“Universal Broadband” in Sweden

PTS has published, on 15/04/2007, a “Proposal for Swedish Broadband Strategy”[1], with a view to define a strategy that aims to increase accessibility to an infrastructure with capacity for broadband transmission so that by 2010 all households and public and business operations are broadband connected.

This strategy focus on three areas (a) objectives and proposed measures in terms of accessibility; (b) the need of a model for equal treatment of operators; (c) open networks, with special incidence on operators’ access to local fibre networks.

The document recognizes that there “important public interests that cannot only be met through the private market and trough the promotion of competition”, such as the availability of a robust and modern IT infrastructure with high transmission capacity throughout the country, and accordingly suggests that the Government should formulate a long-term objective for access to broadband infrastructure – including a set of measures amounting up to SEK 1.135 m (of which SEK 567,5 coming from structural funds and rural development plans) - and strive for broadband to be perceived as a universal service when reviewing the USO Directive.

In fact, as since 31/12/2005 there are, in Sweden, more broadband users than dial-up internet connections, it could be claimed, according to the NRA, that “the majority of consumers” (in the sense referred to in the USO Directive) use broadband.

The Swedish NRA also supports the view that the appropriate model for equal access treatment is based on the functional separation of TeliaSonera (inspired on the BT’s OpenReach approach), including, namely, a complete separation of human resources between wholesale and retail (each side having specific and unrelated target incentives), accompanied by a “Chinese wall” in terms of information flows. In parallel, PTS announced that the conditions of TeliaSonera’s phasing out of infrastructure related with migration to NGN would be subject to future review.

In this framework, noticing that the present legal framework offers only a limited scope to mandate this functional separation, the PTS states that the Swedish government, as the main stakeholder in TeliaSonera, should strive so that the operator voluntarily carries out such separation.

Notwithstanding, PTS is demanding powers to impose openness requirements in order to ensure that broadband networks financed by public funds are open to other service providers and is recommending Municipal authorities to be given responsibility to ensure access to broadband infrastructure and the right to collect related data.

PTS is also recommending that the government takes into account the following guidance when allocating funds: (a) support should only be payable for the rollout of broadband infrastructure in areas that are lacking such access; (b) support should be technologically neutral; (c) infrastructures funded by the government should be open to all service providers.

Other important measure recommended by PTS is that the joint duct planning (currently adopted by municipalities regarding for instance telecoms, heating, road works) – which results in major cost savings – is extended to power companies.

The guidelines of PTS’s strategy seem very much in line with the Best Practice Guidelines for NGN migration that were approved in the 2007 Global Symposium for Regulators[2] and, together, with the foreseen public and private investment, will most likely produce short-term results regarding the deployment of broadband both in urban and rural areas.

The identified strategy also appeals for additional reflection in terms of the discussion regarding the inclusion or not of broadband access as a universal service in the framework of a revised US Directive (especially given the different levels of broadband penetration in the EU – see post of 30/04/2007) as well as of the design of financing model for the universal service net costs.

[1] http://www.pts.se/Archive/Documents/EN/Proposed_broadband_strategy_eng.pdf

[2]http://www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR07/consultation.html

ITU Reform: An interview with the President of the Management and Budget Group

José Saraiva Mendes (J.S.M.), President of the ITU MBG – Management and Budget Group (and former President of the ITU Council), speaks about his present ITU challenges and of his work leading this group, that aims to create a Commission with the mission to assist the Council in the restructuring of the ITU.

[Interview conducted by Ilda Matos; edited by Ilda Matos and Carlos Costa]

Which work are you presently doing at the ITU?

J.S.M:The ITU has a very complicated budget problem. For many years, the revenues generated from expos and fairs, in conjunction with the resources applied in funds, helped this organisation’s bills, but their decreasing importance, since the nineties, highlighted even more the budgetary problem.

Hence, some measures were needed to solve this situation and in Marrakech, in 2002, the Plenipotenciary Conference determined the Council to analise ITU’s managerial processes with a view to a revision. That is when I came in. It was my task, then as President of the Council, to put in practice the decision to revise ITU’s managerial processes which has a heavy and expensive structure.

How many persons work for the ITU?

J.S.M: In round figures, the ITU has 1.000 workers. The process revision concluded that this structure was over dimensioned, so we designed a financial plan with a view to restructuring the organisation and cutting personnel, paying a compensation to the people who volunteered to join the plan.

Were the proposed cuts essentially related with the personnel?

J.S.M: Essentially. The idea was to maintain ITU’s functions, but with less personnel. In three or four years equilibrium would have been reached. But that was not possible, due to several reasons.

Meanwhile, a new Secretary-General was elected and he wants to make things better. In Antalya, in 2006, it was established that I must help to create a Commission that with the new Secretary-General would continue the restructuring. What I am doing now is to create the Commission, to define how it works, how the meetings should be handled, what is the working methodology, who should participate, etc. All this work is going to be presented to the Council in September and from that moment on the Commission should start its workings.

With the background that you have mentioned, are you optimistic with the future of the Commission?

J.S.M: Not really, unless the Member-States decide to go ahead with the indispensable measures. But, there is an important aspect: The Secretary-General considers this Commission very important, because it can complement, with a series of initiatives, the work of the Council, which meets once a year.

Will the work of the Commission allow the ITU to be financially balanced? How?

J.S.M: The intervention of Portugal with a special commitment since Marrakech contributed to a significant ITU management progress. During my Presidency of the Council, the work which was developed resulted in the introduction of a cost accounting system and of a budgetary model based on results.

But there is still a lot of work to be done to take full benefit of these tools and to revert the situation. The Secretary-General has made efforts to obtain resources from several countries and from the industry, to see if it is possible to balance the budget. He has also proposed the reduction of the number of Directions.

In this context, the role of the Commission will be to verify the managerial rules that are in use and to check whether those fit the ends the targets that are aimed at. The Commission will verify as well the budget execution. Taking into account what was referred, the Commission has to provide recommendations to the Secretary-General.

Is the internal restructuring ITU’s main priority?

J.S.M: Yes. The work that I have been doing has already identified problems and solutions and we have some tools to begin controlling the situation. This work will be continued in the Commission to be created.

Apart the internal restructuring, which is the main priority, what are the main challenges that the ITU is confronted with?

J.S.M: Essentially, the enlargement of its attributions, namely at the level of the role that it is going to have in the Information Society, which is a very complex reality. In this context, the internet management, which is ensured today by a private institute (ICCAN) founded based on the legislation of the USA State of California, should be underlined. There are doubts if this function should not be preferably ensured by a more general institution, such as, for instance, the ITU.

How do you see the articulation of ITU with other entities, outside the United Nations System?

J.S.M: For me, it is useful that there are contacts between these entities, because we are dealing with a complex reality. It is fundamental that the ITU cooperates with other organizations.

Does the existence of structures such as ITU, with high costs, make sense?

J.S.M: there is a very important aspect: It is the ITU that manages the spectrum at world level. This is the major justification for its existence (notwithstanding the approval of standards, the development of projects to reduce the Digital Divide between the developed and the developing countries and the preparation of telecoms expos).That does not mean, given the present balance between the different forces present in the ITU, that the field of intervention of ITU should be restricted to spectrum management. It does not mean either that it should be enlarged.

What future do you foresee for the ITU?

J.S.M: The ITU will have the same future as the United Nations System, which is the only international forum for discussing the real major problems. At the moment, there are no alternatives.

Are you available to continue your work at the ITU from September onwards, when the new Commission starts functioning?

J.S.M: Presently, I am not a candidate. It will depend of the dynamics that is generated.

IRG/ERG People: Cristina Campos

Cristina Campos (participant in the Regulatory Accounting WG) will be moving, at the end of May, to Refer, the Portuguese railways operator, where she will be working in the set up of the cost accounting system.

We all (probably including also the railways regulator) feel sorry that the she has to go, but the memory of brave and inspiring discussions related with the very nature of costs and its impact on regulatory decisions persists, as well as of her good companionship.

Anyway, you will always be able to reach her at camcris@gmail.com or to give her a call.

Interview with the Vice-President of the OECD Information Security and Privacy WP

The digital identity, the future of Internet, spam, the revision of the guidelines for the security of networks and of information systems, which date back to 2002, are some of the issues that are in the agenda of the OECD Information Security and Privacy Working Party. According to Manuel Pedrosa de Barros (M.P.B.), Vice-President of the Working Party (WP), all these issues must be fully analysed in order to ensure that in the Interministerial Conference of 2008 there are conditions to celebrate agreements between the Member-States.

[Interview: conducted by Ilda Matos; edited by Ilda Matos and Carlos Costa]


What kind of work does the OECD Information Security and Privacy WP produce?

M.P.B: The WP has a programme (resulting from contributions of the OECD Member-States and Secretariat) including issues related with security and privacy which have serious impact in terms of cooperation and economical development. As for the issues presently under discussion, one should refer the management of the digital identity, e-authentication, international cooperation in terms of privacy, RFID, malware, spyware, spam, trends associated with security of networks and privacy of information systems and, last but not least, the preparation of the forthcoming Interministerial Conference.

How does the WP function?

M.P.B: The WP meets twice a year, usually in March and October, and is supported by a Permanent Secretariat that also participates in the meetings. The works are directed and boosted by a yearly elected bureau composed by a President and several Vice-Presidents.

Does the validation of the tasks fulfilled by the WP need to be always at Interministerial level?

M.P.B: Not always. There is the Council of Ambassadors, where agreements may be arranged between Member-States. At the WP level, important works are also prepared and subject to declassification to be available to the general public.

What are the main priorities of the WP for this year?

M.P.B: The Interministerial Conference that will take place next year is the fundamental goal. We have to prepare a wide set of issues that are now of increasing importance, especially the digital identity issue (that the conjunction of data, in a virtual framework, used to identify an agent, conferring this agent the capacity to fulfil an array of actions) and the stealing of the digital identity.

Other important issue in the preparation of the Interministerial Conference is the future of the internet, which will gradually be seen as the “Internet of things”, beyond the interpersonal communication and towards a communication supported in devices, controlled by a computing programme, that interact recurring to the internet.

We are also working in the revision of the guidelines for the security of networks and of information systems, which date back to 2002, to see whether those can be considered updated, if new questions arise and what must be specifically reviewed.

Naturally, all this work has to be produced between the meetings of the W.P.

How do you foresee the cooperation between OECD and other international organisations in terms of network security and protection of critical infrastructure?

M.P.B: In general, beyond the participation of OECD Member States in the W.P., there is also the adhesion of experts from the industry, EPIC, Council of Europe, European Union, APEC and others. Regarding the protection of critical infrastructure, the W.P. is developing studies comparing the policies for the development of critical infrastructure protection.

How does Europe compare with the USA and Japan in issues such as network security, critical infrastructure protection and digital identity?

M.P.B: The situation varies, for each of these topics there are different layers where the relative development is variable.

Broadband Business Users – Ireland

ComReg has published today an interesting survey-based report on the trends around broadband usage by companies[1].

Some of the main findings:

(a) By mid-2006, 89% of businesses had access to the Internet (and, of those, 69% had a broadband access) with penetration levels highest among businesses in the Finance, Construction and Services Sectors, whilst Retail and Agriculture have the lowest penetration levels;

(b) Larger companies are more likely to be connected and businesses with between 1 and 9 employees have the lowest uptake of Internet services;

(c) The most common type of internet connection for SME was DSL (52% of the SME had a ADSL access) and, in the case of Corporates, a leased line or ADSL access (33% of Corporates had a dedicated leased line and 29% a ADSL access);

(d) The main reasons for not taking up broadband, especially for smaller businesses, were lack of relevance and lack of availability (albeit perceived lack of availability seemed to be higher than actual unavailability);

(e) The key benefits to those businesses using broadband included increased efficiencies and productivity, as well as time savings;

(f) Levels of switching between broadband suppliers were low among both SMEs (10%) and corporates (4%), since: (f1) the level of satisfaction with current providers is generally considered high; (f2) companies fear they will make a poor choice and that there will be a loss of service; (f3) the switching would consume time in exploring different options and choosing the best;

(g) Usage of voice services such as VoIP is relatively low within SMEs in Ireland.

[1] http://www.comreg.ie/_fileupload/publications/ComReg0723.pdf

Cable Network “Spin Off” in Portugal

PT’s shareholders approved last Friday (with the opposition of the Group’s Union) the “spin off” of PT Multimedia, the legal entity presently owning the cable network, agreeing to a trade of 4 PT Multimédia’s shares for each 25 shares of PT.

This decision, opening the field for a wider competition in the fixed voice telephony, television and broadband markets, is part of a plan to counter the recently failed Sonaecom’s PT takeover proposal. A Sonaecom Board Member has meanwhile referred to the press (“Sol”) that the “spin off” is not enough and that “vertical separation is also necessary as well as equal access to contents”, considering fundamental that both companies have “different commercial strategies and shareholder structures”.

This operation will be, foreseeable, concluded not later than December and, probably, before next October. If at the date of the “spin off” the shareholders participation remains the same as today, both the companies would have thirteen major shareholders in common. Notwithstanding, PT’s President has publicly dismissed, as a “fantasy”, the idea that the reference shareholders of both companies would be common.

As for the workers that are presently connected to both the companies (which, according to a PT’s Workers’ Commission source, round up to 150 in a total of circa 500 PT Multimédia workers), PT’s President stated that each case would be dealt with individually.

In relation to the regulatory outcome, the PT’s President position (conveyed to the “Jornal de Negócios”) is that PT Multimédia’s network, "should not be regulated, nor PT’s network; there can not be regulatory discrimination”.

Meanwhile, the Chairman of ICP-ANACOM (which has no power of approval in this separation) reiterated (in an interview to the “Público”) that an increase in competition is dependent upon the creation of two really separated entities (whose verification is not compatible with overlapping shareholder structures).

ICP-ANACOM’s Chairman has also stated that depending of the “spin off” model to be adopted, the NRA will “study the markets, analyse the situations and draw consequences”, especially in terms of concluding if the resulting companies are continuing to hold significant market power or not.

EU E-Communications Household Survey

The EC has released last Friday the (EU) E-Communications Household Survey 2006[1], covering, inter alia, fixed and mobile telephony, directory and enquiry services, television, bundled offers and the European emergency number.

I. The following findings of the survey can be underlined:

A. Fixed and Mobile Telephony

a) 95% of households have access to a telephone (the survey notices the positive evolution registered in Poland and Portugal) and, in average, 58% have both fixed and mobile telephones, albeit more households are giving up their fixed line;

b) For the households that keep their fixed line, the main reason seems to be the internet connection, whilst the sufficiency of a mobile phone (32%) and the high prices of line rental (25%), calls (18%) and installation (10%) are mentioned as strong reasons in the case of households that do not have a fixed line;

c) Mobile penetration is 21% (while the “mobile-only penetration” is significantly higher in the new Member States) and the main reasons mentioned in cases where a household does not have a mobile phone have to do with the fact that no none, in the household, actually wants a mobile phone (41%), the sufficiency of a fixed line (26%), the excessive price (18%) or the existence of good access to phones elsewhere, when outside the home (5%);

d) Only 12% of respondents indicated that their household members used public payphones;

e) 75% of the respondents use, at least sometimes, traditional paper phone directories, whilst 54% sometimes call to a service number to get contact details (notwithstanding, 43% never call to these services);

B. Internet

a) 54% of households have a computer and the broadband penetration rose up significantly, reaching by now 28% (the overall internet penetration is 42%);

b) ADSL is the predominant access technology and the use of dial-up standard lines has decreased by 9 percentage points vis-à-vis 2005;

c) 28% of households with internet access suffered significant problems (including a breakdown in 27% of the cases) caused by spam, viruses and spy ware;

C. Television

97% of the households have a television and aerials (45%) remain the main means of reception, followed by cable (35%) and satellite (21%);

D. Bundles

20% of Europeans admittedly purchase one or more of the services as part of a bundle (the most common being combinations of fixed telephony and internet access) and most are satisfied, either because there is only one invoice (60%) or find it cheaper than paying separately for each service (44%).

E. European Emergency Number

On average, 40% of Europeans are aware that 112 is the number to call anywhere in the EU in the case of an emergency while half of the population is unaware.

II. Some questions

At the light of these findings, I believe the following questions may deserve some reflection:

a) What are the practical implications of the accrued visibility of fixed-mobile substitution in terms of market definition and market power assessment?

b) What type of regulatory rules does the proliferation of bundled offers (mostly between voice telephony and internet access) and the recognition that perceived high rental line prices may be leading to lower levels of fixed penetration – with repercussions on internet penetration – advise, in particular in terms of conciliating objectives of broadband deployment and promotion of competition?

c) Since bundled offers tend to make more difficult for end users to compare product characteristics and prices, adding up transaction costs, is there a need for specific measures to safeguard, in this context, consumer interests? If so, at what concrete level?

d) Does the evident correlation between PC penetration and internet penetration suggest that public entities deepen articulated measures that may even surpass the electronic communications market in order to promote PC penetration and computer literacy?[2]

e) What implications, if any, should be drawn from the scarce use of public payphones and of the more frequent use of paper directories in the framework of the forthcoming Universal Service Green Book?

f) What measures should be taken to promote awareness of the European Emergency Number? and why did not the measures taken so far produce better results?

[1]http://ec.europa.eu/information_society/policy/ecomm/doc/info_centre/studies_ext_consult/ecomm_household_study/eb07_finalreport_v3.pdf

[2] In relation to the intervention of public authorities, the joint OFCOM/DTI document published in the UK, in February 2007, "Public Broadband Schemes – A Best Practice Guide" http://www.ofcom.org.uk/media/mofaq/telecoms/pbs/dti_pbs.pdf, offers an interesting insight, as well as the CMT publication, of January 2005, "La Actividad de las AAPP en el sector de las telecomunicaciones - Catalogo de las Buenas Prácticas" http://www.cmt.es/cmt/centro_info/publicaciones/index.htm.

Regulation for “Civilians”

Albert Einstein used to say that you do not really understand something until you are able to fully explain it to your grandmother. I think that he was exaggerating and that, perhaps, some of you, fellow regulators, may have dealt, at any given point in time, with a certain difficulty trying to explain to your grandmother, friends or children what is it that you actually do and what is the impact of your work on society.

If so, “Regulação e Concorrência” (Regulation and Competition), a short book authored by João Confraria (Professor of Economics and former Member of the Board of ICP-ANACOM) is an ideal introduction to the subject of economic regulation, highlighting the pervasive character of regulation in modern life.

It is a didactic, often entertaining, systematic briefing into the: (a) definition of regulation; (b) interpretation of the nature of market functioning and of the different theories that explain economic regulation; (c) role of the State in the Economy; (d) development of NRA in the EU; (e) periodic cost-benefit assessment of the regulatory activity and (f) present trends and challenges of the regulatory activity.

Most unfortunately, this book, published by Universidade Católica Editora, is not yet translated (if you have some interest in getting it translated please comment at the end of this article).

Another interesting book, readable by non-engineers, who actually want to become familiarised with the buzzword of the XXI Century (VoiP) is “Voice Over IP – Crash Course”, by Steven Shepard, published by McGraw-Hill, which shows the driving forces behind the emergence of VoIP, explains its impact and, mostly, details how it is supported and how it works from the technological and engineering viewpoint.

Across the Atlantic

Broadband

OECD’s announcement that the USA has fallen in the international ranking of broadband penetration (see post of 24/04/07) had an immediate response at the FCC. Commissioner Prof. Copps (see FCC’s press release of 23/04/07) stated that this is a “national embarrassment” adding that “these rankings aren’t a beauty contest – they’re about our competitiveness as a country and creating economic opportunity for all our people” and reiterated a call for a National Broadband Strategy.

Also in relation with broadband, the FCC announced on 16/04/07, two measures related with the assessment of broadband penetration:

(a) A Notice of Inquiry to find out if broadband services are being deployed to all citizens in a “reasonable and timely fashion”;

(b) A Notice of Proposed Rulemaking which attempts to structure and rationalize the collection of data that the FCC needs to set broadband policy.

DTV

The FCC started on 25/04/07 its third periodic review of the broadcast system conversion from analog to DTV with a Notice of Proposed Rulemaking including a set of actions to facilitate this transition (e.g. restricting the grant of future extensions of time to construct digital facilities, offering expedited processing to stations applying for a construction permit for channels based on DTV, examine circumstances in which stations may reduce or terminate analog service, etc).

A Report and Order and a Further Notice of Proposed Rulemaking, published by the FCC also on 25/04/07, is seeking more public discussion on the use of “700 MHz Band”, which is occupied by television broadcasters during the DTV transition, but when released may facilitate the provision of innovative services and of wireless broadband services for the public safety community, especially since establishing communications between emergency workers has been a clearly identified problem during 9/11 and Hurricane Katrina.

At the same date the USA regulator:

(a) Adopted an order requiring retailers to fully inform consumers when TV equipment being sold has only an analog tuner;

(b) Asked for comment on proposals to ensure all cable subscribers, including those with analog TV sets, are able to view must-carry television conditions on cable systems after the transition to DTV.

IRG/ERG People: Augusto Fragoso

Augusto is known mainly as chairman of the IRGIS WG, head of the IRGnet Support Team, co-chairman of the IRG Visibility PT and participant in the IRG Informal IT Security WG. But his techno orientation and professional posture stop at the end of the day transforming him into a Argentinean Tango character - a worldwide known tanguero.

President of the most relevant Tango Association in Portugal - LUSITANGO - he organizes one of the most important International Tango Festivals in Europe - this year FTL2007 Festival Internacional de Tango de Lisboa - 23 to 27 May 2007.

You can dare and participate in this incredible event that gathers more than one thousant people from all over the world or just have a look into Lusitango's web site at www.lusitango.com or the Festival's web site at www.lusitango.com/ftl.