Presentation on M2M and market failure at Internet of Things-week

Last week I was invited to the European Commission's expert group on the Internet of Things to speak on OECD work. It was in Venice during Internet of Things-week, which sounds great until you realize it was 35 degrees Celsisus outside and 40 degrees inside. The European Commission currently is doing a consultation on the Internet of Things, so if you have opinions, voice them! Unsurprisingly maybe, I put the focus on market failure that currently impedes the growth of the Internet of Things.

Update: Here are some links to where I got the data:
- http://stakeholders.ofcom.org.uk/binaries/research/telecoms-research/not-spots/PA_Consulting_main_report.pdf on coverage
- https://ripe64.ripe.net/presentations/172-Mobile_Broadband_Measurements.pdf that 20% of locations are unavailable more than 10 mins/day

Slides available: BEREC expert workshop on IP-Interconnection (Peering and Transit) in cooperation with OECD

Update: BEREC website was redesigned and the slides fell off. They can still be found here in this open directory http://berec.mp.bi.lv/files/doc/berec/oecd/
On November 2nd, BEREC organized a workshop on IP-interconnection together with the OECD. All the slides are now available online.  And to save you from reading the whole post, here they are:

• Dennis Weller, Senior Advisor, Navigant Economics "IP Traffic Exchange;  Market Developments and Policy Challenges"
• Martin Levy, Director, Hurricane Electric "The Background of Internet Interconnection"
• Scott Marcus, Director, WIK-Consult, "IP interconnection, traffic trends, and wholesale and retail prices"
• Bill Krogfoss, Strategy Director, Chief Technology Office Alcatel-Lucent "Internet Economy and Content Peering"
  
• Falk von Bornstaedt, Head of Peering, Deutsche Telekom "IP Interconnection and differentiated QoS."
• Patrick Gilmore, Chief Architect, Akamai 
• Eric Ralph, Chief Economist of the Wireline Competition Bureau, FCC (Video message
  and teleconference); (no guarantee that the video works).
  

This was a direct result of the OECD High Level Meeting on the Internet Economy in June, where through conversations in the halls we noticed that there was a difference in the way regulators and Internet peering coordinators discussed interconnection. The workshop was a huge success, several people from the internet peering community flew in from Vienna for one day even though there was a RIPE-meeting going on too. 

A couple of points to take away from the meeting are:

• Peering agreements are for 95%+ handshake agreements, without any involvement of lawyers. They take 3 minutes to set up technically. 
• Both content providers and eyeball networks are working on getting content closer, faster and cheaper to the consumer. This benefits both parties. An interesting example were Google Global Caches which are now placed in networks around the world, but whose effect can most profoundly be seen in Africa where for instance the traffic over the Kenya Internet Exchange Point increased by several hundreds megabit/s peak after a cache was installed, saving the local internet community hundred thousands of dollars every month
•  The market for peering and transit is highly competitive and highly dynamic, with switching barriers being extremely low. A change in routing from one transit provider to another can literally be done in minutes. The effect of a peering agreement is almost immediate. 
• The people whose job it is to interconnect IP-networks speak of themselves as a community, even though some of them disagree quite considerably on how it should be done and who plays what role. 
• Peering and transit is done between all kinds of networks, even the European Commission has an AS-number and could set up it's own peerings.

 I think everyone looks back at a very successful event, that was seated to capacity. 

 

BEREC expert workshop on IP-Interconnection in cooperation with OECD 

November 2nd, Bloom Hotel Brussels, 9:00-17:30  

The goal of the workshop is to bring experts from the IP- interconnection community in contact with experts on interconnection from national regulatory authorities and to discuss future interconnection in an all-IP world.

The Internet’s way of using peering and transit as the basis for commercial negotiations differs considerably from the telephony’s world of Calling Party’s Network Pays. As a result even when talking the two worlds seem to be speaking about different things even when using the same words.

BEREC has been looking into these different approaches to interconnection in a series of papers since 2007 (ERG Report on IP-Interconnection 2007, ERG Common Statement on Regulatory Principles of IP Interconnection 2008, BEREC Common Statement on NGN future charging mechanisms, 2010). The OECD has studied Internet traffic exchange in a series of reports in 1998, 2002, 2005 and in a forthcoming paper in 2011. Furthermore, it has studied Internet traffic exchange in relation to the development of local content in cooperation with UNESCO and it has also organized a workshop on the topic in 2001 in cooperation with the German government. IP-interconnection markets are global markets crossing national borders and even continents. Therefore the OECD is singular in its analysis of trends in Internet interconnection taking a global perspective. Following the same objective of safeguarding competition, BEREC and the OECD take this workshop as a starting point hopefully to be continued in the future.

The format of the 4 session is intended to allow for an extensive discussion with the audience.

Programme
9:00-9:30 Registration and Coffee

9:30 – 10:00 Opening words by Monica Ariño, BEREC and Sam Paltridge, OECD

10:00-11:30 Session 1: The background of Internet interconnection
The goal of this session is to outline the basics of Internet interconnection.
Technical background: Peering (paid or free), transit, partial transit, variants (reciprocal transit
etc.), “Public” versus private, application needs for QoS.

• Dennis Weller, Senior Advisor, Navigant Economics "IP Traffic Exchange;  Market Developments and Policy Challenges"
• Martin Levy, Director, Hurricaine Electric "The Background of Internet Interconnection"

11:30-12:00 Coffee break

12:00-13:00 Session 2: IP interconnection, traffic trends, and implications for
wholesale and retail prices
The interconnection of internet networks has been described in terms of two-sided networks.
The network provider stands in the middle and can receive money from either the content
provider or the consumer. Is this description of the market accurate? What can the theory of
two-sided markets teach us? What contribution can content providers give to the deployment
of networks or alternatively what is the role of network providers in content?

• Scott Marcus, Director, WIK-Consult, "IP interconnection, traffic trends, and wholesale and retail prices"
• Bill Krogfoss, Strategy Director, Chief Technology Office Alcatel-Lucent "Internet Economy and Content Peering"

13:00-14:00 Lunch

14:00-15:30 Session 3: IP Interconnection and differentiated QoS

• Mike Blanche, Program Manager - Network, Peering and Content Distribution, Google,
• Falk von Bornstaedt, Head of Peering, Deutsche Telekom "IP Interconnection and differentiated QoS."
• Patrick Gilmore, Chief Architect, Akamai

15:30-16:00 Coffee Break

16:00-17:10 Session 4: The Future of Interconnection
The Internet hasn’t done away with telephony as a very important means of communication. The growth of mobile telephony has even been more dramatic than the growth of Internet. There have been calls in academic journals and on regulators directly to both impose the Internet’s way of interconnection on telephony and vice versa the telephony’s way interconnection on the Internet.

• Can we expect the market to evolve into one model or the other for all traffic?
• Could a hybrid model evolve?
• What role will new services on networks play? Will new demands be placed on
• interconnection?
• What characteristics of both models should survive?

Panel: 

Eric Ralph, Chief Economist of the Wireline Competition Bureau, FCC (Video message
and telco);
Andreas Sturm, De-Cix;
Mike Blanche, Falk v. Bornstaedt, Patrick Gilmore; Martin Levy

17:10-17:30 Wrap-up 

Cara Schwarz-Schilling, BEREC and Rudolf van der Berg, OECD

How regulator's and Telco's are holding up the Internet of Things

Well, I got quite a few reactions on my work on Machine to Machine communications. Some of it was critical and deserves a reaction. Many people however are also very positive. Bill St. Arnaud has referred to me multiple times now on his blog. Telco2 has invited me to speak in London on November 9-10. The Apple and Gemalto rumor stimulated me quite a bit more to finish the piece below. BTW I think Steve should talk to me.


I'll go through the criticism point by point. It starts of with that M2M is overrated and who really wants this. The next section is, that I misunderstood technology or misidentified solutions. Then a short intermezzo to explain that even if technology was a solution, it wouldn't solve all and then I lay all the blame on regulators. To get some background, flip through the presentation

Management Summary of Onderzoek Flexibel Gebruik van MNC's

View more presentations from Raindeer.

BTW the spicy title is because it seems I get better response to spicy titles than to none spicy titles. Fear sells and I happen to know some regulators read this blog, so this may give them reason to forward the blog.

Where do we use M2M?

There are many ways of doing machine to machine communication. Much of it is already done in Scada systems and generally uses wired networks. One of these may be analysis systems for hundreds of thousands of sensors in chemical plants. All of this is wired communication. However unlike chemical plants most systems don't sit nicely in one place, they either move or are too distributed.

Update: Dutch regulator OPTA threatens hotels offering internet to guests

Update: 28-10: Hotels aren't telecomproviders the OPTA has confirmed. It had approached 15 organisations. Only 3 organisations who delivered ISP services to multiple hotels were asked for extra information. Hotels, conference centers and installation companies who install hardware were not deemed telecommunications providers.

Update 14-10: Only 10 hotel. chains were asked. If some of them route their own internet traffic, ie have an AS number and routable traffic, then it may be that they do have to register. But it's a big if. See Webwereld, where I perform as a pundit

Just when I was writing a longer blogpost on the outdated distinction between public and private telecoms networks (related to M2M), here comes the Dutch regulator OPTA with a reason why we should have some form distinction. OPTA is of the opinion, after a public network complained, that hotels are offering a public network if they are offering internet to their guests. This means these hotels have to register with OPTA and pay 250 euro a year. What I find shocking is that OPTA isn't able to conclude by itself that the complaining public network was completely and utterly wrong. I also wonder why McDonalds wasn't mentioned as a major infringer.

(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