Opinion: Outlook for telco regulation

Telecommunications Forum CEO David Stone offers a personal perspective on telco issues

It’s sad to think that this will appear in the last print edition of Computerworld. The magazine has been a key element of the industry for as long as I have been in it. Its demise is a symptom of the change that is impacting everything to do with our industry and it is the theme of change that I want to focus on.

Ultra Fast Broadband

The show piece of this government’s nation building activities. This has already fundamentally changed our industry with the structural separation of Telecom and Chorus. At the stroke of a legislative pen we have removed the access bottleneck.

The problem is that we have kept some of the old access regulation and the Commerce Commission has been forced to act on this. Now we have the prospect of an accelerated regulatory review to address the bits we have not yet got right. At least it will give us a chance to fix them.

One positive thing about UFB is that you no longer hear any cries from the naysayers asking what is the need for fibre.

What is happening in other forward thinking countries who are rolling out fibre networks is what will happen here over time and we will be well positioned compared with many other parts of the world.

Think about poor old Europe, unable to afford ubiquitous fibre despite the population density advantages it enjoys. And another thought to comfort us with: if the anticipated change of government takes place in Australia on 14 September and Malcolm Turnbull implements his scale back of the NBN rollout to FTTN, then by 2020 Australia will have reached where New Zealand was in 2010 under cabinetisation. Something to think about.

Telecommunications (Interception Capability and Security) Bill

The Government’s new interception and security bill greatly extends the role of the state in terms of network security.

This, depending on your point of view, is either a watering down of individual freedoms or an overdue response by the state to the enhanced vulnerabilities that the internet delivers to us all.

Whatever your point of view it is clear that we are more exposed now that we ever were and things are only likely to get worse.

Broadband Product Disclosure

Choosing a broadband plan is difficult and ICT Minister Amy Adams has requested that the industry make the choice easier.

Hopefully the work done by the TCF on developing a code of conduct in response to the minister’s request, will deliver an outcome that obviates the need for regulation.

This is the kind of outcome we strive for. So far the indications are favourable.

Impact of OTT

In 2001, at the launch of the United Networks metro fibre networks, I met David Isenberg who was then regarded as something of a network heretic, having, while working at Bell Labs, written a paper forecasting that networks would rapidly become dumb pipes and all the smarts would migrate to the edge of the network.

It may have taken rather longer than Isenberg imagined but it certainly is happening. Increasingly voice and data traffic is no longer the preserve of the network owner but rather is the domain of the over the top content and service providers.

These large, foreign-domiciled providers such as Skype, Facebook, and Google are increasingly controlling what is carried over the networks and are essentially invisible to the network owners. In the mobile area it is similar with the device and app providers now owning the customer rather than the network provider. Increasingly the networks run the risk of becoming relegated to just being a collection of dumb pipes.

This is a fundamental change to the dynamics of our industry and one that could have catastrophic consequences if new business models are not rapidly adopted.

As it currently stands the OTT providers make no contribution to the cost of the network and as a result the capital available for future network investment is diminishing.

Further, since most are foreign domiciled, they are beyond the reach of domestic regulation. If you extrapolate this out to its (il)logical conclusion, you end up with a scenario where there is no effective regulation as our laws have no extra-territorial effect.

Somehow this seems unlikely and there will continue to be jobs for lawyers and regulatory economists for many years to come.

*This opinion piece is part of a series looking back at major issues covered by Computerworld, to mark the final print edition, published Monday July 1, 2013.

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