. Soon we will have other standards increasing some aspects of that evolution to even higher stages of service delivery, like 802.20 for instance, in mobile wireless communication. The first question raised in this situation is of course to evaluate whether each proposed standard is superior to the preceding one or simply different in terms of implementation implications and in a subsidiary manner whether each successive standard ever proposed is automatically a progress as compared with its predecessors. For the subsidiary aspect of the question, ISDN, UMTS and other historical attempts of the kind may provide for a stimulating doubt[3]. As for the dilemma “superior in performance or mainly different in terms of implications”, one has to acknowledge that the issue is still quite open.
Quite early in the emergence of this technology, which unlike mobile telephony, went immediately digital and compliant with the Internet communication protocol, arose the idea that thanks to its quite horizontal scheme of functioning, there were expectations of 1) getting rid of the existing regime constituted by the oligopolistic hold over wired telecom infrastructure and 2) getting rid of big players dominance thanks to a new type of operating mode, The first claim implies proven effectiveness to carry on all the duties of the cabled infrastructure, including in the area of roaming and security, unless a combination of cabled and wireless segments can prevail (but with non trivial governance problems to be dealt with). The second expectation bets upon the high diffusion of low level access points (numerous and well scattered rather than high range) and the possibility to come to inter-connect themto build a wide world of relaysfor at least a reliable form of proximity wireless communication, and why not, first through fixed infrastructure dependence, later within an alternative, stand-alone status, a consistent and “free” (and which still needs to be designed) overall Internet communication scheme.
As we suggest here, wireless computing issues will not be solved only in terms of technological feasibility but as parts of a broader construction, namely the building blocks of the Information society, as driving economic paradigm in the Lisbon process sense for the European countries, as component of a more public policy horizon in the case of some Asian countries (Korea, Japan) or as a test to a early liberalized market as expression of a competitive credo in the United States. All these situations inter-influences each other and involve governance solutions to a large extent still to be explored.
3Key players of the “wireless” confrontation
In a situation conveying at the same time so many promises but also so much indetermination, it is necessary to identify the players who not only are concerned by the stakes and issues of wireless computing but already engaged one way or another in trying to make the best of the situation in their own terms. These players are the following ones:
-technological device makers, with of course some big international players of the telecom, computing (as well as entertainment) industries, but also quite numerous much smaller players;
-historical telecom operators;
-ISP and new telecom operators: trying to push themselves in, as best as they can;
-standardisation committees, mainly IEEE, but some others too;
-specialized authorizing bodies, in particular national ones (or supernational as in the EU case) and more generally all bodies having to do with regulatory issues (like the ones involved in the surveillance of competitive fairness for instance);
-lead user communities (in the Von Hippel sense described further or very close to it), i.e.,end-users experimenting, discussing, benchmarking, qualifying acceptable materials and usages; this category includes passionate hobbyists, but in specific cases, also, the international support groups for a particular standard (WiFi, WiMax),as well as powerful players such as cities and regions wanting to play a prominent role (e.g., Tokyo and WiMax);
-research communities, general and cross-cutting the all domain (wireless in all its form), but also specialized (non IT-experts, outside a few economists, being still quite absent of this activity).
All these players have in common the necessity to do something about wireless potential as everyone can observe the emergence of different options or interests that do no coincide or even are in potential conflict with one another. Let us see now these various viewpoints.
4Historical operators: innovating, but not too much
Historical operators[4]may be defined by a series of typical features: they tend to have a serious hold on the copper-cable infrastructure, and from that advantage, historically acquired through monopolistic status, developed a dominant market share position in most telecom sectors. Dominance, according to the countries and the telecom sub-segment, can mean between 60 and 85 % of the market. Historical operators capacity to maintain themselves as leaders through current technological change is based upon that advantage and to monetary revenue that they have been able to negotiate in their status transition and also in the various large-scale openings having taken place in the telecom market, in the last seven years (going listed for first aspect and Internet bubble initiative and UMTS auctions for the secondone). For a while TV-cable operators have been the only contenders, with mostly a second role to play. Now, with the liberalization pressure and the committed unbundling of the last mile, different new players may alter the market structure in a significant manner, in the first place Internet providers, a more recently, within the coming of age of wireless standards, new stakeholders (“user innovators” of different kinds). The historical operators, almost everywhere have adopted in double strategy: 1) resisting as long as possible on a monopolistic defense line as far as the last mile of copper infrastructure is concerned, time gained allowing for on the one hand some minor technological innovative move to occupy the field commercially speaking and on the other hand to make moves in the merger and acquisition perspective, in the worldwide telecom market; 2) innovate, in technological terms, but not too much[5], not to rapidly, just to maintain oneself at the edge of things changing. The second aspect leaves them no easy move to play: if it is quite common practice to see historical operators propose, before anyone else (they still have, in most countries, the lower price advantage), strong offers in TV and voice over the Internet, thanks to the recent xDSL boom, it seems to be more difficult to establish a clear lead in such other technological development as optic cable to the home, powerline connections and finally wireless systems. The only thing which can be clearly observed is that in most cases, they have more money than their rivals to finance new investments. In the current evolution of the historical operator’ strategy in particular countries, however, let us also acknowledge that this situation is changingrapidly, under liberalization motos and legislative moves. We shall therefore consider now some critical regulation issues.
5Regulatory issues
It is no scoop to stress the importance of the liberalization trend having taken place in the last ten years, with a fatidic milestone, for the telecom sector, of January 1st, 1998 to start complying with EU recommendations, in the European area of influence (meanwhile earlier liberalization moves had been undertaken in the United States, Korea and Japan followed a somehow similar agenda as the EU). The purpose of this orientation is manifold, although suggesting a sort of argumentative sequence:
-open the game so that the consumer can decide among several possibilities for is best for him,
-stimulate best business models and technological innovation,
-support competitiveness,
-generate an improved situation in terms of citizen accessibility to high-level services.
Among the issue to be solved along the way is the universal service: everyone has the right to be delivered the same level of service, being more and more reinterpreted towards a minimal level of high-quality service, with all the controversies as how to define that and pay for it). Among the obstacle to be removed, last expression of the monopolistic configuration, is the control over the last mile by the historical operator, accessible by others at a price:
-still detrimental for other players according to these new comers,
-guaranteeing the interest of the incumbent to maintain his level of investment and maintenance of the infrastructure according to the historical operators.
All sorts of mid-way solutions have been discussed or tried, but the trend seems to go inexorably towards total unbundling (for the time being). Regulators have the duty to monitor this process to keep it within fair lines. As the ultimate argument is that such liberalization process should stimulate innovation, in particular alternate technological solutions to the fixed copper-cable infrastructure, it is essential to observe how the different countries’ regulator(s) deal with new technological offers, among which powerline systems, but above all, wireless concepts. This means in particular setting up public interest oriented procedures for assessing and eventually authorizing new standards. Let us remark, however, that sometimes regulators can play with blurred boundaries, as the WiFi IEEE 802.11 g standard has been authorized, in many countries, before its testing completion by expert bodies (decision which made sense to give way of rights to the advance of technology, but disputable in legal and even political terms).
At this moment (mid-2005), the national licensing game, even after the authorization of the 802.16 standard (WiMaX) in many countries, is still undecided as radio frequencies are considered as being part of public good. Their chaotic take-over by uncontrolled actors is a risk which no one seems likely to let happen. Still, the first hearings which took place in some European countries (Scandinavian States, Germany, Switzerland, just to mention a few) and the consultations which followed, indicate that the game is this time more complex than with the 3G mobile telephony license auctions (which took place a few years ago). There is some uncertainty whether it is better to go as usual (as Norway already did) and concede licenses to recognized players (with the “sale” to these companies of part of the available radio frequency within the targeted bandwidth) or if a new and more open scheme has to be set up and further supported, as precautionary principle. In this situation, we imagine easily that the historical operators, who are, for some of them, quite wealthy and capable of integrating this new stage with full innovation power, will be happy to be delivered a somehow new form of oligopolistic privilege.
Whatever happens this time, for each generations of standards being proposed, eventually authorized and arbitrated between early or more established lead-users on one side and the main players of telecom business on the other side, this will be a game played between different rationales, with their public or even citizen value and capabilities to demonstrate their power, all opportunities and inconvenients taken into account. Let us imagine also that within ten years, there will most likely be a new level of convergence of wireless systems (post WiFi 902.11 g and post WiMax?) with “3.5” or “4G” mobile telephony (beyond UMTS).
The governance of this diversity and discrepancy of options (let us not forget that optic cable to the home, powerline systems and satellite technology advances will make this plot even more complex), in which many actors are already de facto involved, appears to be one of the challenges of network management for these ten-fifteen coming years. Its early analysis and follow-up, seen as a learning curve necessary to this governance, has therefore become a crucial public regulation factor. In order to re-enforce the debate on the role and modus operandi of regulation in the future of wireless technologies (and in the ICT domain at large), it is therefore crucial that
- focused foresight, scenario, risks and opportunities studies be developed even more than they have been (often too general and not enough contrastive among the various options considered);
- the regulator be also regulated (representatives of the citizens, i.e., parliaments, must keep the initiative and not give excessive rights to the administration).
6User-innovation dynamics
One of the most interesting parts of the current configuration is the emerging role of minor players, whom we have labeled by the generic term of user innovators.
In the sense defined by Von Hippel [2], user innovators are actors who tend to innovate to solve fulfill better their own needs (for which the market provides only for an unsatisfactory technological offer), who are themselves both users and innovators for their sake. In a larger sense, as suggested by Rossel and Stricker [3], this might mean any user tightly involved in the overall innovation process and influencing it. In any case, in the wireless emergence, we have lead users or lead promoters of wireless usages, who deserve a particular attention when it comes to analyze the competing network perspective.
Lead users are in particular early adopters, who pioneer the field taking risks and trying to weigh on its future. In the wireless domain, lead users have installed an on-line technological watch, an acute sense for experimenting the highs and lows of the wireless technology progress, as reflected in the virtual community chats on the topic. In these discussions, we can clearly distinguish two sides: one expressing the hope for “free”, independent, horizontal networking in Internet-type of information exchange, the other one trying to take problematic issues and regulatory needs into account. It is a fact that wireless technologiesseem for the time being penalized by a series of shortcomings which are also part of the debate, either economically or politically.