Friday, 31 July 2009

Mobile termination in non CPP countries

As I only discovered two days ago, Ofcom is busy with a consultation on the future of mobile termination charges.

On the site you can find a report by Analysys Mason that describes the situation with regards to mobile termination tariffs in Canada, HongKong, Singapore and the USA.
One of the interesting conclusions is, that for elements like penetration it doesn't really seem to matter which tariff scheme is used, but it does affect the usage of mobile telephony.

Also have a look at Sri Lanka, the only country to have decided to go to CPP, but decided not to after a wave of protest in the country on the issue. their approved retail tariffs are interesting to look at too.

Tuesday, 28 July 2009

(Mobile) termination rates may end your career

I have been quite critical on "termination charges". One reaction I received to my previous post via e-mail was quite eye-opening.

I have a friend, he was a member of the board of the regulator in XXXX. He ‘was’ because next day after regulator presented decision to lower MTRs, parliament (instead approving this decision) voted to change the CEO and the board. He was a member of dispute resolution commission. While resolving an ordinary dispute one of the sides started to influence him. Finally some people were trying to shut him. That’s more or less realistic picture of regulatory environment in developing country.

As a Dutchman I don't know what corruption is. It doesn't really exist here as far as I know. Maybe I'm blind, but we're doing pretty well according to Transparency International and World Audit Corruption. However, most countries are fighting a 2 TRILLION dollar industry (services (fixed and mobile)and equipment), when they want to change the rules to make sure that their country benefits from (mobile) telecommunications. To see some recent examples look for instance to these postings by Steve Song about telecoms in Africa, or at Russia aiming to ban foreign VoIP. Benefiting often means more for the same money, or more for less money and this is perceived as a loss by the local telecommunications companies.

You know, it's an increase in telecommunications usage that benefits economies, not an increase in telecommunications revenues, but that is awfully easy to say from the Northern bit of Europe

Friday, 24 July 2009

Low (mobile) termination costs are good for the poor

I've been interested in mobile termination rates for quite a while and I've blogged about it previously. In recent days I've been looking at it again for a variety of reasons and I found some new data, which might are interesting in the debate and that show that low termination rates or no termination rates are beneficial to poor people and to competition in general. I also read this article by Emma Buckland or Analysys Mason, who claims that in developing countries, where almost all mobile users are prepaid, a move to MPP would be even less popular.
But first, what was it all about again.

In most countries in the world, if you call a telephone number, your network will pay some money to the receiving network for the termination of the call. This system is called, Calling Party Pays. The effect is that in those countries the receiving of calls is free. The amount that needs to be paid (termination rate) is often determined by the regulator. If the market would set it, it would result in termination monopolies and as Orange in the The Netherlands once showed, you can raise termination costs without affecting incoming call levels, so it's essentially free money. The height of the termination rate is very contentious. Even more so because many regulators have deemed it right that some networks should receive more than others (asymmetric). Incumbents less than new entrants and mobile more than VoIP and fixed lines. Termination rates can be anywhere between $0.004 cents per minute (India) to $0.20 cents per minute (calling a mobile in Bulgaria). For a nice overview of the EU, see these graphs of the ERG.

There are a few countries that have a system that is known either as Bill and Keep or Receiving Party Pays or Mobile Party Pays. The way this is generally implemented is that the networks of the calling parties do not pay each other at all for the traffic terminated on the other's network. (I don't know of any country that has implemented a system that works like a collect call, where the receiving parties network pays back to the originating parties network) Countries that have this model are the USA, Canada, Sri Lanka, Singapore. There isn't one effect of this model, as in the USA you buy a bucket of minutes and whether it's an incoming or an outgoing call, your bucket is emptied) but in Singapore and Sri Lanka incoming calls are free.

There are many countries who have moved away from this model to CPP (like France and China). Sri Lanka had decided to move to CPP, but reversed that decision after an uproar in the country. So you would expect CPP be better for competition, better for consumers etc. And this is argued by the GSMA. And well, that just isn't true. The exact opposite is the case. Scott Marcus wrote a good comparison of CPP vs Bill and Keep and pointed to the larger amount of minutes of use in BAK countries.

One of the problems with the comparisons between BAK and CPP however is that they are often written in a black and white fashion. The main argument against BAK is that you would have to pay for incoming calls, that no user would/should accept this. Often the argument is used that it is bad for low usage and pre-paid customers as in CPP the operator gets income from their incoming calls too. What isn't done however is to make a comparison between countries with a high termination rate and a low termination rate in CPP countries. It is here that you can see some very interesting developments.

India is the ultimate country when it comes to low termination rates. They are at 20 paise per minute or $0.004/minute. Idea Cellular there reports around 400 minutes of use and an ARPU of $5.70. Interestingly they see a decline in average minutes of use, because of more multi-SIM customers. So an average customer may use more minutes, but on various SIM's. Almost all of these customers are on pre-paid subscriptions. Now contrast this to some other countries in the world.

Telenor in it's quarterly reports gives a good insight into the minutes of use for all of it's countries.
Pakistan has termination rates set at $0.013 per minute.  For Pakistan they give 150 minutes of use on average.

Thailand's termination rates are at around $0.02 per minute. In Thailand there are on average 300 minutes of use.
In Bangladesh the termination rate is at $0.0026 per minute and the Grameen Phone customers call 300 minutes of use.
All three countries aren't rich, but have mobile penetration rates of 30% or more and compound average growth rates of over 50 %, which means that with 2 years they will be above 60% market penetration. 

Now compare this to Telenor's European operations, neither Norway, Denmark or Sweden reach more than 250 minutes of use. Serbia gets 100 minutes of use. What are the termination rates in these countries?
Norway - between $0.08 and $0.14 and 250 mins of use
Denmark - between $0.10 and $0.14 and 200 mins of use
Sweden - $0.06 and 220 mins of use

So the poorer countries in this example have more minutes of use and a lower termination rate. Given the CAGR in the poor countries it can't be said that they don't see an uptake of mobile phone usage. Despite even the fact that in these countries most people use pre-paid mobiles.  All in all to me this implies that there is much to say in favour of decreasing mobile termination rates and maybe to abolish them all together. Also I would expect that developing nations would be in favour of such a move as it becomes clear that the nations with the lowest termination charge are the one's with the highes minutes of use.

Tuesday, 21 July 2009

Now even RIM says Etisalat was hacking Blackberries

As reported last week, Etisalat installed software to intercept communications from Blackberries on their customers Blackberries. The software, called Interceptor, was developed by SS8 and was of rather shoddy quality, leading to decreased battery times and slower Blackberries. Etisalat denied any wrong doing and claimed it was an upgrade that would improve 2G to 3G handover. Many people, including me, called this utterly bogus.

Now an unsuspected source of support has come. RIM itself has developed and released a security update to remove the SS8 Interceptor application. Here is their announcement:

Registration App Remover for BlackBerry smartphones
Recently an update may have been provided to you by Etisalat for your BlackBerry Handheld via a WAP push. The Etisalat update is not a RIM-authorized update and was not developed by RIM. Independent sources have concluded that the Etisalat update is not designed to improve performance of your BlackBerry Handheld, but rather to send received messages back to a central server. RIM has developed this software (“Software”) that will enable you to remove the Etisalat update.

Tuesday, 14 July 2009

Etisalat and SS8 hacking your Blackberry for (un) lawful interception

It seems the UAE had some trouble reading Blackberry communications and turned to SS8 for a solution. SS8 suggested an unobtrusive program to be loaded on all Etisalat's customers Blackberry's. 'Trust me guv, nobody will notice'... yeah right. The programme eats batteries for lunch and the server it needed to communicate back with was overloaded (IDIOTS, like you don't know how many devices there are!). Annoyed Blackberry users saw their devices slow down to a crawl and started to complain. A little investigation later and a programmer found out the so called performance upgrade rolled out to all Blackberry users was a snooping programme by the SS8 company.

As some of you might know I've worked on the data retention and lawful interception in the past. I was at the Ministry of Economic Affairs, writing obligations into the Dutch Telecommunications law (chapter 13). The rules of lawful interception are that:

  1. you perform it in a way that the target cannot identify whether he/she is being intercepted.
  2. the intercepted data is transferred to the government as is and with precautions against tampering with the data on the side of the telecommunications company and on the side of the law enforcement agency.
  3. all the communications of the target are intercepted, regardless of the service/channel used (so GSM, GPRS, UMTS etc)
The trouble is that a target may irritate a law enforcement agency by using encrypted communications. So when you intercept that according to the rules, you get intercepted communication that you can't read. (but still can perform cool traffic analysis on, however that is for a different post.) In the past we've seen complaints about Skype and the German/Dutch Cryptophone. Blackberry is also one of the naughty boys who seem to have encryption in place. Not a very good one as the NSA doesn't like it for Obama and from what I can find on the net, the Indians claim to have cracked it.
For the UAE it seems to have been too difficult to do cryptanalysis on the Blackberry. They must have asked around the world of lawful interception vendors and found one who was able to sell them a 'solution'. From personal experience I can tell you that the world of lawful interception vendors is full with dodgy, shady, snake oil vendors. If ever you want to see some of them, go to the ISS world conference. It is way fun as you can read in this Wired story :-) And well SS8 is one of the more respectable ones in this dodgy world. But they're still out to make a quick buck and now have been found with their pants down. This is not the way to do proper interception and even if the technology would have worked as advertised chances are that some Blackberry developer would have figured this one out within no time and would have spilled the beans on-line. What programmer doesn't want to know how a proprietary performance update works.
Now the UAE is no democracy and it doesn't care much for 'rights' as demonstrated in this video, so it doesn't care about due process, but it does care about 'face' and I bet SS8 will have quite some trouble to try and save it's masters face ..... or face a 'similar' punishment as the grain salesman in the video. (who wants to bet that SS8 will not be at ISS World Dubai in 2010?)
Update: I did some searching around and came across this brilliant posting on the Blackberry boards. To really make everything very clear the files in the update were in a directory named: ss8/interceptor.... yeah right... like we don't have Google these days.

Wednesday, 1 July 2009

UPC Fiber Power rips off Hong Kong FTTH Commercial (badly)

The orginal commercial is funny. It has farts in it.

Here the UPC-commercial, no farts, not funny

For those people who want to know which commercials UPC's creative team will rip off in the future?

for all Hongkong city telecom commercials.