| Global Telecommunications
Society
Amsterdam 25 January 2001 |
A speech by Ewan Sutherland, Executive Director of the International
Telecommunications Users Group, to the Netherlands Branch of the Global
Telecommunications Society at the Olympic Stadium in Amsterdam on Thursday
25 January 2001.
Mr Chairman, Ladies and Gentlemen
Good evening. May I offer you my best wishes for the new year, the year of the snake which began yesterday.
On behalf of INTUG may I thank you for the invitation to speak here this evening. We are always grateful for the chance to express the views of users wherever we think they can be of influence.
It is very nice to be here in Amsterdam. I had never thought I would appear at the Olympic stadium. As physique tells you, I am unlikely to appear in any of the competitive events.
The Netherlands has the distinction of having of two regulators. One in Den Haag and one further south in Rotterdam. I had the pleasure of being in Amsterdam back in September at an event when both spoke. It helped me to a much better understanding of the position here.
As you will be aware, the European Union's 1999 Review of telecommunications policy has been dragged through 2000 and into 2001. It looks likely to continue into 2002 and 2003. If the usual pattern of implementation by member states continues, then it will tak even longer. It will be work in progress for a some time to come.
I do not intend to take you in detail through the five directives, one
regulation and one decision. Nor, despite the presence of Professor Melody,
do I intend to set a test at the end or to assign grades. Whether he plans
to give me a grade, I am less certain.
One of the major claims is that services are to be personalised. Information about your location is central to that.
Until now, mobile operators made their money from three sources, subscription and calls, plus termination from fixed networks and roaming charges. Now they are to add services. If the sums of money being paid at auction and in mergers are anything to go by, then they expect to make a great deal of money from these services.
However, to do so they need to know who we are. If we are flooded with messages about the price of Heineken, then the service is of little value. Especially, if like me, you do not drink beer. If on arrival at Centraal Station the new systems fill your handset with service information of a generic nature, you will be willing to pay very little. A flood of adverts will cause you to reach for the off button.
However, if they know your tastes from previous visits, then you might well get a surprise.
There is a great difference between walking down the Damrak at two o'clock in the afternoon and stopping in a couple of pubs for drinks and doing the same in the Warmmoesstraat at 2 o'clock in the morning. Yet, they run parallel, only by a few hundred metres apart. In the normal course of events, only other doing the same would know what you were doing. Now it seems that KPN Mobiel or Libertel will know where you are at every hour of the day and night. I am not sure that cuddly toys of Ben are any more reasurring.
Of course, they already have the potential to know quite a lot about you. They have your home address, which any marketing company can turn into a profile. They know who you call and to whom you send SMSs. If those people are also customers, they have the potential to extract patterns.
Cookies have been on our computers for some years. We are now to get them on our mobile phones. Companies offering services will be able to identify individual customers and their pattern of activities. All the problems of computer cookies are reproduced with mobile phones. Then enhanbced by detailed knowledge about you, your location and your movements.
If they know where you are at different times, they have the potential to extract patterns. If they expect to sell you expensive services, then they have the incentive to do so.
Suddenly, your mobile operator knows more about you then you do yourself.
It remains to be seen whether the legal framework will be sufficiently resilient to deal with these issues.
One word of warning to the operators. It is far from clear that any
of GSM brands has the strength to stand up to customer fears on the issue
of privacy. A mistake could easily scare off customers. In Europe the operators
will have to face data protection authorities in the USA it is more likely
to be class actions.
There are those who question the appropriateness of having DG Information Society defining the various markets in this way.
Markets can be of two types, national and multi-country. Where a market can be shown to include more than one country the test of competitiveness is to be made by a panle comprised of all the relevant NRAs. Thus, if a market covers the European Union, it will have all fifteen NRAs present. Some will wish to bring along their colleagues from the National Competition Authority. These panels are to take concerted decisions.
It is tempting to wonder if they will be able to take a concerted decision on the commencement and duration of the lunch break.
The likely market segments which will be mult-country or pan-European are:
The sad truth is that operators know their own NRAs, even though they
may not like them. They have a temptation and the ability at least at a
superficial level to make markets seem national by varying the conditions.
Nonetheless, demand is often pan-European or global.
About this time last year, the European Commission produced a draft Recommendation on Unbundled Access to the Local Loop. This went through the usual procedures and appeared in the Official Journal in late April. However, by then it had been overtaken by political events. The European Commission had taken the view that some member states were dragging their feet on implementation. Some member states had also discovered that they needed primary legislation. The Lisbon Summit of late March 2000 decided to make unbundling the local loop a political priority and resolved that it be done by the end of the year.
On 12 July 2000, the Commission proposed a Regulation. This came as something of surprise, since theprevious week it had been expected to be a Directive. However, a Directive would have required transposition into national legislation and would not have met the timetable. Instead, the legislative measure used was one that worked directly into the legislation of member states. It was approved by the novel procedure of "pre-emptive conciliation", passing the final legislative stage on 4 December 2000 and becoming law across the European Union on 2 January 2000.
The Independent Regulators Group (IRG) has produced guidelines for the implementation of the Regulation.
We all wait with fascination to see how the work of unbundling the local
loop unravels. It is already clear that it will be a complicated business.
Germany has 19 flavours or unbundled local loop, more than your local ice-cream
shop. Telecom Eireann, the former monopoly in Ireland, has priced wholesale
DSL at ....
I refer to the GSM operators, the people who put the tel into cartel.
The GSM operators have taken the book of tricks developed by the former PTTs and added whole new chapters. These cover:
Belgacom did the same. They compounded this by concealing the price increase as a footnote on the final page of the document, after the price of calls to various Pacific islands.
Tromboning.
SMP and Joint Dominance
Oligopoly Clause.
Roaming inquiry
I imagine that I cannot avoid saying a word on the vexed subject of
auctions. It is difficult to see any good that has come out of them.I am
told that some politicians here feel that they lost out. I am told one
operator feels it was intimidated. In Switzerland the auctions collapsed,
when the number of bidders suddenyl equalled the nbumber of licences. Singapore
has delayed its auctions. It is all very messy.
The European Commission rushed its proposals. Key sections of the final propsals were produced at the last minute. In part this was the result of unresolved rivalries between DG Competition and DG Information Society. The Commission was unduly optimistic about getting such a daunting legislative package approved. The legislative machinery in teh Treaty of Maastricht was never designed for this volume of highly technical material.
The European Parliament really does not do detail. The vast majority of members have little interest in telecommunications. There are, perhaps, ten who have a detailed knowledge. Amongst that number is Wim van Velzen.
The Council operates in secret. Rumour suggests that member states are in almost constant session in Brussels trying to reach agreement. There seems little enthusiasm to achieve harmonisation.
You have two parallel processes defined by the Treaty of Maastricht. In contradiction of the laws of geometry these meet in a process of conciliation. Fifteen MEPs and fifteen representatives of the member states take their jackets off and slug it out in a political fight to the compromise. How it will end is unknown.
How will European telecommunications fare for the rest of the decade?
Will it support the maxiumum economic growth?
| copyright © INTUG, 2001. |
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